<SEC-DOCUMENT>0001640334-17-000280.txt : 20181221
<SEC-HEADER>0001640334-17-000280.hdr.sgml : 20181221
<ACCEPTANCE-DATETIME>20170209200919
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001640334-17-000280
CONFORMED SUBMISSION TYPE:	DRS/A
PUBLIC DOCUMENT COUNT:		12
FILED AS OF DATE:		20170210
<PUBLIC-REL-DATE>20181221
DATE AS OF CHANGE:		20180905

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			SolarMax Technology, Inc.
		CENTRAL INDEX KEY:			0001519472
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-BUILDING MATERIALS, HARDWARE, GARDEN SUPPLY [5200]
		IRS NUMBER:				262028786
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		DRS/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	377-01422
		FILM NUMBER:		17589207

	BUSINESS ADDRESS:	
		STREET 1:		3080 12TH STREET
		CITY:			RIVERSIDE
		STATE:			CA
		ZIP:			92507
		BUSINESS PHONE:		(951) 300-0788

	MAIL ADDRESS:	
		STREET 1:		3080 12TH STREET
		CITY:			RIVERSIDE
		STATE:			CA
		ZIP:			92507
</SEC-HEADER>
<DOCUMENT>
<TYPE>DRS/A
<SEQUENCE>1
<FILENAME>filename1.htm
<TEXT>
<html><head><title>solarmax_s1.htm</title><!--Document Created by EDGARMaster--></head><BODY spellcheck="true" style="color:#000000;text-align:justify;font:10pt Times New Roman;margin:0% 7%" scroll="yes"><p style="MARGIN: 0px" align="center"><b>As confidentially submitted to the U.S. Securities and Exchange Commission on <font style="FONT-SIZE: 12pt; FONT-WEIGHT: normal; mso-bidi-font-size: 10.0pt"><b><font style='FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman","serif"; mso-fareast-font-family: SimSun; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> February 9, 2017 </font></font></font></b></font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>pursuant to the Jumpstart Our Business Startups Act of 2012</b></p>
<p style="MARGIN: 0px" align="right"><b>Registration Statement No.&nbsp;333-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</b>&nbsp;</p>
<p style="MARGIN: 0px">
<div style="FONT-SIZE: 1px; WIDTH: 100%; BORDER-BOTTOM: #000000 4px solid; MARGIN: 0px"></div>
<div style="FONT-SIZE: 1pt; WIDTH: 100%; BORDER-BOTTOM: #000000 1px solid; MARGIN-TOP: 2px"></div>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px" align="left"><strong></strong>
<p style="MARGIN: 0px" align="right"><strong></strong>&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><font size="3">UNITED STATES</font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><font size="3">SECURITIES AND EXCHANGE COMMISSION</font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><font size="3">WASHINGTON, D.C. 20549</font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b style="MARGIN: 0px"><font size="4"></font></b>&nbsp;</p><b style="MARGIN: 0px"><font size="5">
<p style="MARGIN: 0px" align="center"><font style="FONT-SIZE: 12pt; FONT-WEIGHT: normal"><b><font size="4"><font style='MARGIN: 0px; mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> AMENDMENT No. 1 </font></font></font></b></font></p>
<p style="MARGIN: 0px" align="center"><font style="FONT-SIZE: 12pt; FONT-WEIGHT: normal"><b><font size="4"><font style='MARGIN: 0px; mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> </font></font></font></b></font><font style="FONT-SIZE: 12pt; FONT-WEIGHT: normal"><b><font size="4"><font style='MARGIN: 0px; mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> To </font></font></font></b></font></p>
<p style="MARGIN: 0px" align="center"></font></b><b style="MARGIN: 0px"><font size="5">FORM S-1</font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933</strong></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cols="1" cellpadding="0" width="70%" align="center" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font size="5">SOLARMAX TECHNOLOGY, INC.</font></b></p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px" align="center">(Exact name of registrant as specified in its charter) </p></td></tr></table></p>
<p style="MARGIN: 0px"><font size="1">&nbsp;</font></p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td style="BORDER-BOTTOM: black 1px solid" valign="top" width="30%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Nevada</b></p></td>
<td width="5%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="top" width="30%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>4931</b></p></td>
<td width="5%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="top" width="30%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>26-2028786</b></p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">(State or other jurisdiction of <br>incorporation or organization)</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">(Primary Standard Industrial</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">Classification Code Number)</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">(I.R.S. Employer <br>Identification Number)</p></td></tr></table></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>3080 12th Street</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Riverside, California 92507</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><u>(951) 300-0788</u></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">(Address, including zip code, and telephone number, including area code, of Registrant&rsquo;s principal executive offices) </p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>David Hsu, Chief Executive Officer</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>SolarMax Technology Inc.</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>3080 12th Street</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Riverside, California 92507</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><u>(951) 300-0788</u></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">(Name, address, including zip code, and telephone number, including area code, of agent for service)</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><i>Copies to:</i></p>
<p style="MARGIN: 0px"><font size="1">&nbsp;</font></p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr height="15">
<td valign="top" width="45%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>[counsel for underwriters]</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">&nbsp;</p></td>
<td width="10%"></td>
<td valign="top" width="45%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Asher S. Levitsky P.C.<br>Ellenoff Grossman &amp; Schole LLP</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>1345 Avenue of the Americas, 11th Floor</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>New York, New York 10105-0302</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>(646) 895-7152</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Fax: (646) 895-7238</b></p></td></tr></table></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b>Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.</b></p>
<p style="MARGIN: 0px"><strong></strong>&nbsp;</p>
<p style="MARGIN: 0px">If any of the securities being registered on this Form&nbsp;are to be offered on a delayed or continuous basis pursuant to Rule&nbsp;415 under the Securities Act of 1933 check the following box: <font style="FONT-FAMILY: Wingdings">&#168;</font></p>
<p style="MARGIN: 0px"><font face="Wingdings"></font>&nbsp;</p>
<p style="MARGIN: 0px">If this Form&nbsp;is filed to register additional securities for an offering pursuant to Rule&nbsp;462(b)&nbsp;under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. <font style="FONT-FAMILY: Wingdings">&#168;</font></p>
<p style="MARGIN: 0px"><font face="Wingdings"></font>&nbsp;</p>
<p style="MARGIN: 0px">If this Form&nbsp;is a post-effective amendment filed pursuant to Rule&nbsp;462(c)&nbsp;under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. <font style="FONT-FAMILY: Wingdings">&#168;</font></p>
<p style="MARGIN: 0px"><font face="Wingdings"></font>&nbsp;</p>
<p style="MARGIN: 0px">If this Form&nbsp;is a post-effective amendment filed pursuant to Rule&nbsp;462(d)&nbsp;under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. <font style="FONT-FAMILY: Wingdings">&#168;</font></p>
<p style="MARGIN: 0px"><font face="Wingdings"></font>&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of &ldquo;large accelerated filer,&rdquo; &ldquo;accelerated filer&rdquo; and &ldquo;smaller reporting company&rdquo; in Rule&nbsp;12b-2 of the Exchange Act.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr height="15">
<td valign="top" width="30%">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: -12pt">Large accelerated filer</p></td>
<td width="20%"><font style="FONT-FAMILY: Wingdings">&#168;</font></td>
<td valign="bottom" width="30%">
<p style="MARGIN: 0px">Accelerated&nbsp;filer</p></td>
<td width="20%"><font style="FONT-FAMILY: Wingdings">&#168;</font></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: -12pt" align="left">Non-accelerated filer&nbsp;</p></td>
<td><font style="FONT-FAMILY: Wingdings">&#168;</font></td>
<td valign="bottom">
<p style="MARGIN: 0px">Smaller&nbsp;reporting&nbsp;company</p></td>
<td><font style="FONT-FAMILY: Wingdings">x</font></td></tr>
<tr height="15">
<td colspan="2">
<p style="MARGIN: 0px">(Do not check if a smaller reporting company)</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>CALCULATION OF REGISTRATION FEE</strong></p>
<p style="MARGIN: 0px"><font size="1">&nbsp;</font></p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="left"><b>Title of each class of securities</b></p>
<p style="MARGIN: 0px" align="left"><b>to be registered</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Amount to</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>be</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Registered</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Proposed</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Maximum</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Offering</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Price Per</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Security (1)</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Proposed</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Maximum</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Aggregate</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Offering</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Price (1)</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Amount of Registration</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Fee</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">Common Stock, par value $0.001 per share</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="12%">
<p style="MARGIN: 0px" align="center">8,050,000 shares (2)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">8.50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">68,425,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,930.00</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">_________&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="4%">
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">(1)</p></td>
<td valign="top" width="96%">
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) promulgated under the Securities Act of 1933, as amended. Pursuant to Rule 416 under the Securities Act, this registration statement also includes any additional shares of common stock that shall become issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">(2)</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">Includes 1,050,000 shares of common stock issuable upon exercise of the underwriter&rsquo;s overallotment option.</p></td></tr></table></p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify"><font size="1">&nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph; TEXT-INDENT: 45px" align="justify">The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a) may determine.</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify"><font size="1">&nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
<p style="MARGIN: 0px">
<div style="FONT-SIZE: 1pt; WIDTH: 100%; BORDER-BOTTOM: #000000 1px solid; MARGIN: 0px"></div>
<div style="MARGIN-BOTTOM: -12px; FONT-SIZE: 1pt; WIDTH: 100%; BORDER-BOTTOM: #000000 4px solid; MARGIN-TOP: 2px"></div>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td>&nbsp;</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px"><font color="red">The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.</font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td width="30%">
<p style="MARGIN: 0px 0px 0px 0.55pt; TEXT-INDENT: -0.55pt"><b><font color="red">Preliminary Prospectus</font></b></p></td>
<td width="45%">
<p style="MARGIN: 0px" align="right"><font color="red"><strong>Subject To Completion, Dated </strong></font><strong><font color="#f52887"> February 9, 2017 </font></strong></p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><font size="4"></font>7,000,000 Shares</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><font size="4">SolarMax Technology, Inc. </font></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Common Stock</b>&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">This is the initial public offering of 7,000,000 shares of common stock of SolarMax Technology, Inc. on a firm commitment basis. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to this offering, there has been no public market for our common stock. It is currently estimated that the initial public offering price per share will be between $6.50&nbsp;and $8.50. We intend to apply to list our common stock on the NASDAQ Global Market under the symbol &ldquo;SMXT.&rdquo; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have granted the underwriters have the option to purchase up to an additional 1,050,000 shares from us at the public offering price less the underwriting discount and commissions to cover over-allotments.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are an &ldquo;emerging growth company&rdquo; as that term is used in the Jumpstart Our Business Startups Act of 2012, and as such, we have elected to take advantage of certain reduced public company reporting requirements for this prospectus and future filings. See &ldquo;Risk Factors&rdquo; and &ldquo;Prospectus Summary&#8212;Emerging Growth Company Status.&rdquo;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><b>Investing in our common stock involves a high degree of risk. See &ldquo;Risk Factors&rdquo; beginning on page <font color="#f52887"> 10 </font>&nbsp;of this prospectus for a discussion of information that should be considered in connection with an investment in our common stock.</b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><b>Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Per&nbsp;Share </b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px 0px 0px 12.25pt" align="center"><b>Total </b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Public offering price</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right"></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right"></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Underwriting discounts and commissions<sup>(1)</sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">$ </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">$ </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Proceeds to us, before expenses </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">$ </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">$ </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>________</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="4%">(1)</td>
<td valign="top">In addition, we have agreed to provide the underwriters additional compensation and reimburse the underwriters for certain expenses. See &ldquo;Underwriting&rdquo; on page&nbsp;<font color="#f52887"> 96 </font> of this prospectus for additional information.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The underwriters expect to deliver the shares of common stock to purchasers in the offering against payment on&nbsp;&nbsp; , <font color="#f52887"> 2017. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">The date of this prospectus is&nbsp;&nbsp; &nbsp;, <font color="#f52887"> 2017 </font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>[Name of Managing Underwriter]</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak7f255152-f686-4f12-9c3c-b46beb3bb1cc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">ii</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><em></em></td></tr></table></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="TOC1">TABLE OF CONTENTS </a></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="89%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p></td>
<td width="1%"></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="top" width="9%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><strong>Page</strong></p></td>
<td width="1%"></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#PROSPECTUS SUMMARY">Prospectus Summary</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">2</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#THE OFFERING">The Offering</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">6</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#SELECTED CONSOLIDATED FINANCIAL DATA">Selected Consolidated Financial Data </a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">7</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#RISK FACTORS">Risk Factors</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">8</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS">Cautionary Note Concerning Forward-Looking Statements</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">31</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#USE OF PROCEEDS1">Use of Proceeds</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">33</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#DIVIDEND POLICY">Dividend Policy</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">33</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#CAPITALIZATION ">Capitalization</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">34</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#DILUTION">Dilution</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">35</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION">Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">36</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#BUSINESS">Business</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">52</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#MANAGEMENT">Management</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">74</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#EXECUTIVE COMPENSATION">Executive Compensation</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">77</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS">Certain Relationships and Related Party Transactions</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">79</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#PRINCIPAL STOCKHOLDERS">Principal Stockholders</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">81</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#DESCRIPTION OF CAPITAL STOCK">Description of Capital Stock</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">82</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#SHARES ELIGIBLE FOR FUTURE SALE1">Shares Eligible for Future Sale</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">85</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#UNDERWRITING">Underwriting</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">86</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#LEGAL MATTERS1">Legal Matters</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">88</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#EXPERTS1">Experts</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">88</p></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#WHERE YOU CAN FIND MORE INFORMATION">Where You Can Find More Information</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">88</p></td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><a href="#TOC2">Index <font color="#f52887"> to </font> Financial Statements</a></p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="right">F-1</p></td>
<td></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakefe25c81-726e-42e3-9522-b58cb68e58f3" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">iii</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><em></em></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">You should rely only on the information contained in this prospectus and in any free writing prospectus prepared by or on behalf of us and delivered or made available to you. Neither we nor the underwriters have authorized anyone to provide you with additional or different information. We are offering to sell, and seeking offers to buy, shares of our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus or a free writing prospectus is accurate only as of its date, regardless of its time of delivery or of any sale of shares of our common stock. Our business, financial condition, operating results, and prospects may have changed since that date.</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px"><b>Until&nbsp;&nbsp;&nbsp; , 2017 (25 days after commencement of this offering), all dealers that buy, sell, or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.</b></p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside of the United States.</p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify"><b>Industry and Market Data</b></p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled &ldquo;Risk Factors.&rdquo; These and other factors could cause results to differ materially from those expressed in these publications.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">
<table id="pagebreak2db6c736-3e2e-4f52-98c0-19d22c38577d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr"></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">1</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="PROSPECTUS SUMMARY">PROSPECTUS SUMMARY</a></b></p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><i>This summary highlights selected information that is presented in greater detail elsewhere in this prospectus. This summary does not contain all of the information you should consider before investing in our common stock. You should read this entire prospectus carefully, including the sections titled &ldquo;Risk Factors&rdquo; and &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and our consolidated financial statements and the related notes included elsewhere in this prospectus, before making an investment decision. </i></p>
<p style="MARGIN: 0px"><em style="MARGIN: 0px"></em>&nbsp;</p>
<p style="MARGIN: 0px"><em style="MARGIN: 0px">In this prospectus, unless the context otherwise requires, the terms &ldquo;we,&rdquo; &ldquo;us,&rdquo; &ldquo;our,&rdquo; and the &ldquo;Company&rdquo; refer to SolarMax Technology Inc. and its <font color="#f52887"> consolidated </font> subsidiaries<font style="FONT-SIZE: 10pt; COLOR: black">.</font></em></p>
<p style="MARGIN: 0px"><b></b>&nbsp;</p>
<p style="MARGIN: 0px"><b>Company Overview&nbsp;</b>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are an integrated solar energy company. Through our subsidiaries, we are primarily engaged in the following business activities:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Selling and installing integrated photovoltaic systems and for residential and commercial customers in the United States, which is our principal source of revenue from our United States operations;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing secured loans to purchasers of our photovoltaic systems and servicing installment sales by our customers in the United States;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">
<p style="MARGIN: 0px">Owning and funding renewable energy projects in the United States <font color="#f52887"> based on leases which we entered into prior to 2015, </font> and generating revenue from this business through operating leases and power purchase agreements primarily with commercial <font color="#f52887"> users; </font></p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
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<p style="MARGIN: 0px"><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> Designing, selling or financing<font style="mso-spacerun: yes"> and maintaining</font> </font></font></font></font><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'> turnkey solar energy systems;</font></p></td></tr>
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<td valign="top">Selling and installing battery backup solutions for residential and commercial customers in the United States, which sales commenced in the third quarter of 2016;</td></tr>
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<td valign="top">Providing exterior and interior light-emitting diodes, known as LED, lighting sales and retrofitting services for governmental and commercial applications;</td></tr>
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<td valign="top">Identifying and procuring solar farm system projects for resale to third party developers and related services in China;</td></tr>
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<td valign="top">Providing engineering, procuring and construction services, which are referred to in the industry as EPC services, for solar farms in China; and</td></tr>
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<p style="MARGIN: 0px"><font color="#f52887"> Operating and maintaining </font>solar farm projects in China following the completion of our EPC <font color="#f52887"> work on the </font>projects.</p></td></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We operate in two segments &#8211; our United States operations and our Chinese operations. Our United States operations includes (i) the sale and installation of photovoltaic and battery backup systems, (ii) financing the sale of our photovoltaic and battery backup systems, (iii) owning and leasing to third parties through operating leases and power purchase agreements, and (iv) sales of LED systems.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in"><font size="4"><font size="2">Our Chinese operations consist of (i) identifying and procuring solar farm projects for resale to third parties; (ii) EPC services for solar farm projects and (iii) maintenance <font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font size="2"><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> and operation </font></font>of solar farm projects <font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"><font size="2">once the projects are <font color="#f52887"> completed </font></font></font></font></font><font color="#f52887"> .<font style="mso-spacerun: yes"></font> </font></font><font color="#f52887"> </font></font></font></font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> We commenced operations in China following the completion of two acquisitions on April 28, 2015. </font></font></font></font><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font color="#f52887"> </font></font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Symbol; mso-fareast-font-family: Symbol; mso-fareast-language: KO; mso-bidi-font-family: Symbol"><font style="mso-list: Ignore">
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<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> We acquired the ownership of Chengdu Zhonghong Tianhao Technology Limited Company, which we refer to in this prospectus as ZHTH, through a share exchange agreement among us, one of our PRC subsidiaries, and the equity owners of ZHTH. </font></font></font></font><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font color="#f52887"> </font></font></td></tr>
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<td valign="top"><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> We acquired the ownership of Jiangsu Zhonghong Photovoltaic Engineering Technology Limited Company, which we refer to in this prospectus as ZHPV, through a share exchange agreement between us and the holders of the stock of Accumulate Investment Co. Ltd., which we refer to as Accumulate.<font style="mso-spacerun: yes"> Accumulate owns ZHPV through a Hong Kong subsidiary. <font style="mso-spacerun: yes"></font>The share exchange agreement for ZHPV was amended on May 12, 2016 to revise certain terms including adjusting the total consideration retroactively to the original acquisition date of April 28, 2015.</font> </font></font></font></font></td></tr></tr></table>
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<p style="MARGIN: 0px"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'>&nbsp;</font></font></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our business in China is conducted through our subsidiaries, primarily ZHTH and ZHPV, which we acquired in April 2015, and their <font color="#f52887"> subsidiaries </font><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> , and Jiangsu Honghao Electricity Technology Co. Ltd. which we formed in September 2015. </font></font></font></font><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'></font></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">ZHTH is engaged in <font color="#f52887"> project development. ZHTH, either directly or </font><font size="2"><font size="2">through a subsidiary</font><font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> .<font style="mso-spacerun: yes"> ZHPV&rsquo;s core business is to provide engineering, procurement and construction (&ldquo;EPC&rdquo;) services. <font style="mso-spacerun: yes"></font>In order to build a solar farm in China it is first necessary to obtain a permit, which covers a specific location. <font style="mso-spacerun: yes"></font>ZHTH and ZHPV establish special subsidiaries to own and acquire a permit for a solar farm. <font style="mso-spacerun: yes"></font>We refer to these subsidiaries as permit subsidiaries. <font style="mso-spacerun: yes"></font>When a buyer of a project is identified, we sell to the buyer the equity in the permit subsidiary that holds the permit for that specific solar farm project, and the buyer of the project engages ZHPV for the EPC work. <font style="mso-spacerun: yes"></font>The purchase price for the permit subsidiary is an amount approximating the permit subsidiary&rsquo;s net assets. <font style="mso-spacerun: yes"></font>Accordingly, we do not generate a material gain or loss from the sale of the permit subsidiaries. <font style="mso-spacerun: yes"></font>The sale of the equity in the permit subsidiaries is part of the normal course of our operations in China. <font style="mso-spacerun: yes"></font>Because government regulations prohibit the sale of the permit relating to a solar farm, it is necessary for us to sell the equity in the permit subsidiary to effectuate the transfer of the ownership of the solar farm and permit to the buyer. <font style="mso-spacerun: yes"></font>At or prior to completion of the EPC work on the solar farm, we seek to obtain an agreement to operate and maintain the solar farm upon its completion. <font style="mso-spacerun: yes"></font>Jiangsu Honghao would provide the operations and maintenance services if we get the agreement.</font> </font></font></font></font><font style='FONT-SIZE: 10pt; mso-fareast-font-family: "Malgun Gothic"; mso-fareast-language: KO'><font color="#f52887"> </font></font></font></p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Unlike systems in the United States, which are installations for residential and small business users, the projects in China are solar farms, which are large land areas where multiple ground-mount solar tracking towers are installed. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">During 2015 and 2014, most of our revenue was derived from the sale of solar systems in the United States, principally residential sales, which accounted for approximately $33.2 million, or 91.7% of revenue, in 2015 and approximately $35.4 million, or 92.9% of revenue, in 2014. Financing revenue, which includes principally interest revenue from loans to purchasers of our solar systems in the United States, accounted for approximately $2.4 million, or 6.7% of revenue, in 2015, and approximately $1.7 million, or 4.6% of revenue, in 2014. Our revenue declined from approximately $38.1 million in 2014 to approximately $36.2million in 2015, principally as a result of the decline in sales of solar systems. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of one EPC contract<font color="#f52887"> with a related </font><font color="#f52887"> party, </font> our Chinese operations generated revenue of approximately <font color="#f52887"> $43 </font><font color="#f52887"> .8 </font> million for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016. Our total revenue for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 was approximately <font color="#f52887"> $ </font><font color="#f52887"> 65.9 </font> million. Our <font color="#f52887"> United States </font>solar sales decreased from <font color="#f52887"> $24 </font><font color="#f52887"> .9 </font> million in the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 to <font color="#f52887"> $20 </font><font color="#f52887"> .1 </font> million in the <font color="#f52887"> September </font> 2016 period. Financing revenue was approximately <font color="#f52887"> $1 </font><font color="#f52887"> .7 </font> million in both the <font color="#f52887"> September </font> 2016 and <font color="#f52887"> September </font> 2015 periods. Increased competition and the resulting price reduction is a major factor in the decrease in revenue.</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Private Placement</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October and November 2016, we sold 3,900,000 shares of common stock to ten accredited investors at a purchase price of $5.00 per share, generating gross proceeds of $19.5 million<font color="#f52887"> , of which, as of January 31, 2017, $8.5 million had been received and the balance is a subscription </font><font color="#f52887"> receivable. </font> We did not engage a broker or placement agent in connection with the private placement. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Selected Risks Associated with Our Business</b></p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our business is subject to a number of risks and uncertainties, including those highlighted in the section titled &ldquo;Risk Factors&rdquo; immediately following this prospectus summary. Some of these risks are:<font size="4"></font></p>
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<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">
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<p style="MARGIN: 0px">We sustained losses <font color="#f52887"> of $3.8 million </font>in the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016, $7.5 million for </font> the <font color="#f52887"> year </font> ended December 31, 2015 and <font color="#f52887"> $8.8 million for the year ended December 31, 2014, </font> and negative cash flow from operations <font color="#f52887"> of $3.7 million </font>for 2015 and <font color="#f52887"> $2.5 million for </font>2014, and we cannot assure you that we can or will operate profitably.</p></td></tr>
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<td valign="top">Our business in the United States and China is dependent on the continuation of government benefits.</td></tr>
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<td valign="top">Changes in utility regulations and pricing could impair the market for our products.</td></tr>
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<td valign="top">Our failure to raise sufficient capital could impair our ability to expand our financing operations.</td></tr>
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<td valign="top">Our failure to adequately assess credit risks of its finance customers for our United States operations could impair our ability to operate profitably, and if we have to foreclose on defaulting customers, we may have difficulty in recovering any money owed to us.</td></tr></table></font></p>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol"></font>&nbsp;</p>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></font>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&nbsp;
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<td valign="top">Changes in government regulations, tariffs and policies, including enforcement policies in the United States and China, and our inability to comply with or correctly interpret present or future government regulations could impair our ability to develop our business.</td></tr>
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<td valign="top">Our industry in very competitive, and we compete in both the United States and China with other solar energy companies as well as with the local utilities. A material drop in the price of electricity from the local utility could impact the market for solar energy systems.</td></tr>
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<td valign="top">To the extent that we have to reduce prices to meet competition, our gross profit and gross margin may be impaired.</td></tr>
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<p style="MARGIN: 0px"><font color="#f52887"> Because we offer customers a production guarantee, we may incur additional expenses if the system does not generate the production of electricity covered by the production guarantee. </font></p></td></tr>
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<td valign="top">We have recently commenced business in China, and we may not be able to operate profitably.</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our business in China is dependent upon our ability to obtain permits for solar farms, to obtain the rights to lease a sufficient amount of land with exposure to the sun to justify the construction of a solar farm, to obtain a buyer for the project, to obtain an agreement from the buyer for us to provide the EPC services relating to the construction of the solar farm and to maintain the solar farm following the commencement of operations, to obtain any necessary financing for the project, and to receive timely payments from the owner of the project. Our failure to obtain any of the foregoing could impair our ability to generate revenue in China.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</font>&nbsp;</p>
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<td valign="top">We may not have sufficient cash flow to comply with our commitments under a supply contract.</td></tr>
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<td valign="top">Because we have a small number of contracts for our China segment, our quarterly results could vary sharply from quarter to quarter. At present we are performing EPC services for one solar farm in China, which has been our sole source of revenue from our China segment for the six months ended June 30, 2016.</td></tr>
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<td valign="top">Fluctuations in the currency exchange rate between dollars and the RMB, Chinese currency, could affect our value.</td></tr>
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<p style="MARGIN: 0px">Because we have a small number of contracts for our China segment, our quarterly results could vary sharply from quarter to quarter. At present we are performing EPC services for one solar farm in China, <font color="#f52887"> which is owned by a related party and </font>which has been our sole source of revenue from our China segment for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016.</p></td></tr>
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<td valign="top">Our business could be affected by uncertainties with respect to the Chinese legal system.</td></tr>
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<td valign="top">There is no public market for our stock and we cannot assure you that an active market in our stock will develop.</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our articles of incorporation and bylaws and our employment agreements with our senior executive officers, as well as Nevada law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Future sales of our common stock in the public market could have an adverse effect upon the market for our common stock.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">We are dependent upon our senior executive officers, and our failure to identify, engage and retain qualified executive and management personnel in the United States and China could impair our ability to develop our business.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Because our directors and officers own 40.5% of our common stock and will own 34.8% of the common stock after giving effect to the sale of the 7,000,000 shares offered hereby, they may be able to elect all directors, approve matters requiring stockholder approval and to block any action which may be beneficial to stockholders.</td></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></table></font>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&nbsp;
<p style="MARGIN: 0px">
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</font></p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Implications of Being an Emerging Growth Company</b><font size="4"></font></p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an &ldquo;emerging growth company&rdquo; as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An &ldquo;emerging growth company&rdquo; may take advantage of reduced reporting requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company, we:</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px">
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<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">may present only two years of audited financial statements and only two years of related Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations, or MD&amp;A;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives , which is commonly referred to as &ldquo;compensation discussion and analysis&rdquo;;</td></tr>
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">are not required to obtain an attestation and report from our auditors on our management&rsquo;s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the &ldquo;say-on-pay,&rdquo; &ldquo;say-on frequency&rdquo; and &ldquo;say-on-golden-parachute&rdquo; votes);</td></tr>
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;</td></tr>
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under &#167;107 of the JOBS Act; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">will not be required to conduct an evaluation of our internal control over financial reporting for two years.</td></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We intend to take advantage of all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under &#167;107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under &#167;107 of the JOBS Act.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Certain of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a &ldquo;smaller reporting company&rdquo; under SEC rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding management&rsquo;s assessment of internal control over financial reporting, are not required to provide a compensation discussion and analysis, are not required to provide a pay-for-performance graph or CEO pay ratio disclosure, and may present only two years of audited financial statements and related MD&amp;A disclosure.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Under the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended, or such earlier time that we no longer meet the definition of an emerging growth company. The JOBS Act provides that we would cease to be an &ldquo;emerging growth company&rdquo; if we have more than $1.0 billion in annual revenues, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1 billion in principal amount of non-convertible debt over a three-year period. Under current SEC rules, however, we will continue to qualify as a &ldquo;smaller reporting company&rdquo; for so long as we have a public float (i.e., the market value of common equity held by non-affiliates) of less than $75 million as of the last business day of our most recently completed second fiscal quarter.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> </font><font color="#f52887"> </font>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">5</td></tr>
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<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Our Corporate Structure </font></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> We are a Nevada corporation formed in January 2008. We have three wholly-owned and one 93.75%-owned subsidiaries in the United States. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Renewable Energy Provider, Inc., a California corporation </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Financial, Inc., a California corporation (&ldquo;SolarMax Financial&rdquo;) </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax LED, Inc., a California corporation (&ldquo;LED&rdquo;) </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SMX Capital, Inc., a New Jersey corporation (&ldquo;SMX Capital&rdquo;) </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SMX Capital is a 93.75% owned subsidiary, and its financial statements are included in our consolidated financial statements. The 6.25% minority interest is held by the president of our PRC operations. The minority interest is reflected as non-controlling interests in the accompanying consolidated financial statements. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Our wholly-owned subsidiaries outside the United States are as follows: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
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<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> Accumulate, a British Virgin Islands corporation, which is wholly owned by us. We acquired Accumulate as part of our acquisition of ZHPV in April 2015. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> SolarMax Technology Holdings (Hong Kong) Limited (&ldquo;SolarMax Hong Kong&rdquo;), which was established under the laws of Hong Kong on October 27, 2014. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> Golden Solarmax Finance Co., Ltd., (&ldquo;Golden SolarMax&rdquo;), which was organized under the laws of the Peoples&rsquo; Republic of China (&ldquo;China&rdquo; or the &ldquo;PRC&rdquo;) on June 1, 2015. </font></td></tr></tr></tr></table>&nbsp; </font>
<p style="MARGIN: 0px"><font color="#f52887"> Accumulate has one wholly-owned subsidiary, Accumulate Investment Co., Limited (HK), an entity organized under the laws of Hong Kong. Accumulate Hong Kong has one wholly-owned subsidiary, ZHPV. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Hong Kong has one wholly-owned subsidiary, SolarMax Technology (Shanghai) Co., Ltd. (&ldquo;SolarMax Shanghai&rdquo;), which is organized under the laws of the PRC and was formed on February 3, 2015. SolarMax Shanghai is a wholly foreign-owned entity, which is referred to as a WFOE. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Shanghai has two wholly-owned subsidiaries, ZHTH and Jiangsu Honghao, which was organized on September 21, 2015. Jiangsu Honghao is engaged in the project operation and maintenance business. Jiangsu Honghao may also form a separate subsidiary for each solar farm for which it has a contract to operate and maintain the solar farm. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> The following are charts showing our corporate structure for the United States and China segments. The chart for the China segment does not include the permit subsidiaries or the subsidiaries of ZHTH, ZHPV and Jiangsu Honghao that are formed for specific projects. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;
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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">6</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><a href="#TOC1"><em>Table of Contents</em></a></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> United States Segment </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
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<tr height="15">
<td valign="top" width="20%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="15%" colspan="4">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="23%" colspan="6">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology Inc. </font></p></td>
<td valign="top" width="11%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="24%" colspan="4"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="20%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="21%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="7%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="11%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="7%"><font color="#f52887"> </font></td>
<td valign="top" width="10%"><font color="#f52887"> </font></td>
<td valign="top" width="10%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="8%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="25%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="16%" colspan="5"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="7%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="10%"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="10%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="20%" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax Renewable </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Energy Provider, Inc. </font></p></td>
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="18%" colspan="4">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax LED Inc. </font></p></td>
<td valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="4%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="17%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax Financial Inc. </font></p></td>
<td valign="top" width="7%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="21%" colspan="3">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SMX Capital, Inc.<br>(93.75%) </font></p></td></tr>
<tr height="15">
<td width="8%"><font color="#f52887"> </font></td>
<td width="11%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="8%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="8%"><font color="#f52887"> </font></td>
<td width="3%"><font color="#f52887"> </font></td>
<td width="2%"><font color="#f52887"> </font></td>
<td width="3%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="5%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="7%"><font color="#f52887"> </font></td>
<td width="10%"><font color="#f52887"> </font></td>
<td width="5%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> China Segment </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="16%" colspan="7">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="23%" colspan="8">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology Inc. </font></p></td>
<td valign="top" width="8%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="23%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="10%" colspan="3"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="10%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="17%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="12%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="24%" colspan="7"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="8%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="29%" colspan="10"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="11%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="2%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="19%" colspan="6"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="14%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="17%" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Golden Solarmax </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Finance. Co. Ltd. </font></p></td>
<td valign="top" width="8%" colspan="3">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="23%" colspan="10">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Holdings (Hong Kong) Limited </font></p></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="24%" colspan="7">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Accumulated Investment </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Co. Ltd. (BVI) </font></p></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="16%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="15%" colspan="6"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="21%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="12%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="16%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="15%" colspan="6"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="21%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="12%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" rowspan="2" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="21%" colspan="9">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> (Shanghai) Co., Ltd. </font></p></td>
<td valign="top" rowspan="2" width="11%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" rowspan="2" width="3%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="24%" colspan="7">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Accumulate Investment Co., </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Ltd. (HK) </font></p></td>
<td valign="top" rowspan="2" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="7%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="7%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="23%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="10%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="7%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="7%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="8%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="9%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="23%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="10%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" rowspan="2" width="17%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="11%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Chengdu Zhonghong TianHao Technology Co. Ltd (ZHTH) </font></p></td>
<td valign="top" rowspan="2" width="5%" colspan="3">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="14%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Jiangsu Honghao Electricity Technology Co. Ltd </font></p></td>
<td valign="top" rowspan="2" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="10%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="21%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Jiangsu Zhonghong Photovoltaic </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Electric Co. Ltd (ZHPV) </font></p></td>
<td valign="top" rowspan="2" width="12%" colspan="3"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="10%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="17%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="17%" colspan="8"><font color="#f52887"> </font></td>
<td valign="top" width="14%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="24%" colspan="7"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> </font></td></tr></table></p>
<p style="MARGIN: 0px"><b>Corporate Information</b></p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our principal executive offices are located at 3080 12th Street, Riverside, California 92507. Our telephone number is (951) 300-0788. Our website address is http://www.solarmaxtech.com. The information contained on, or that can be accessed through, our website or any other website is not a part of this prospectus.</p>
<p style="BACKGROUND: white; MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px">
<table id="pagebreakd040fd20-9fbd-44ad-9ccc-c70e77070e7d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr"></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">7</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="THE OFFERING">THE OFFERING</a></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#ffffff">
<td valign="top" width="42%">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Common stock outstanding :</p></td>
<td width="2%"></td>
<td valign="top" width="56%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">44,803,928 shares <sup>1</sup></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top"></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Common stock offered hereby:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">7,000,000 shares.</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top"></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">Common stock to be outstanding immediately after completion of this offering:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">51,803,928 shares (52,853,928 shares if the underwriters&rsquo; overallotment option is exercised in full).</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top"></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Use of proceeds:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">We intend to use the net proceeds of this offering, estimated at approximately $ :</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0.25in; TEXT-INDENT: -0.25in"><font style="FONT-FAMILY: Symbol">&#183;</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font dir="ltr"></font>to finance our solar system financing business in the United States; and</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0.25in; TEXT-INDENT: -0.25in"><font style="FONT-FAMILY: Symbol">&#183;</font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font dir="ltr"></font>for working capital and other corporate purposes.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">See &ldquo;Use of Proceeds.&rdquo;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Dividend policy:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">We do not anticipate paying any cash dividends on our common stock. We expect that, for the foreseeable future, any earnings will be reinvested in our business. See &ldquo;Dividend Policy.&rdquo;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">&nbsp;</td>
<td>&nbsp;</td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp; </p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Listing and trading symbol:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">We intend to apply to list our common stock on the NASDAQ Global Market under the symbol &ldquo;SMXT.&rdquo;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">&nbsp;</td>
<td>&nbsp;</td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp; </p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 5.5pt; TEXT-INDENT: -5.5pt">Risk Factors:</p></td>
<td></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">You should carefully read and consider the information set forth under the heading &ldquo;Risk Factors,&rdquo; beginning on page&nbsp;<font color="#f52887"> 10 </font> of this prospectus and all other information set forth in this prospectus before deciding to invest in our common stock.</p></td></tr></table></p>
<p style="MARGIN: 0px">__________&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px"><sup>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="3%">1</td>
<td valign="top">The outstanding shares (a) include 3,816,000 shares which were issued as restricted stock grants that are subject to forfeiture under certain conditions and (b) do not include 2,984,000 shares which may be issued pursuant to our 2016 long-term incentive plan and pursuant to outstanding stock options.<font size="4"></font></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak76861c05-acee-4130-9e26-252759cc5038" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr"></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">8</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px"></sup>&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="SELECTED CONSOLIDATED FINANCIAL DATA">SELECTED CONSOLIDATED FINANCIAL DATA</a></b></p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 24.5pt">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following information as of December 31, 2015 and 2014 and for years then ended have been derived from our audited financial statements which appear elsewhere in this prospectus. The information at <font color="#f52887"> September </font> 30, 2016 and for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 has been derived from our unaudited financial statements which appear elsewhere in this prospectus. Dollars are in thousands, except per share amounts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify"><b>Statement of Operations Information:</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> Nine </font> Months Ended </strong></p>
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> September </font> 30,</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px" align="center"><strong>Year Ended</strong></p>
<p style="MARGIN: 0px" align="center"><strong>December 31,</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2016&nbsp;&nbsp;&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2015&nbsp;&nbsp;&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2015&nbsp;&nbsp;&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2014&nbsp;&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px">Revenues:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Construction of solar farms (China)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,754 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Installation of solar systems (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 20,099 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 24,863 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">33,237</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35,417</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Interest revenue from loan portfolio</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,693 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,700 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,436</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Other, primarily LED</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 306 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 188 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">569</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">955</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Total revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 65,852 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 26,751 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,242</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38,110</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Gross profit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,040 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,451 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,656</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,240</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Operating income (loss)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,181 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,688 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(6,980</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,372</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,850 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,043 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,570</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,876</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss attributable to SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,759 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,960 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,478</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,830</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net loss per share (basic and diluted)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.10 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.14 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(0.20</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(0.27</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Weighted average shares of common stock outstanding</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,087,928 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 34,505,877 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">37,409,024</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32,587,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Balance Sheet Information:</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> September </font> 30, </strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2016</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2015&nbsp;&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2014</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 104,957 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">82,063</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">64,081</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,518 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">27,253</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">21,712</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Working capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,711 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,881</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15,545</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accumulated deficit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (20,033 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(16,274</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,795</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Stockholders&rsquo; equity attributable to SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,457 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16,284</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11,968</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="RISK FACTORS">RISK FACTORS</a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><i>An investment in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of the other information in this prospectus, including the section titled &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and our consolidated financial statements and related notes, before making a decision to invest in our common stock. Our business, operating results, financial condition, or prospects could be materially and adversely affected by any of these risks and uncertainties. If any of these risks actually occurs, the trading price of our common stock could decline and you might lose all or part of your investment. Our business, operating results, financial performance, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.</i></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Risks Related to Our Business</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We have sustained losses since our organization, and we cannot assure you that we can or will operate profitably.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our revenue has declined from approximately $38.1 million in 2014 to $36.2 million in 2015, and we sustained net losses of approximately $8.9 million in 2014 and $7.6 million in 2015. For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, revenue from our United States operations decreased from approximately <font color="#f52887"> $26 </font><font color="#f52887"> .6 </font> million <font color="#f52887"> in the 2015 period </font>to <font color="#f52887"> $22 </font><font color="#f52887"> .1 </font> million for the <font color="#f52887"> 2016 </font> period<font color="#f52887"> . Most </font> of our revenue <font color="#f52887"> for the nine months ended September 30, 2016 </font>resulted from one contract being performed by our Chinese operations, which generated revenue of <font color="#f52887"> $ </font><font color="#f52887"> 43.7 </font> million. Contributing to the 2015 consolidated net loss is the $2.2 million net loss from our Chinese operations which commenced in May 2015. <font color="#f52887"> We did not generate any revenue from our Chinese operations during 2015. </font>We generated negative cash flows from operations of approximately $3.7 million in 2015 and approximately $2.5 million in 2014. These are factors which may raise concerns as to our ability to continue as a going concern. We will need both to increase our revenue and reduce our costs for our operations in both the United States and in China in order for us to operate profitably. Our financial statements do not include any adjustments that might result from the uncertainty about our ability to continue as a going concern. We cannot assure you that we will be able to operate profitably or positive cash flows from operations in the future, and the failure to do so may impair our ability to continue in business. </p>
<p style="MARGIN: 0px">&nbsp;<font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Prior to our acquisition of ZHPV in April 2015, ZHPV incurred losses and a negative gross margin, and we cannot assure you that our Chinese operations will not be subject to the same problems.</strong> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We acquired ZHPV in April 2015. During 2014, ZHPV incurred a negative gross margin of approximately $4.2 million and a loss before income tax of $6.3 million on revenues of approximately $38.3 million, and it had an accumulated deficit of approximately $6.5 million at December 31, 2015. Prior to our acquisition of ZHPV, ZHPV was engaged in the same business as our Chinese operations. The auditor&rsquo;s report on the ZHPV&rsquo;s financial statements include a going concern qualification. We cannot assure you that the factors that resulted in the negative gross margin and net loss will not affect our operations. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font>&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We may not have sufficient cash flow to comply with our commitments under a supply contract.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We have a supply </font> agreement with Sunspark Technologies Inc., <font color="#f52887"> pursuant to the agreement, </font> we agreed to purchase 150 <font color="#f52887"> MW </font> of solar panels over a three-year period at <font color="#f52887"> a price to be negotiated not to exceed 110% of the three month rolling average market price per watt </font><font color="#f52887"> for an estimated total commitment of approximately $84.0 million based on the most recent price paid on a purchase order from Sunspark. </font>The agreement stipulates a 30 <font color="#f52887"> MW </font> minimum amount <font color="#f52887"> per year,&nbsp;which will cost approximately $16.8 million based on the most recent price paid on a purchase order from&nbsp;Sunspark,&nbsp;with the first year being the year beginning June 1, 2016. </font>We cannot assure you that we will be able to<font color="#f52887"> meet our required purchases for the initial contract year ending May 31, 2017 or that we will be able to generate sufficient cash from operations or </font> obtain sufficient financing to enable us to satisfy our obligations, and we cannot assure you that we will be able to use or sell all of the solar panels we are required to purchase. Further, since we do not control the operations of the supplier, we may not be able to monitor or control the quality or delivery schedules for the solar panels. Our failure to meet our obligations, to generate the necessary cash flow from operations or otherwise finance our obligations, or the failure of the supplier to meet our delivery and quality requirements could impair the results of our operations and our financial condition. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b>
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></b>
<p style="MARGIN: 0px"><b>&nbsp;
<p style="MARGIN: 0px"></b>
<p style="MARGIN: 0px"><b>We have relied on loans through the United States government&rsquo;s EB-5 program, which loans may need to be refinanced when they become due and payable.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As of <font color="#f52887"> September </font> 30, 2016, we had loans payable to related parties in the amount of <font color="#f52887"> $49 </font><font color="#f52887"> .0 </font> million which were provided by related parties pursuant to the United States government&rsquo;s EB-5 program. Under this program, which is administered by the United States Customs and Immigration Service, entrepreneurs (and their spouses and unmarried children under 21) are eligible to apply for a green card (permanent residence) if they make the necessary investment in a commercial enterprise in the United States and plan to create or preserve 10 permanent full-time jobs for qualified U.S. workers. The Company is a commercial enterprise that creates permanent full-time jobs in the United States. The loans are secured and are payable 48 months from the date of the advance, and may be extended by the lender to a date when the final step of the EB-5 visa process is completed and the immigrant investors can become lawful permanent residents of the United States. Our ability to obtain funding from the EB-5 program is dependent on both our ability to create the required full-time jobs, our finding lenders or investors who have the funds to make a meaningful investment in us or one of our United States subsidiaries and the continuation of the EB-5 program. We cannot assure you that we will continue to be eligible to obtain debt or equity funding through the EB-5 program. The loans will become due, commencing in 2017, at which time we will need to repay the loans. We cannot assure you that we will be able to obtain the funds to pay the EB-5 loans when they mature, and our inability to pay or refinance these loans could have a material adverse effect upon our business. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we recently commenced business in China, you have no basis to evaluate our prospects for our Chinese business.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We acquired our Chinese subsidiaries in April 2015, and we commenced business in China <font color="#f52887"> in May 2015 following our acquisition of ZHTH and ZHPV. However, we did not begin earning revenues from our China subsidiaries until the construction of our </font> first <font color="#f52887"> solar farm began during </font> 2016. During that period, based upon our unaudited financial statements for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, we generated revenue of approximately <font color="#f52887"> $43 </font><font color="#f52887"> .8 </font> million, on which we generated operating income of approximately <font color="#f52887"> $3 </font><font color="#f52887"> .3 </font> million. The revenue was generated from one contract<font color="#f52887"> with a related </font><font color="#f52887"> party. </font> We have no audited financial statements showing our Chinese operations<font color="#f52887"> , and the audited financial statements for ZHPV for 2014 show a negative gross margin and a </font><font color="#f52887"> loss. </font> As a result, you have no basis to evaluate our Chinese business or our ability to operate in China. Our ability to operate profitably is currently dependent upon <font color="#f52887"> a small number of contracts. </font> In order to develop this business, we need to generate contracts on an ongoing basis and to develop the <font color="#f52887"> projects </font> on schedule and on budget. We cannot assure you that we will be able to generate revenue or net income on an ongoing basis from our operations in China.&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><b>&nbsp;</b></p>
<p style="MARGIN: 0px"><b>We may not be successful in developing our solar farm project business in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In order to conduct the solar farm project business in China, we will need to:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">
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<td valign="top">obtain required governmental approval and permits;</td></tr>
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<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">complete any applications that may be necessary to enable us or the end user to take advantage of available government benefits;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">identify and obtain land use rights for significant contiguous parcels of land in areas where there is sufficient sunlight to justify a solar farm;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">resolve any problems with residents and businesses in the area where the solar farm is to be constructed;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">negotiate an interconnection agreement with the utility or government Electricity Bureau;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">obtain substantial financing for each project, and the proceeds of this offering will not be sufficient to provide us with such financing;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">identify a buyer of the project and negotiate a purchase and sale contract with a project buyer, which will involve the sale of the project to the buyer and an agreement with the buyer for us to design and perform the EPC work on the project on time and within the budget;</td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
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<td valign="top">receive the required interim and final payments under the purchase and sale contract;</td></tr>
<tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">complete the engineering for the project;</td></tr>
<tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">purchase the polysilicon and other components of the solar farm;</td></tr>
<tr>
<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">engage qualified contractors and subcontractors to construct the solar farm;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">accurately evaluate the cost of all aspects of the projects, including any reserve for unexpected factors;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">accurately estimate our potential warranty liability; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">address any changes resulting from weather or climate conditions, unexpected construction difficulties, changes in the buyer&rsquo;s specifications or other changes beyond our control.</td></tr>
<tr>
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<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></font>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In the event that we are not able to satisfy any of these conditions, we will not be able to generate income from our Chinese operations, and it may be necessary for us to suspend or terminate these operations. Further, the development of solar projects also may be adversely affected by many other factors outside of our control, such as inclement weather, acts of God, and delays in regulatory approvals or in third parties&rsquo; delivery of equipment or other materials, shortages of skilled labor. We cannot assure you that we will be able to engage in the solar farm business successfully. Our failure to operate this business successfully will materially impair our financial condition and the results of our operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Delays in construction of solar farms could increase our costs and impair our revenue stream from our Chinese operations.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We presently obtain permits and construct solar farms for our end user customers to whom we sell the projects. We incur significant costs prior to completion, and the contracts with the end user typically have a completion schedule. Any delay in completing a project would delay our receipt of payment from the customer as well as our recognition of revenue from the project. If the delay is significant, it could result in penalties under the contract or a refusal of the customer to pay the stated purchase price or any interim payments that are due under the contract. Delays can result from a number of factors, many of which are beyond our control, and include, but are not limited to:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">
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<td valign="top">unanticipated changes in the project plans;</td></tr>
<tr>
<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
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<tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">defective or late delivery of components or other quality issues with components;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">difficulty in obtaining and maintaining required permits;</td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> difficulty in receiving timely payments from the customers; </font></p></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">changes in regulatory requirements;</td></tr>
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<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">failure to obtain financing, and additional conditions required by lenders;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">unforeseen engineering and construction problems;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">labor problems and work stoppages;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">equipment problems;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">adverse weather, environmental, and geological conditions, including floods, earthquakes, landslides, mudslides, sandstorms, drought, or other inclement weather and climate conditions or natural disasters; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">cost overruns resulting from the foregoing factors as well as our miscalculation of the actual costs.</td></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></table></font>
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&nbsp;
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px"></font>&nbsp;</p>
<p style="MARGIN: 0px"><b>Changes in the PRC Government policies on solar power and industry conditions could affect our ability to generate business in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our ability to develop business in China is dependent upon the continuation of government policies relating to solar power and the relationship between the solar farm owner and the local utility. Any changes in the policies or practices that affect the solar power industry could make the construction and operation of a solar farm less desirable. Although our Chinese subsidiary is a licensed EPC contractor in China, changes in the law or regulations could make it difficult or more expensive for us to maintain our license. Delays in payments from the utilities or difficulties in connecting with the grid could also make solar farms less attractive. Any regulations or practices that give preference to a Chinese business rather than a subsidiary of a United States business or which would require us to devote a portion of our profit for local uses would also make it more difficult or more expensive to operate our business. We cannot assure you that changes in law or practices will not impair our ability to conduct our business in China.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our failure to control our costs could impair our financial results.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our cost of revenues and our operating expenses increased significantly both in dollars and as a percentage of revenues. Unless we are able to reduce both our cost of revenues and our operating costs, we will not be able to operate profitably. There are many factors beyond our control that may affect our costs, such as the price of components, cost of labor and the availability of warehouse and office space at reasonable rents. Unless we are able to control our costs, we will not be able to operate profitably. We cannot assure you that we can or will ever operate profitably.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Because we are dependent upon a small number of customers for a significant portion of our revenue, our inability to develop new business could impair our ability to operate profitably. </font><font color="#f52887"> </font></strong></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;<font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px; TEXT-INDENT: 33.75pt" align="justify">During the nine months ended September 30, 2016, our largest customer, a subsidiary of Changzhou Almaden Co., Ltd., which is a related party that we refer to in this prospectus as AMD, accounted for revenues of approximately $43.7 million, or approximately 66.3% of our revenue for the period. This revenue related to our services, primarily EPC services relating to the Guizhou phase 1 project, which is a solar farm in China. The nature of our business in China is such that a small number of customers is responsible for a significant percentage of our revenue from the China segment and of our total revenue. Because EPC contracts are of limited duration and, unless the customer has additional projects requiring EPC services, once we complete the construction and installation of a solar farm, there is no ongoing revenue stream from the customer unless the customer engaged us to perform ongoing maintenance services for the solar farm. The revenue stream from the maintenance services is significantly less than the revenue from the EPC services. Accordingly, it is necessarily for us, on an ongoing basis, to continue to develop new EPC business, and our failure to develop the EPC business and to enter into maintenance contracts with the customers will impair our ability to operate profitably.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"> </font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our second largest customer for the nine months ended September 30, 2016, is Sunrun, Inc., a third party leasing company with which we have a channel agreement pursuant to which Sunrun appoints us as its sales representative to solicit orders from residential customers for the Sunrun&rsquo;s products in portions of southern California. Sales to the leasing company were approximately $9.4 million, or approximately 14.2% of revenue, for the nine months ended September 30, 2016 and approximately $5.8 million for the year ended December 31, 2016. Sales to this customer for the nine months ended September 30, 2016 represented approximately 42.4% of revenues from our United States segment. Pursuant to our agreement with Sunrun, we introduce potential leasing customers to the leasing company, purchase the components and perform the EPC services and sell the completed system to the leasing company which then leases the system to the customer. Our agreement with Sunrun prohibits us from marketing, selling or constructing solar systems to be leased to customers other than through Sunrun. These restrictions do not affect our financing operations. The agreement has a term of three years, which commenced in January 2015. Sunrun may terminate the agreement if we fail to meet specified minimum volume requirements. Sunrun also has the right to terminate certain incentives contained in the agreement at any time. Because a significant number of our potential customers prefer a leasing arrangement, we believe the ability to offer a leasing alternative is important to our business. In the event that our relationship with Sunrun is terminated or in the event that our customers are not satisfied with the products or terms provided by Sunrun, we may have difficulty finding alternative leasing companies and our revenue and our ability to generate profits would be impaired. We cannot assure you that we will be able to find alternative leasing arrangements. </font></p>
<p style="MARGIN: 0px"><b></b>&nbsp;</p>
<p style="MARGIN: 0px"><b>We may require significant funds in excess of the maximum proceeds from this offering if we are to expand our financing of solar energy systems in the United States.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The solar energy systems market is very cash intensive, particularly with respect to the financing of the purchase by our United States customers. We require substantial funds in order to finance our customers&rsquo; purchase of solar energy systems in the United States and to finance solar farm projects in China and for working capital. Our failure to obtain the financing could materially impair our ability expand our financing activities in the United States. The maximum proceeds from this offering may not be sufficient to enable us to expand our financing activities and meet our requirements to develop and expand our business in China. Furthermore, if subsequent to this offering we raise additional funds, we cannot assure you as to the availability or terms of any financing. Any equity financing could result in dilution to our stockholders. Further, to the extent that we have to rely on credit rather than equity, our profit from financing operations will be impacted and changes in interest rates may further reduce our margins on the loans. If we are not able to finance the sale of our systems, whether through a loan to the customers or a lease with the customers, our failure to sell our solar energy systems will adversely affect our revenues and the results of our operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our business in both the United States and China is dependent on the continuation of government benefits.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Federal, state and local government laws, including tax laws, regulations and policies concerning the electric utility industry, utility rate structures, interconnection procedures, and internal policies and electric utility regulations heavily influence the market for electricity generation products and services. These regulations and policies, which, on the state and local level, differ from state to state, often relate to tax benefits, electricity pricing, net metering the interconnection of customer-owned electricity generation with the local electricity utility. These laws, regulations and policies are constantly subject to change, and many benefit provisions have sunset clauses, which would result in a termination or reduction of the benefit unless the benefit is expressly extended. The solar power industry is heavily dependent on government incentives and subsidies that constitute an important economic factor in a user&rsquo;s decision to purchase a solar energy system. We cannot assure you that these benefits will continue at their present levels, if at all. The reduction, elimination or expiration of government benefits and economic incentives for solar energy systems could substantially increase the cost of our systems to our potential customers, which would in turn reduce the demand for our solar energy systems.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In many areas in China, solar farms, particularly on-grid photovoltaic systems, would not be commercially viable without government subsidies or economic incentives. The cost of generating electricity from solar energy in these markets currently exceeds, and very likely will continue to exceed for the foreseeable future, the cost of generating electricity from conventional or other renewable energy sources. These subsidies and incentives have been primarily in the form of set electricity prices and performance incentive programs, to solar farm operators. To the extent that these incentives are not available, we may not be able to sell our systems to customers in these regions. Further, if we decide to operate the solar farms in these regions for our own account instead of selling the project, we may not be able to generate a profit from those operations, which would impair results of our operations and our ability to operate profitably.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Changes in utility regulations and pricing could impair the market for our products.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The market for alternative energy products is affected by utility regulation and pricing policies. Changes in regulations or pricing could result in a significant reduction in the demand for our products. Depending on the region, electricity generated by solar energy systems competes most effectively with expensive peak-hour electricity from the electric grid, rather than the less expensive average price of electricity. Modifications to the utilities&rsquo; peak hour pricing policies affect the competitive nature of our systems. To the extent that we have to lower prices, the profitability of our systems could be impaired. In addition, any changes to government or internal utility regulations and policies that favor electric utilities could reduce our competitiveness and cause a significant reduction in demand for our products and services.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Changes in net metering regulations could impair the market for solar products. </font><font color="#f52887"> </font></strong></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Net metering is a billing mechanism that credits solar energy system owners for the electricity that they add to the electricity grid. If the owner of a solar system generates more electricity than it consumes, the excess electricity is sold back to the grid. California presently has net metering regulations, and the California Public Utilities Commission required that California&rsquo;s three largest utilities keep the original net energy metering rates in effect until 2019 or earlier if the utility purchases under net metering exceed 5% of its aggregate customer peak demand. If this target is not reached by 2019, the Public Utilities Commission will review the matter. To the extent that the utilities are not required to purchase excess electricity from owners of solar systems or are permitted to lower the amounts paid, the market for solar systems may be impaired. Because net metering can enable the solar system owner to further reduce the cost of electricity by selling excess electricity to the utility, any elimination or reduction of this benefit would reduce the cost savings from solar energy. We cannot assure you that net metering will not be eliminated or the benefits significantly reduced for future solar systems which may dampen the market for solar energy. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Although we are not regulated as a utility, changes in regulations may subject us to regulation as a utility.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are presently exempt from regulation as a utility since we have obtained exemptions from regulations by establishing &ldquo;qualifying facility&rdquo; status with the Federal Energy Regulatory Commission for all of our qualifying solar energy projects. Any local, state, federal or foreign regulations which classify us as a utility could place significant restrictions on our ability to operate our business by prohibiting or otherwise restricting our sale of electricity. If we were subject to the same state, federal or foreign regulatory authorities as utilities in the United States or if new regulatory bodies were established to oversee our business in the United States or in foreign markets such as China, then our operating costs would materially increase, which would impair our ability to generate a profit from our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our business may be affected by increases in the price of solar energy products, including price increases resulting from the United States&rsquo; trade and tariff policies.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The declining cost of solar panels has been a key factor in the pricing of our solar energy systems, which, in turn affects the potential customer&rsquo;s decision to use solar energy. With any stabilization or increase of solar panel and other component prices, our ability to market our solar energy systems could be impaired, which would affect our revenues and gross profit. The cost of solar panels and raw materials could increase in the future due to tariff penalties or other factors. The U.S. government has imposed tariffs on solar cells manufactured in China, which have increased the price of solar panels containing Chinese-manufactured solar cells. Currently, many solar panels contain components from China and other Asian countries. The purchase price of solar panels containing solar cells manufactured in China reflects these tariff penalties. At present we do not purchase solar panels containing solar cells manufactured in China for our United States installations. While solar panels containing solar cells manufactured outside of China are not subject to these tariffs, the prices of these solar panels are, and may continue to be, more expensive than panels produced using Chinese solar cells, before giving effect to the tariff penalties. If additional tariffs are imposed or other negotiated outcomes occur, our ability to purchase these products on competitive terms from those countries could be limited. Any of those events could impair our financial results by requiring us to account for the cost of trade penalties or to purchase solar panels or other system components from alternative, higher-priced sources.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our business would be impaired if we lose our licenses, if more stringent government regulations are enacted or if we fail to comply with the growing number of regulations pertaining to solar energy and consumer financing industries.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our business is subject to numerous federal and state laws and regulations. The installation of solar energy systems performed by us is subject to oversight and regulation under local ordinances, building, zoning and fire codes, environmental protection regulation, utility interconnection requirements, and other rules and regulations. The financing transactions by SolarMax Financial are subject to numerous consumer credit and financing regulations. The consumer protection laws, among other things:</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The number of laws affecting both aspects of our business continues to grow. We can give no assurances that we will properly and timely comply with all laws and regulations that may affect us. If we fail to comply with these laws and regulations, we may be subject to civil and criminal penalties. In addition, non-compliance with certain consumer disclosure requirements related to home solicitation sales and home improvement contract sales affords residential customers with a right to rescind such contracts in some jurisdictions. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>A material drop in the retail price of electricity from the local utility or from other sources would affect our ability to generate revenues.</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 27.8pt">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We believe that a customer&rsquo;s decision to buy a solar energy system from us is primarily driven by a desire to pay less for electricity. Decreases in the retail prices of electricity from the utilities or other renewable energy sources would impair our ability to offer competitive pricing which would, in turn, affect our ability both to generate revenue and to maintain gross margins. The price of electricity from utilities could decrease as a result of such factors as a reduction in the price of natural gas as a result of new drilling techniques or a relaxation of associated regulatory standards; the development of energy conservation technologies and public initiatives to reduce electricity consumption; the construction of a significant number of new power generation plants, including nuclear, natural gas or renewable energy technologies.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>A material decline in the price electricity charged by the local utility to commercial users may impair our ability to attract commercial customers.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Often large commercial customers pay less for energy from utilities than residential customers. To the extent that the utilities offer commercial customers a lower rate for electricity, they may be less willing to switch to solar energy. Under such conditions, we may be unable to offer solar energy systems in commercial markets that produce electricity at rates that are competitive with the price of retail electricity they are able to obtain from the local utility. In such event, we would be at a competitive disadvantage compared to the local utility and may be unable to attract new commercial customers, which would impact our revenues.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Solar energy and other forms of renewable energy compete with other forms of energy and the attractiveness of solar energy reflects the cost of electricity from the local grid.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Solar energy competes with other all other forms of energy, including, particularly the local utilities, whose pricing structure effectively determines the market for solar energy. If consumers, whether residential or commercial, believe that they are paying and will continue to pay too much for electricity from the local utility, they may consider other alternatives, including alternative providers of electricity from the local utility as well as forms of renewable energy. If they are in a location where, because of the climate and geography, solar energy is a possibility, they may consider solar energy as an alternative, provided that they are satisfied that they will receive a net savings in their cost of electricity and their system will provide them with a constant source of energy. Further, although some customers may purchase a solar energy system because of environmental considerations, we believe that the cost of electricity is the crucial factor that influences the decision of a user, particularly a commercial user, to elect to use solar energy.</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Within the solar energy market, we face an intense and increasing competition in the developing market of solar energy system providers, which exposes us to the risk of reduction of our market penetration and/or of our profit margins.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The solar energy system installation market is highly and increasingly competitive. The number of new solar energy installation businesses that have entered the industry in California has almost doubled since 2008 when we commenced business. We compete with a both major companies in the solar business, particularly in California, as well as a large number of small companies. The solar energy industry may continue to expand and possibly consolidate. As a result of increasing competition, our revenue from solar systems in the United States declined in both 2015 from 2014 and in the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 from the comparable period of 2015. The competitive factors also were a significant cause of the decline in our gross margin in 2015 as compared with 2014 and in the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 as compared with the comparable period of 2015. We may continue to encounter increasing competition from larger companies that have greater resources than we and which would enjoy more economies of scale and greater name recognition than we have. Further, increasing competition may also lead to excessive supply of solar energy installation services on the market and which could continue to affect both our ability to generate revenue as well as the gross margin which we could generate if we have to reduce our prices and the criteria for providing financing to customers. Further, to the extent that our ability to provide financing to our customers is an important element in selling our systems, we will compete with both other solar companies that provide financing and with banks, leasing companies and other <font color="#f52887"> businesses </font> that seek to <font color="#f52887"> offer financing alternatives to </font>purchasers of solar systems.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>In China we compete with other firms for a limited number of available permits.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In China we obtain permits, construct and sell solar farms to major customers who have the financial ability to purchase and operate these systems. The permits are granted by the local government agency and a list of available permits is published by the agency. There is a limited number of potential customers as well as a limited number of permits available and we compete with other firms in seeking to obtain permits and seeking to perform EPC services. In seeking both permits and customers, we compete with other companies, many of which are Chinese companies, which have significantly greater financial resources and are better known than we are. Further, many of our competitors have or can develop relationships with both the government officials who issue the permits as well as the buyers of the projects, and our competition may not be subject to the restrictions imposed <font color="#f52887"> on us </font>by the Foreign Corrupt Practices Act. We cannot assure you that we will be able to obtain the necessary permits for our customers or enter into agreements with end users who would operate the solar farms. Our failure to obtain the permits and enter into agreements would impair our ability to generate revenue from this business.&nbsp;</p>
<p style="MARGIN: 0px"><b>&nbsp;</b></p>
<p style="MARGIN: 0px"><b>Because of the cost of construction of the solar farms, we could require financing in order to complete projects in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 45px">Although our EPC contracts with the solar farm owner provide for progress payments, we cannot assure you that we will be paid in a timely manner and that our customers will not be significantly delinquent on their payments. Our failure both to receive timely progress payments and to obtain any necessary project financing in China would impair our ability to develop our business in China. Because of the size of the solar farms that we build in China, we may require financing for our projects. We cannot assure you that we will be able to obtain financing or that our business will not be impaired by delinquent customers. Further, we may not be able to generate business without a financing arrangement. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because our business in China involves the construction of large projects for a small number of customers; we do not have an ongoing revenue base and need to obtain new customers for our projects.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 45px">Because of the nature of our business in China, we construct large projects for a small number of customers, who may not require additional services from us after we have completed their projects. As a result, we need to continually market our services to new customers who have the financial resources to purchase a solar farm. Thus, each year a small number of customers will be responsible for a large percentage of our revenue from China and a large percentage of our total revenue, and the major customers in one year may not generate any significant revenue in future years. Further, to the extent that any customer fails to make time payments to us, our business and cash flow could be impaired. If we are unable to develop new sales contracts for solar farms, we may not be able to continue our Chinese operations which would impair our operating results and our financial condition.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because of the amount of land required for a solar farm, it may be difficult to obtain the necessary land use rights, which may increase the cost of the land.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">There is no private ownership of land in China, and the owner or operator of a solar farm must obtain the necessary land use rights from the applicable government agency. Solar farms require a substantial amount of land, which could be in the range of 800 to 3,500 acres, for the construction of the solar farm. It is also crucial to have a land parcel close to the grid connection point in order both to control the cost for the construction of transmission line and to avoid the electricity transmission loss. The solar farm for which we are performing EPC services had to reduce the size of the project because <font color="#f52887"> of zoning issues and </font>the inability to obtain land use rights to sufficient contiguous parcels of land to support the initial size of the project. The shortage of available land may also result in an increase in the cost of the land use rights as well as increased completion for the land use rights. Further, since the land is owned by the government, the government has the ability to determine what it determines to be the best use of the limited available land and it might determine that the land could be used for other purposes that solar farms. If we or solar farm owners cannot sufficient obtain land use rights at a reasonable cost, they may be reluctant to make the investment in solar farms which would impair our ability to generate revenue and operate profitably in China.<font color="#f52887"> Further, changes in the size of a project may result in increased costs as well as construction difficulties which we may be unable to pass on to our customers, which could reduce our gross margins. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">There is intense competition for a limited number of project sites that are appropriate for solar power projects. As the downstream solar power market in China continues to evolve, the number of attractive project sites available has decreased and will continue to decrease. Even if we sign investment agreements, we may not be able to find and secure the use rights to suitable project sites for the relevant projects. We generally obtain land use rights for our ground-mounted projects through land use right granting or assignment by the government, or leasing from the land use right owners; and obtain the access and use rights for our solar power projects through leasing from the roof top owners. Our rights to the properties used for our solar power projects may be challenged by property owners or other third parties, in case of any disputes over the ownership or lease of the properties. It is critical to maintain our land use right on the land parcel and access and use right on the roof top during the life cycle of solar power projects. In case the relevant lease agreement were determined null and void by the competent authorities or our land use right and access and use right on roof top were recouped by the government, our solar power projects may be forced to cease operation and our results of operation, financial condition will be materially adversely affected.</p>
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<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The economics of a solar farm are affected by the money which the solar farm owner receives from the utility.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In China, a solar farm sells the power it generates to the electricity utility at prices which are set by the Electricity Bureau, a government agency, at the beginning of the term of the power sales agreement between the owner and the utility. The prices have been declining, and we cannot assure you that the price reductions will not continue or that price reductions will increase substantially. The cash flow that the owner receives from the utility is critical in determining whether the project will be profitable to the owner. If the potential revenue stream is not sufficient to meet the owner&rsquo;s return, taking into account the cost of the project, the cost of the land use rights and the other operating costs, the owner may be unwilling to develop a solar farm or it may be necessary for us to reduce our charges to the owner in order for us to generate the revenue, which could significantly reduce our gross margin on the project and could result in a negative gross margin. Decreases in the potential revenue stream may also significantly affect the terms on which we could provide maintenance services for a solar farm following its completion. Further, it is possible that the Electricity Bureau could set prices at a level which makes it uneconomical to operate a solar farm, in which event we would not be able to continue in this business. Although the rate is presently set for the duration of the contract with the utility, we cannot assure you that the Chinese government would not change its policy and reduce the rate during the term of the agreement. We cannot assure you that we will be able to operate our EPC business or manage solar farms in China profitably, and our failure to operate profitably in China could materially impair our overall ability to operate profitably.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Changes in solar farm delivery schedules and order specifications may affect our revenue stream.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although we build solar farms pursuant to agreement with the customers, we may experience delays in the scheduling and changes in the specification of the project. These changes may result from a number of factors, including a determination by the customer that the scope of the project needs to be changed. In the event of such changes, we may suffer a delay in the recognition of revenue from the projects and may increase our costs. We cannot assure you that our revenue will not be affected by delays or changes in specifications or that we will ever be able to recoup revenue which was lost as a result of the delays or changes. Further, if we cannot allocate our personnel to a different project, we will continue to incur some expenses relating to the project, including labor and overhead. We cannot assure you that our income will not decline as a result of changes in customers&rsquo; orders or their requirements for their projects. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>If we operate solar farms <font color="#f52887"> in China </font>&nbsp;for our own account we will be subject to additional regulations.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although we have no plans to <font color="#f52887"> own and </font>operate solar farms for our own account during 2016 or 2017, we may consider the possibility of owning and operating solar farms for our own <font color="#f52887"> account </font><font color="#f52887"> , either by direct ownership or by holding a majority equity interest in a company that owns solar farms. Unlike the solar systems that we sell in the United States, which are relatively small in scale and generally provide power for one home or building, the solar farms in China are of a significantly larger scales. Thus, while a typical residential or small business installation in the United States generally generates between 6.5KW and 0.2MW of power, the solar farms in China can generate in the range of 30MW to 100 MW of power. </font>In the event that we operate solar farms for our own account, which would involve constructing the solar farm for our own account and selling the electricity either to end users or to the local utility, we will be subject to significant additional regulations by the applicable Chinese authorities and we will require significant additional funding for such purpose. We do not plan to use any of the proceeds from this offering to construct solar farms for our own account. <font color="#f52887"> Prior to 2013, we entered into power purchase agreements that have a term of up to 20 years. We own and maintain the systems and sell the power generated by the systems to commercial customers pursuant to the power purchase agreement. These power purchase agreements, which cover a solar system designed for a local commercial user, are significantly different is size and scope from the solar farms in China. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because of the weather conditions in certain provinces in China, our quarterly revenue may be affected by weather conditions. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In the northern provinces in China, it may be difficult to perform construction work on solar farm projects during the winter months. To the extent that we have EPC contracts for solar farms in the northern provinces, revenue generated during the winter months may sharply decrease. Because we account for revenue on a percentage of completion basis, to the extent that we are not working on a project, we will not generate any significant revenue from the project during those months in which we are unable to work because of the cold weather. If we are not able to work on a project on a continuing basis, our ability to operate efficiently may be impaired which may result in a reduced gross margin. We cannot assure you that we will be able to operate profitably to the extent that we have projects in the northern provinces in China.</p>
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<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The results of our United States operations may vary significantly from quarter to quarter.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In our experience, consumers generally, and residential customers in particular, express interest in a solar energy system during March and April, when they are preparing their tax returns, and in July and August, when they experience high electricity charges from the local utility. Since the selling cycle is typically three to four months, we generally install systems two to three months after contract, and we recognize revenue after the installation is complete and the user has received a permit to operate. If we cannot complete a sale to a customer when the customer expresses interest in a solar system, the potential customer may seek alternative sources. Factors which may cause our quarterly results to fluctuate include:</p>
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<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we are dependent on our senior executive officers, the loss of their services and our failure to hire additional qualified key personnel could harm our business.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our business is largely dependent upon the continued efforts of two of our founders, our chief executive officer, David Hsu, and our executive vice president, chief strategy officer and treasurer, Ching Liu. Our operations in China are dependent upon Mr. Hsu and Richard (YuMin) Gu, who is the president of our China operations. Although we have employment agreements with Mr. Hsu and Ms. Liu and ZHTH has an employment agreement with Mr. Gu, the agreements with Mr. Hsu, Ms. Liu and Mr. Gu do not guarantee that they will continue to work for us. The loss of Mr. Hsu or Ms. Liu could affect our ability to operate profitably in both the United States and China and, depending upon the nature of the termination of their relationship, could result in substantial severance payments which we may have difficulty in funding. The loss of Mr. Gu could have a material adverse effect upon our ability to develop and operate our business in China. Because our senior management is based in the United States, our failure to develop senior management personnel in China may stretch our management resources and make it difficult for our corporate management to monitor both our China operations and United States operations efficiently. Our failure to have qualified executive personnel in China who can operate in accordance with and implement our business plan and who can comply with applicable United States and Chinese laws are regulations may impair our ability to generate revenue and operating income from our Chinese operations, which could impair our overall operations and financial condition.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>In order to develop our business, we need to identify, hire and retain qualified sales, installation and other personnel.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">To develop our business, we need to hire, train, deploy, manage and retain a substantial number of skilled employees, including sales, installation and other employees and marketing and lending personnel for our financing activities. Identifying, recruiting and training qualified personnel requires significant time, expense and attention. If we are unable to hire, develop and retain qualified personnel or if our personnel are unable to achieve the desired level of productivity for a reasonable period of time, we may have difficulty in developing our business. Competition for qualified personnel in our industry is increasing, particularly for skilled installers and other personnel involved in the installation of solar energy systems. We also compete with the homebuilding and construction industries for skilled labor. As these industries recover and seek to hire additional workers, our cost of labor may increase. The unionization of our labor force could also increase our labor costs. Shortages of skilled labor could significantly delay a project or otherwise increase our costs. Because our profit on a particular installation is based in part on assumptions as to the cost of such project, cost overruns, delays or other execution issues may cause us to not achieve our expected margins or cover our costs for that project. In addition, we compete for a limited pool of technical and engineering resources in both the United States and China that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields. We not only compete for highly qualified personnel, but we also face the other companies seeking to hire our personnel, particularly our highly skilled personnel. If we cannot meet our hiring, retention and efficiency goals, we may be unable to complete our customers&rsquo; projects on time, in an acceptable manner, if at all. Any significant failures in this regard would materially impair our growth, reputation, business and financial results. If we are required to pay higher compensation than we anticipate, the increased cost may adversely impact our financial results and our ability to develop our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Since we act as a general contractor in the United States, we face typical risks of a construction company. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We act as the licensed contractor for our customers and are subject to risks associated with construction, cost overruns, delays, regulatory compliance and other contingencies, any of which could have a material adverse effect on our business and results of operations. For our residential projects, we are the general contractor, construction manager and installer. For our commercial projects, we are the general contractor and construction manager, and we typically rely on some licensed subcontractors to support some of our solar panel installs. In either case we are responsible for the completion of the project and must take steps to make sure that we and our subcontractors comply with all applicable laws and regulations. We may be liable to customers for any damage we cause to their home or facility, belongings or property during the installation of our systems. In addition, shortages of skilled labor for our commercial projects could significantly delay a project or otherwise increase our costs. Because our profit on a particular installation is based in part on assumptions we make as to the cost of such project, cost overruns, delays or other execution issues may impair our ability to generate the gross margins that we are seeking. In addition, the installation of solar energy systems and the evaluation and modification of buildings as part of our energy efficiency business is subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building codes, safety, environmental protection, utility interconnection and metering, and related matters. It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards. Any new government regulations or utility policies pertaining to our systems may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction in demand for our systems.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our financing activities dependent upon the continued development of a market for solar systems as well as factors that affect the lending industry generally.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We generate revenue in the United States from the sale of both residential and commercial solar systems and from financing sales of systems sold by us. Our ability to generate financing revenue is dependent upon such factors as the market for solar systems generally, the creditworthiness of the borrowers and interest rates and loan terms available from banks as well as a wide range of consumer lending institutions, all of which compete vigorously for loans. We cannot assure you that we will be able to generate any significant revenue from new loans.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our failure to adequately assess credit risks for financing the sale of our systems in the United States could impair our ability to operate profitably.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of our establishment in 2011 of a finance subsidiary to finance the purchase of our solar systems, we provide financing to our customers. The principal amount of our loan portfolio was <font color="#f52887"> $38 </font><font color="#f52887"> .9 </font> million at <font color="#f52887"> September </font> 30, 2016 and $42.9 million at December 31, 2015. <font color="#f52887"> Approximately 41% of our United States revenues and approximately 21% of our total revenues for the nine months and 44% of our revenue for the year ended December 31, 2016 was generated from customers who used our in-house financing. All of our 2015 revenue was generated by our United States operations. </font>We do not have significant experience with loans to customers to evaluate the effectiveness of our credit criteria. If we try to meet financing terms of competitors, we may have to reduce our financing criteria, which could increase the possibility of default by the customers. Residential customers could be more adversely impacted during economic slowdowns or recessions, which could affect their ability or willingness to pay us. Our failure to collect any significant portion of our customer loan receivables or the need to place a significant reserve against these receivables could materially impair our financial condition and the results of our operations. We cannot assure you that we will not incur significant losses on our customer loan portfolio.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We may have difficulty in collecting in the event we have to foreclose on a customer loan.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although we file UCC-1 financing statements, we may have difficulty in generating any money in the event that we foreclose on a defaulting customer. The foreclosure process could be time-consuming and collection uncertain, particularly if the customer seeks protection under applicable bankruptcy or insolvency laws, and any defects in the filing of the financing statements could impair the validity of our security interest. Unless the subsequent owner of the building on which the solar power system is located is willing to assume the obligations with respect to the system on terms acceptable to us, we would incur substantial costs in removing and reselling the system. Further, even if we are able to remove the system, the components may not be saleable at their book value, if at all. Our failure to collect the amount due under the customer loan agreements would materially impair our financial condition and the results of our operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant monetary penalties, operational delays and adverse publicity.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The installation of solar energy systems requires our employees to work at heights with complicated and potentially dangerous electrical systems. The evaluation and modification of buildings as part of our energy efficiency business requires our employees to work in locations that may contain potentially dangerous levels of asbestos, lead or mold. There is substantial risk of serious injury or death if proper safety procedures are not followed. Our operations are subject to regulation under the U.S. Occupational Safety and Health Act, or OSHA, and equivalent state laws. Changes to OSHA requirements, or stricter interpretation or enforcement of existing laws or regulations, could result in increased costs. If we fail to comply with applicable OSHA regulations, even if no work-related serious injury or death occurs, we may be subject to civil or criminal enforcement and be required to pay substantial penalties, incur significant capital expenditures, or suspend or limit operations. Any such accidents, citations, violations, injuries or failure to comply with industry best practices may subject us to adverse publicity, damage our reputation and competitive position and adversely affect our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we are dependent upon a limited number of suppliers for our products, problems with our suppliers could impair our ability to meet our obligations to our customers.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have relied on two vendors to provide us with substantially all of our solar panels. <font color="#f52887"> We have </font> a supply agreement with Sunspark, pursuant to which we agreed to purchase 150 megawatts of solar panels for our operations over a three-year period at <font color="#f52887"> a price at a price to be negotiated not to exceed 110% of the three month rolling average market price per watt for an estimated total </font> commitment of <font color="#f52887"> approximately $84.0 </font> million <font color="#f52887"> based on the most recent price paid on a purchase order from Sunspark. The agreement stipulates a 30 MW minimum amount per year, which will cost approximately $16.8 million based on the most recent price paid on a purchase order from Sunspark,&nbsp;with the first year being the year beginning June 1, 2016. </font> We did not purchase any solar panels from Sunspark in 2015. In the event we have any quality, delivery or other problems with Sunspark or in the event that we are not otherwise able to purchase solar panels form Sunspark, it may be more difficult for us to find alternative suppliers, particularly those with whom we terminated relationships or significantly reduced purchases<font color="#f52887"> in order to meet our purchase requirements from Sunspark </font>. If we fail to develop or maintain our relationships with these or our other suppliers, or if the suppliers are not able to meet our quality, quantity and delivery schedules, we may not be able to sell meet our delivery and installation schedules for our systems and we may be unable to enter into new contracts with potential customers, thus impairing our revenue base. Any increases in price would affect our ability to market our systems or generate acceptable gross margins. We cannot assure you that Sunspark will be able to meet our quality, quantity and delivery requirements or that we will be able to find alternate suppliers can meet our quality, quantity, deliver and price requirement, and the failure to find alternate suppliers could materially affect our ability to conduct our business. Further, since suppliers may have a limited operating history and limited financial resources, we may not be able obtain an adequate remedy in the event that the suppliers are unable to meet their contractual obligations to us. Although there are a number of suppliers or solar panels, we cannot assure you that we will be able to negotiate reasonable terms for the purchase of solar panels if Sunspark is unable to meet our quality, delivery and price requirements. Because we do not control the manufacture of key components for our systems, we are subject to our suppliers&rsquo; ability to perform as well as the suppliers&rsquo; allocation of their own resources to us and to other customers. We cannot assure you that we will be able to purchase key components for our systems on acceptable terms, if at all, and the failure to obtain these components could materially impair our ability to generate revenue.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have recently commenced marketing the Flex Energy Storage System battery backup for our United States business pursuant to a distribution agreement with Li-Max Technology, Inc. Li-Max will be our sole supplier for this product. Thus, our success with this product line will be dependent upon both our ability to market and sell the system and the ability of Li-Max to deliver products meeting the necessary quality standards in a timely manner and at prices which enable us to market the product at an acceptable gross margin. </p>
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<p style="MARGIN: 0px"></b>
<p style="BACKGROUND: white; MARGIN: 0px"><b>&nbsp;</b></p>
<p style="BACKGROUND: white; MARGIN: 0px"><b>The availability and price of silicon raw materials may affect our gross margins and profitability.</b></p>
<p style="BACKGROUND: white; MARGIN: 0px"><strong></strong>&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Polysilicon is an essential raw material in the production of solar power products. The costs of silicon wafers and other silicon-based raw materials have accounted for a large portion the cost of revenues from the solar panel manufacturing facility. Although the silicon price has declined in recent years, we cannot assure you that the price of polysilicon will continue to decline or remain at its current level. Increases in the price of polysilicon have in the past resulted in increases in the price of wafers, and these increases in the price of silicon raw materials have in the past increased our production costs. Due to the volatile market prices, we cannot assure you that the price of polysilicon will remain at its current levels, especially if the global solar power market gains its growth momentum. Moreover, in the event of an industry-wide shortage of polysilicon, we may experience late or non-delivery from suppliers and it may be necessary for us to purchase silicon raw materials of lower quality that may result in lower efficiencies and reduce our average selling prices and revenues.</p>
<p style="BACKGROUND: white; MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we derive all of the revenue in the United States from sales from solar energy systems in California, we depend on economic and regulatory climate and weather conditions in California</b><b>.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We currently derive all of our revenue from solar energy projects in the United States from California, which is the only state in which we have offices. This geographic concentration exposes us more to government regulations, economic conditions, weather conditions, fire and other natural disasters, and changes affecting California that if we if we operated in more states. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Because we provide a production guarantee for some solar systems in California, we may incur additional costs if the output of our systems does not meet the required minimums. </font><font color="#f52887"> </font></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Commencing in 2015, our standard contract for residential systems provides for a production guarantee, which means that we guarantee that the system would generate a specified minimum solar energy during a year. The agreements generally have a term specified in the contract, which is generally ten years. In the contract, we specify a minimum annual production and provide that if the power generated by the system is less than 95% of the estimate, we will reimburse the owner for the cost of the shortfall. Because our obligations are not contingent upon external factors, such as sunlight, changes in weather patterns or increases in air pollution, these factors could affect the amount of solar power that is generated and could increase our exposure under the production guarantee. Although our obligations under these agreements have not been significant through September 30, 2016, we cannot assure you that in the future any obligations we have under these agreements will not have a material adverse effect upon our revenue and the results of our operations. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We do not have effective internal controls over financial accounting and reporting, and, even if we establish controls, there are limitations on the effectiveness of controls, and a failure of our control systems to prevent error or fraud may materially harm us.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to the date of this prospectus, we were a privately-owned company, which was not subject to the requirements relating to the establishment and maintenance of internal controls over financial accounting and reporting as required of a public company. We have not established effective internal controls over financial accounting and reporting, and we may be unable to establish effective internal controls. The failure to establish internal controls would leave us without the ability to reliably assimilate and compile financial information about us and significantly impair our ability to prevent error and detect fraud, all of which would have a negative impact on us from many perspectives. Moreover, we do not expect that disclosure controls or internal control over financial reporting, even if established, will prevent all error and fraud. Since we currently have few accounting employees and little, if any, segregation of duties, it will be difficult, if not impossible, to establish internal controls over financial reporting. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system&rsquo;s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Failure of our control systems to prevent error or fraud could materially adversely impact us.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our warranty costs may exceed our warranty reserve.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 45px">We provide warranties to the clients of our EPC services in China and purchasers of our solar systems in the United States. Although we generally pass the warranties from our equipment suppliers to the purchasers of the systems. We provide a warranty for our EPC services, which is for one year in the China and ten years in the United States. We maintain a warranty reserve on our financial statements, and our warranty claims may exceed the warranty reserve. Any significant warranty expenses could adversely affect our financial condition and results of operations. In addition, significant warranty problems could impair our reputations which could result in lower revenue.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because of the rapid development of solar panels and other components for solar systems, we may be subject to inventory obsolescence.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">The solar industry has seen rapid technological development. We have an inventory of raw materials that include silicon wafers and other consumables and construction materials used in solar system installations. We evaluate our inventory on a quarterly basis for excess and obsolete inventory, based on assumptions as to market demand, market conditions and technological developments. We cannot assure you that we will not incur significant inventory write-offs resulting from obsolete inventory.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>If we seek to expand our business through acquisition, and may not be successful in identifying acquisition targets or integrating their businesses with our existing business. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">During past three years, we acquired three companies, one in the United States, which is now our LED subsidiary, and two in China, ZHPV and ZHTH, through which our solar farm business in China is conducted. In 2015, we incurred impairment losses in connection with the LED acquisition, resulting in impairment write-offs relating to the goodwill associated with the acquisition. There are significant risks associated with any acquisition program, including, but not limited to, the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<td valign="top">We may incur significant expenses and devote significant management time to the acquisition and we may be unable to consummate the acquisition on acceptable terms.</td></tr>
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<td valign="top">If we identify an acquisition, we may face competition from other companies in the industry or from financial buyers in seeking to make the acquisition.</td></tr>
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<td valign="top">The integration of any acquisition with our existing business may be difficult and, if we are not able to integrate the business successfully, we may not only be unable to operate the business profitably, but management may be unable to devote the necessary time to the development of our existing business;</td></tr>
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<td valign="top">The key employees who operated the acquired business successfully prior to the acquisition may not be happy working for us and may resign, thus leaving the business without the necessary continuity of management.</td></tr>
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<td valign="top">Even if the business is successful, our two senior executive officers who may need to devote significant time to the acquired business, which may distract them from their other management activities.</td></tr>
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<td valign="top">If the business does not operate as we expect, we may incur an impairment charge based on the value of the assets acquired. In 2015, we recorded an impairment loss of $320,000 on the goodwill associated with the LED acquisition.</td></tr>
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<td valign="top">We may have difficulty maintaining the necessary quality control over the products and services by the acquired business.</td></tr>
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<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></p></td>
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<p style="MARGIN: 0px"><font color="#f52887"> To the extent that an acquired company operates at a loss prior to our acquisition, we may not be able to develop profitable operations following the acquisition. </font></p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Problems and claims relating to the acquired business that were not disclosed at the time of the acquisition may result in increased costs and may impair our ability to operate the acquired company.</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Any indemnification obligations of the seller under the purchase agreement may be inadequate to compensate us for any loss, damage or expense which we may sustain, including undisclosed claims or liabilities.</td></tr>
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<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></p></td>
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<p style="MARGIN: 0px"><font color="#f52887"> To the extent that the acquired company is dependent upon its management to maintain relationships with existing customers, we may have difficulty in retaining the business of these customers if there is a change in management. </font></p></td></tr>
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<td valign="top">Government agencies may seek damages after we make the acquisition for conduct which occurred prior to the acquisition, and may not have adequate recourse against the seller.</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">We may require significant capital both to acquire and to operate the business, and the capital requirements of the business may be greater than we anticipated. Our failure to obtain capital on reasonable terms may impair the value of the acquisition.</td></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">If any of these risk occur, our business, financial condition and prospects may be impaired.</p>
<p style="BACKGROUND: white; MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Risks Associated with Doing Business in China</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of&nbsp;our business.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The PRC&rsquo;s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions within the PRC. Although the PRC government has stated that that economic development will follow the model of a market economy, the concept of a market economy in the PRC is different from the way a market economy is understood in the United States. While we believe that this trend toward a market economy, as understood by the PRC government, will continue, there can be no assurance that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Further, the availability of credit in the PRC can have a major impact on the ability of companies to purchase or otherwise acquire capital assets. While the Chinese economy has grown significantly in the past 30 years, the growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. Accordingly, we cannot assure you that the PRC government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC&rsquo;s political, economic and social environment. While the Chinese economy has grown significantly in the past 30 years, the growth has been uneven, both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. The interpretation of some of these measures, including tax measures, is both complex and evolving and it may be difficult to ascertain, with any degree of certainty, whether we are in compliance. Our financial condition and results of operations may be adversely affected by the effects of government control over capital investments or changes in and interpretations of tax, currency and other regulations that are applicable to us. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>A slowdown or other adverse developments in the PRC economy may harm our customers and the demand for our products.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although the PRC economy has grown significantly in the past two decades, there is no assurance that this growth will continue and there have been recent period of declining growth. A slowdown in overall economic growth, an economic downturn, a recession or other adverse economic developments in the PRC could significantly reduce the demand for projects such as ours.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>If relations between the United States and China worsen, investors may be unwilling to hold or buy our stock and our stock price may decrease</b>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">At various times during recent years, the United States and China have had significant disagreements over political and economic issues. Controversies may arise in the future between these two countries that may affect the economic outlook both in the U.S and in China. Any political or trade controversies between the U.S and China, whether or not directly related to our business, could adversely affect the price of our common stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Future inflation in China may inhibit the profitability of our business in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In recent years, the Chinese economy has experienced periods of rapid expansion and high rates of inflation. Rapid economic growth can lead to growth in the money supply and rising inflation. Any adverse change in the terms on which we construct solar energy projects or sell electricity generated by our Chinese operations may impair our ability to operate profitably in China. Factors such as rapid expansion and inflation have led to the adoption by the PRC government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the PRC government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The fluctuation of the RMB may have a material adverse effect on your investment.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The change in value of the RMB against the U.S. dollar and other currencies is affected by various factors, such as changes in China&rsquo;s political and economic conditions. On July&nbsp;21, 2005, the PRC government changed its decade-old policy of pegging the value of the Renminbi to the U.S. dollar. Under such policy, the Renminbi was permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. Later on, the People&rsquo;s Bank of China decided to implement further reform of the RMB exchange regime to enhance the flexibility of RMB exchange rates. Such changes in policy have resulted in a significant appreciation of the Renminbi against the U.S. dollar since 2005. There remains significant international pressure on the PRC government to adopt a more flexible currency policy, which could result in a further and more significant adjustment of the Renminbi against the U.S. dollar.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Any significant appreciation or revaluation of the <font color="#f52887"> RMB </font> may have a material adverse effect on the value of, and any dividends payable on, shares of our common stock in foreign currency terms. More specifically, if we decide to convert our <font color="#f52887"> RMB </font> into U.S. dollars, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amount available to us. To the extent that we need to convert U.S. dollars we receive from any public offering of our <font color="#f52887"> common stock </font> into RMB for our operations, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. In addition, appreciation or depreciation in the exchange rate of the RMB to the U.S. dollar could materially and adversely affect the price of our common stock in U.S. dollars without giving effect to any underlying change in our business or results of operations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Restrictions on currency exchange may limit our ability to receive and use our revenue effectively. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our revenue from our Chinese operations is denominated in RMB. Our Chinese operations currently account for a significant portion of our revenue. Accordingly, restrictions on currency exchange may limit our ability to use earnings generated in China to fund any business activities we may have outside China in the future or to make dividend payments to our shareholders in U.S. dollars. Under current PRC laws and regulations, RMB is freely convertible for current account items, such as trade and service-related foreign exchange transactions and dividend distributions. However, RMB is not freely convertible for direct investment or loans or investments in securities outside China, unless such use is approved by the PRC State Administration of Foreign Exchange (&ldquo;SAFE&rdquo;). For example, foreign exchange transactions under our subsidiary&rsquo;s capital account, including principal payments in respect of foreign currency-denominated obligations, remain subject to significant foreign exchange controls and the approval requirement of SAFE.<font color="#f52887"> SolarMax Shanghai and ZHPV have completed necessary filing as foreign investment enterprise with SAFE. </font>These limitations could affect our ability to obtain foreign exchange for capital expenditures.</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our subsidiary and affiliated entity in China are subject to restrictions on making dividend and other payments to us. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Under the applicable requirements of PRC law, our PRC subsidiary may only distribute dividends after it has made allowances to fund certain statutory reserves. These reserves are not distributable as cash dividends. In addition, if our PRC subsidiary or our affiliated entity in China incurs debt on its own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any such restrictions may materially affect such entities&rsquo; ability to make dividends or make payments, in service fees or otherwise, to us, which may materially and adversely affect our business, financial condition and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we must comply with the Foreign Corrupt Practices Act, we may face a competitive disadvantage in competing with Chinese companies that are not bound by those prohibitions.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in China. If our competitors engage in these practices, they may receive preferential treatment from personnel of other companies or government agencies, giving our competitors an advantage in securing permits or business or from government officials who might give them priority in obtaining new permits or licenses, which would put us at a disadvantage. Although we inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Uncertainties with respect to the PRC legal system could have a material adverse effect on us. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions in a civil law system may be cited as reference but have limited precedential value. Since 1979, newly introduced PRC laws and regulations have significantly enhanced the protections of interest relating to foreign investments in China. However, since these laws and regulations are relatively new and the PRC legal system is continuing to evolve, the interpretations of such laws and regulations may not always be consistent, and enforcement of these laws and regulations involves significant uncertainties, any of which could limit the available legal protections.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In addition, the PRC administrative and judicial authorities have significant discretion in interpreting, implementing or enforcing statutory rules and contractual terms, and it may be more difficult to predict the outcome of administrative and judicial proceedings and the level of legal protection we may enjoy in the PRC&nbsp;than under some more developed legal systems. These uncertainties may affect our decisions on the policies and actions to be taken to comply with PRC laws and regulations, and may affect our ability to enforce our contractual or tort rights. In addition, the regulatory uncertainties may be exploited through unmerited legal actions or threats in an attempt to extract payments or benefits from us. Such uncertainties may therefore increase our operating expenses and costs, and materially and adversely affect our business and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The PRC&rsquo;s legal and judicial system may not adequately protect our business and operations and the rights of our investors.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;The PRC legal and judicial system may negatively impact foreign investors. In 1982, the National People&rsquo;s Congress amended the Constitution of China to authorize foreign investment and guarantee the &ldquo;lawful rights and interests&rdquo; of foreign investors in the PRC. However, the PRC&rsquo;s system of laws is not yet comprehensive. The legal and judicial systems in the PRC are still rudimentary, and enforcement of existing laws is inconsistent. As a result, it may be impossible to obtain swift and equitable enforcement of laws that do exist, or to obtain enforcement of the judgment of one court by a court of another jurisdiction. The PRC&rsquo;s legal system is based on the civil law regime, which means that it is based on written statutes. A decision by one judge does not set a legal precedent that is required to be followed by judges in other cases. In addition, the interpretation of Chinese laws may be varied to reflect domestic political changes. The promulgation of new laws, changes to existing laws and the pre-emption of local regulations by national laws may adversely affect foreign investors. There can be no assurance that a change in leadership, social or political disruption, or unforeseen circumstances affecting the PRC&rsquo;s political, economic or social life, will not affect the PRC government&rsquo;s ability to continue to support and pursue these reforms. Such a shift could have a material adverse effect on our business and prospects.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>PRC regulation of direct investment by offshore holding companies to PRC entities may delay or prevent us from making additional capital contributions to our PRC subsidiary and affiliated entity, which could harm our liquidity and our ability to fund and expand our business. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As an offshore holding company of our PRC subsidiary, we may (i)&nbsp;make loans to our PRC subsidiaries although we have no plans to do so, (ii)&nbsp;make additional capital contributions to our PRC subsidiaries, (iii)&nbsp;establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, and (iv)&nbsp;acquire offshore entities with business operations in China in an offshore transaction. However, most of these uses are subject to PRC regulations and approvals. For example:</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<td valign="top">loans by us to our wholly-owned subsidiary in China, which is a foreign-invested enterprise, cannot exceed statutory limits and must be registered with SAFE, or its local counterparts;</td></tr>
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<td valign="top">loans by us to our affiliated PRC entities, over a certain threshold must be approved by the relevant government authorities and must also be registered with SAFE or its local counterparts; and</td></tr>
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<td valign="top">capital contributions to our wholly-owned subsidiary must be approved by the Ministry of Commerce, known as MOFCOM, or its local counterparts.</td></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in">&nbsp;We cannot assure you that we will be able to obtain these government registrations or approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our entities in China. If we fail to receive such registrations or approvals, our ability to use capital raised and to capitalize our PRC operations may be negatively affected, which could adversely affect our liquidity and our ability to fund and expand our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Certain PRC regulations, including the M&amp;A Rules and national security regulations, may require a complicated review and approval process which could make it more difficult for us to pursue growth through acquisitions in China. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On August 8, 2006, six PRC regulatory authorities jointly issued the Regulation on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&amp;A Rules. The M&amp;A Rules established additional procedures and requirements that could make merger and acquisition activities in China by foreign investors more time-consuming and complex. For example, the MOFCOM must be notified in the event a foreign investor takes control of a PRC domestic enterprise. In addition, certain acquisitions of domestic companies by offshore companies that are related to or affiliated with the same entities or individuals of the domestic companies, are subject to approval by the MOFCOM. In addition, the Implementing Rules Concerning Security Review on Mergers and Acquisitions by Foreign Investors of Domestic Enterprises, issued by the MOFCOM in August 2011, require that mergers and acquisitions by foreign investors in &ldquo;any industry with national security concerns&rdquo; be subject to national security review by the MOFCOM. In addition, any activities attempting to circumvent such review process, including structuring the transaction through a proxy or contractual control arrangement, are strictly prohibited.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;There is significant uncertainty regarding the interpretation and implementation of these regulations relating to merger and acquisition activities in China. In addition, complying with these requirements could be time-consuming, and the required notification, review or approval process may materially delay or affect our ability to complete merger and acquisition transactions in China. As a result, our ability to seek growth through acquisitions may be materially and adversely affected.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;Although we do not believe that our business in China is in an industry with national security concerns, we cannot assure you that the MOFCOM will not reach a different conclusion. If MOFCOM determines that we should have obtained its approval, we may be required to file for remedial approvals. There is no assurance that we would be able to obtain such approval from MOFCOM. We may also be subject to administrative fines or penalties by MOFCOM that may require us to limit our business operations in the PRC, delay or restrict the conversion and remittance of our funds in foreign currencies into the PRC or take other actions that could have material and adverse effect on our business, financial condition and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Under the New Enterprise Income Tax Law, we may be classified as a &ldquo;resident enterprise&rdquo; of China. Such classification could result in unfavorable tax consequences to us and our non-PRC shareholders.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The New Enterprise Income Tax (EIT) Law and its implementing rules provide that enterprises established outside of China whose &ldquo;de facto management bodies&rdquo; are located in China are considered &ldquo;resident enterprises&rdquo; under PRC tax laws. The implementing rules promulgated under the New EIT Law define the term &ldquo;de facto management bodies&rdquo; as a management body which substantially manages, or has control over the business, personnel, finance and assets of an enterprise. However, there are no further detailed rules or precedents governing the procedures and specific criteria for determining &ldquo;de facto management body.&rdquo; It is still unclear if the PRC tax authorities would determine that our Chinese operations, which are owned by <font color="#f52887"> SolarMax </font> Hong Kong, should be classified as a PRC &ldquo;resident enterprise.&rdquo;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;If we are deemed as a PRC &ldquo;resident enterprise,&rdquo; we will be subject to PRC enterprise income tax on our worldwide income at a uniform tax rate of 25%, although dividends distributed to us from our existing PRC subsidiary and any other PRC subsidiaries which we may establish from time to time could be exempt from the PRC dividend withholding tax due to our PRC &ldquo;resident recipient&rdquo; status. This could have a material and adverse effect on our overall effective tax rate, our income tax expenses and our net income. Furthermore, dividends, if any, paid to our <font color="#f52887"> stockholders </font> may be decreased as a result of the decrease in distributable profits. In addition, if we were to be considered a PRC &ldquo;resident enterprise,&rdquo; dividends we pay with respect to shares of our <font color="#f52887"> common stock </font> and the gains realized from the transfer of shares of our <font color="#f52887"> common stock </font> may be considered income derived from sources within the PRC and be subject to PRC withholding tax. This could have a material and adverse effect on the value of your investment in us and the price of shares of our <font color="#f52887"> common </font><font color="#f52887"> stock. </font></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;<b>Our obligations under labor contract laws in China may adversely affect our results of operations. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><i>&nbsp;</i>On June&nbsp;29, 2007, the PRC government promulgated the Labor Contract Law of the PRC which became effective on January&nbsp;1, 2008. The Labor Contract Law imposes greater liabilities on employers and significantly affects the cost of an employer&rsquo;s decision to reduce its workforce. In addition, it requires certain terminations be based on the mandatory requirement age. In the event we decide to significantly change or decrease our workforce, the Labor Contract Law could adversely affect our ability to enact such changes in a manner that is most advantageous to our business or in a timely and cost-effective manner, thus materially and adversely affecting our financial condition and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we require a license to engage in the EPC business in China, any changes in the certification or qualification requirements could impair our ability to operate in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We require a specific license to engage in the EPC business in China. While we currently hold the necessary licenses, <font color="#f52887"> including Construction Enterprise Qualification Certificate (&ldquo;Qualification&rdquo;) for Level III of General Contractor for Power Engineering Constructor which permits ZHPV to conduct business as a contractor in power engineering construction business throughout the PRC, according to PRC Laws based on such Qualification, </font>any changes in the requirements for obtaining and maintaining such licensure could impair our ability to retain our license which could preclude us from performing EPC services in China.&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px"><b>If we import polysilicon into China from the United States or South Korea, our gross margin may be impaired.</b></p>
<p style="BACKGROUND: white; MARGIN: 0px"><strong></strong>&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">On July 18, 2013, China&rsquo;s Ministry of Commerce announced that it would enact preliminary tariffs on imports of solar-grade polysilicon at rates up to 57% for United States suppliers and 48.7% for South Korean suppliers. In January 2014, China&rsquo;s Ministry of Commerce upheld its previous ruling that investigated products from South Korea and the United States are subject to import tariffs at different rates with the highest rate being 57% and 48.7%, respectively. Import tariffs and limitations imposed on foreign polysilicon suppliers may lead to the increased prices of products from Chinese domestic suppliers. Although we do not source any significant amount of our polysilicon from the United States or South Korea, if we import polysilicon from these countries our cost of revenue is likely to increase, and we may not be able to pass the increased cost to our customers, which would impair our gross margin.</p>
<p style="BACKGROUND: white; MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We may fail to comply with laws and regulations regarding the development, construction and operation of solar power projects and photovoltaic production projects in China.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The development, construction and operation of solar power projects and photovoltaic production projects are highly regulated activities. Our operations in China are governed by different laws and regulations, including national and local regulations relating to urban and rural planning, building codes, safety, environmental protection, fire control, utility transmission, engineering and metering and related matters. Such as, historically, the establishment of a solar power project is subject to the approval of the NDRC or its local branches, pursuant to the Administrative Provisions on Generation of Electricity by Renewable Energy Resources promulgated by the NDRC on January 5, 2006. Pursuant to the Provisions on the Administration of Electric Power Business Permit, which became effective on December 1, 2005 and were amended on May 30, 2015, certain solar power projects may be required to obtain the electric power business permits specifically for power generation from the State Electricity Regulatory Commission, known as SERC. Pursuant to the Interim Measures for the Administration of Solar Power Projects, promulgated by the National Energy Administration, known as the NEA, on August 29, 2013, solar power projects are subject to filings with the provincial NDRC. Such filing is subject to the national development plan for solar power generation, the regional scale index and implementation plan of the year as promulgated by the competent national energy authority and a pre-condition for connecting to power grid. Pursuant to the Interim Measures for the Administration of Distributed Generation Projects, or the Distributed PV Interim Measures, promulgated by the NEA on November 18, 2013, distributed generation projects are subject to filings with the provincial or regional NDRC. Such filing is subject to State Council&rsquo;s rules for administration of investment projects and the regional scale index and implementation plan of the year as promulgated by the competent national energy authority. Distributed Generation projects in the regional scale index of the year that are not completed or put into operation within two years from their respective filing date must be cancelled and disqualified to receive national subsidies. The Distributed PV Interim Measures also provide that the filing procedures should be simplified and the electric power business permit and permits in relation to land planning, environmental impact review, energy saving evaluation and other supporting documents may be waived. Detailed requirements of the filing are also subject to local regulations, and the effects of the Distributed PV Interim Measures on our business are yet to be evaluated. Pursuant to the Standard Conditions of Photovoltaic Production Industry, or the Photovoltaic Production Rule, promulgated by the MIIT and effective on March 25, 2015 in place of its old version, the minimum proportion of capital funds contributed by the producer for newly built, renovation and expansion PV production projects shall be 20%. The Photovoltaic Production Rule also provides, among other matters, requirements in relation to the production scale, cell efficiency, energy consumption and operational life span of various PV products and requirement of obtaining the pollution discharge permits.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our failure to obtain or maintain any required approvals, permits, licenses, filings or to comply with the conditions associated therewith could result in fines, sanctions, suspension, revocation or non-renewal of approvals, permits or licenses, or even criminal penalties, which could have a material adverse effect on our business, financial condition and results of operations. Any new government regulations pertaining to solar power projects may result in significant additional expenses to the development, construction and operation of solar power projects and, as a result, could cause a significant reduction in demand for our solar power projects and services. Currently, some of our project companies in the PRC have not obtained electric power business permits due to the delay in the governmental review or approval process. Failure to secure such permits may lead to monetary damages, fines or even criminal penalties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We cannot assure you that we will be able to promptly and adequately respond to changes of laws and regulations, or that our employees and contractors will act in accordance with our internal policies and procedures. Failure to comply with laws and regulations where we develop, construct and operate solar power projects may materially adversely affect our business, financial condition and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Failure to comply with PRC regulations regarding the registration of share options held by our employees who are &lsquo;&lsquo;domestic individuals&rsquo;&rsquo; may subject such employee or us to fines and legal or administrative sanctions.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company issued by the SAFE in February 2012, or the Stock Incentive Plan Rules, &lsquo;&lsquo;domestic individuals&rsquo;&rsquo; (both PRC residents and non-PRC residents who reside in China for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) participating in any stock incentive plan of an overseas listed company according to its stock incentive plan are required, through qualified PRC agents which could be the PRC subsidiary of such overseas-listed company, to register with the SAFE and complete certain other procedures related to the stock incentive plan.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We and our employees, who are &lsquo;&lsquo;domestic individuals&rsquo;&rsquo; and have been granted stock options, or the PRC optionees,&nbsp;<font color="#f52887"> will&nbsp;become </font>&nbsp;subject to the Stock Incentive Plan Rules when we&nbsp;<font color="#f52887"> become </font> an overseas listed company upon the completion of our initial public offering. We plan to conduct and complete the registration as required under the Stock Incentive Plan Rules and other relevant SAFE registrations upon the completion of this offering and to update the registration on an on-gong basis. If we or our PRC optionees fail to comply with the Individual Foreign Exchange Rule and the Stock Incentive Plan Rules, we and our PRC optionees may be subject to fines and other legal sanctions. We may also face regulatory uncertainties that could restrict our ability to adopt additional option plans for our directors and employees under PRC law. In addition, the General Administration of Taxation has issued a few circulars concerning employee stock options. Under these circulars, our employees working in China who exercise stock options will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee stock options with relevant tax authorities and withhold individual income taxes of those employees who exercise their stock options. If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or any other PRC government authorities. Furthermore, there are substantial uncertainties regarding the interpretation and implementation of the Individual Foreign Exchange Rule and the Stock Incentive Plan Rules.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a PRC establishment of a non-PRC company, or immovable properties located in China owned by a non-PRC company.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We face uncertainties on the reporting and consequences of private equity financing transactions, private share exchange transactions and private transfer of shares, including private transfer of public shares, in our company by non-resident investors. According to the Notice on Strengthening Administration of Enterprise Income Tax for Share Transfers by Non-PRC Resident Enterprises issued by the PRC State Administration of Taxation on December 10, 2009, or SAT Circular 698, when a non-resident enterprise transfers the equity interests in a PRC resident enterprise indirectly through a disposition of equity interests in an overseas holding company, or an Indirect Transfer, the non-resident enterprise, as the seller, may be subject to PRC enterprise income tax of up to 10% of the gains derived from the Indirect Transfer in certain circumstances.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On February 3, 2015, the SAT issued Announcement on Several Issues Concerning the Enterprise Income Tax on Indirect Property Transfers by Non-RPC Resident Enterprises, or SAT Notice No. 7, to supersede the existing tax rules in relation to the tax treatment of the Indirect Transfer, while the other provisions of SAT Circular 698 that are irrelevant to the Indirect Transfer remain in force. SAT Notice No. 7 introduces a new tax regime and extends the SAT&rsquo;s tax jurisdiction to capture not only the Indirect Transfer as set forth under SAT Circular 698 but also transactions involving indirect transfer of (i) real properties in China and (ii) assets of an &ldquo;establishment or place&rdquo; situated in China, by a non-PRC resident enterprise through a disposition of equity interests in an overseas holding company. SAT Notice No. 7 also extends the interpretation with respect to the disposition of equity interests in an overseas holding company. In addition, SAT Notice No. 7 further clarifies how to assess reasonable commercial purposes and introduces safe harbors applicable to internal group restructurings. However, it also brings challenges to both the foreign transferors and transferees as they are required to make self-assessment on whether an Indirect Transfer or similar transaction should be subject to PRC tax and whether they should file or withhold any tax payment accordingly. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">However, as these notices are relatively new and there is a lack of clear statutory interpretation, there are uncertainties on the reporting and consequences on future private equity financing transactions, share exchange or other transactions involving the transfer of shares in our company by investors that are non-PRC resident enterprises, or sale or purchase of shares in other non-PRC resident companies or other taxable assets by us. We and other non-resident enterprises in our group may be subject to filing obligations or being taxed if we and other non-resident enterprises in our group are transferors in such transactions, and may be subject to withholding obligations if we and other non-resident enterprises in our group are transferees in such transactions. For the transfer of shares in our company by investors that are non-PRC resident enterprises, our PRC subsidiaries may be requested to assist in the filing under the rules and notices. We may be required to expend costly resources to comply with SAT Circular 698 and SAT Notice No. 7, or to establish a case to be tax exempt under SAT Circular 698 and SAT Notice No. 7, which may cause us to incur additional costs and may have a negative impact on the value of your investment in us.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The PRC tax authorities have discretion under SAT Circular 698 and SAT Notice No. 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the transferred equity interests and the investment cost. We may pursue acquisitions in the future that may involve complex corporate structures. If we are considered as a non-PRC resident enterprise under the EIT Law and if the PRC tax authorities make adjustments to the taxable income of the transactions under SAT Circular 698 and SAT Notice No. 7, our income tax expenses associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Risks Related to the Offering and our Common Stock</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The initial public offering price of our common stock may not be indicative of the market price of our common stock after this offering. </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Prior to this offering, our common stock was not traded on any market. The market price of our common stock could vary significantly as a result of a number of factors, some of which are beyond our control. In the event of a drop in the market price of our common stock, you could lose a substantial part or all of your investment in our common stock. The initial public offering price&nbsp;<font color="#f52887"> was </font> negotiated between us and the underwriters, based on numerous factors which we discuss in &ldquo;Underwriting,&rdquo; and may not be indicative of the market price of our common stock after this offering or any intrinsic value of our common stock. Consequently, you may not be able to sell shares of our common stock at prices equal to or greater than the price paid by you in this offering.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">The following factors, among others, could affect our stock price:&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td valign="top">our operating and financial performance;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the market&rsquo;s perception of the viability of companies in the solar energy business;</td></tr>
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the market&rsquo;s perception of companies that have significant operations in China;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the market&rsquo;s perception of the effect of proposed or implemented changes in government regulations and public utility pricing policies in general and in the states in which we conduct business;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">quarterly variations in the rate of growth of our financial indicators, such as net income (loss) per share, net income (loss) and revenues;</td></tr>
<tr>
<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the public reaction to our press releases, our other public announcements and our filings with the SEC;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">strategic actions by our competitors, including consolidation of companies in the solar energy industry in the states in which we operate;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">changes in revenue or earnings estimates, or changes in recommendations or withdrawal of research coverage, by equity research analysts;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">speculation in the press or investment community as to our company, the solar industry or companies with significant operations in China;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the failure of research analysts to cover our common stock;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">
<p style="MARGIN: 0px">sales of our common stock by us or the perception that such sales<font color="#f52887"> , including sales of shares issued pursuant to our equity incentive plans, </font> may occur;</p></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">changes in accounting principles, policies, guidance, interpretations or standards;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">additions or departures of key management personnel;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">actions by our stockholders;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">domestic and international economic, legal and regulatory factors unrelated to our performance; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">the realization of any risks describes under this &ldquo;Risk Factors&rdquo; section.</td></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price and the trading volume of our common stock. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company&rsquo;s securities. Such litigation, if instituted against us, could result in very substantial costs, divert our management&rsquo;s attention and resources and harm our business, operating results and financial condition.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak32182ad6-59cf-4af0-a9cf-6f45931b8f8f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">30</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>An active, liquid and orderly trading market for our common stock may not develop or be maintained, and our stock price may be volatile.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Since this offering is our initial public offering and there is no market for our common stock, we cannot predict the nature of the market for our common stock, and we cannot assure you that an active, liquid or orderly trading market for our common stock will develop. To the extent that an active market does not develop, you may have difficulty in selling any shares of our common stock which you purchase in this offering or in the open market. If there is no active, liquid or orderly market for our common stock, the reported bid and asked price at the time you seek to purchase or sell shares may not reflect either the price at which you could buy or sell shares of our common stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Our certificate of incorporation and bylaws and our employment agreements with our senior executive officers, as well as Nevada law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors issues preferred stock, such issuance could make it more difficult for a third party to acquire us. Our employment agreements with our two senior executive officers provide that, in the event of a termination of employment by David Hsu, our chief executive officer, or Ching Liu, our executive vice president, chief strategy officer and treasurer, following a change of control, we are to pay them, upon termination, a lump sum payment equal to&nbsp;<font color="#f52887"> two </font> times the highest annual compensation for the three years preceding the date of termination, multiplied by the number of years they have been employed by us. Their employment commenced in February 2008. In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr height="15">
<td width="4%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top" width="4%">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">limitations on the removal of directors;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">limitations on the ability of our stockholders to call special meetings;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">establishing advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">providing that the board of directors is expressly authorized to adopt, or to alter or repeal our bylaws; and</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">establishing advance notice and certain information requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings.</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Investors in this offering will experience immediate and substantial dilution of $ per share.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Based on an assumed initial public offering price of $7.50 per share (the midpoint of the range set forth on the cover of this prospectus), purchasers of our common stock in this offering will experience an immediate and substantial dilution of $&nbsp;per share in the adjusted net tangible book value per share of common stock from the initial public offering price, and our net tangible book value as of <font color="#f52887"> September </font> 30, 2016 after giving effect to this offering would be $&nbsp;per share. This dilution is due in large part to earlier investors having paid substantially less than the initial public offering price when they purchased their shares as well as our accumulated deficit of approximately <font color="#f52887"> $ </font><font color="#f52887"> 20.0 </font> million at <font color="#f52887"> September </font> 30, 2016, which amounts to $ per share after giving effect to the sale of shares of common stock in this offering. See &ldquo;Dilution.&rdquo;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We have broad discretion in the use of the proceeds from this offering, and we may invest or spend the proceeds of this offering in ways with which you may not agree or in ways which may not yield a return.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">A portion of the net proceeds from this offering are expected to be used for general corporate purposes, including working capital. Our management will have considerable discretion in the application of the net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. The net proceeds may be used for corporate purposes that do not increase our operating results or market value. Until the net proceeds are used, they may be placed in investments that do not produce significant income or that may lose value.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak39876efc-f816-44a1-ba69-4cf01dfcde44" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Provisions of our by-laws and Nevada law could deter a change of our management, which could discourage or delay offers to acquire us. </font><font color="#f52887"> </font></strong></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Certain provisions of Nevada law and of our by-laws could discourage or make it more difficult to accomplish a proxy contest or other change in our management or the acquisition of control by a holder of a substantial amount of our voting stock. It is possible that these provisions could make it more difficult to accomplish, or could deter transactions that stockholders may otherwise consider to be in their best interests or in our best interests. These provisions include: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> requiring stockholders who wish to request a special meeting of the stockholders to disclose certain specified information in such request and to deliver such request in a specific way within a certain timeframe, which may inhibit or deter stockholders from requesting special meetings of the stockholders; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> requiring the stockholders can only call a special meeting if the request is made by the holders of two-thirds of the entire capital entitled to vote; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> requiring that stockholders who wish to act by written consent request a record date from us for such action and such request must include disclosure of certain specified information, which may inhibit or deter stockholders from acting by written consent; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> requiring that, if a matter is to be brought before a meeting of stockholders which is not specified in the notice of meeting or brought at the direction of the board of directors, it can only be brought up at the meeting if brought by stockholders of record holding two-thirds of the outstanding stock; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> establishing the board as the sole entity to fill vacancies in the board of directors, which lengthens the time needed to elect a new majority of the board; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> establishing a two-thirds majority vote of the stockholders to remove a director or all directors, which lengthens the time needed to elect a new majority of the board; </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> providing that our bylaws may be amended only by either the affirmative vote of two-thirds of the stockholders entitled to vote or by the board of directors, which limits the ability of stockholders to amend our by-laws, including amendments to provisions in the bylaws that are described in this risk factor; and </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> establishing more detailed disclosure in any stockholder&rsquo;s advance notice to nominate a new member of the board, including specified information regarding such nominee, which may inhibit or deter such nomination and lengthen the time needed to elect a new majority of the board. </font></td></tr></tr></tr></tr></tr></tr></tr></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Because our bylaws limit the court in which you may bring an action against us, you may have difficulty enforcing any rights which you may claim. </strong> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our bylaws provide that any person who acquires equity in us shall be deemed to have notice and consented to the forum selection provision of our bylaws, which require actions to be brought only in Riverside County, California, which is where our executive offices are located, which may inhibit or deter stockholders actions (i) on behalf of us, (ii) asserting claims of breach of fiduciary duty by officers or directors of us, or (iii) arising out of the Nevada Revised Statutes. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak19a2edfb-3701-4c55-83bc-708c5aa02773" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because we do not intend to pay dividends on our common stock, </b><b>your only opportunity to achieve a return on your investment is if the price of our common stock appreciates.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">We do not plan to declare dividends on shares of our common stock in the foreseeable future. As a result, your only opportunity to achieve a return on your investment in us will be if you sell your common stock at a price greater than you paid for it. We cannot assure you that the price of our common stock that will prevail in the market will ever equal or exceed the price that you pay in this offering.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Future sales of our common stock in the public market could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">All of the 44,803,928 shares of common stock that are outstanding prior to this offering, which constitute approximately 86.5% of the outstanding shares of common stock, assuming the over-allotment option is not exercised, are eligible for sale pursuant to Rule 144 at various times commencing 90 days from the date of this prospectus, subject to limitations provided by Rule 144 and lock-up agreements which our officers, directors and certain principal stockholders have signed with the underwriters and which are subject to release from the lock-up restriction at the discretion of the underwriters. See &ldquo;Shares Eligible for Future Sale.&rdquo;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">We intend to file a registration statement with the SEC on Form&nbsp;S-8 providing for the registration of shares of our common stock issued or reserved for issuance under our equity incentive plan or pursuant to stock options no later than approximately six months from the date of this prospectus. . Subject to the satisfaction of vesting conditions and the expiration of lock-up agreements, shares registered under the registration statement on Form&nbsp;S-8 will be available for resale immediately in the public market without restriction other than restrictions imposed on sales by affiliates pursuant to Rule 144.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">We cannot predict the size of future issuances of our common stock or securities convertible into common stock or the effect, if any, that future issuances and sales of shares of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares issued in connection with an acquisition), or the perception that such sales, including sales by our existing stockholders pursuant to Rule 144, could occur, may adversely affect prevailing market prices of our common stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>The managing underwriter may waive or release parties to the lock-up agreements entered into in connection with this offering, which could adversely affect the price of our common stock.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our directors and executive officers have entered into lock-up agreements with respect to their common stock, pursuant to which they are subject to certain resale restrictions for a period of 180 days following the effective date of the registration statement of which this prospectus forms a part. [Managing underwriter], at any time and without notice, may release all or any portion of the common stock subject to the foregoing lock-up agreements. If the restrictions under the lock-up agreements are waived, then common stock will be available for sale into the public markets, which could cause the market price of our common stock to decline and impair our ability to raise capital.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our articles of incorporation authorize us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our common stock respecting dividends and distributions, as our board of directors may determine. The terms of one or more classes or series of preferred stock could adversely impact the voting power or value of our common stock. For example, we might grant holders of preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of preferred stock could affect the residual value of the common stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including those relating to accounting standards and disclosure about our executive compensation, that apply to other public companies.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">In April 2012, President Obama signed into law the JOBS Act. We are classified as an &ldquo;emerging growth company&rdquo; under the JOBS Act. For as long as we are an emerging growth company, which may be up to five full fiscal years, unlike other public companies, we will not be required to, among other things, (i)&nbsp;provide an auditor&rsquo;s attestation report on management&rsquo;s assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section&nbsp;404(b) of the Sarbanes-Oxley Act, (ii)&nbsp;comply with any new requirements adopted by the PCAOB requiring mandatory audit firm rotation or a supplement to the auditor&rsquo;s report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, (iii)&nbsp;provide certain disclosure regarding executive compensation required of larger public companies or (iv)&nbsp;hold nonbinding advisory votes on executive compensation. We will remain an emerging growth company for up to five years, although we will lose that status sooner if we have more than $1.0 billion of revenues in a fiscal year, have more than $700 million in market value of our common stock held by non-affiliates, or issue more than $1.0 billion of non-convertible debt over a three-year period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">To the extent that we rely on any of the exemptions available to emerging growth companies, you will receive less information about our executive compensation and internal control over financial reporting than issuers that are not emerging growth companies. If some investors find our common stock to be less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because our directors and executive officers own approximately 38.7% of our outstanding common stock, they may be able to approve any action which requires stockholder approval.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">Our directors own approximately 38.7% of our outstanding common stock and, upon sale of the 7,000,000 shares offered hereby, will own approximately 33.5%. Our bylaws provide that one-third of the outstanding common stock constitutes a quorum for a meeting of stockholders. As a result, they may have the ability to elect all of our directors and to approve action requiring stockholder approval as well as to prevent any action from being taken which they oppose even if such action would benefit stockholders.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px"><b>Because a significant portion of the proceeds of this offering is allocated to working capital and other corporate purposes, we will have broad discretion in the application of these proceeds.</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">A significant portion of the proceeds is allocated to working capital and other corporate purposes. As a result, we will have broad discretion as to the specific use of the proceeds and, accordingly, you will be entrusting the proceeds of this offering to us with little information as to the manner in which we use the proceeds.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS">CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS</a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">This prospectus contains forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in our &ldquo;Prospectus Summary,&rdquo; &ldquo;Use of Proceeds,&rdquo; &ldquo;Risk Factors,&rdquo; &ldquo;Management Discussion and Analysis of Financial Condition and Result of Operations,&rdquo; and &ldquo;Business&rdquo; sections. In some cases, you can identify these forward-looking statements by terms such as &ldquo;anticipate,&rdquo; &ldquo;believe,&rdquo; &ldquo;continue,&rdquo; &ldquo;could,&rdquo; &ldquo;depends,&rdquo; &ldquo;estimate,&rdquo; &ldquo;expects,&rdquo; &ldquo;intend,&rdquo; &ldquo;may,&rdquo; &ldquo;ongoing,&rdquo; &ldquo;plan,&rdquo; &ldquo;potential,&rdquo; &ldquo;predict,&rdquo; &ldquo;project,&rdquo; &ldquo;should,&rdquo; &ldquo;will,&rdquo; &ldquo;would&rdquo; or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our operations and business prospects are always subject to risks and uncertainties including, among others: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="LAYOUT-GRID-MODE: char; MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
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<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to obtaining any financing we may require to enable us to finance our customer&rsquo;s purchase of solar systems and to finance any solar projects in China;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The availability of tax incentives and other benefits sufficient to justify the purchase by a user of a solar system;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The ability of the solar user to sell excess power to the local utility on reasonable terms;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Assumptions regarding the size of the available market, benefits of our products, product pricing, timing of product installations;</td></tr>
<tr>
<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Assumptions relating to our ability to operate a public company;</td></tr>
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<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to obtain contracts for solar systems in China;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to install solar systems in China at costs which will enable us to operate profitably;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to engage and retain qualified executive and management personnel;</td></tr></table></p>
<p style="LAYOUT-GRID-MODE: char; MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">&nbsp;</p>
<p style="LAYOUT-GRID-MODE: char; MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to implement an effective financing program for our products that both enable us to generate revenue from customers who meet our credit criteria;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Our dependence upon a small number of key executive officers, principally our chief executive officer;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Competition with both the local utilities and other companies offering electricity service as well as other solar energy companies;</td></tr>
<tr>
<td></td>
<td>
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<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The effect of changes in climate and weather patterns in the areas we serve;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Delays in our ability to purchase solar panels and other raw materials for our systems;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to engage and retain qualified executive and management personnel as we seek to expand our operations in the United States and China;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to reduce our costs and expenses;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to operate profitably;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The effect of prices of raw materials, including solar panels, and our ability to source raw materials at reasonable prices;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our compliance with all applicable regulations;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to install systems in a timely manner;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Our ability to maintain an effective system of disclosure controls and internal control over financial reporting, and our ability to produce timely and accurate financial statements or comply with applicable regulations;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Risks associated with this offering;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The effect of general economic and financial conditions in the United States, China and in the world generally which could adversely affect our operations;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Other factors which affect the solar energy industry in general</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The forward-looking statements in this prospectus represent our views as of the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="USE OF PROCEEDS1">USE OF PROCEEDS </a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We expect the net proceeds from this offering to be approximately $ million, assuming an initial public offering price of $7.50 per share (the midpoint of the price range set forth on the cover page of this prospectus) and after deducting estimated underwriting discounts and commissions and estimated offering expenses of approximately $ million, in the aggregate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We intend to use the proceeds of this offering substantially as follows:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Approximately $25.0 million (approximately % of the net proceeds) to finance our solar system financing business in the United States.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The balance of approximately $ , together with any net proceeds from the exercise by the underwriters of their overallotment option, for working capital and other corporate purposes. Funds for working capital and general corporate purposes include amounts required to pay officers&rsquo; compensation, consulting fees, professional fees, ongoing public reporting costs, office-related expenses and other corporate expenses and other costs which we incur in connection with the operation of our business in the United States and China.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have granted the underwriters a 30-day option to purchase up to an aggregate of&nbsp;1,050,000 additional shares of common stock to cover over-allotments of shares in this offering. We will use the proceeds from the sale of these additional shares for working capital and general corporate purposes.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As of the date of this prospectus, we cannot specify with certainty all of the particular uses for the net proceeds to us from this offering. Accordingly, we will have broad discretion in the application of these proceeds. Net offering proceeds not immediately applied to the uses summarized above will be invested in short-term interest-bearing deposits and securities.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">A $1.00 increase or decrease in the assumed initial public offering price of $ per share would cause the net proceeds from this offering, after deducting the underwriting discounts and commissions and estimated offering expenses, received by us to increase or decrease, respectively, by approximately $ million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus remains the same. If the proceeds increase due to a higher initial public offering price or due to the issuance of additional shares, we would use the additional net proceeds for general corporate purposes. If the proceeds decrease due to a lower initial public offering price or a decrease in the number of shares issued, then we would reduce by a corresponding amount the net proceeds directed to capital expenditures.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="DIVIDEND POLICY">DIVIDEND POLICY</a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="CAPITALIZATION ">CAPITALIZATION </a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following table sets forth our cash and cash equivalents and capitalization as of <font color="#f52887"> September </font> 30, 2016:&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
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<td valign="top">on an actual basis;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">as adjusted basis after giving effect to (i) the sale by us of 3,900,000 shares of common stock in October <font color="#f52887"> and November </font>2016 and the receipt of <font color="#f52887"> gross </font> proceeds of <font color="#f52887"> $19 </font><font color="#f52887"> ,500,000 prior to the date of this prospectus, </font> and (ii) the issuance by us of 3,816,000 shares of common stock to directors, officers, key employees and consultants as restricted stock grants, which are subject to forfeiture under certain condition, which is under the column &ldquo;As Adjusted (1)&rdquo;; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">as further adjusted for the sale of 7,000,000 shares of common stock in this offering at an assumed initial offering price of $7.50 per share (which is the midpoint of the range set forth on the cover of this prospectus) and our receipt of the estimated $ net proceeds of this offering, which is under the column &ldquo;As Adjusted 2).&rdquo;</td></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph; TEXT-INDENT: 45px" align="justify">You should read the following table in conjunction with &ldquo;Prospectus Summary &#8211; Selected Consolidated Financial Data,&rdquo; &ldquo;Management&rsquo;s Discussion and Analysis of Financial Condition and Results of Operations&rdquo; and our consolidated financial statements and related notes appearing elsewhere in this prospectus.</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">&nbsp;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> September </font> 30, 2016</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><strong>Actual</strong></font></font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><strong>As Adjusted(1)</strong></font></font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><strong>As Adjusted (2)</strong></font></font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><strong>(Dollars in thousands)</strong></font></font></font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Cash and cash equivalents</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 23,392 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 35,392 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right"></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Long-term debt, related parties<font color="#f52887"> * </font></font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Long-term debt, other<font color="#f52887"> * </font></font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Total long-term debt</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,765 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Stockholders&rsquo; equity:</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Common stock</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 46 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Additional paid-in capital</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 40,588 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 60,081 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Less, equity subscription receivable</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,445</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,445</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,445</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Less, treasury stock, at cost</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,800</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,800</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,800</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Accumulated deficit</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (20,033 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (20,033 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (20,033 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Accumulated other comprehensive loss</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (892 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (892 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (892 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Stockholders&rsquo; equity attributable to SolarMax Technology, Inc.</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,456 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 31,957 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2"><font style="mso-tab-count: 1"></font>Non-controlling interest</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 90 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 90 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 90 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Total stockholders&rsquo; equity</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,596 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 32,047 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font style="mso-bookmark: OLE_LINK4"><font style="mso-bookmark: OLE_LINK5"><font size="2">Total capitalization</font></font></font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 69,311 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 88,812 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">_________&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> * Includes short-term maturities of long-term debt amounting to $6,500 for long-term debt, related parties, and $7,496 with respect to long-term debt, other.&nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph; TEXT-INDENT: 45px" align="justify">The information presented above assumes no exercise by the underwriters of their over-allotment option, and is based on the number of shares of our common stock outstanding as of&nbsp;<font color="#f52887"> September </font> 30, 2016. The table does not reflect shares of common stock reserved for issuance under our long-term incentive plan or outstanding options.</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-JUSTIFY: inter-ideograph" align="justify">
<table id="pagebreakd7615021-6007-446a-a0bb-d81e74662cb0" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr"></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">37</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="DILUTION">DILUTION</a></b></p>
<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock for accounting purposes. Our net tangible book value as of <font color="#f52887"> September </font> 30, 2016, was approximately <font color="#f52887"> $ </font><font color="#f52887"> 3.3 </font> million, or <font color="#f52887"> $0. </font><font color="#f52887"> 09 </font> per share of common stock. Net tangible book value per share is determined by dividing our tangible net worth (tangible assets less total liabilities) by the total number of outstanding shares of common stock that were outstanding on <font color="#f52887"> September </font> 30, 2016. After giving effect to the sale by us of 3,900,000 shares of common stock in October and November 2016,&nbsp;<font color="#f52887"> for a total </font>&nbsp;of $19.5 million, and the issuance by us of 3,816,000 shares of common stock as restricted stock grants, our net tangible book value was approximately <font color="#f52887"> $22 </font><font color="#f52887"> .7 </font> million, or <font color="#f52887"> $0 </font><font color="#f52887"> .51 </font> per share. After giving effect to the sale of the shares in this offering (assuming the midpoint of the range on the cover of this prospectus and after deducting estimated underwriting discounts and commissions and estimated offering expenses), our adjusted pro forma net tangible book value as of <font color="#f52887"> September </font> 30, 2016 would have been approximately $ million, or $ per share. This represents an immediate increase in the net tangible book value of $ per share to our existing stockholders and an immediate dilution (i.e., the difference between the offering price and the adjusted pro forma net tangible book value after this offering) to new investors purchasing shares in this offering of $ per share:</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td width="85%" colspan="2"></td>
<td valign="bottom" width="5%"></td>
<td></td>
<td></td>
<td></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: -12pt">Assumed initial public offering price per share</p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">$</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">7.50&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 0.25in">Net tangible book value per share as of <font color="#f52887"> September </font>30, 2016 </p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">$0.09</p></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 0.25in">Increase per share attributable to the sale of stock and restricted stock grants in October and November 2016</p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">&nbsp; 0.25</p></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 0.25in">Adjusted net tangible book value per share</p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">&nbsp; 0.34</p></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 0.25in">Increase per share attributable to new investors in the offering</p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px">As adjusted pro forma net tangible book value per share </p></td>
<td valign="bottom" width="5%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: -12pt">Dilution in pro forma net tangible book value per share to new investors in this offering from the adjusted net tangible book value per share(1)</p></td>
<td valign="bottom" width="5%"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td valign="bottom"></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="bottom" colspan="2">______</td>
<td valign="bottom" width="5%"></td>
<td valign="bottom"></td>
<td valign="bottom"></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top" width="4%">
<p style="MARGIN: 0px">(1)</p></td>
<td valign="top" colspan="5">
<p style="MARGIN: 0px">If the initial public offering price were to increase or decrease by $1.00 per share, then dilution in pro forma net tangible book value per share to new investors in this offering would equal $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, respectively.</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">The following table summarizes the total number of shares of common stock (i) owned by existing stockholders, including the 3,816,000 shares granted in October 2016 as restricted stock grants, (ii) issued by us in the private placement in October and November 2016, and (iii) owned by purchasers in this offering, and in each case, the total consideration paid. For purchasers in this offering we used a public offering price of $7.50, the midpoint of the range of the initial public offering prices set forth on the cover page of this prospectus, calculated before deduction of estimated underwriting discounts and commissions.<font size="4"></font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Shares Purchased</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Total Consideration</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Average Price</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Number</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Percent</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Amount</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Percent</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>Per Share</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Existing stockholders<font color="#f52887"> <sup>1</sup> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,903,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">79.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 39,927,084 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.98</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Investors in October<font style="FONT-SIZE: 12pt; mso-bidi-font-size: 10.0pt"><font style='FONT-SIZE: 10pt; FONT-FAMILY: "Times New Roman","serif"; mso-fareast-font-family: SimSun; mso-ansi-language: EN-US; mso-fareast-language: EN-US; mso-bidi-language: AR-SA'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> /November </font></font></font></font> 2016 private placement<sup><font color="#f52887"> 2 </font></sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,900,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7.5</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">19,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17.4</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.00</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">New investors</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">7,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">13.5</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">52,500,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">46.9</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">7.50</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">51,803,928</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">100.0</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">111,927,084</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">100.0</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">2.16</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">________&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; BACKGROUND: white; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="4%"><font color="#f52887"> <sup>1</sup> </font></td>
<td valign="top">The consideration paid by stockholders who received their shares pursuant to an acquisition agreement is equal to the value of the common stock issued. The consideration from existing stockholders also includes a subscription receivable of approximately <font color="#f52887"> $5.4 </font> million <font color="#f52887"> relating to our 2015 private placement. </font></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px"><sup><font color="#f52887"> 2 </font></sup></p></td>
<td>
<p style="MARGIN: 0px 0px 0px 0in"><font color="#f52887"> The information relating to the October/November private placement assumes that the Company has received the full proceeds from the sale of the shares prior to the date of this p </font><font color="#f52887"> rospectus. </font></p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">The foregoing table does not include 2,984,000 shares which may be issued pursuant to our 2016 long-term incentive plan and pursuant to outstanding stock options <font color="#f52887"> issued prior to the adoption of the plan. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="BACKGROUND: white; MARGIN: 0px; TEXT-INDENT: 45px">If the underwriters&rsquo; over-allotment option is exercised in full, the number of shares held by new investors will be increased to&nbsp;8,050,000 shares, or approximately 15.8% of the total number of shares of common stock.<font size="4"></font></p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b><a name="MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION">MANAGEMENT&rsquo;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION</a></b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="center"><b>AND RESULTS OF OPERATIONS</b></p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in"><i>You should read the following discussion and analysis of our financial condition and results of operations together with &ldquo;Selected Consolidated Financial Data&rdquo; and our financial statements and the related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See &ldquo;Cautionary Note Concerning Forward-Looking Statements.&rdquo; Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled &ldquo;Risk Factors&rdquo; included elsewhere in this prospectus. All amounts in this prospectus are in U.S. dollars, unless otherwise noted. </i></p>
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<p style="MARGIN-BOTTOM: 0px; TEXT-JUSTIFY: inter-ideograph; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px" align="justify"><b>Overview</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in">We are an integrated solar energy company. Through our subsidiaries, we are primarily engaged in the following business activities:</p>
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<td valign="top">Selling and installing integrated photovoltaic systems for residential and commercial customers in the United States, which is our principal source of revenue from our United States operations;</td></tr>
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<td valign="top">Providing secured loans to purchasers of our photovoltaic systems and servicing installment sales by our customers in the United States;</td></tr>
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<p style="MARGIN: 0px">Owning renewable energy projects in the United States and generating revenue from this business through operating leases and power purchase agreements primarily with commercial users <font color="#f52887"> which we entered into prior to </font><font color="#f52887"> 2015; </font></p></td></tr>
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<td valign="top">Selling and installing battery backup solutions for residential and commercial customers in the United States, which sales commenced in the third quarter of 2016;</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing exterior and interior light-emitting diode, known as LED, lighting sales and retrofitting services for governmental and commercial applications;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Identifying and procuring solar farm system projects for resale to third party developers and related services in China;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing <font color="#f52887"> EPC </font> services for solar farms in China; and</td></tr>
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<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">
<p style="MARGIN: 0px">Maintaining solar farm projects in China following the completion of <font color="#f52887"> EPC services for </font><font color="#f52887"> solar farm projects </font> in China.</p></td></tr></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN-BOTTOM: 0px; MARGIN-TOP: 0px; MARGIN-RIGHT: 0px; TEXT-INDENT: 0.5in">We operate in two segments &#8211; our United States operations and our Chinese operations. Our United States operations includes (i) the sale and installation of photovoltaic and battery backup systems, (ii) financing the sale of our photovoltaic and battery backup systems, (iii) owning and leasing to third parties through <font color="#f52887"> existing </font>&nbsp;operating leases and power purchase agreements, an d (iv) sales of LED systems.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our Chinese operations consist of (i) identifying and procuring solar farm projects for resale to third parties; (ii) <font color="#f52887"> performing </font>EPC services for solar farm projects and (iii)<font color="#f52887"> operation and </font> maintenance of solar farm projects. Our business in China is conducted through our subsidiaries, ZHTH and ZHPV, which we acquired in April 2015, and their <font color="#f52887"> subsidiaries </font><font color="#f52887"> , and Jiangsu Honghao, which we formed after the acquisition of ZHTH and ZHPV </font><font color="#f52887"> . </font> Through <font color="#f52887"> December 31, </font> 2016, our Chinese activities have consisted of<font color="#f52887"> : </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
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<td valign="top"><font color="#f52887"> identifying, procuring and selling to a subsidiary of a related party one solar farm project, which is scheduled to be completed in the first quarter of 2017 and for which we have a maintenance contract; </font></td></tr>
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<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
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<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
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<td valign="top"><font color="#f52887"> identifying, procuring and selling to a second subsidiary of the related party one solar farm project a second project, which was commenced in the fourth quarter of 2016; </font></td></tr>
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<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
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<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
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<td valign="top"><font color="#f52887"> performing EPC services pursuant to a contract we entered into in the fourth quarter of 2016 that related only to EPC services and did not require us to provide a permit. </font></td></tr></tr></tr></table></p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 33.75pt" align="justify">On April 28, 2015, <font color="#f52887"> we acquired the ownership of ZHTH, through a share exchange agreement among us, SolarMax Shanghai, and the equity owners of ZHTH. Also on April 28, 2015, we acquired the ownership of ZHPV through a share exchange agreement among us and the holders of the stock of Accumulate, which, through Accumulate Hong Kong, owned ZHPV. We own all of the stock of Accumulate, which, in turn, through its wholly-owned subsidiary, Accumulate Hong Kong, owns all of the stock of ZHPV </font>. The share exchange agreement for ZHPV was amended on May 12, 2016 to revise certain terms including <font color="#f52887"> reducing </font> the total consideration retroactively to the original acquisition date of April 28, 2015.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In 2014, prior to our acquisition of ZHTH and ZHPV, ZHTH developed the one projects in Ningxia province (30MW) and two in Shandong province (15MW and 25MW). ZHPV obtained the EPC contract for both the Ningxia and Shandong project and completed the projects in 2014. Neither ZHTH nor ZHPV generated any significant revenue during 2015 prior to our acquisition. When we acquired ZHTH in April 2015, ZHTH had a permit backlog, which we valued at $1.4 million and which represented a total of 130 MW of contract backlog. The permit backlog is an intangible asset that we amortize proportionately with the cash flows to be earned from these permit backlog through 2017. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our business in China is conducted through <font color="#f52887"> three </font> subsidiaries, ZHTH<font color="#f52887"> , </font> ZHPV <font color="#f52887"> and Jiangsu Honghao </font>and their subsidiaries. ZHTH is engaged in the business of identifying and procuring solar system projects for resale to third party developers and related services in China. After <font color="#f52887"> we acquire </font> the permits <font color="#f52887"> for a solar project through a permit subsidiary and </font> obtain a contract for the sale of the project, ZHPV builds the projects<font color="#f52887"> pursuant to an EPC contract. The subsidiary that owns the equity in </font> the permit subsidiary transfers the equity in the <font color="#f52887"> permit </font>subsidiary to the project owner. The project owner then engages ZHPV to perform the EPC services for the solar farm. <font color="#f52887"> We seek </font> to obtain a further contract to <font color="#f52887"> operate and </font>maintain the system after the solar farm project is completed. <font color="#f52887"> The operation and maintenance services are performed by Jiangsu Honghao and its subsidiaries. </font>Unlike systems in the United States, which are installations for residential and small business users, the projects in China are solar farms, which are large land areas where multiple ground-mount solar tracking towers are installed. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> ZHPV also performs EPC services on a contract basis, for solar farm owners who do not require a permit from us. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">During 2015 and 2014, most of our revenue was derived from the sale of solar systems in the United States, principally residential sales, which accounted for approximately $33.2 million, 91.7% of revenue, in 2015 and approximately $35.4 million, or 92.9% of revenue, in 2014. Financing revenue, which includes principally interest revenue from loans to purchasers of our solar systems in the United States, accounted for approximately $2.4 million, or 6.7% of revenue, in 2015, and approximately $1.7 million, or 4.6% of revenue, in 2014. Our revenue declined from approximately $38.1 million in 2014 to approximately $36.2 million in 2015, principally as a result of the decline in sales of solar systems. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of one EPC contract<font color="#f52887"> with a subsidiary of AMD, a related party </font>, our Chinese operations generated revenue of approximately $<font color="#f52887"> 43.8 </font> million for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 (the &ldquo;<font color="#f52887"> September </font> 2016 period&rdquo;). Total revenue for the <font color="#f52887"> September </font> 2016 period was approximately $<font color="#f52887"> 65.9 </font> million. Our solar sales decreased from $<font color="#f52887"> 24.9 </font> million in the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 (the &ldquo;<font color="#f52887"> September </font> 2015 period&rdquo;) to $<font color="#f52887"> 20.1 </font> million in the <font color="#f52887"> September </font> 2016 period. Financing revenue was approximately $<font color="#f52887"> 1.7 </font> million in both the <font color="#f52887"> September </font> 2016 and <font color="#f52887"> September </font> 2015 periods. Increased competition and the resulting price reduction is a major factor in the decrease in revenue. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We incurred consolidated net losses of approximately $7.6 million in 2015 and $8.9 million in 2014, and generated negative cash flows from operations of approximately $3.7 million in 2015 and approximately $2.5 million in 2014. Contributing to the 2015 consolidated net loss is the $2.2 million net loss from our Chinese operations which commenced during 2015.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in"><font color="#f52887"> We have a supply agreement with Sunspark pursuant to which we agreed to purchase 150 MW of solar panels over a three-year period beginning June 2016 at a price to be negotiated not to exceed 110% of the three month rolling average market price per watt for an estimated total commitment of approximately $84.0 million based on the most recent price paid on a purchase order from Sunspark. The agreement stipulates a 30 MW minimum supply commitment per year, which will cost approximately $16.8 million based on the most recent price paid on a purchase order from Sunspark, with the first year being the year beginning June 2016. </font></p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> On October 2016, we entered into a loan agreement with China Everbright Bank, a PRC-based financial institution, to borrow RMB 38.5 million (approximately $5.6 million) with a one-year term. We plan to use the proceeds of the loan to finance our purchase obligations to Sunspark. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In April 2016, we made unsecured loans to Sunspark in the amount of $195,000. The loans had a three-month term with an annual fixed interest rate of 8% and were paid in July 2016. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">ZHTH, acquired, through <font color="#f52887"> permit subsidiaries </font>, the rights to construct <font color="#f52887"> two </font> solar farm in Guizhou, China<font color="#f52887"> which we refer to as Guizhou Phase 1 and Guizhou Phase 2. </font> Guizhou is one of the southern provinces in China. Because of Chinese regulations relating to permits for solar farms, we obtain a permit for a solar farm in the name of one of our subsidiaries and we transfer the equity in the subsidiary to the buyer of the solar farm project. <font color="#f52887"> Pursuant to a </font> February <font color="#f52887"> 2016 </font> agreement<font color="#f52887"> , we sold </font> 100% of our equity interest in the <font color="#f52887"> permit subsidiary that held the permit for the Guizhou Phase 1 project to a company owned by AMD for $152,000, and in October 2016, in connection with the Guizhou Phase 2 project we sold the second permit subsidiary to a second company owned by AMD for approximately $150,000. The sale of equity in the permit subsidiaries is generally based on the net assets of the entity and does not produce significant gains or losses. AMD, </font> a publicly-traded company in China<font color="#f52887"> , </font> is one of our principal stockholders<font color="#f52887"> and its chairman and chief executive officers is one of our directors. The sales price for the permit subsidiary is not included in our revenue, since the sale is treated as a financing transaction. We recognize any gain or loss as other income. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In February 2016, we signed an agreement with <font color="#f52887"> the </font>AMD <font color="#f52887"> subsidiary </font>pursuant to which <font color="#f52887"> the </font>AMD <font color="#f52887"> subsidiary </font>engaged ZHPV to perform the EPC services for its Guizhou<font color="#f52887"> Phase 1 </font> solar farm. The solar farm was initially designed to generate 70 MW of power and the contract price, <font color="#f52887"> exclusive </font> of VAT, was approximately RMB <font color="#f52887"> 528.0 </font> million (approximately $<font color="#f52887"> 80.0 </font> million). Due to the limitation of available land use, the size of the project was reduced to 55MW, with a contract price of RMB 425 million (approximately $64 million). As of <font color="#f52887"> September </font> 30, 2016, the project was approximately <font color="#f52887"> 79 </font>% completed<font color="#f52887"> . The project is scheduled to be completed in the first quarter of 2017. </font> We recognize revenue on our EPC services on the percentage of completion basis. <font color="#f52887"> Our gross prices include value added taxes, known as VAT. Although we do not include VAT as either revenues or cost of revenues, the contract prices to our customers in the PRC include VAT and, accordingly, the prices in this prospectus include VAT. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In </font><font color="#f52887"> October 2016, ZHPV executed an EPC contract with the second subsidiary of AMD for another 50MW solar farm project in Guizhou, China, which is referred to as Guizhou Phase 2. The contract price is RMB 322.5 million (approximately $49.0 million). We commenced construction of this project in December 2016. The project is scheduled to be completed and delivered during the first quarter of 2017. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In November 2016, ZHPV executed an EPC contract with Xin Huang Duong Minority Poverty Relief Office, a PRC governmental entity, to construct photovoltaic power stations at 11 villages in Xin Huang Dong Minority autonomous county. The total system size for the 11 sites is 660 kilowatts with a contract value of RMB 5.1 million (approximately $750,000). The retainage for the five-year construction warranty would be 10% or RMB 0.5 million, with 20% to be released at the end of each the first five years. Because of its small size and short construction period, this contract will be accounted for under the completed contract method and is expected to begin and be completed in the first quarter of 2017. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although our business plan contemplates positive cash flows in our United States segment, <font color="#f52887"> and we have loan facilities, </font>we cannot assure you that if we are able to generate a positive cash flow from operations, it<font color="#f52887"> , together with our credit facilities, </font> will be sufficient to enable us to meet either our debt service requirement or our agreement with Sunspark. We are continuing to explore alternatives for additional sources of financing to fund our United States operations including securing borrowing facilities from a bank in the PRC, disposing of a portion of <font color="#f52887"> our </font> loan portfolio to financial institutions based in the United States and obtaining additional funding through investors under federal EB-5 immigration programs. We cannot assure you that positive cash flows will be achieved or that alternative sources of financing will be available to us if and when needed and under favorable terms, if any.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In June 2016, we began the launch of a new product line, FLEX Energy Storage System, a battery system which we will purchase from Li-Max Technology, Inc., pursuant to a five-year exclusive distribution agreement with Li-Max. The agreement gives us the exclusive worldwide distribution rights except in Asia. The agreement has minimum purchase requirements and, if we fail to meet these requirements, Li-Max has the right to terminate the agreement. We believe this new product line will complement our existing solar systems and commercial LED lighting in the United States.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> On October 7, 2016, our board of directors adopted, and in November 2016, our stockholders approved, the 2016 long-term incentive plan pursuant to which a total of 6,500,000 shares may be issued pursuant to various equity-based incentives, including non-qualified stock options, incentive stock options and restricted stock grants. The board of directors granted restrict stock grants covering 3,816,000 shares of common stock, which will become non-forfeitable six months after the date of this prospectus. The board of directors also authorized the grant of options to purchase a total of 2,275,500 shares of common stock at an exercise price of $5.00 per share. The value of the restricted stock and the options will be reflected as compensation, which will affect our earnings and earnings per share. We expect to incur for 2016, non-cash compensation expense resulting from the restricted stock grants and the option grants in October 2016 of approximately $4.2 million. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of employment agreements with our senior management and the grant of options and restricted stock grants pursuant to our 2016 long-term incentive plan, as well as the costs associated with our obligations as a reporting company, our general and administrative expenses will increase significantly commencing in 2017. For 2015, our chief executive officer and our executive vice president, chief strategy officer and treasurer received salary of $450,000 in the aggregate and bonuses of approximately $103,000. For 2016, our chief executive officer and our executive vice president, chief strategy officer and treasurer <font color="#f52887"> received </font> base salaries at the aggregate annual rate of approximately $<font color="#f52887"> 450,000 and bonuses of approximately $109,000. In addition, they received a restricted stock grant pursuant to our 2016 long-term incentive plan for a total of 2,350,000 shares. The shares are subject to forfeiture provisions. For 2016, we will recognize a non-cash compensation expense in the amount of $2,350,000 million related to these restricted stock grants. The balance will be recognized into expense through December 31, 2017. </font> Pursuant to employment agreements dated October 7, 2016, <font color="#f52887"> commencing January 1, 2017, </font>we are <font color="#f52887"> paying </font> our chief executive officer and our executive vice president, chief strategy officer and treasurer salaries in the total amount of $1.16 million, which salary increases by at least 3% annually, commencing in 2018. In addition, they are to receive an annual bonus based upon a percentage of revenue in excess of $30 million, which range from a total of $450,000 for revenue between $30 million and $50 million, to a total of 1.9% of revenue if our revenue is at least $300 million. The agreements also provide for severance benefits in the event of termination resulting from their death, disability, termination by us without cause or termination by them for good reason, including termination following a change of control.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Results of Operations</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following table sets forth information relating to our operating results for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 and the years ended December 31, 2015 and 2014 (dollars in thousands) and as a percentage of revenue:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakd0f043ee-b8c0-4ffd-9d49-60132f688c07" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">42</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp; &nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="14">
<p style="MARGIN: 0px" align="center"><strong style="MARGIN: 0px"><font color="#f52887"> Nine </font> Months Ended <font color="#f52887"> September </font> 30,</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="14">
<p style="MARGIN: 0px" align="center"><strong>Year Ended December 31,</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>2016</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong><font color="#f52887"> 2015 </font></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Dollars</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>%</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Dollars</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>%</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Dollars</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>%</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Dollars</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>%</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px">Revenue:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%" colspan="4">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Solar energy sales (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 20,099 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 30.5 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 24,863 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 92.9 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="7%" align="right">33,236</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">91.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="7%" align="right">35,417</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">92.9</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Financing (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,693 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 2.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,700 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 6.4 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">2,436</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">6.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">4.6</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Other, primarily LED (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 306 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.5 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 188 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">569</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1.6</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">955</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">2.5</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Solar farm project (China)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 43,754 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 66.4 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 65,852 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">100.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 26,751 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 100.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">36,242</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">100.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">38,110</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">100.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Cost of revenue:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%" colspan="3">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Solar energy sales</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 15,584 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 23.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 18,109 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 67.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">25,134</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">69.4</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">27,502</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">72.2</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Financing </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Other, primarily LED</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 408 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 193 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">452</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1.2</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">368</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Solar farm projects</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 36,820 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 55.9 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total cost of revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 52,790 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 80.2 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 18,301 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 68.4 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">25,586</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">70.6</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">27,870</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">73.1</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Gross profit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 13,062 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 19.8 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 8,450 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 31.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">10,656</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">29.4</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">10,240</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">26.9</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Operating Expenses:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%" colspan="3">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Sales and marketing (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,898 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 2.9 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,355 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 5.1 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,815 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 5.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">2,456</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">6.4</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Sales and marketing (China)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 460 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 186 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 206 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">General and administrative (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 8,701 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 13.2 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 8,959 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 33.5 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 11,908 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 32.9 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">13,856</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">36.4</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">General and administrative (China)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 3,162 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 4.8 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,508 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 5.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 2,578 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 7.1 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px">Impairment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">0</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 0.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,130 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 4.2 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1,130</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">3.1</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">1,300</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">3.4</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Total operating expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 14,221 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 21.6 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 13,138 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 49.1 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">17,637</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">48.7</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">17,612</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">46.2</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">(Loss) from operations (US)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (4,493 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 6.8 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (2,994 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (11.2%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(4,101</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(11.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(7,372</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(19.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Income (loss) from operations (China)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 3,311 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="left">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 5.3 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1,694 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (6.3%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(2,879</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(7.9%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">0</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">0.0</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Income (Loss) from operations</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1,181 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 1.8 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (4,688 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (17.5%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(6,980</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(19.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(7,372</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(19.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Equity in income (loss) of unconsolidated ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (34 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (0.1 </font>%<font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 333 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="left">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 1.2 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">351</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">1.0</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(83</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(0.2%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Interest expense.net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1,802 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 2.7 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1,129 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (4.2%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(1,573</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(4.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(1,177</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(3.1%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Other income<font color="#f52887"> (expense) </font>, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (189 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (0.3 </font>%<font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 79 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="left">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 0.3 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">74</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">0.2</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">22</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">0.1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Income (Loss) before income taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (3,207 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 4.9 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (5,404 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (20.2%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,128</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(22.4%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,610</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(22.6%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Income tax benefit (provision)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (643 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1.0 </font>%<font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 361 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="left">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 1.3 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> % </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">557</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">1.5</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">%</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(266</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(0.7%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Net (loss)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (3,850 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 5.8 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (5,043 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (18.9%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(7,570</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(20.9%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,876</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(23.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Net (loss) attributable to non-controlling interest</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (91 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 0.1 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (83 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (0.3%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(92</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(0.3%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(46</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(0.1%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Net (loss) allocable to SolarMax</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (3,759 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 5.7 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (4,960 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (18.5%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(7,478</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(20.6%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,830</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(23.2%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Currency translation adjustment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (262 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 0.4 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (446 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (1.7%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(630</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">(1.7%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">0</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">0/0%</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Comprehensive (loss) attributable to SolarMax</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (4,021 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(<font color="#f52887"> 6.1 </font>%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px" align="right">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (5,406 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> ) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> (20.2%) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,108</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(22.4%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px" align="right">(8,830</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="left">)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="right">(23.2%)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="left">&nbsp;</p>
<table id="pagebreak512bf4a6-a035-428a-9fb9-fb8e4e03d9cc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">43</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Nine</strong> </font><strong> Months Ended <font color="#f52887"> September </font> 30, 2016 and 2015</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Revenues</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Consolidated revenues for the <font color="#f52887"> September </font> 2016 period were approximately $<font color="#f52887"> 65.9 </font> million, an increase of $<font color="#f52887"> 39.1 </font> million, or <font color="#f52887"> 146 </font>%, from $<font color="#f52887"> 26.8 </font> million for the <font color="#f52887"> September </font> 2015 period. The increase resulted solely from our China segment, since revenue from our United States operations declined by approximately $<font color="#f52887"> 4.7 </font> million, or <font color="#f52887"> 17 </font>%. The decrease in United States revenue resulted primarily from a decrease in solar energy systems sales which was affected by increased competition. We deployed <font color="#f52887"> 5.8 </font> MW on <font color="#f52887"> 795 </font> completed projects in the United States during the <font color="#f52887"> September </font> 2016 period, compared with <font color="#f52887"> 6.4 </font> MW on <font color="#f52887"> 924 </font> projects during the <font color="#f52887"> September </font> 2015 period. Our average solar revenue per watt is $<font color="#f52887"> 3.45 </font> in the <font color="#f52887"> September </font> 2016 period, <font color="#f52887"> an 11 </font>% decrease from $<font color="#f52887"> 3.87 </font> in the <font color="#f52887"> September </font> 2015 period. Solar revenue per watt represents the revenue generated during the period <font color="#f52887"> from sales of solar systems </font>divided by the wattage installed during the period. Our revenue for both the <font color="#f52887"> September </font> 2016 and the <font color="#f52887"> September </font> 2015 periods includes finance-related revenues of approximately $<font color="#f52887"> 1.7 </font> million. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our revenue from our <font color="#f52887"> China segment </font> related to the construction of one project, the Guizhou Phase 1 solar farm project. We commenced work on this project in early 2016 and, as of <font color="#f52887"> September </font> 30, 2016, the project was approximately <font color="#f52887"> 79 </font>% completed based on total project costs incurred to total project costs budgeted, and accordingly <font color="#f52887"> 79 </font>% of the project revenue, or $<font color="#f52887"> 43.8 </font> million, is recorded as revenue in the <font color="#f52887"> September </font> 2016 period. <font color="#f52887"> We expect to complete t </font><font color="#f52887"> he </font> Guizhou Phase 1 solar farm project <font color="#f52887"> in the first quarter of 2017 </font><font color="#f52887"> . During the quarter ended September 30, 2016, the project was delayed as a result of zoning issues, which resulted in a reduction of the size of the project from 64MW to 55MW, with a reduction in the project cost. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The agreement provides for a 5% retainage which will be paid upon expiration of the one-year warranty period. <font color="#f52887"> In June 2016, we entered into a five-year maintenance contract for the Guizhou Phase 1 project, pursuant to which we are providing operations and maintenance services for which we receive RMB 0.05 per watt per year, with a minimum contract amount of RMB 3.0 million (approximately $451,000) per year. Revenue for our China segment for the September 2016 period includes approximately $93,000 from this maintenance contract. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Cost of revenue and gross profit</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Cost of revenue for our United States operations for the <font color="#f52887"> September </font> 2016 period decreased <font color="#f52887"> 13 </font>% from $<font color="#f52887"> 18.3 </font> million for the <font color="#f52887"> September </font> 2015 period to $<font color="#f52887"> 16.0 </font> million for the <font color="#f52887"> September </font> 2016 period. Even though our revenues decreased <font color="#f52887"> 17 </font>%, our cost only decreased by <font color="#f52887"> 13 </font>%, reflecting the effects of competition on the pricing of solar energy systems. Our cost per watt for the <font color="#f52887"> September </font> 2016 period is $<font color="#f52887"> 2.67 </font> compared to $<font color="#f52887"> 2.82 </font> for the <font color="#f52887"> September </font> 2015 period. Our gross margin decreased to <font color="#f52887"> 22 </font>% for the <font color="#f52887"> September </font> 2016 period from <font color="#f52887"> 27 </font>% a year ago. We have no cost of revenue with respect to our revenue from financing. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Cost of revenue for our Chinese operations for the <font color="#f52887"> September </font> 2016 period relates <font color="#f52887"> primarily </font>to the project costs incurred on the Guizhou Phase 1 solar farm project which is approximately <font color="#f52887"> 79% complete at September 30, 2016. </font> We recognized our revenue under the percentage-of-completion basis based on the percentage of the actual project costs incurred versus the total budgeted project costs. Our gross margin on this project for the <font color="#f52887"> September </font> 2016 period is 16%. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Consolidated gross margin for the <font color="#f52887"> September </font> 2016 period is <font color="#f52887"> 20 </font>% compared to 32% for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 as a result of the lower gross margin for the China solar farm project which began in 2016. Because of the lower margin for our China <font color="#f52887"> EPC </font>business and the large percentage of our business that comes from the China <font color="#f52887"> EPC business which produces a much lower gross margin than our United States </font>business, we anticipate that the China <font color="#f52887"> operations </font> will continue to have a negative impact on our overall gross margin.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Operating expenses</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Sales and marketing expense increased for our United States operations to approximately $<font color="#f52887"> 1.9 </font> million, <font color="#f52887"> an </font> increase of $<font color="#f52887"> 543,000, or 40%, </font> from $<font color="#f52887"> 1.4 million </font> for the <font color="#f52887"> September </font> 2015 period. As a percentage of <font color="#f52887"> our United States </font>revenue, <font color="#f52887"> sales and marketing expenses are 9 </font>% compared <font color="#f52887"> with 5% in the September 2015 </font> period. The increase is the direct result of our ramping up of our marketing campaign to seek to increased sales in 2016, specifically the referral program for the sale of the solar energy systems which was not in place in <font color="#f52887"> the September </font> 2015 period, as well as the marketing related to our newly launched FLEX Energy Storage System that <font color="#f52887"> we </font> launched in June 2016. Because our FLEX revenues did not commence until June 2016, we incurred sales and marketing expenses relating to this product line before we recognized revenues.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Sales and marketing expense relating to our Chinese operations increased to $<font color="#f52887"> 460,000 </font> for the <font color="#f52887"> September </font> 2016 period from $<font color="#f52887"> 186,000 </font> for the <font color="#f52887"> September </font> 2015 period. We did not have significant activity for our China operations in the <font color="#f52887"> September </font> 2015 period, which we acquired in April 2015. We are expanding our efforts to procure new EPC contracts for solar farm projects, and we expect our sales and marketing expense for our China operations <font color="#f52887"> will </font> continue to increase.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">General and administrative expenses for our United States operations for <font color="#f52887"> the September 2016 period decreased modestly to $8.7 million, a decrease of $258,000 or 3% from $9.0 million in the September 2015 period </font>. As a percentage of <font color="#f52887"> our United States </font>revenue, general and administrative expenses were <font color="#f52887"> 39 </font>% of revenue compared to <font color="#f52887"> 34 </font>% for<font color="#f52887"> the </font> prior period due to the decrease in sales in 2016. General and administrative expenses included compensation and benefits, depreciation and amortization, rental and leasing expense, and other corporate overhead expenses. We expect corporate overhead expense to increase significantly <font color="#f52887"> beginning in the fourth quarter of 2016 due to the October 2016 equity grants to our senior executive officers, certain employees and consultants, </font> compensation payable to our senior executive officers<font color="#f52887"> pursuant to the October 2016 employment agreements which commenced in 2017, </font> and compliance and other regulatory costs as a result of being a public reporting company. During 2015, our chief executive officer and our executive vice president, chief strategy officer and treasurer received <font color="#f52887"> an </font>aggregate salary of $450,000 and bonuses of $103,000. Commencing in <font color="#f52887"> 2017, </font> pursuant to employment agreements<font color="#f52887"> executed in October 2016, </font> they are to receive<font color="#f52887"> an </font> aggregate salary of $1,560,000, plus bonuses based on a percentage of revenue in excess of $30 million. All of our corporate overhead, other than overhead directly related to our China operations, is allocated to our United States operations. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> During 2016, our three senior executive officers received an aggregate salary at the annual rate of $570,000, and cash bonuses of approximately $109,000 and restricted stock grants of 2,950,000 shares of common stock. The value of the 2,950,000 shares granted to our three senior executive officers is $14,750,000, based on the $5.00 per share price at which we sold shares in the October/November private placement. We will recognize, with respect to these grants, a non-cash compensation expense in the fourth quarter of 2016 of $2,950,000, and the balance will be recognized as a compensation expense during 2017. In addition to the grant of restricted stock to our three senior officers, we granted 100,000 shares to one director and 766,000 shares to employees, former employees and consultants for services rendered and to be rendered. We will recognize in the fourth quarter of 2016, a non-cash compensation expense relating to the stock grants and stock options issued to our officers, directors and employees of approximately $4.0 million. See &ldquo;Executive Compensation &#8211; Employee Benefit Plans&rdquo; for information concerning the restricted stock grants and the forfeiture provisions. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">During the <font color="#f52887"> September </font> 2015 period, based on projected cash flows and operations of our LED business, we recognized an impairment loss related to goodwill relating to our 2013 acquisition of Act One, the company that conducts our LED business, in the amount of $320,000. In the <font color="#f52887"> September </font> 2015 period, we also recorded impairment loss of $810,000 associated with one solar energy system that we own and lease to a commercial customer for which the carrying values of such systems was determined to be in excess of the estimated fair value. The impairment loss resulted from the renegotiation of the arrangement with the customer. We did not identify any impairments on any of our long-lived assets including goodwill for the <font color="#f52887"> September </font> 2016 period.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">General and administrative expenses relating to our Chinese operations increased from $<font color="#f52887"> 1.5 million </font> in the <font color="#f52887"> September </font> 2015 period to $<font color="#f52887"> 3.2 million </font> in <font color="#f52887"> the September </font> 2016 period<font color="#f52887"> , an increase of $1.7 million, or 110% </font>. Since we commenced operations in China in <font color="#f52887"> May </font> 2015, <font color="#f52887"> following the April 2015 acquisition of ZHTH and ZHPV, </font>we only had <font color="#f52887"> five </font> months of operations during the <font color="#f52887"> September 2015 period compared with nine months of operations during the September 2016 </font> period. General and administrative expenses relate to the corporate and overhead expenses relating to our China operations that began in <font color="#f52887"> May </font> 2015 after the acquisitions. Such expenses include personnel costs, facilities rental and leasing and other corporate expenses. As we ramp up our China operations, we expect general and administrative expenses to <font color="#f52887"> continue to </font>increase. </p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Income (loss) from operations</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We had <font color="#f52887"> a loss </font> from operations of approximately $<font color="#f52887"> 1.2 </font> million<font color="#f52887"> for the September 2016 period </font>, principally as a result of <font color="#f52887"> the $4.5 million loss from our United States operations. Our </font> China operations<font color="#f52887"> generated </font> operating income <font color="#f52887"> of </font> approximately $<font color="#f52887"> 3.3 </font> million for the <font color="#f52887"> September </font> 2016 period as compared with a loss from operations of approximately $<font color="#f52887"> 1.7 million </font> for the <font color="#f52887"> September </font> 2015 period, reflecting the recognition <font color="#f52887"> in the September 2016 period </font>of revenue from the Guizhou Phase 1 solar farm project. Our loss from operations for our United States operations increased approximately $<font color="#f52887"> 1.5 million, </font> or <font color="#f52887"> 50 </font>%, to approximately $<font color="#f52887"> 4.5 </font> million, as compared with a loss from operations of approximately $<font color="#f52887"> 3.0 </font> million for the <font color="#f52887"> September </font> 2015 period. The loss from operations for our United States operations increased as a result of the lower gross profit stemming from the decreased sales, partially offset by the $1.1 million decrease in impairment loss in the <font color="#f52887"> September </font> 2016 period from the <font color="#f52887"> September </font> 2015 period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Equity in income (loss) from unconsolidated ventures</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Equity in income from unconsolidated ventures, which relates to the United States segment, decreased by $<font color="#f52887"> 367,000, </font> or <font color="#f52887"> 110 </font>%, from an income of $<font color="#f52887"> 333,000 </font> in the <font color="#f52887"> September </font> 2015 period to <font color="#f52887"> a loss of $34,000 </font> in the <font color="#f52887"> September </font> 2016 period, primarily as a result of a decrease in income contributed by our China-based joint venture resulting from lower sales by the joint venture, as well as the impact of the cumulative catch-up adjustment<font color="#f52887"> of approximately $222,000 </font> in the 2015 period related to the basis difference attributed to the over-depreciation of certain assets held by one of the United States joint ventures. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Interest expense, net</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Interest expense for the United States segment <font color="#f52887"> was approximately $1.1 million for both the September 2016 and September 2015 period </font>. Our interest expenses primarily relate to interest incurred on our $5.0 million term loan and $1.0 million revolver loan with our <font color="#f52887"> United States </font>bank and $46.2 million loans from affiliated entities<font color="#f52887"> in the United States </font>. The interest rate on our $5.0 million term loan and the $1.0 million revolver loan is variable and was 5% during the <font color="#f52887"> September </font> 2016 period. The interest rate on the loans from affiliates is fixed at 3%. Our interest expenses decreased in the <font color="#f52887"> September </font> 2016 period compared to the <font color="#f52887"> September </font> 2015 period as a result of the decrease in the average principal balance on the bank term loan. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Interest expense, net, for the China segment was $<font color="#f52887"> 740,000 </font> for the <font color="#f52887"> September </font> 2016 period and related primarily to the RMB 50 million line of credit that was entered into in October 2015. The line of credit bears a fixed 12% interest rate<font color="#f52887"> . These advances were paid in October and November 2016. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Income tax benefit (provision)</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Income tax benefits for the U.S. segment increased approximately $<font color="#f52887"> 109,000 </font> for the <font color="#f52887"> September </font> 2016 period as compared with the <font color="#f52887"> September </font> 2015 period. Income tax benefits increased due to changes in deferred tax assets and the provision of full valuation allowance against the deferred tax assets. Deferred tax assets primarily consist of net operating losses carryover, investment tax credits and deferred charges. Current income tax (provision) for the U.S. segment consists primarily of states franchise or capital taxes. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Income tax (provision) for the China segment increased approximately $<font color="#f52887"> 1.1 million </font> for the <font color="#f52887"> September </font> 2016 period as compared with the <font color="#f52887"> September </font> 2015 period primarily due to of the utilization of the deferred tax assets as our China operations financial performance continued to improve. Current income tax (provision) for the China segment for the <font color="#f52887"> September </font> 2016 period is approximately $<font color="#f52887"> 701,000. </font> We recorded an income tax benefit of $<font color="#f52887"> 412,000 </font> for the <font color="#f52887"> September </font> 2015 period. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Net loss</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We had a consolidated net loss of approximately $<font color="#f52887"> 3.9 million </font> for the <font color="#f52887"> September </font> 2016 period, as compared with a consolidated net loss of approximately $<font color="#f52887"> 5.0 </font> million for the <font color="#f52887"> September </font> 2015 period. The decrease in the net loss resulted from the profitable Chinese operations as described above. Our United States operations are continuing to operate at a loss resulting primarily from the decrease in revenue from solar systems in the United States. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have a 93.75%-owned subsidiary and non-controlling interests represent the 6.25% interest held by Richard Gu, president of our China operations. Mr. Gu was not employed by us at the time we acquired the 93.75% interest in the entity. The net income (loss) attributable to non-controlling interests represents the allocation of the subsidiary&rsquo;s net income (loss) to non-controlling interests.</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of the foregoing, we had a consolidated net loss attributed to SolarMax of approximately $<font color="#f52887"> 3.8 million, </font> or $<font color="#f52887"> 0.10 </font> per share (basic and diluted), for the <font color="#f52887"> September </font> 2016 period, as compared with a <font color="#f52887"> consolidated </font>net loss attributed to SolarMax of $<font color="#f52887"> 5.0 </font> million, or $<font color="#f52887"> 0.14 </font> per share (basic and diluted), for the <font color="#f52887"> September </font> 2015 period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Comprehensive</em> income</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The currency translation adjustment relates to our China segment for which the functional currency is the local currency which is different from our reporting currency which is in <font color="#f52887"> United States </font> dollars. The operational impact of the currency translation adjustment in the <font color="#f52887"> September </font> 2016 period of $<font color="#f52887"> 262,000 </font> is primarily related to the exchange loss of the local currency from December 31, 2015 to <font color="#f52887"> September </font> 30, 2016. During this period, the local currency declined against the US dollars by approximately <font color="#f52887"> 2.5% from RMB 6.51: US$1 to RMB 6.67: US$1 </font>. The currency translation impact in the <font color="#f52887"> September </font> 2015 period is minimal due to our ownership of the China operations for only <font color="#f52887"> five </font> months from our acquisition date in April 2015.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Years Ended December 31, 2015 and 2014</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">During 2015, all of our revenue was derived from our United States operation. We acquired our China subsidiaries in April 2015, and did not generate any revenue from our China operations until 2016. Although we did not generate revenue from our China operations during 2015, we incurred sales and marketing expenses and general and administrative expenses relating to this operation in 2015.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Revenues</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Revenues for 2015 decreased $1.9 million, or 5%, compared to 2014. Our average solar revenue per watt is $3.92 in 2015, a decrease from $3.94 in 2014. Our solar sales declined approximately $2.2 million, from approximately $35.4 million in 2014 to approximately $33.2 million in 2015. The decrease in revenue results from the effects of increased competition, which is reflected in lower sales. Revenues include finance-related revenues of $2.4 million for 2015 and $1.7 million for 2014. Our finance-related revenues increased $698,000, or 40%, year over year as a result of a $6.6 million, or 18%, increase in our loan portfolio, from $36.3 million at December 31, 2014 to $42.9 million at December 31, 2015. The increase in the loan portfolio resulted from an increase in sales of solar systems for which we provided the financing. The average interest yield on the loan for 2015 is approximately 5.7% compared to 4.8% for 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Cost of revenue and gross profit</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Cost of revenue for 2015 decreased $2.3 million, or 8%, over 2014 primarily as a result of an overall decrease in solar panel costs as well as the corresponding decrease in solar revenues. Our average solar cost per watt is $2.96 in 2015, a decrease from $3.06 in 2014. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our gross profit in 2015 improved over prior year by $416,000, and our gross margin increased to 29% from 27% primarily as a result of an overall decrease in panel costs notwithstanding the overall decrease in revenues from sales.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Operating expenses</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Sales and marketing expense for the United States segment decreased by <font color="#f52887"> $641 </font><font color="#f52887"> ,000, </font> or <font color="#f52887"> 26 </font><font color="#f52887"> %, </font> from 2014 to 2015. Such decrease is primarily resulting from the change in our marketing focus and strategies during 2015 which included the cancellation of our canvassing marketing campaigns, resulting in significant savings. As a percent of our revenue, our sales and marketing expense for 2015 represents 4% compared to 6% for 2014. As we refocus on the use of what we consider more effective marketing strategies to increase sales, we expect our spending on sales and marketing to increase relative to our projected increase in the sales of our solar energy systems and other products.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Sales and marketing expense for the China segment relate to expenses related to procuring the EPC contracts in China for the solar farm projects. As our China operations begin to grow, we expect our sales and marketing expense will continue to increase.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">General and administrative expenses for the United States segment decreased year over year by <font color="#f52887"> $1.9 </font>million, or <font color="#f52887"> 14 </font><font color="#f52887"> %. </font> During 2015, we significantly reduced our operational staffing in the United States which resulted in a reduction in compensation and benefits of approximately $1.2 million. As a percent of our revenue, our general and administrative expense decreased from 36% in 2014 to <font color="#f52887"> 33 </font>% in 2015. General and administrative expenses included compensation and benefits, depreciation and amortization, rental and leasing expense, and other corporate overhead expenses. We expect to continue to manage our general and administrative expenses, however, we expect the expense to increase due to compliance and other regulatory costs as a result of increased executive compensation costs and the costs relating to our being a public reporting company, as described above.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">General and administrative expenses for the China segment relate to the corporate and overhead expenses that relate directly to our China operations that began in April 2015. Such expenses include personnel costs, facilities rental and leasing and other corporate expenses. As we ramp up our China operations, we expect general and administrative expenses to increase.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Impairment relates to the United States segment and the amount decreased by $169,000, or 13%, from 2014 to 2015. During 2015, we recognized an impairment loss related to goodwill relating to our 2013 acquisition of Act One, the company that conducts our LED business, in the amount of $320,000. In 2015, we also recorded impairment loss of $810,000 associated with one solar energy system that we own and lease to a commercial customer for which the carrying value of such system was determined to be in excess of the estimated fair value. The impairment loss resulted from the renegotiation of the arrangement with the customer. Our impairment loss in 2014 relates substantially to the solar energy system that we own and lease to University of California at Riverside for which we determined the carrying amount of our investment exceeded the fair value of the underlying solar energy system.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Loss from operations</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Loss from operations for the United States segment decreased by $3.3 million, or 44%, from 2014 to 2015 primarily as a result of the overall decrease in operating expenses, as well as the improvement in gross margin. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Loss from operations for the China segment in 2015 reflects costs and expenses related to the initial ramp up of the China operations following our acquisitions of our Chinese subsidiaries in April 2015 and the absence of revenues in this segment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Equity in income (loss) from unconsolidated ventures</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Equity in income from unconsolidated ventures relate to the United States segment and increased by $434,000, or <font color="#f52887"> 523 </font>%, to $351,000 in 2015, compared to equity in the loss from unconsolidated ventures of $83,000 in 2014, principally as a result of the improved operations in 2015 compared to 2014 of the unconsolidated ventures. In addition, the 2015 equity in income includes approximately $222,000 resulting from the basis difference attributable to the over-depreciation of certain assets by the venture<font color="#f52887"> as a result of accounting errors made by the unconsolidated joint venture dating back to 2010 and 2011. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Interest expenses, net</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Interest <font color="#f52887"> expense </font>, net for the <font color="#f52887"> United States </font> segment increased $302,000 or 26% from $1.2 million in 2014 to $<font color="#f52887"> 1.6 </font> million in 2015. Our interest <font color="#f52887"> expense </font> primarily <font color="#f52887"> relates </font> to interest incurred on our $5.0 million term loan with our bank and $46.2 million loans from our unconsolidated affiliates. The interest rate on our $5.0 million term loan is variable and was 5.0% at December 31, 2015. The interest rate on the affiliate loans is fixed at 3%. Our interest expenses increased in 2015 as a result of an increase in the principal of the affiliate loans from $42.5 million at December 31, 2014 to $46.2 million at December 31, 2015, offset by a decrease in the principal balance on our bank term loan from $3.8 million at December 31, 2014 to $1.5 million at December 31, 2015. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Interest <font color="#f52887"> expense </font>, net for the China segment is $94,000 for the period from our acquisition date in April 2015 to December 31, 2015, and is primarily related to interest related a line of credit of RMB 50 million (approximately $7.7 million). The principal and all interest were repaid on December 31, 2015.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Income tax benefit (provision)</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Income tax (provision) for the <font color="#f52887"> United States </font> segment decreased approximately $214,000 for the year ended December 31, 2015 as compared to December 31, 2014. Income tax (provision) decreased due to changes in deferred tax assets and the provision of full valuation allowance against the deferred tax assets. Deferred tax assets primarily consist of net operating losses carryover, investment tax credits and deferred charges. Current income tax (provision) for the United States segment consists primarily of state franchise or capital taxes for 2015 and 2014. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Income tax benefits for the China segment for the year ended December 31, 2015 was approximately $610,000 as this was the initial year of active operations for our China subsidiaries. The income tax benefits are recognized primarily due to increase in the deferred tax assets for our China operations. We did not provide any valuation allowance against the China segment deferred tax assets as we anticipate utilization of these deferred tax assets in the near future based on the outlook of our China operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Net loss</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We had a consolidated net loss of approximately $7.6 million for 2015, as compared with a consolidated net loss of approximately $8.9 million for 2014. The net loss for 2015 reflected a net loss of approximately $5.4 million for our United States operations and approximately $2.2 million from our Chinese operations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have a 93.75%-owned subsidiary and non-controlling interests represent the 6.25% interest held by an individual who is <font color="#f52887"> the president </font> of our China operations. The net income (loss) attributable to non-controlling interests represents the allocation of the subsidiary&rsquo;s net income (loss) to non-controlling interests.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of the foregoing, we had consolidated net loss attributed to SolarMax of approximately $7.5 million, or $0.20 per share (basic and diluted), for 2015 and approximately $8.8 million, or $0.27 per share (basic and diluted) for 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Comprehensive income</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The comprehensive income reflects the adjustment on net income form the currency translation adjustment. The currency translation adjustment relates to our China segment for which the functional currency is the local currency which is different from our reporting currency which is in United States dollars. The operational impact of the currency translation adjustment in 2015 of $630,000 is primarily related to the exchange loss of the local currency during 2015. During this period, the local currency declined against the United States dollars by approximately 4.8%. There was no foreign currency translation adjustment for 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Liquidity and Capital Resources</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following tables show cash flow information for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 and the years ended December 31, 2015 and 2014 (dollars in thousands). </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreaka1b71b84-7ef9-4184-a4ff-d16f7ebf102e" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong><font color="#f52887"> Nine </font> Months </strong><strong>Ended</strong></p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong>September</strong> </font><strong> 30,</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>$ Increase</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2016</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>(Decrease)</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Consolidated cash flow data:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net cash provided by operating activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,465 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,688 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (223 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net cash provided by (used in) investing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,817 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,007 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,824 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net cash provided by financing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,418 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,628 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 10,790 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net increase (decrease) in cash and cash equivalents, net of exchange rate effect</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,410 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (801 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 20,031 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>Year Ended December 31,</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>$ Increase</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>(Decrease)</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px">Consolidated cash flow data:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net cash used in operating activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(3,733</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(2,457</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,276</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net cash used in investing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(6,033</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,664</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">12,631</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net cash provided by financing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,372</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19,003</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(12,631</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net increase (decrease) in cash and cash equivalents, net of exchange rate effect</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(3,463</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(2,118</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,345</td>
<td valign="bottom" width="1%">)</td></tr></table>&nbsp;
<p style="MARGIN: 0px"><em>Operating Activities</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Net cash provided by operating activities for the <font color="#f52887"> September </font> 2016 period was $<font color="#f52887"> 2.5 </font> million, compared to $<font color="#f52887"> 2.7 </font> million for the <font color="#f52887"> September </font> 2015 period. The <font color="#f52887"> modest decrease of $223,000 over the prior period </font> is attributed to the reduction in the consolidated net loss of $<font color="#f52887"> 1.2 </font> million<font color="#f52887"> , and </font> an increase in cash from<font color="#f52887"> non-cash adjustments of $1.5 million, offset by a decrease in cash from working capital of $2.9 million. Major components of </font> changes in non-cash adjustments<font color="#f52887"> and in working capital are as follows: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Non-cash adjustments: </font></p>
<p style="MARGIN: 0px">&nbsp;</p><font color="#f52887">
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $367,000 increase as a result of the reduction in our non-cash equity in income from unconsolidated joint ventures due primarily to adverse operating results of a PRC-based non-consolidated joint venture during the September 2016 period. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $218,000 increase as a result of a non-cash loss from the sale of a portion of our equity interest in a PRC-based non-consolidated joint venture during the September 2016 period. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $710,000 increase in depreciation and amortization expense resulting primarily from our acquisition of ZHTH and ZHPV in April 2015 and the amortization related to the permit portfolio, an intangible asset that was one of the assets of ZHTH. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $211,000 increase in the overall non-cash net provision for losses. The increase is substantially attributed to the write-off taken on inventories as a result of the suspected inventory theft in early 2016. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $1.0 million increase in deferred income taxes as a result of our China operations. Our China operations began generating revenues in early 2016. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"><font color="#f52887"> $1.1 million decrease in impairment loss, where we recognized a $1.1 million impairment loss in the September 2015 period related to the impairment of LED goodwill as well as the impairment of certain solar assets </font>, and did not recognize any impairment loss in the September 2016 period.</font></td></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></font>
<p style="MARGIN: 0px">
<table id="pagebreakdb01b4d3-f3d9-4da4-b27b-098ae1ce8607" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">50</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Working capital: </font></p>
<p style="MARGIN: 0px">&nbsp;</p><font color="#f52887">
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $2.9 million decrease in cash as a result of restricted cash funding required for operating purposes. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $8.4 million decrease in cash generated from the collection of accounts receivable as a result of the increase in accounts receivable of $5.7 million in the September 2016 period, $6.2 million of which is related to our China segment. Our China operations commenced the construction activity and began earning revenues in early 2016, primarily from the Guizhou Phase 1 project. For the September 2015 period, accounts receivable decreased by $2.7 million due to cash collected. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $6.8 million decrease in cash as a result of the costs and estimated earnings incurred in excess of billings related to the Guizhou Phase 1 project in China. We commenced the construction of the Guizhou Phase 1 project during the September 2016 period. There were no such costs and estimated earnings incurred during the September 2015 period since there was no construction activity in China. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $5.1 million decrease in cash as a result of the increase of inventories, principally inventory related to the Guizhou Phase 1 solar farm project in China. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $23.1 million increase in cash as a result of the increase in accounts payable and operating notes payable, primarily attributed to the Guizhou Phase 1 solar farm project in China. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $3.1 million decrease in cash from customer and vendor deposits. Vendor bid deposits relate to our China operations and are 100% refundable. We had received significant vendor bid deposits in 2015 in anticipation of the work on the Guizhou Phase 1 project and related to the work on the Guizhou Phase 1 solar farm project and refunded a significant portion in the September 2016 period when we selected the vendors to work on the project. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $1.0 million increase in cash from current and other assets as a result of the decrease of prepaid expenses in the United States, offset by the increase from our China operations due to the ramping up of the operations. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td style="MARGIN: 0px" valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> $703,000 decrease in accrued expenses and other liabilities, $400,000 of which is attributed to our China operations. </font> Net cash used in operating activities was $3.7 million in 2015 and $2.5 million in 2014. Our net cash used in operating activities was primarily from our net losses which were $7.6 million in 2015 and $8.9 million in 2014. Included in the operating activities is cash provided related to non-cash adjustments (which include depreciation, amortization, impairment loss and various reserves among other items) of $3.0 million for 2015 and $4.3 million for 2014. Operating assets and liabilities contributed $812,000 of net operating cash in 2015 and $2.1 million in 2014.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> Major components of changes in non-cash adjustments and in working capital are as follows: </font></p></td></tr></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></font>
<p style="MARGIN: 0px"><font color="#f52887"> Non-cash adjustments: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $434,000 decrease in cash from the prior year contributed by the non-cash equity in income from our unconsolidated joint ventures in the 2015 period. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $710,000 increase in depreciation and amortization expense, resulting from the acquisition of ZHTH and ZHPV in April 2015. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $735,000 net decrease from our provisions and write-offs. During 2014, we wrote off net receivables of $527,000 from four unconsolidated joint ventures. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $872,000 decrease in deferred income taxes, primarily related to our China operations. Since our U.S. operations has been experiencing recurring net losses, we have provided for a 100% valuation allowance and therefore do not record any deferred income tax assets associated with our U.S. operations. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"><font color="#f52887"> $227,000 increase in non-cash </font>adjustments related to stock-based compensation expense. During 2015, additional options were granted resulting in additional expenses. Additionally in June 2015, the board of directors extended the terms of the existing grants to seven years from the initial date of grant, resulting in an expense associated with the grant modifications.</font></td></tr></tr></tr></tr></tr></table></font>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;
<p style="MARGIN: 0px"> </font>
<p style="MARGIN: 0px">
<table id="pagebreaka3f1db0b-12e4-4198-adc3-04e7a737b262" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">51</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Working capital: </font></p>
<p style="MARGIN: 0px">&nbsp;</p><font color="#f52887">
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $1.3 million net increase in accounts receivable for the U.S. operations. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $917,000 increase in inventories, primarily from our U.S. operations. We did not commence construction activity in China until early 2016. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $1.7 million increase in current and other assets. We began our China operations after completing the acquisitions of two PRC-based entities in April 2015 and began ramping up our operations in China. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $3.0 million net increase in accounts payable, accrued expenses and other liabilities. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $500,000 increase in cash in the 2015 period as a result of the receipt of payment in 2014 of an arbitration settlement payable to us. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> $2.6 million increase in deposits, $1.7 million of which is vendor bid deposits related to our China operations. </font></td></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></font>
<p style="MARGIN: 0px"><em>Investing Activities </em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Net cash provided by investment activities for the <font color="#f52887"> September </font> 2016 <font color="#f52887"> period </font>was $<font color="#f52887"> 3.8 </font> million compared to net cash used in investment activities for the <font color="#f52887"> September 2015 </font> period of $<font color="#f52887"> 6.0 </font> million. The increase in cash from investment activities is primarily as a result of customer loan repayments, net of cash used to fund new loans, in the <font color="#f52887"> September </font> 2016 period of $<font color="#f52887"> 3.9 </font> million compared to cash used to fund customer loans, net of cash received from loan repayments, of $<font color="#f52887"> 6.8 </font> million in the <font color="#f52887"> September </font> 2015 period.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Net cash used in investing activities was $6.0 million in 2015 and $18.7 million in 2014. During 2015, we used $16.3 million to fund our customer loan portfolio and received loan principal repayments of $9.6 million. We also received cash distributions from our <font color="#f52887"> unconsolidated </font>joint <font color="#f52887"> ventures </font> and cash through our acquisitions totaling $1.1 million and used $335,000 to fund our capital expenditures in 2015. During 2014, we used $20.6 million to fund our customer loan portfolio and received loan principal repayments of $6.2 million. Our capital expenditures in 2014 aggregated $4.4 million, primarily from our investment in one solar energy system that <font color="#f52887"> we lease </font> to University of California in Riverside.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Financing Activities</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Net cash from financing activities for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 was $<font color="#f52887"> 13.4 </font> million compared to $<font color="#f52887"> 2.6 </font> million for the comparable prior year period. During the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, we received proceeds from loans of $<font color="#f52887"> 17.3 </font> million and repaid $<font color="#f52887"> 11.3 </font> million during this period. During the <font color="#f52887"> September 2016 period, we received $7.5 million of subscription deposit from prospective investors; such deposit was applied to the purchase price of the common stock in October 2016 as part of our private placement. During the nine months ended September </font> 30, 2015, we received the proceeds from loans of $<font color="#f52887"> 2.5 </font> million and repaid <font color="#f52887"> loans of $1.1 million. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Net cash provided by financing activities was $6.4 million in 2015 and $19.0 million in 2014. During the year ended December 31, 2015, we received proceeds from new borrowings from affiliates and non-affiliates aggregating $11.8 million and made principal repayments on borrowings of $7.2 million. During 2015, we also received proceeds from our equity issuance of $1.8 million and paid $75,600 toward the cancellation of warrants previously issued to our lender. During the year ended December 31, 2014, we received proceeds from new borrowings from our affiliates of $20.0 million and made principal repayments on the borrowings of $997,000.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October <font color="#f52887"> and November </font>2016, we <font color="#f52887"> sold </font><font color="#f52887"> </font><font color="#f52887"> 3,900,000 </font> shares of common stock at purchase price of $5.00 per share<font color="#f52887"> , for a total of $19.5 million,&nbsp;from which we received $8.5 million as of January 31, 2017, with the balance being a subscription receivable, which we expect to receive by March 31, 2017. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em>Cash and Cash Equivalents</em> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> The following table sets forth, our cash and cash equivalents held by our United States and our China operations at September 30, 2016 and December 31, 2015 (dollars in thousands): </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>September 30, 2016</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>&nbsp;<font color="#f52887"> December 31, 2015 </font></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> United States </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,066 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,081 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> China </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 20.326 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 902 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 23,392 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,982 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;<font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
<table id="pagebreak84394dd7-90ef-4d21-b77b-5d56dc56c761" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">52</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We currently do not plan to repatriate any cash or earnings from any of our non-United States operations because we intend to utilize such funds to expand our overseas operations. Therefore we do not accrue any taxes related to the repatriation. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Additionally, at September 30, 2016 and December 31, 2015, had restricted cash balance of $1,459,989 and $321,458, respectively, for the United States operations, primarily held by U.S. financial institutions to support the letters of credit and business credit cards; and $9,031,036 and $0, respectively, for the China operations. The remaining restricted cash of $1,540,279 is held by a PRC financial institution as collateral for the notes payable issued in the normal course of business. Our cash at September 30, 2016 includes $7,490,757 which represented advance payments by Chinese investors in connection with our October/November private placement, which funds were held in our China bank account pending transfer to the United States upon the completion of the private placement documents with these investors. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Under applicable PRC law and regulations, wholly foreign-owned enterprises in the PRC, such as our PRC subsidiaries, may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, these wholly foreign-owned enterprises are required to set aside at least 10% of their respective accumulated after-tax profits, if any, each year, to fund certain reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital. We do not believe that this restriction will impair our operations since we do anticipate that we will use the cash generated from our PRC operations in those operations and we do not plan to repatriate such funds to the United States. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Bank Borrowings</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We <font color="#f52887"> had </font> a $1.0 million variable interest revolver loan and a $5.0 million variable interest term loan with Cathay Bank. The $1.0 million revolver has a maturity date of November 30, 2016 and the $5.0 million term loan has a maturity date of July 20, 2016. We have repaid our balance on the term loan on January 22, 2016 using the proceeds from the revolver loan<font color="#f52887"> , and we repaid the balance on the revolver loan on December 1, 2016. Both facilities are terminated, and we have not further obligations under these facilities </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Non-affiliate Borrowings</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On October 19, 2015, ZHPV entered into a line of credit agreement with an unrelated lender to borrow up to a maximum amount of RMB 50 million (approximately $7.7 million). The line of credit bears a fixed interest rate at 12% per annum and <font color="#f52887"> had an original maturity date of June 30, 2016, which was extended in 2016 to </font> October<font color="#f52887"> 31, 2016 </font> as to RMB 40 million (approximately $6.1 million) and <font color="#f52887"> to January 2017as to RMB 10 million. The line of credit is guaranteed by AMD. As of September 30, 2016, RMB 50.0 million (approximately $7.5 million) was outstanding. </font>The October 2016 maturity was paid in October <font color="#f52887"> 2016 and the remaining balance was paid in November </font>2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On November 15, 2015, ZHPV entered into a term loan agreement with the same unrelated lender to borrow RMB 20.4 million (approximately $3.1 million). The maturity date of the loan was June 30, 2016 and the loan was non-interest bearing. The loan was repaid on April 19, 2016.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On October 24, 2016, we entered into a loan agreement with China Ever Bright Bank, a PRC-based financial institution, to borrow RMB 38.5 million (approximately $5.7 million) for a one-year term. The interest rate is 3.8% per annum and payable quarterly in arrears. The loan is secured by our fixed deposit held at the bank in the amount of RMB 40 million (approximately $5.9 million) placed by <font color="#f52887"> one of our PRC subsidiaries </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Affiliate </em><em>Borrowings</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We, through a subsidiary, entered into a loan agreement on January 3, 2012 with our affiliate, Clean Energy Funding, LP, to borrow up to $45.0 million. The proceeds of the loan are advanced in increments of $2,500,000 and Clean Energy Funding may determine in its sole and absolute discretion a lesser amount. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Each advanced principal amount is due and payable 48 months from the advance date, which maturity date may be extended by the lender. The principal balance was $45.0 million at <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 and <font color="#f52887"> $ </font>42.5 million at December 31, 2015. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakf0e4f32e-87fd-40d7-b8ae-c731d480db40" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">53</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We, through another our wholly-owned subsidiary, entered into a loan agreement on August 26, 2014 with our affiliate, Clean Energy Funding II, LP, to borrow up to $13.0 million. The proceeds of the loan would be used for LED operations. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Principal is due and payable in 48 months, and may be extended by the lender. As of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the principal loan balance was $<font color="#f52887"> 4.0 million and $1.0 million, respectively. The increase reflects drawdowns of a total of $3.0 million in the third quarter of 2016 to fund required purchases related to a new major LED contract. </font> There was no outstanding balance on December 31, 2014. As of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the remaining undrawn amount on the loan was <font color="#f52887"> $9.0 million and </font>$12.0 million<font color="#f52887"> , respectively </font>. The loans from both of the affiliated entities, which were made pursuant to the United States government&rsquo;s EB-5 immigration program, are secured by assets of the borrowing <font color="#f52887"> subsidiaries </font>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 29, 2015, ZHPV entered into an unsecured loan agreement with Changzhou, an entity in which we hold a 22.5% equity interest. Under the agreement, ZHPV can borrow up to RMB 2 million (approximately $308,086) for three months from Changzhou with a 6% fixed annual interest rate. The outstanding balance on the loan was RMB 1.5 million (approximately $231,064) as of December 31, 2015. Another RMB 500,000 (approximately $77,021) was drawn down on January 10, 2016. The entire loan was repaid on March 10, 2016 in the total amount of RMB 2,023,000 (approximately $311,616) including principal and interest</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Contractual Obligations</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Borrowings</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Principal maturities for the financing arrangements as of <font color="#f52887"> September 30, 2016 </font> are as follows<font color="#f52887"> (dollars in thousands) </font>:&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>PRC Line of Credit</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Auto Loans</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Bank Revolver</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Related Party Loans</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Total</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2016 (balance) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 200 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 500 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 709 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2017 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 35 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,531 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2018 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 25 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,025 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2019 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2010 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 22,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 22,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 69 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 200 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,795 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Operating Leases</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Future minimum lease commitments for office facilities and equipment <font color="#f52887"> for each of the next five fiscal years as of September 30, 2016, </font> are as follows<font color="#f52887"> (dollars in thousands) </font>: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><em>Years ending December 31,</em></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Related Parties</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Others</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Total</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2016<font color="#f52887"> (balance) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 189 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 86 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 275 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2017</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 327 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,535 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 133 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,342 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 31 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,239 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2020 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2021 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,208 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Thereafter </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,231 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,231 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total lease payments</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,459 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 578 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,037 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak38d5cc80-55b6-4923-a0a7-abe8275f59f1" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">54</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em>Supply Agreements</em> </font></p>
<p style="MARGIN: 0px">&nbsp;<font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We have a supply agreement with Sunspark, pursuant to which, we agreed to purchase 150 MW of solar panels over a three-year period at a price to be negotiated not to exceed 110% of the three month rolling average market price per watt for an estimated total commitment of approximately $84.0 million based on the most recent price paid on a purchase order from Sunspark. The agreement stipulates that we will make minimum annual purchases of at least 30 MW, which will cost approximately $16.8 million based on the most recent price paid on a purchase order from Sunspark, with the first year being the year beginning June 1, 2016. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> On July 29, 2016, we entered into a five-year distribution agreement with Li-Max Technology, Inc. with an effective date of June 9, 2016. Pursuant to the agreement, we would be the exclusive distributor of Li-Max Energy Storage System worldwide except for Asia (including but not limited to the Republic of China and the Peoples&rsquo; Republic of China). The agreement contains an initial purchase commitment of 375 units, or approximately $1.1 million, of Li-Max Energy System within the first six months of the term of the agreement. In the event that we fail to purchase 60% of this commitment within such six month period, Li-Max can require us to purchase 60% of the target number within 60 days, failing which Li-Max has the right to terminate the agreement. Li-Max provides a ten-year warranty all the systems purchased from Li-Max for a period of ten years from the date of installation. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We believe that we will be able to satisfy our debt service requirements and our obligations under our supply agreements through both operations and financing, including the proceeds of this offering.&nbsp; Our total panel purchases for our United States and China operations were approximately $4.0 million during the nine months ended September 30, 2016 and approximately $3.9 million for the year ended December 31, 2015.&nbsp; All of our panel purchases during 2015 were from suppliers other than Sunspark.&nbsp; Since our purchases from Sunspark are based on market price, we believe that meeting our obligations under our agreement with Sunspark is consistent with our anticipated needs in both the United States and China and that we will be able to meet our first-year commitment by May 31, 2017.&nbsp; &nbsp;We believe that, from a financial point of view, we will be using a different supplier and we will continue to pay the market price for the panels.&nbsp; With respect to our commitments under the LiMax agreement, we believe that a market for this product will develop and that we will generate cash flow for these products through the sale of the products to provide us with the funds to meet our obligations to LiMax.&nbsp; In the event that we are not able to develop a market for this product, LiMax has the right to terminate the agreement.&nbsp; In addition to the proceeds of this offering, we have the balance of the funds from the October/November private placement which we believe will provide us with sufficient funding to meet our near term obligations.&nbsp; However, we cannot assure you that we will not require additional funds to meet our commitments or that funds will be available on reasonable terms, if at all. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em><strong>Employment Agreements</strong></em> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; On October 7, 2016, we entered into employment agreements with David Hsu, our chief executive officer&nbsp;and Ching Liu, our executive vice president, each for a five-year term commencing January 1, 2017and continuing on a year-to-year basis unless terminated by us or the executives on not less than 90 days&rsquo; notice prior to the expiration of the initial term or any one-year extension.&nbsp; The agreements provide for an annual salary with an increase of not less than 3% on January 1st of each year, commencing January 1, 2018, an annual bonus in restricted stock and cash, commencing with the year ending December 31, 2017, equal to a specified percentage of consolidated revenues for each year. See &ldquo;Executive Compensation &#8211; Employment Agreements&rdquo; for information as to the terms of these agreements. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Critical Accounting Policies</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are an emerging growth company within the meaning of the rules under the Securities Act, and we will utilize certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. For example, we will not have to provide an auditor&rsquo;s attestation report on our internal controls in future annual reports on Form 10-K as otherwise required by Section 404(b) of the Sarbanes-Oxley Act. In addition, Section 107 of the JOBS Act provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to utilize this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards as they become applicable to public companies.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak01e65c44-0aab-42e2-bcdc-9731dce45f18" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">55</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our consolidated financial statements have been prepared in accordance with GAAP. The preparation of these financial statements in conformity with GAAP requires us to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. We base these estimates, judgments, and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances. We continually evaluate the policies and estimates we use to prepare our consolidated financial statements. Changes in estimates or policies applied could affect our financial position and specific items in our results of operations that are used by our stockholders, potential investors, industry analysts, and lenders in their evaluation our performance. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Principles of Consolidation</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our consolidated financial statements have been prepared in conformity with GAAP, and reflect the accounts and our operations and those of our subsidiaries in which we have a controlling financial interest. All intercompany transactions and balances have been eliminated in consolidation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Revenue Recognition</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Solar farm projects </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We recognize design and EPC revenue using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that we are responsible for the ultimate acceptability of the project. Contracts are generally segmented between types of services, primarily design services and EPC services. Accordingly, gross margin related to each activity is recognized as those separate services are rendered. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined. Pre-contract costs are expensed as incurred. Revenue recognized in excess of amounts billed would be classified as a current asset under contract work in progress. Advances that are payments on account of contract work in progress would be deducted from contract work in progress. Amounts billed to clients in excess of revenue recognized to date would be classified as a current liability under advance billings on contracts. Although we charge VAT to the customer, VAT is not included in either revenues or cost of revenues. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> For EPC contracts whereby the estimated contract duration is less than four months and the contract value is under $2.0 million, our policy is to recognize the revenue on such contracts using the completed contract method. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We generally provide limited warranties for work performed under our construction contracts. The warranty periods typically extend for a limited duration for up to 12 months following substantial completion of our work on a project. Typically 5% of the contractual amount is withheld by customers until the warranty periods expire. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We provide operation and maintenance service on solar farm projects after the projects are completed pursuant to operation and maintenance contracts, which are separate from the EPC contract. Revenue is recognized as earned over the term of the contract and is generally based on a specific amount per watt per year. We may be entitled to additional performance incentives if specified performance targets are met, which will be recognized when those targets are achieved. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Solar energy systems and product sales</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">For solar energy systems and components sales for which customers pay the full purchase price upon delivery of the system, we recognize revenue, net of any applicable governmental sales taxes, in accordance with ASC 605, Revenue Recognition&#8212;Overall. We recognize revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. Components are comprised of photovoltaic panels and solar energy system monitoring hardware. We recognize revenue when we install a solar energy system and it passes inspection by the utility or the authority having jurisdiction and the permit to operate has been issued, provided all other revenue recognition criteria have been met. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">For solar energy systems sold under an installment contract, we complete an extensive review of the customer&rsquo;s credit history prior to approving the customer for an installment sale which provides us with reasonable assurance of the collectability of the related installment sale receivable over the installment term. Accordingly, we recognize the revenue from the installment sale of a solar energy system when we deliver a system that has passed inspection by the utility or the authority having jurisdiction and the permit to operate has been issued.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">LED projects and product sales</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our revenue recognition policy as related to LED products and services is in accordance with ASC 605. We recognize revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. We recognize our LED revenue upon the completion of the installation and the final acceptance from the customer, provided all other revenue recognition criteria have been met. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Financing interest and other financing related income</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Customer loans receivable are classified as held for investment based on management&rsquo;s intent and ability to hold the loans for the foreseeable future or to maturity. Loans held for investment are carried at amortized cost and are reduced by an allowance for estimated credit losses as necessary. We recognize interest income on loans, including the amortization of discounts and premiums, using the effective interest method. The interest method is applied on a loan-by-loan basis when collectability of the future payments is reasonably assured. Premiums and discounts are recognized as yield adjustments over the term of the related loans. Loans are transferred from held-for-investment to held-for-sale when management&rsquo;s intent is to no longer hold the loans for the foreseeable future. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Operating Leases and Power Purchase Agreements</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> From 2010 to 2014, we constructed and offered built-to-suit commercial-grade photovoltaic systems for certain commercial and not-for-profit customers in California, Hawaii, Colorado and New Jersey; under long-term leases and power purchase agreements, with terms of up to 20 years. Under these arrangements, we own the systems and receive the 30% federal grant, as well as any state and utility company rebates on the systems we own. Upfront rebates and incentives were applied to reduce our cost of the systems. All other annual rebates and performance-based incentive rebates are recognized in revenue when received. In connection with our ownership of solar systems primarily in New Jersey, we own a number of Solar Renewable Energy Certificates (&ldquo;SREC&rdquo;). In states that provide for SRECs, regulations require electricity suppliers to obtain a portion of their electricity from solar generators and the utilities can purchase SRECs to meet this requirement. There is currently no assigned monetary value to an SREC and the prices are ultimately determined by market forces within the parameters set forth by the state. We recognize the revenue of the SREC when it is sold. We have not constructed solar systems for us to lease to our customers in the United States subsequent to 2104, although we continue to have obligations under existing operating leases and power purchase agreement. We have no plans to offer operating leases or power purchase agreements in the United States. Instead of leasing directly, we have a distribution agreement with Sunrun, a leasing company. We buy the components of the system, perform the EPC services and sell the completed system to the leasing company which leases the system to the customer. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Under the long-term leases which we entered into before 2015, we are the lessor of solar energy systems, which are accounted for as operating leases in accordance with ASC 840, Leases, since these leases do not provide for the ownership transfer to the lessee at the end of lease, the arrangement does not contain a bargain purchase option, the lease term does not exceed the economic life of the underlying solar system which is typically 35-40 years, and the net present value of the lease payments does not exceed 90% of the original investment after giving effect to the rebates. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">For solar energy systems where customers purchase electricity from us under power purchase agreements, we have determined that these agreements should be accounted for, in substance, as operating leases pursuant to ASC 840. <font color="#f52887"> These&nbsp;agreements do not provide for the ownership transfer to the purchaser at the end of term, the agreements do not contain a bargain purchase option, the term does not exceed the economic life of the underlying solar system, and the net present value of the&nbsp;payments does not exceed 90% of the original investment after giving effect to the rebates. </font>We recognize revenue based upon the amount of electricity delivered at rates specified under the contracts, assuming all other revenue recognition criteria are met.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> With respect to our outstanding operating leases and power purchase agreements that we entered into before 2015, we capitalized </font> initial direct costs from the origination of solar energy systems leased to customers (the incremental cost of contract administration, referral fees and sales commissions) as an element of solar energy systems, leased and to be leased, and subsequently amortize these costs over the term of the related lease or power purchase agreement, which generally ranges from 10 to 20 years.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Third-Party Leasing Arrangements </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We no longer lease solar systems. In January 2015, we entered into a channel agreement with Sunrun, Inc. pursuant to which Sunrun appoints us as its sales representative to solicit orders for Sunrun&rsquo;s products in portions of southern California. Pursuant to this agreement, we introduce potential leasing customers to Sunrun. Sunrun pays us for our services in connection with the projects. Upon a customer signing a Sunrun lease, we purchase the equipment from Sunrun or other vendor from a listing of preapproved equipment by Sunrun. We then perform the design and EPC work until the system receives the permit to operate. Sunrun pays us 80% of the purchase price of the system after the system receives the city sign off and the final 20% after receiving the permit to operate. Similar to the solar systems that we sell directly to residential and commercial customers, we recognize the revenue on the solar systems sold to Sunrun when the permit to operate is received. Sunrun owns the equipment, leases and also services the lease. Our relationship with the residential customer is only during the sales and installation process. Our agreement with Sunrun prohibits us from marketing, selling or constructing solar systems to be leased to customers other than through Sunrun. These restrictions do not affect our financing operations. The agreement has a term of three years, which commenced in January 2015. Sunrun may terminate the agreement if we fail to meet specified minimum volume requirements. Sunrun also has the right to terminate certain incentives contained in the agreement at any time. As a result, Sunrun was the largest customer in the U.S. during the year ended December 31, 2015 and the nine months ended September 30, 2016. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Upon the completion of the system, Sunrun performs the inspection to ensure the system meets Sunrun&rsquo;s quality standards, and we are responsible to fix any issues as identified by Sunrun if they are caused by us. Sunrun covers all warranty issues with the system and may also contract with us to perform the work to fix any potential future issues with the system. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We previously had a dealer participation agreement with another leasing company. However, since we only offer leasing through Sunrun, we no longer work with any other leasing companies. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Business Combinations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Business combinations are accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations (&ldquo;ASC 805&rdquo;). Under the acquisition method of accounting, we allocate the purchase price of a business acquisition based on the fair value of the identifiable tangible and intangible assets. The difference between the total cost of the acquisition and the sum of the fair values of the acquired tangible and identifiable intangible assets less liabilities is recorded as goodwill or bargain purchase gain. We used third party appraisers to assist in estimating fair values, including the business enterprise value, which is based on estimated future cash flows (including timing) which are estimated using the income approach and discount rates reflecting the risk inherent in the future cash flows. Under ASC 805, acquisition related transaction costs (such as advisory, legal, valuation, and other professional fees) are expensed as incurred. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Impairment of Long-Lived Assets and Goodwill</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We assess the carrying value of our long-lived assets and related intangibles for impairment whenever events or changes in circumstances indicate that the carrying value of the long-lived asset, or group of assets, may not be recoverable, but at least annually. Recoverability of long-lived assets is measured by comparing the carrying amount of the long-lived assets to the respective estimated future undiscounted cash flows. The estimated future undiscounted cash flows are calculated utilizing the lowest level of identifiable cash flows that largely independent of the cash flows of other assets and liabilities. If our analysis indicates that the carrying value of the long-lived assets is not recoverable on an undiscounted cash flow basis, we recognize an impairment charge for the amount by which the carrying value exceeds the fair value of the long-lived asset.</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Goodwill is tested for impairment at least annually based on certain qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. . When assessing goodwill for impairment, we consider the enterprise value and if necessary, the discounted cash flow model, which involves assumptions and estimates, including our future financial performance, weighted-average cost of capital and interpretation of currently enacted tax laws. Circumstances that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in the financial results, a significant decline in the enterprise value relative to its net book value, an unanticipated change in competition or the market share and a significant change in the strategic plans. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Income Taxes</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in our opinion, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. We have determined it is more likely than not that its deferred tax assets will not be realizable and have currently recorded a full valuation allowance against our deferred tax assets. In the event we are able to realize its deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We consider the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Unless we can increase our revenue and generate positive cash flows, we may not have sufficient resources to enable us to make the required minimum purchases. Although our business plan contemplates positive cash flows in our United States segment, we cannot assure you that if we are able to generate a positive cash flow from operations, it will be sufficient to enable us to meet either our debt service requirement or our agreements under the supply agreement. We are continuing to explore alternatives for additional sources of financing to fund our United States operations including securing borrowing facilities from a bank in the PRC, disposing of a portion of the Company&rsquo;s loan portfolio to financial institutions based in the United States and obtaining additional funding through investors under federal immigration programs. While we cannot assure you that positive cash flows will be achieved or that alternative sources of financing will be available to us if and when needed and under favorable, if any, terms.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="BUSINESS">BUSINESS</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Introduction</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are an integrated solar and renewable energy company. A solar energy system retains the direct current (DC) electricity from the sun and converts it to alternating current (AC) electricity that can be used to power residential homes and commercial businesses. The solar business is based on the ability of the users of solar energy systems to save on energy costs and reduce their carbon imprint as compared with power purchased from the local electricity utility. Through our subsidiaries, we are primarily engaged in the following business activities:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Selling and installing integrated photovoltaic systems and for residential and commercial customers in the United States, which is our principal source of revenue from our United States operations;</td></tr>
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<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing financing to purchasers of our photovoltaic systems and servicing installment sales by our customers in the United States;</td></tr>
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<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Owning and funding renewable energy projects in the United States and generating revenue from this business through operating leases and power purchase agreements <font color="#f52887"> which we entered into prior to 2015 </font>primarily with commercial users;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Selling and installing battery backup solutions for residential and commercial customers in the United States, which sales commenced in the third quarter of 2016;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing exterior and interior light-emitting diode, known as LED, lighting sales and retrofitting services for governmental and commercial applications;</td></tr>
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<td></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Identifying and procuring solar farm system projects for resale to third party developers and related services in China;</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Providing engineering, procuring and constructing (EPC) services for solar farms in China; and</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Operating and maintaining </font> solar farm projects in China.</td></tr></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We operate in two segments &#8211; our United States operations and our Chinese operations. Our United States operations includes (i) the sale and installation of photovoltaic and battery backup systems, (ii) financing the sale of our photovoltaic and battery backup systems, (iii) owning and leasing to third parties through operating leases and power purchase agreements, and (iv) sales of LED systems.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our Chinese operations consist of (i) identifying and procuring solar farm projects for resale to third parties; (ii) <font color="#f52887"> performing </font>EPC services for solar farm projects and (iii) <font color="#f52887"> operating and maintaining </font> solar farm projects. Our business in China is conducted through our subsidiaries, primarily ZHTH and ZHPV, which we acquired in April 2015, <font color="#f52887"> and Jiangsu Honghao, which we formed in September 2015, </font>and their subsidiaries. Through September 30, 2016, our Chinese activities have consisted of identifying, procuring and selling to a <font color="#f52887"> related </font> party one solar farm project, <font color="#f52887"> the Guizhou Phase 1 project, </font>which was approximately 79% completed<font color="#f52887"> at September 30, 2016 and is scheduled to be completed during the first quarter of 2017, identifying, procuring and selling to another subsidiary of the related party a second solar far project, the Guizhou Phase 2 project, which commenced in the fourth quarter of 2016 and an EPC contract with a non-affiliated party which commenced in the fourth quarter of 2016. In June 2016, we entered into a five-year maintenance contract for the Guizhou Phase 1 project, pursuant to which we are providing operations and </font> maintenance services for <font color="#f52887"> which we receive RMB 0.05 per watt per year, with a minimum contract amount of RMB 3.0 million (approximately $451,000) per year. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We commenced our business in China in <font color="#f52887"> 2015, following the acquisition of ZHTH and ZHPV in April 2015, </font> and we did not generate any revenue from that business during 2015. At present, our Chinese operations represent the most significant component of our revenue. As a result of one EPC contract by our Chinese <font color="#f52887"> segment </font>, we generated revenue of approximately $<font color="#f52887"> 43.8 </font> million for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016. </font> Total revenue for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 was approximately $<font color="#f52887"> 65.9 </font> million. Our <font color="#f52887"> United States </font>solar sales decreased from $<font color="#f52887"> 24.9 </font> million in the <font color="#f52887"> September </font> 2015 <font color="#f52887"> period </font>to $<font color="#f52887"> 20.1 </font> million in the <font color="#f52887"> September </font> 2016 period. Financing revenue was approximately $<font color="#f52887"> 1.7 </font> million in both the <font color="#f52887"> September </font> 2016 and <font color="#f52887"> September </font> 2015 periods. Increased competition and the resulting price reduction is a major factor in the decrease in revenue.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Our Corporate Structure</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We are a Nevada corporation <font color="#f52887"> formed </font> in January 2008. <font color="#f52887"> We have has three wholly-owned and one 93.75%-owned </font> subsidiaries <font color="#f52887"> in the United States, SolarMax Renewable Energy Provider, Inc., SolarMax Financial, LED and SMX Capital. SMX Capital is a 93.75% owned subsidiary, and its financial statements are consolidated with our consolidated financial statements. The 6.25% minority interest </font> is held by the president of our <font color="#f52887"> PRC operations. The minority interest is reflected as non-controlling interests in the accompanying consolidated financial statements. </font> SMX Capital operates through three limited liability companies in which we have a 30% interest<font color="#f52887"> and which we account for on the equity method in our consolidated financial statements </font>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our wholly-owned subsidiaries outside the United States are Accumulate, SolarMax Hong Kong and Golden SolarMax. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Accumulate has one wholly-owned subsidiary, Accumulate Hong Kong, which has one wholly-owned subsidiary, ZHPV. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> SolarMax Hong Kong has one wholly-owned subsidiary, SolarMax Shanghai. SolarMax Shanghai is a wholly foreign-owned entity, which is referred to as a WFOE. SolarMax Shanghai has two wholly-owned subsidiaries, ZHTH and Jiangsu Honghao. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> The following charts show our corporate structure for our United States and China segments. The chart for our China segment does not include the subsidiaries of ZHTH, ZHPV and Jiangsu Honghao, which are either permit subsidiaries or subsidiaries which are formed to perform services for a specific contract. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> United States Segment </font>&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="16%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="13%" colspan="4">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="19%" colspan="6">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology Inc. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font>&nbsp;</p></td>
<td valign="top" width="10%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="21%" colspan="4"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="16%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="18%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="6%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="10%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="6%"><font color="#f52887"> </font></td>
<td valign="top" width="9%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="2"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="7%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="21%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="4%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="13%" colspan="5"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="5%" colspan="2"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="6%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="9%"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="9%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="16%" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax Renewable Energy Provider, Inc. </font></p></td>
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="16%" colspan="4">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax LED Inc. </font></p></td>
<td valign="top" width="4%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="4%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="14%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SolarMax Financial Inc. </font></p></td>
<td valign="top" width="6%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="18%" colspan="3">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> SMX Capital, Inc.<br>(93.75%) </font></p></td></tr>
<tr height="15">
<td width="7%"><font color="#f52887"> </font></td>
<td width="10%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="7%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="7%"><font color="#f52887"> </font></td>
<td width="2%"><font color="#f52887"> </font></td>
<td width="2%"><font color="#f52887"> </font></td>
<td width="3%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="5%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> </font></td>
<td width="6%"><font color="#f52887"> </font></td>
<td width="9%"><font color="#f52887"> </font></td>
<td width="5%"><font color="#f52887"> </font></td>
<td width="4%"><font color="#f52887"> </font></td></tr></table></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> China Segment </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="14%" colspan="8">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="18%" colspan="9">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology Inc. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="top" width="9%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="20%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="3"><font color="#f52887"> </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="14%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="11%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="20%" colspan="7"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="7%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="25%" colspan="11"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="10%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="2%"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="17%" colspan="7"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="11%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="15%" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Golden Solarmax Finance. Co. Ltd. </font></p></td>
<td valign="top" width="7%" colspan="4">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="20%" colspan="10">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology Holdings (Hong Kong) Limited </font></p></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="3">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="20%" colspan="7">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Accumulated Investment Co. Ltd. (BVI) </font></p></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="14%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="13%" colspan="6"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="18%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="10%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="14%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="13%" colspan="6"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="18%" colspan="8"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="10%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" rowspan="2" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="18%" colspan="10">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Solarmax Technology (Shanghai) Co., Ltd. </font></p></td>
<td valign="top" rowspan="2" width="8%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" rowspan="2" width="5%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="20%" colspan="7">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Accumulate Investment Co., Ltd., (HK) </font></p></td>
<td valign="top" rowspan="2" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="4%"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="6%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="6%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="7%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="7%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="20%" colspan="9"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="9%"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="6%" colspan="3"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="6%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-TOP: black 1px solid" valign="top" width="7%" colspan="4"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="7%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="20%" colspan="9"><font color="#f52887"> </font></td>
<td style="BORDER-LEFT: black 1px solid" valign="top" width="9%"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" rowspan="2" width="15%" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="10%" colspan="6">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Chengdu Zhonghong TianHao Technology Co. Ltd (ZHTH) </font></p></td>
<td valign="top" rowspan="2" width="5%" colspan="3">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="12%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Jiangsu Honghao Electricity Technology Co. Ltd </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font>&nbsp;</p></td>
<td valign="top" rowspan="2" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="9%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" rowspan="2" width="16%" colspan="5">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Jiangsu Zhonghong Photovoltaic Electric Co. ltd (ZHPV) </font></p></td>
<td valign="top" rowspan="2" width="11%" colspan="3"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="9%" colspan="4"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td width="1%"><font color="#f52887"> &nbsp; </font></td></tr>
<tr height="15">
<td valign="top" width="15%" colspan="2"><font color="#f52887"> </font></td>
<td valign="top" width="15%" colspan="9"><font color="#f52887"> </font></td>
<td valign="top" width="12%" colspan="5"><font color="#f52887"> </font></td>
<td valign="top" width="2%"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="3"><font color="#f52887"> </font></td>
<td valign="top" width="20%" colspan="7"><font color="#f52887"> </font></td>
<td valign="top" width="8%" colspan="2"><font color="#f52887"> </font></td>
<td width="4%" colspan="2"><font color="#f52887"> &nbsp; </font></td></tr></table></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
<table id="pagebreak608097ec-a5f2-464f-9d8c-53537e70c651" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">61</td></tr>
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our principal executive offices are located at 3080 12th Street, Riverside, California 92507. Our telephone number is (951) 300-0788. Our website address is http://www.solarmaxtech.com. The information contained on, or that can be accessed through, our website or any other website is not a part of this prospectus.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Operations in China</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em>General</em> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Through our subsidiaries, we are primarily engaged in the following business activities in China: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Developing solar farm projects in China, which involves identifying a potential project, identifying the land for the solar farm, obtaining the permits for the project; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Obtaining land use rights or leasing land for the project; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Entering into power purchase agreements for the project with the utility; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Identifying potential solar farm owners and entering into agreements to transfer ownership of the project to them; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Providing EPC for the solar project; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
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<td valign="top"><font color="#f52887"> Offering operation and maintenance service for all projects including residential, commercial and power plants; </font></td></tr></tr></tr></tr></tr></tr></table></font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Based on the effective light resource and available land use, we are focusing on provinces with large tracts of available land and solar resources sufficient for the development of solar farms. We look to work with local entities to do the project development together. As part of this process we need to discuss the potential development with local government agencies, which may involve discussions with several departments. The local government agencies publish the availability of permits for solar farms, and we would need to obtain the permit for the solar farm from the applicable government agency. Under normal circumstance, we will also find the final buyer who will own the solar farm. Because of the regulations relating to permits for solar farms, we form a separate permit subsidiary to acquire the rights to the permit and solar farm&rsquo; and, if we find a buyer to operate the solar farm, we would transfer the stock of the permit subsidiary to the buyer. When we identify the buyer, we seek to both obtain the contract to perform the EPC work as well as to operate and maintain the project after completion. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our business in China is conducted through ZHTH<font color="#f52887"> , </font> ZHPV and <font color="#f52887"> Jiangsu Honghao </font>. To comply with the local requirements to own and operate the EPC business in China, ZHTH<font color="#f52887"> , ZHPV </font> and <font color="#f52887"> Jiangsu Honghao </font> establish a number of subsidiaries for different purposes. These special purpose subsidiaries include <font color="#f52887"> permit </font>subsidiaries which were formed <font color="#f52887"> by ZHTH or ZHPV to own the solar farms and </font> the permits to construct and operate solar farms. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">ZHTH is primarily engaged in the business of identifying and procuring solar system projects for resale to third party developers and related services in China.<font color="#f52887"> ZHPV&rsquo;s core business is to provide EPC services. Jiangsu Honghao performs the operation and maintenance services. Either ZHTH or ZHPV may obtain the permit for a project in the name of a permit subsidiary. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> When we identify a buyer for a project, the subsidiary that owns the permit subsidiary sells all of the equity in the permit subsidiary to the buyer, and the buyer of the project engages ZHPV for the EPC work. The purchase price for the permit subsidiary is an amount approximating the permit subsidiary&rsquo;s net assets. Accordingly, we do not generate a material gain or loss from the sale of the permit subsidiaries. The sale of the equity in the permit subsidiaries is part of the normal course of our operations in China. Because government regulations prohibit the sale of the permit relating to a solar farm, it is necessary for us to sell the equity in the permit subsidiary to effectuate the transfer of the ownership of the solar farm and permit to the buyer. Upon completion of the solar farm, Jiangsu Honghao seeks to obtain a contract for the operation and </font> maintenance <font color="#f52887"> of the solar farm for a specified term. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In addition to performing EPC services for buyers who purchase a permit subsidiary from us, ZHPV also performs EPC services as a general contractor for a solar farm owner that already owns the permit. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Unlike systems in the United States, which are installations for residential and small business users, the projects in China are solar farms, which are<font color="#f52887"> constructed on </font> large land areas where multiple ground-mount solar tracking towers are installed. While a typical residential or small business installation in the United States generally generates between 6.5KW and 0.2MW of power, the solar farms <font color="#f52887"> can </font>generate in the range of 30MW to 100 MW of power.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We presently have agreements for three EPC projects, which are described under &ldquo;EPC&rdquo; and one agreement for operation and maintenance which is described under &ldquo;Operation and Maintenance.&rdquo; We </font> do not operate any solar farms as owner, and we have no present plans to operate solar farms for our own account at least through the end of 2017. To the extent that, in the future, we propose to construct and operate a solar farm for our own account, any decision would be subject to obtaining sufficient financing to enable us to construct and operate the project<font color="#f52887"> and complying with government regulations relating to the ownership of a solar farm </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Acquisition of ZHTH and ZHPV</strong> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On April 28, 2015, we acquired<font color="#f52887"> the ownership of ZHTH </font>, through a share exchange agreement <font color="#f52887"> among us. SolarMax Shanghai, and the equity owners of ZHTH. </font>The purchase price for ZHTH consisted of cash of RMB 200,000 (approximately $32,786) and 2,400,000 shares of unvested restricted common stock, to be earned and vested upon achieving specified milestones related to procurement of solar system projects through December 31, 2017. The specified milestones had been met as of December 31, 2015, and accordingly, all shares of the common stock related to the transaction are fully vested as of December 31, 2015. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Also on April 28, 2015, we acquired the ownership of ZHPV through a share exchange agreement among us and the holders of the stock of Accumulate, which, through Accumulate Hong Kong, owned ZHPV. We own all of the stock of Accumulate, which, in turn, through Accumulate Hong Kong, owns all of the stock of ZHPV. The share exchange agreement for ZHPV was amended on May 12, 2016 to revise certain terms including reducing the total consideration retroactively to the original acquisition date of April 28, 2015. </font>Pursuant to the share exchange agreement<font color="#f52887"> for ZHPV, as </font> amended<font color="#f52887"> , </font> the purchase price for ZHPV consisted of 1,000,000 shares of common stock, which are pledged to us pursuant to a stock pledge agreement dated April 28, 2015 <font color="#f52887"> among </font> us and the former owners of ZHPV to ensure compliance of certain seller post-closing obligations. The ZHPV share exchange agreement, as amended, also includes a contingency for us to pay the sellers&rsquo; liquidated damages of RMB 10,000,000 (approximately $1.6 million) in the event that we fail to file a registration statement on Form S-1 with the SEC by May 12, 2017, which is one year from the effective date of the amendment. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Effective on May 12, 2016, in conjunction with the execution of the amendment to the share exchange agreement for ZHPV, ZHPV entered into a debt settlement agreement with Uonone Group Co., Ltd., one of the former owners of ZHPV. Pursuant to the debt settlement agreement, ZHPV and Uonone agreed to settle a list of pending business transactions entered by them during the period from December 31, 2012 to December 31, 2015. The financial impact of the debt settlement agreement was retrospectively adjusted to the acquisition date of April 28, 2015 which reflects a receivable balance from Uonone Group in the amount of $1,570,000. As of <font color="#f52887"> September </font> 30, 2015, the receivable balance due from the Uonone Group was $<font color="#f52887"> 1,651,000. In December 2016, Uonone Group requested a payment extension and entered into an amendment </font> to the debt settlement agreement<font color="#f52887"> under which Uonone Group agreed to provide and endorse to ZHPV a commercial bill, which is a note issued by a third party that is not a bank, due in August 2017 and guaranteed by Uonone in the amount of RMB 4.0 million (approximately $588,000), and to pay RMB 2.0 million (approximately $294,000) , which is 50% of the balance of by March 31, 2017, and the remaining RMB 2.0 million by June 30, 2017. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The former beneficial owners of ZHTH continue to work for ZHTH. In this connection, the agreement also includes a provision whereby the former beneficial owners may request us to arrange for project financing on behalf of ZHTH. However, the agreement provides that any project financing will be subject to negotiation of financing and the agreement does not confer upon any party or ZHTH any right to obtain financing and none of us, our Chinese subsidiary or ZHTH have any obligation to provide access to funds or direct financing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>EPC</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> ZHPV holds a construction enterprise qualification certificate for Level III of general contractor for power engineering constructor issued on April 29, 2016, which permits ZHPV to conduct business as a contractor in power engineering construction. The certificate </font> is granted by the local government and enables ZHPV to perform its services throughout China. We engage a local licensed engineering firms to perform the initial design work through a bidding process. When this firm completes its design proposal, we obtain owner approval prior to procurement and construction. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We purchase the equipment for the project from local suppliers pursuant to a bidding process. Our construction team will remain on site to perform the EPC services, using local licensed subcontractor as needed. Our EPC services include continuing negotiate with local government and the utility to resolve any issues that may occur on-site until the project is fully connected<font color="#f52887"> to the grid </font>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In February 2016, ZHPV entered into an agreement with a subsidiary of AMD pursuant to which the AMD subsidiary engaged ZHPV to perform the EPC services for its Guizhou Phase 1 solar farm. The solar farm was initially designed to generate 70 MW of power and the contract price, was approximately RMB 518 million (approximately $80 million). Due to the limitation of available land use and zoning regulations, the size of the project was reduced to 55MW, with a contract price of RMB 425 million (approximately $64 million). The project was approximately 79% completed at September 30, 2016 and is scheduled to be completed during the first quarter of 2017. We recognize revenue on our EPC services on the percentage of completion basis. Although we do not include VAT as either revenues or cost of revenues, the contract prices to our customers in the PRC include VAT and, accordingly, the prices in this prospectus include VAT. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In October 2016, ZHPV executed an EPC contract with a different subsidiary of AMD for another 50MW solar farm project in Guizhou, China, which is referred to as Guizhou Phase 2. The contract price was RMB 280 million (approximately $42.5 million). We commenced construction of this project in December 2016. The project is scheduled to be completed and delivered during the first quarter of 2017. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In November 2016, ZHPV executed an EPC contract with Xin Huang Duong Minority Poverty Relief Office, a PRC governmental entity, to construct photovoltaic power stations at 11 villages in Xin Huang Dong Minority autonomous county. The total system size for the 11 sites is 660 kilowatts with a contract value of RMB 5.1 million (approximately $750,000). The retainage for the five-year construction warranty would be 10% or RMB 0.5 million, with 20% to be released at the end of each the first five years. Because of its small size and short construction period, this contract will be accounted for under the completed contract method and is expected to begin and be completed in the first quarter of 2017. Pursuant to this agreement, ZHPV provides EPC services. Xin Huang Duong Minority Poverty Relief Office did not require us to provide it with a permit. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Because we cannot transfer a solar farm permit under PRC law, we use a permit subsidiary to acquire the solar farm and permit and sell 100% of the equity in the permit subsidiary to the buyer. We sell the equity in the permit subsidiary to the owner of the solar farm for a price that was approximately the new worth of the permit subsidiary with the result that we do not generate any significant gain or loss on the sale. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Seasonal weather patterns affect our construction of large scale solar projects. Northern provinces often experience below zero temperatures along with snow storms which could cause a closure of transportation options along with frozen ground which needs to be cleared for solar equipment, all of which can potential cause slowdowns in construction. Our EPC contracts to date have been in the southern provinces where cold weather does not have the same effect. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Operation and Maintenance</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">If we enter into a maintenance agreement with the solar farm owner, once the project is fully connected to the grid, we will operate and maintain the project at a price and for a term to be agreed upon. <font color="#f52887"> In performing these services, we </font> work with a local maintenance team who will be in charge of the daily maintenance work including one stationmaster and several workers depend on the plant size, subject to our overall supervision<font color="#f52887"> , and may engage a subcontractor with specialized experience for certain maintenance services. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> In June 2016, we entered into a five-year maintenance contract for the Guizhou Phase 1 project, pursuant to which we are providing operations and maintenance services for which we receive RMB 0.05 per watt per year, with a minimum contract amount of RMB 3.0 million (approximately $451,000) per year </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Government Subsidies</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The solar investment and the development of solar industry in China depend on the continued government subsidies. Government policies have, and will continue to have, a significant impact on the solar industry in general. The government agencies set the rates that the utility pays the solar farm owner. In general, the rate set at the beginning of the contract period remains the same during the period, although there is a risk that the rate will be changed. The rate varies from province to province, and, for each province, the rate for projects completed in 2016 is lower than the rate in effect for 2015. The government has announced that there will be a yearly decrease in the payment. After 2016, all the solar projects in China are required to be involved with the local government to help alleviate poverty in the region. In addition, solar farm construction needs to be integrated with local agriculture, tourism or animal husbandry, which will increase the cost of our EPC services.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Government </strong><strong>Regulations</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Renewable Energy Law and Other Government Directive</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Renewable Energy Law of PRC, which originally became effective on January 1, 2006 and was amended on December 26, 2009, sets forth policies to encourage the development and on-grid application of the renewable energy, including solar energy. Renewable Energy in the Law referred to non-fossil energy of wind energy, solar energy, water energy, biomass energy, geothermal energy, ocean energy and other forms of renewable energy. The law also sets forth a national policy to encourage the installation and use of solar energy water heating systems, solar energy heating and cooling systems, photovoltaic systems and other systems that use solar energy. It also provides economic incentives, such as the establishment of national funding, the preferential loan provided by financial institutes with financial interest subsidy to certain renewable energy development and utilization projects, and tax preferential treatment for the development of certain renewable energy projects.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The PRC Energy Conservation Law, which was amended on October 28, 2007 and July 2, 2016, with the latest amendment came into effect on September 1, 2016, encourages the utilizations of energy-saving building materials like new wall materials and energy-saving equipment, and encourage the installation and application of renewable energy use systems such as solar energy. The law also encourages and supports and support the vigorous development of methane in rural areas, promote the utilization of renewable energy resources such as biomass energy, solar energy and wind power, develop small-scale hydropower generation based on the principles of scientific planning and orderly development, promote energy-saving-type rural houses and furnaces, encourage the utilization of non-cultivated lands for energy plants, and energetically develop energy forests such as firewood forests.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On September 4, 2006, the MOF and Ministry of Construction jointly promulgated the Interim Measures for Administration of Special Funds for Application of Renewable Energy in Building Construction, pursuant to which the MOF will arrange special funds to support the application of Building Integrated Photovoltaics systems, or BIPV applications, to enhance building energy efficiency, protect the environment and reduce consumption of fossil fuel energy. Under these measures, applications to provide hot water supply, refrigeration, heating and lighting are eligible for such special funds.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On September 26, 2009, the State Council of the PRC approved and circulated the Opinions of National Development and Reform Commission, known as the NDRC, and other Nine Governmental Authorities on Restraining the Production Capacity Surplus and Duplicate Construction in Certain Industries and Guiding the Industries for Healthy Development. These opinions concluded that polysilicon production capacity in China has exceeded demand and adopted a policy to impose more stringent requirements on the construction of new facilities for manufacturing polysilicon in China. These opinions also stated in general terms that the government should encourage polysilicon manufacturers to enhance cooperation and affiliation with downstream solar power product manufacturers to expand their product lines. However, these opinions do not provide any detailed measures for the implementation of this policy. As we are not a polysilicon manufacturer and do not expect to manufacture polysilicon in the future, we believe the issuance and circulation of these opinions will not have any material impact on our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On October 10, 2010, the State Council of the PRC promulgated a decision to accelerate the development of seven strategic new industries. Pursuant to this decision, the PRC government will promote the popularization and application of solar thermal technologies by increasing tax and financial policy support, encouraging investment and providing other forms of beneficial support.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In March 2011, the National People&rsquo;s Congress approved the Outline of the Twelfth Five-Year Plan for National Economic and Social Development of the PRC, which includes a national commitment to promoting the development of renewable energy and enhancing the competitiveness of the renewable energy industry. Accordingly, in January 2012, the Ministry of Industry and Information Technology and the Ministry of Science and Technology respectively promulgated the Twelfth Five-Year Special Plans Regarding the New Materials Industry and the High-tech Industrialization to support the development of the PRC solar power industry.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On March 8, 2011, the Ministry of Finance, known as MOF, and the Ministry of Housing and Urban-Rural Development jointly promulgated the Circular on Further Application of Renewable Energy in Building Construction to increase the utilization of renewable energy in buildings.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On March 27, 2011, the NDRC promulgated the revised Guideline Catalogue for Industrial Restructuring which categorizes the solar power industry as an encouraged item. On February 16, 2013, the NDRC promulgated the 2013 revised Guideline Catalogue for Industrial Restructuring to be effective on May 1, 2013, the solar power industry is still categorized as an encouraged item.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In March 2016, the National People&rsquo;s Congress approved the Outline of the Thirteenth Five-Year Plan for National Economic and Social Development of the PRC, which mentions a national commitment to continuing to support the development of PV generation industry.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Laws and Regulations Concerning the Electric Power Industry</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The regulatory framework of the PRC power industry consists primarily of the Electric Power Law of the PRC, which became effective on April 1, 1996 (lately revised effective on April 24, 2015) and the Electric Power Regulatory Ordinance, which became effective on May 1, 2005. One of the stated purposes of the Electric Power Law is to protect the legitimate interests of investors, operators and users and to ensure the safety of power operations. According to the Electric Power Law, the PRC government encourages PRC and foreign investment in the power industry. The Electric Power Regulatory Ordinance sets forth regulatory requirements for many aspects of the power industry, including, among others, the issuance of electric power business permits, the regulatory inspections of power generators and grid companies and the legal liabilities for violations of the regulatory requirements.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Electric Power Business Permit</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On January 5, 2006, the NDRC promulgated the Administrative Provisions on Renewable Energy Power Generation which set forth specific measures for setting the price of electricity generated from renewable energy sources, including solar, and for allocating the costs associated with renewable power generation. The Administrative Provisions on Renewable Energy Power Generation also delegate administrative and supervisory authority among government agencies at the national and provincial levels and assign partial responsibility to electricity grid companies and power generation companies for implementing the Renewable Energy Law.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the Provisions on the Administration of the Electric Power Business Permit, which were issued by the State Electricity Regulatory Commission, known as SERC, and became effective on December 1, 2005, unless otherwise provided by the SERC, no company or individual in the PRC may engage in any aspect of electric power business (including power generation, transmission, dispatch and sales) without first obtaining an electric power business permit from the SERC. These provisions also require that if an applicant seeks an electric power business permit to engage in power generation, it must also obtain in advance all relevant government approvals for the project including construction, generation capacity and environmental compliance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">However, there are exceptions pursuant to which certain of our photovoltaic power generation projects may not need obtain an electric power business permit from the SERC. On July 18, 2013, the NDRC issued the Interim Measures for the Administration of Distributed PV Power Generation, which waived the previous requirement to obtain an Electric Power Business Permit for distributed generation projects. On April 9, 2014, the NEA issued the Circular on Clarifying Issues concerning the Administration of Electric Power Business Permit, which waived requirement to obtain an Electric Power Business Permit for those solar power generation projects with installed capacity less than 6 MW and any distributed generation projects approved by or filed with the NDRC or its local branches, and required local NEA to simplify the Electric Power Business Permit application procedure for the solar power generation companies.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Grid Connection and Dispatchment</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">All electric power generated in China is distributed through power grids, except for electric power generated by facilities not connected to a grid. The distribution of power to each grid is administered by dispatch centers, which administers and dispatches planned output by power plants connected to the grid. The Regulations on the Administration of Electric Power Dispatch to Networks and Grids, promulgated by the State Council and the former Ministry of Electric Power Industry, effective on November 1, 1993, as amended on January 8, 2011, and its implementation measures, regulate the operation of dispatch centers.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Feed-in Tariff (FIT) Payments</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Renewable Energy Law of the PRC, which was amended on December 26, 2009 and became effective on April 1, 2010, sets forth policies to encourage the development and utilization of solar power and other renewable energy. The Renewable Energy Law authorizes the relevant pricing authorities to set favorable prices for electricity generated from solar and other renewable energy sources.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The NDRC further issued the Circular on Promoting the Healthy Development of PV Industry by Price Leverage on August 26, 2013, or the 2013 Circular. Under this circular, the feed-in tariff (&ldquo;FIT&rdquo;) (including VAT) for solar power projects approved or filed after September 1, 2013 or beginning operation after January 1, 2014 would be RMB0.90 per kWh, RMB0.95 per kWh or RMB1.00 per kWh, depending on the locations of the projects (excluding on-grid solar power projects located in Tibet).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In addition, the 2013 Circular sets forth special rules that entitle distributed generation projects (excluding the projects that have received an investment subsidy from the central budget) to a national subsidy of RMB0.42 per kWh. According to the Circular on Further Implementing Polices Relating to Distributed Generation issued by the NEA on September 2, 2014 and the Circular on Implementation Plans of PV Generation Construction for 2015 issued by the NEA on March 16, 2015, rooftop distributed generation projects that sell electricity directly to consumers or to both consumers and grid enterprises will receive a national subsidy of RMB0.42 per kWh plus the local desulphurized coal benchmark electricity price for the electricity sold to the State Grid or a negotiated electricity purchase price for electricity sold directly to consumers. Ground-mounted projects and rooftop distributed generation projects which sell all electricity to grid enterprises are entitled to the FIT of RMB0.90 per kWh, RMB0.95 per kWh or RMB1.00 per kWh, depending on where the project is located (excluding on-grid solar power projects located in Tibet).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 22, 2015, the NDRC issued the Circular on Improving the Policies on the On-grid Tariffs of Onshore Wind Power Generation and PV Generation, effective on January 1, 2016, which provides that ground mounted projects, as well as rooftop distributed generation projects that sell all electricity generated to the local grid companies, are entitled to FIT of RMB0.80 per kWh, RMB0.88 per kWh or RMB0.98 per kWh, depending on where the project is located (excluding on grid solar power projects located in Tibet), provided that these projects are filed after January 1, 2016 and fall within the regional scale index of the year, or these projects are filed prior to January 1, 2016 and fall within regional scale index of the year, but do not commence operations prior to June 30, 2016.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The difference (in amount) between the FIT for solar power projects and the desulphurized coal benchmark electricity price, or the subsidies paid to distributed generation projects, are funded by the renewable energy development funds. The above FIT and subsidy policies are valid for 20 years for each power generation project since its formal operation, in principle.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Subsidy Catalog</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On November 29, 2011, the MOF, NDRC and NEA jointly issued the Interim Measures for the Administration of Levy and Use of Renewable Energy Development Fund, which provides that development funds for renewable energy include designated funds arranged by the public budget of national finance, and renewable energy tariff surcharge collected from electricity consumers. Solar power projects can only receive central government subsidies after completing certain administrative and perfunctory procedures with the relevant authorities of finance, price and energy to be listed in the Subsidy Catalog issued by the MOF, NDRC and NEA. These subsidies represent the difference between the FIT for solar power projects and the desulphurized coal benchmark electricity price. In January 2016, the NEA announced that there would be a nation-wide inspection on all the solar power projects that are in operation and under construction, and the solar power projects that fall within the regional scale index of the year would be included in and managed via the Platform for Renewable Energy Power Generation Projects for the purpose of government subsidies application and payment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In order to be listed in the Subsidy Catalog, ground-mounted projects submit applications to the relevant provincial authorities; and in accordance with the Circular on Issues Concerning Implementing Electric Quantity-based Subsidy Policy for Distributed Generation Projects issued by the MOF on July 24, 2013, rooftop distributed generation projects submit applications to the grid enterprises in the area where the projects are located. After preliminary review of the applications, the provincial authorities will jointly report to the MOF, NDRC and NEA, and the MOF, NDRC and NEA will have final review on such applications to decide whether to list in the Subsidy Catalog.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Development Funds of Renewable Energy</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Renewable Energy Law provides financial incentives, including national funding for the development of renewable energy projects.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the Interim Measures for the Administration of Designated Funds for the Development of Renewable Energy issued by the MOF and effective on April 2, 2015, the MOF sets up designated funds to support the development and utilization of renewable energy in accordance with the national fiscal budget.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">According to the Implementing Measures for the Administration of Price of Renewable Energy and Cost Sharing Program and the Interim Measures for Adjustment to Additional On-grid Tariff for Renewable Energy issued by the NDRC, the gap between the FIT for solar power projects and the desulphurized coal benchmark electricity price is subsidized by collecting tariff surcharge from the electricity consumers within the service coverage of grid enterprises at or above provincial level.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Mandatory Purchase of Renewable Energy</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Renewable Energy Law imposes mandatory obligations on grid enterprises to purchase the full amount of on-grid electricity generated by approved renewable energy plants whose power generation projects meet the grid connection technical standards in the areas covered by the grid enterprises&rsquo; power grids. Grid enterprises must improve the power grid construction in order to better absorb electricity generated from renewable energy.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the Measures for the Supervision and the Administration of Purchase of Full Amount of Renewable Energy by Grid Companies issued by the SERC in July 2007, the SERC and its local branches supervise the purchase of the full amount of renewable energy by the grid enterprises. If the grid enterprises do not purchase the full volume of the electricity generated from the renewable energy due to the circumstances such as force majeure or any other circumstance endangering the safety and stability of the power grids, the grid enterprises must promptly notify the renewable energy power generation companies of the details in writing and also submit detailed facts to the competent local branches of the SERC.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Several Opinions on Promoting the Healthy Development of PV Industry also requires the grid enterprises to ensure PV power generation projects&rsquo; timely connection to the power grid and purchase the full amount of electricity generated by the PV power generation projects.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On March 20, 2015, the NDRC and NEA issued a directive opinion, which emphasizes that the competent provincial authorities must strengthen the implementation of the provisions with regard to the purchase of the full amount of electricity generated by renewable energy and avoid any curtailment of solar power projects. In addition, it also stated that electricity generated by clean energy is encouraged to be sold directly to the consumers in the regions where there is ample supply of clean energy, and the relevant parities must coordinate the trans-provincial supply of electricity and power transmission capability, in order to maximize the utilization of clean energy. Local governments also announced their intentions to efficiently implement the system regarding the purchase of the full amount of renewable energy, such as the Inner Mongolian Autonomous Government.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On March 24, 2016, the NDRC issued the Measures for the Administration of Guaranteed Purchase of Full Amount of Renewable Energy, to strengthen the administration of, and provide details for, the implementation of purchase of the full amount of renewable energy by the grid enterprises.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Environmental Protection</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The construction processes of the solar power projects may generate noise, waste water, gaseous emissions and other industrial wastes. Therefore, we are subject to a variety of government regulations related to the storage, use and disposal of hazardous materials and to the protection of the environment of the community. The major environmental regulations applicable our business activities in the PRC include the Environmental Protection Law of the PRC, the Law on the Prevention and Control of Noise Pollution, the Law on the Prevention and Control of Air Pollution, the Law on the Prevention and Control of Water Pollution, the Law on the Prevention and Control of Solid Waste Pollution, the Environmental Impact Evaluation of Law, and the Regulations on the Administration of Environmental Protection In Construction Projects. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Foreign Investment in Solar Power Business</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The principal regulation governing foreign ownership of solar power businesses in the PRC is the Foreign Investment Industrial Guidance Catalog. Under the current catalog, which was amended in 2015 and became effective on April 10, 2015, the solar power industry is classified as an &ldquo;encouraged foreign investment industry.&rdquo; Foreign-invested enterprises in the encouraged foreign investment industry may be entitled to certain preferential treatment, such as exemption from tariff on equipment imported for their operations, after obtaining approval from the PRC government authorities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Work Safety</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Work Safety Law of the PRC, which became effective on November 1, 2002 and was amended on August 31, 2014, is the principal law governing the supervision and administration of work safety for solar power projects. In accordance with the Measures for the Supervision and the Administration of Work Safety of Electricity Industry promulgated by the NDRC, which became effective on March 1, 2015, power plants are responsible for maintaining their safety operations in accordance with the relevant laws, regulations, rules and standards regarding the work safety. The NEA and its local branches supervise and administer the work safety of electricity industry at the national and local level. On April 20, 2015, the NEA and the State Administration of Work Safety jointly promulgated the Circular on Standardizing Safe Production Process for PV Generation Enterprises, which detailed the standards of production process for PV generation enterprises for work safety purpose.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Labor Laws and Social Insurance</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On June 29, 2007, the Standing Committee of the National People&rsquo;s Congress, or the SCNPC, promulgated the Labor Contract Law, as amended on December 28, 2012, which formalizes employees&rsquo; rights concerning employment contracts, overtime hours, layoffs and the role of trade unions and provides for specific standards and procedure for the termination of an employment contract. In addition, the Labor Contract Law requires the payment of a statutory severance pay upon the termination of an employment contract in most cases, including in cases of the expiration of a fixed-term employment contract. In addition, under the Regulations on Paid Annual Leave for Employees and its implementation rules, which became effective on January 1, 2008 and on September 18, 2008 respectively, employees are entitled to a paid vacation ranging from 5 to 15 days, depending on their length of service and to enjoy compensation of three times their regular salaries for each such vacation day in case such vacation days are deprived by employers, unless the employees waive such vacation days in writing. Although we are currently in compliance with the relevant legal requirements for terminating employment contracts with employees in our business operation, in the event that we decide to lay off a large number of employees or otherwise change our employment or labor practices, provisions of the Labor Contract Law may limit our ability to effect these changes in a manner that we believe to be cost-effective or desirable, which could adversely affect our business and results of operations.</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to time at locations where they operate their businesses or where they are located. According to the Social Insurance Law, an employer that fails to make social insurance contributions may be ordered to pay the required contributions within a stipulated deadline and be subject to a late fee of 0.05% of the amount overdue per day from the original due date by the relevant authority. If the employer still fails to rectify the failure to make social insurance contributions within such stipulated deadline, it may be subject to a fine ranging from one to three times the amount overdue. According to Regulations on Management of Housing Fund, an enterprise that fails to make housing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline; otherwise, an application may be made to a local court for compulsory enforcement.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Taxation</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>PRC Enterprise Income Tax</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The PRC enterprise income tax is calculated based on the taxable income determined under the PRC laws and accounting standards. On March 16, 2007, the National People&rsquo;s Congress of China enacted a new PRC Enterprise Income Tax Law, which became effective on January 1, 2008. On December 6, 2007, the State Council promulgated the Implementation Rules to the PRC Enterprise Income Tax Law, or the Implementation Rules, which also became effective on January 1, 2008. On December 26, 2007, the State Council issued the Notice on Implementation of Enterprise Income Tax Transition Preferential Policy under the PRC Enterprise Income Tax Law, or the Transition Preferential Policy Circular, which became effective simultaneously with the PRC Enterprise Income Tax Law. The PRC Enterprise Income Tax Law imposes a uniform enterprise income tax rate of 25% on all domestic enterprises, including foreign-invested enterprises unless they qualify for certain exceptions, and terminates most of the tax exemptions, reductions and preferential treatments available under previous tax laws and regulations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Moreover, under the PRC Enterprise Income Tax Law, enterprises organized under the laws of jurisdictions outside China with their &lsquo;&lsquo;de facto management bodies&rsquo;&rsquo; located within China may be considered PRC resident enterprises and therefore subject to PRC enterprise income tax at the rate of 25% on their worldwide income. The Implementation Rules define the term &lsquo;&lsquo;de facto management body&rsquo;&rsquo; as the management body that exercises full and substantial control and overall management over the business, productions, personnel, accounts and properties of an enterprise. In addition, the Circular Related to Relevant Issues on the Identification of a Chinese holding Company Incorporated Overseas as a Residential Enterprise under the Criterion of De Facto Management Bodies Recognizing issued by the State Administration of Taxation on April 22, 2009 provides that a foreign enterprise controlled by a PRC company or a PRC company group will be classified as a &lsquo;&lsquo;resident enterprise&rsquo;&rsquo; with its &lsquo;&lsquo;de facto management bodies&rsquo;&rsquo; located within China if the following requirements are satisfied: (i) the senior management and core management departments in charge of its daily operations function mainly in China; (ii) its financial and human resources decisions are subject to determination or approval by persons or bodies in China; (iii) its major assets, accounting books, company seals and minutes and files of its board and shareholders&rsquo; meetings are located or kept in China; and (iv) more than half of the enterprise&rsquo;s directors or senior management with voting rights reside in China. Although the circular only applies to offshore enterprises controlled by PRC enterprises and not those controlled by PRC individuals or foreigners, the determining criteria set forth in the circular may reflect the State Administration of Taxation&rsquo;s general position on how the &lsquo;&lsquo;de facto management body&rsquo;&rsquo; test should be applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>PRC VAT and Business Tax</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the Interim Regulation of the People&rsquo;s Republic of China on Value-Added Tax (the &lsquo;&lsquo;VAT Regulation&rsquo;&rsquo;), which was amended on November 10, 2008 and February 6, 2016, any entity or individual engaged in the sales of goods, provision of specified services and importation of goods into China is generally required to pay a VAT, at the rate of 17% of the gross sales proceeds received, less any deductible VAT already paid or borne by such entity.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the PRC Provisional Regulations on Business Tax, taxpayers falling under the category of service industry in China are required to pay a business tax at a normal tax rate of 5% of their revenues. In November 2011, the Ministry of Finance and the State Administration of Taxation promulgated the Pilot Plan for Imposition of Value-Added Tax to Replace Business Tax. Pursuant to this plan and relevant notices, from January 1, 2012, the value-added tax has been imposed to replace the business tax in the transport and shipping industry and some of the modern service industries in certain pilot regions, of which Shanghai is the first one. A value-added tax, or VAT, rate of 6% applies to revenue derived from the provision of some modern services.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 12, 2013, the Ministry of Finance and State Administration of Taxation issued Notice of the Ministry of Finance and the State Administration of Taxation on Including the Railway Transportation and Postal Industries in the Pilot Program of Replacing Business Tax with Value-Added Tax (2013 Amendment), along with Pilot Implemental Rules of Replacing Business Tax with VAT, which is effective on January 1, 2014 (&lsquo;&lsquo;Pilot Rules&rsquo;&rsquo;). Pursuant to Pilot Rule, the unit and individual who provide service in transportation, postal and other modern service industrial shall be tax payer of VAT. Taxpayers who provide taxable service shall pay VAT instead of the Business Tax. The tax rate for provision of modern service industrial (exclusive of leasing of tangible chattel) is 6%.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 16, 2013, the State Administration of Taxation issued the Announcement on Matters concerning the Determination of the Qualification of General VAT Taxpayers under the Pilot Program of Replacing Business Tax with VAT (the &lsquo;&lsquo;VAT Announcement&rsquo;&rsquo;), which became effective on January 1, 2014. According to the VAT Announcement, a pilot taxpayer who has been determined as a general VAT taxpayer before the implementation of the pilot program and concurrently provides taxable services is not required to apply for the qualification again. The competent tax authority shall prepare and deliver the Notice of Tax-Related Matters and inform the taxpayer. A pilot taxpayer with annual sales amount of taxable services above RMB5.0 million ($0.8 million) before the implementation of the pilot program of VAT in lieu of business tax shall go through the formalities for the qualification of a general VAT taxpayer with the competent tax authority under the State Administration of Taxation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Dividend Withholding Tax</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the PRC Enterprise Income Tax Law and the Implementation Rules, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise in China to its foreign investors are subject to a 10% withholding tax, unless any such foreign investor&rsquo;s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Foreign Currency Exchange</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Foreign currency exchange regulation in the PRC is primarily governed by the Regulations on the Administration of Foreign Exchange, and the Provisions on the Administration of Settlement, Sale and Payment of Foreign Exchange. Currently, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions. Conversion of Renminbi for most capital account items, such as direct investment, security investment and repatriation of investment, however, is still subject to registration with the SAFE. Foreign-invested enterprises may buy, sell and remit foreign currencies at financial institutions engaged in foreign currency settlement and sale after providing valid commercial documents and, in the case of most capital account item transactions, obtaining approval from the SAFE. Capital investments by foreign enterprises are also subject to limitations, which include approvals by the NDRC, the MOC, and registration with the SAFE.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In August 2008, the SAFE issued the Circular on the Relevant Operating Issues Concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-Invested Enterprises, or the SAFE Circular No. 142, regulating the conversion by a foreign invested enterprise of foreign currency-registered capital into RMB by restricting how the converted RMB may be used. Pursuant to the SAFE Circular No. 142, the RMB capital converted from foreign currency registered capital of a foreign-invested enterprise may only be used for purposes within the business scope approved by the applicable government authority and may not be used for equity investments within the PRC. In addition, the SAFE strengthened its oversight of the flow and use of the RMB capital converted from foreign currency registered capital of foreign-invested enterprises. The use of such RMB capital may not be changed without the SAFE&rsquo;s approval, and such RMB capital may not in any case be used to repay RMB-denominated loans if the proceeds of such loans have not been used. Violations may result in severe monetary or other penalties. Furthermore, on March 30, 2015, the SAFE issued the Circular on Reforming the Administration Approach Regarding the Foreign Exchange Capital Settlement of Foreign-invested Enterprises, or SAFE Circular NO.19, which became effective on June 1, 2015 and replaced Circular 142. SAFE Circular NO.19 provides that, the conversion from foreign currency registered capital of foreign-invested enterprises into the Renminbi capital may be at foreign-invested enterprises&rsquo; discretion, which means that the foreign currency registered capital of foreign-invested enterprises for which the rights and interests of monetary contribution has been confirmed by the local foreign exchange bureau (or the book-entry of monetary contribution has been registered) can be settled at the banks based on the actual operational needs of the enterprises. However, Circular 19 does not materially change the restrictions on the use of foreign currency registered capital of foreign-invested enterprises. For instance, it still prohibits foreign-invested enterprises from, among other things, spending Renminbi capital converted from its foreign currency registered capital on expenditures beyond its business scope.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In February 2012, the SAFE promulgated the Notice on the Administration of Foreign Exchange Matters for Domestic Individuals Participating in the Stock Incentive Plans of Overseas Listed Companies, or the Stock Option Notice. The Stock Option Notice replaced a prior rule issued by SAFE in 2007, the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in an Employee Stock Holding Plan or Stock Option Plan of an Overseas-Listed Company. Under the Stock Option Notice, domestic individuals who participate in equity incentive plans of an overseas listed company are required, through a PRC agent or PRC subsidiary of such listed company, to register with SAFE and complete certain other bank and reporting procedures. The Stock Option Notice simplifies the requirements and procedures for the registration of stock incentive plan participants, especially in respect of the required application documents and the absence of strict requirements on offshore and onshore custodian banks, as were stipulated in the previous rules.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Circular of Further Improving and Adjusting Foreign Exchange Administration Policies on Foreign Direct Investment issued by the SAFE on November 19, 2012 and amended on May 4, 2015 substantially amends and simplifies the foreign exchange procedure. Pursuant to this circular, the opening of various special purpose foreign exchange accounts (e.g. pre-establishment expenses account, foreign exchange capital account, guarantee account), the reinvestment of lawful incomes derived by foreign investors in the PRC (e.g. profit, proceeds of equity transfer, capital reduction, liquidation and early repatriation of investment), and purchase and remittance of foreign exchange as a result of capital reduction, liquidation, early repatriation or share transfer in a foreign-invested enterprise no longer require the SAFE&rsquo;s approval, and multiple capital accounts for the same entity may be opened in different provinces, which was not possible before. In addition, the SAFE promulgated the Circular on Printing and Distributing the Provisions on Foreign Exchange Administration over Domestic Direct Investment by Foreign Investors and the Supporting Documents in May 2013, which specifies that the administration by the SAFE or its local branches over direct investment by foreign investors in the PRC must be conducted by way of registration and banks shall process foreign exchange business relating to the direct investment in the PRC based on the registration information provided by the SAFE and its branches.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On February 13, 2015, the SAFE promulgated the Circular on Further Simplification and Improvement of Foreign Currency Administration Policies on Direct Investment, which became effective on June 1, 2015. This circular aims to further remove or simplify the approval requirements of SAFE upon the direct investment by foreign investors.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Dividend Distribution</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The principal regulations governing dividend distributions of wholly foreign-owned enterprises include:</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"></font><font color="#f52887"> </font>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Under these regulations, wholly foreign-owned enterprises in the PRC may pay dividends only out of their accumulated profits as determined in accordance with PRC accounting standards and regulations.&nbsp;&nbsp;In addition, these wholly foreign-owned enterprises are required to set aside at least 10% of their respective accumulated after-tax profits each year, if any, to fund certain reserve funds, until the aggregate amount of such fund reaches 50% of its registered capital.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Qualification of Construction Enterprise</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">According to the Construction Law of PRC issued by the Standing Committee of the National People&rsquo;s Congress on November 1, 1997, effective on March 1, 1998, and as amended on April 22, 2011, building construction enterprises, survey units, design units and project supervision units that engage in building operations shall have the following qualifications: (1) a registered capital conforming to state provisions; (2) specialized technical personnel with qualifications for legal operations that commensurate with the building operations being engaged in; (3) technical equipment for engaging in related building operations; and (4) other qualifications as may be prescribed by laws and administrative regulations. In addition, building construction enterprises, survey units, design units and project supervision units that engage in building operations shall be classified into different grades of quality in accordance with such quality qualifications as the registered capital, specialized technical personnel, technical equipment in their possession and achievements in construction projects completed, and may engage in building operations within the scope permitted by their respective quality grades on acquisition of the corresponding grade quality certificates upon passing qualification examination.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to the Administration Rules Regarding Qualification of Construction Enterprise issued by Ministry of Construction of PRC on June 26, 2007, and effective on September 1, 2007, a construction enterprise may conduct its construction business after the receipt of qualification which is classified into three categories, with each category having several grades.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Regulations on Overseas Listing</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In August 2006, six PRC regulatory agencies jointly adopted the Provisions on the Merger and Acquisition of Domestic Enterprises by Foreign Investors, or the M&amp;A Rule.&nbsp;&nbsp;As amended in 2009, this rule requires that, if an overseas company established or controlled by PRC domestic companies or citizens intends to acquire equity interests or assets of any other PRC domestic company affiliated with the PRC domestic companies or citizens, such acquisition must be submitted to the Ministry of Commerce, rather than local regulators, for approval.&nbsp;&nbsp;In addition, this regulation requires that an overseas company controlled directly or indirectly by PRC companies or citizens and holding equity interests of PRC domestic companies needs to obtain the approval of the CSRC prior to listing its securities on an overseas stock exchange.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">While the application of the M&amp;A Rule remains unclear, based on their understanding of current PRC laws, regulations, and additional procedures announced by the CSRC on September&nbsp;21, 2006, we believe it is not applicable since we are not an overseas company controlled by PRC domestic companies or <font color="#f52887"> natural persons </font>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">If, conversely, it is determined that CSRC approval is required for this offering, we may face sanctions by the CSRC or other PRC regulatory agencies for failure to seek CSRC approval for this offering.&nbsp;&nbsp;These sanctions may include fines and penalties on our operations in the PRC, delays or restrictions on the repatriation into the PRC of the proceeds from this offering, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiary, or other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our ordinary shares.&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Regulations on Stock Incentive Plans</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 25, 2006, the People&rsquo;s Bank of China promulgated the Administrative Measures of Foreign Exchange Matters for Individuals, setting forth the respective requirements for foreign exchange transactions by individuals (both PRC or non-PRC citizens) under either the current account or the capital account.</p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On February 15, 2012, SAFE issued the Notices on Issues concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of Overseas Publicly-Listed Company, or the Stock Incentive Plan Rules. The purpose of the Stock Incentive Plan Rules is to regulate foreign exchange administration of PRC domestic individuals who participate in employee stock holding plans and stock option plans of overseas listed companies. According to the Stock Incentive Plan Rules, if PRC &lsquo;&lsquo;domestic individuals&rsquo;&rsquo; (both PRC residents and non-PRC residents who reside in China for a continuous period of not less than one year, excluding the foreign diplomatic personnel and representatives of international organizations) participate in any stock incentive plan of an overseas listed company, a PRC domestic qualified agent, which could be the PRC subsidiary of such overseas listed company, shall, among others things, file, on behalf of such individual, an application with SAFE to conduct the SAFE registration with respect to such stock incentive plan, and obtain approval for an annual allowance with respect to the purchase of foreign exchange in connection with stock holding or stock option exercises. In addition, SAFE Circular 37 also provides certain requirements and procedures of foreign exchange registration in relation to equity incentive plan of SPV before listing. In this regard, if a non-listed SPV grants equity incentives to its directors, supervisors, senior officers and employees in its domestic subsidiaries, the relevant domestic individual residents may register with SAFE before exercising their rights.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The Stock Incentive Plan Rules and SAFE Circular 37 were promulgated only recently and many issues require further interpretation. If we or our PRC employees fail to comply with the Stock Incentive Plan Rules, we and our PRC employees may be subject to fines and other legal sanctions. In addition, the General Administration of Taxation has issued a few circulars concerning employee stock options. Under these circulars, our employees working in China who exercise stock options will be subject to PRC individual income tax. Our PRC subsidiary has obligations to file documents related to employee stock options with relevant tax authorities and withhold individual income taxes of those employees who exercise their stock options. If our employees fail to pay and we fail to withhold their income taxes, we may face sanctions imposed by tax authorities or other PRC government authorities</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>United States Operations</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Solar Energy Systems</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We design, install and sell or <font color="#f52887"> finance </font> high performance photovoltaic solar energy systems and, commencing in the third quarter of 2016, backup battery systems. A photovoltaic system generates electricity directly from sunlight via an electric process that occurs naturally in certain types of materials. A system consists of one or more photovoltaic modules and an inverter. Photovoltaic modules, which are manufactured in different sizes and shapes, generate direct current (DC) electricity. The electricity current is then fed through an inverter to produce the alternating current (AC) electricity that can be used to power residences and commercial businesses. The major components of our solar energy systems include solar panels that convert sunlight into electrical current, inverters that convert the DC electrical output from the panels to AC current compatible with the electric grid, racking that attaches the solar panels to the roof or ground and electrical hardware that connects the solar energy system to the electric grid. The backup battery system is an optional system that is used by some of our clients who want to store solar power and use it when <font color="#f52887"> there is a disruption in electricity power for any reason. </font>We currently install solar systems only in California. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We provide and install both grid-tied and off-grid systems. Grid-tied systems remain connected to the electric grid, so that the energy generated by the system is sent back to the grid during the day and power is drawn back at night. The electric grid thus serves as a &ldquo;storage device&rdquo; for photovoltaic-generated power. If consumers use more power than is generated by their solar energy system, they can purchase power from the regional utility. If consumers use less power than the system generates, they can sell the electricity back to their local utilities and receive a credit on their electric bills. In order to sell power back to the utility, the owners need to make an application to the utility and the utility gives the owners a standard agreement covering the purchase of the excess power. Grid-tied systems generally represent the most common, affordable and feasible option for urban and suburban residences.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Off-grid systems are not connected to the utility grid and therefore require battery backup. Off-grid solutions are less common and are mostly employed for residences that do not have the option of connecting to the utility grid. Almost all of our installations are grid-tied systems. </p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em><u>Our Sale and Installation Process</u></em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our system sale and installation process consists of five stages &#8212; feasibility, design, permitting, procurement and installation. In addition, when a customer requests additional services, we will enter into post-installation maintenance agreements with customers who own the systems.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We market to our customers using print ad, internet, radio and television adverting along with customer referrals. After the initial contact with a prospective customer, our construction and solar engineers visit the customer to conduct an on-site evaluation and assess the customer&rsquo;s electricity needs. The site assessment includes a shading analysis, roof inspection and review of any existing mechanical systems. Additionally, we review the customer&rsquo;s recent utility bills so that we can <font color="#f52887"> present a proposal designed </font> to meet the customer&rsquo;s energy requirements and answer the customer&rsquo;s questions. At this stage, the customer has not made any commitment to purchase a system from us. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">At the design stage, we analyze the information obtained during the feasibility stage to design a proposed solar energy solution, based on the customer&rsquo;s stated energy needs, financial means and the specifics of the building location. Upon completion of the design stage, we present the customer with a detailed written proposal outlining the components of the system, the proposed timeline of the system implementation, the estimated price and estimated energy savings as well as the expected return on the investment based on existing rate information. Approved customers who purchase <font color="#f52887"> our </font> systems sign a purchase agreement and tender to us a <font color="#f52887"> down payment equal to the lesser of 10% of the overall cost or $1,000, which can be refundable within three days. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The period of time between the initial customer contact at the feasibility stage and the signing of the contract upon the completion of the design stage (the negotiation period) may range from less than a month to more than a year, with six to nine months being the average negotiation period for larger commercial projects. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Before installing any solar or backup battery system, we must obtain required permits and approvals from the fire department and the department of building and safety and other applicable state and local agencies, as well as from the utility companies. We prepare a full permitting package and apply for these permits on behalf of the customer. We may also assist the customer with necessary paperwork to apply for and obtain the tax rebates and incentives. The permitting process typically takes four to eight weeks. Upon completion of this stage, we require customers paying cash for the system to pay 40% of the total purchase price.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Once the customer orders the system, we order products, parts and materials necessary to implement the project. Upon delivery of the materials to the customer&rsquo;s site, we require an additional 40% of the purchase price from the customers paying cash.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Finally, we assemble and install the system at the customer&rsquo;s site. Once installation is complete, we meet with the customer to conduct a final walk-through of the system and go over its components. Upon the final walk-through and sign-off by the fire marshal, the system becomes fully operational, and we require the remaining 20% of the purchase price from a customer who is paying cash.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em><u>Source of Supply</u></em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our largest supplier<font color="#f52887"> , Consolidated Electrical Distributor, Inc., </font> accounted for purchases of approximately $5.6 million, or 26.2% of our purchases for 2015. For 2014, this supplier accounted for purchases of approximately $6.1 million, or 21.1% of our purchases for all solar system related components such as panels, inverters, railings and mounts. No other supplier accounted for 10%or more of our purchases in either year. We also have access to all commercially available solar panels and associated equipment by using the large number of other suppliers. There are multiple alternative suppliers of solar panels and associated products, except that LiMax is our sole supplier of the FLEX backup battery system.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in"><font color="#f52887"> We have a supply agreement with Sunspark pursuant to which we agreed to purchase 150 MW of solar panels over a three-year period at a price to be negotiated which shall not exceed 110% of the three month rolling average market price per watt, for an estimated total commitment of approximately $84.0 million based on the most recent price paid on a purchase order from Sunspark. The agreement stipulates a 30 MW minimum amount per year, which will cost approximately $16.8 million based on the most recent price paid on a purchase order from Sunspark, with the first year being the year beginning June 1, 2016. </font></p>
<p style="MARGIN: 0px">&nbsp; &nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> On July 29, 2016, we entered into a five-year distribution agreement with Li-Max with an effective date of June 9, 2016. Pursuant to the agreement, we would be the exclusive distributor of Li-Max Energy Storage System worldwide except for Asia (including but not limited to the Republic of China and the Peoples&rsquo; Republic of China). The agreement contains an initial purchase commitment of 375 units, or approximately $1.1 million, of Li-Max Energy System within the first six months of the term of the agreement. In the event that we fail to purchase 60% of this commitment within such six month period, Li-Max can require us to purchase 60% of the target number within 60 days, failing which Li-Max has the right to terminate the agreement. Li-Max provides a ten-year warranty all the systems purchased from Li-Max for a period of ten years from the date of installation. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em><u>Warranty Obligations<font color="#f52887"> ; Production Guarantee </font></u></em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">All parts of the system provided by us are under manufacturers&rsquo; warranties, typically for 25 years for the panels and inverters. The manufacturer&rsquo;s warranty on the solar energy systems&rsquo; components, which is typically passed-through to the customers, ranges from one to ten years. We provide a limited installation services warranty that warrants the installation services related to the system owner&rsquo;s photovoltaic modules and inverters to be free from defects in the installation services under normal application, use and service conditions for a period of 10 years from the first date of the original installation services. Our agreement with our customers provides that we are not responsible for damage resulting from natural disasters, such as hurricanes, or other weather conditions. For leased systems we require the customer to maintain insurance covering these risks. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to <font color="#f52887"> 2015, </font> we entered into power purchase agreements that have a term of up to 20 years. We own and maintain the systems and sell the power generated by the systems to commercial customers pursuant to the power purchase agreement. Revenue from power purchase agreements is not material.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Beginning in March 2015, we <font color="#f52887"> included a production guarantee as part of our standard sales contract for residential users and we may also provide a production guarantee for commercial users as well. Under our residential contract, we agree that if the system does not generate an agreed amount of electricity guaranteed certain during a year, we will reimburse the customer for the shortfall in production. When the customer signs a contract, we include an estimate of the annual electricity to be produced from the system and agree that the system will generate 95% of the estimated amount. In the event that there is a shortfall, we reimburse the customer for the shortfall. The reimbursement amount will be determined based upon the average cost of electric power paid by the customer during the year of the shortfall. The production guarantee covers a specified time period set forth in the contract, which is </font> generally for a <font color="#f52887"> period </font> of up to ten years. We monitor the solar energy systems to be sure that these outputs are being achieved. <font color="#f52887"> Our obligations under the production guarantee are subject to the customer maintaining the systems taking all commercially reasonable steps to prevent overshadowing, shading or other interference with equipment. We give the production guarantee only to retail customers. We do not provide the production guarantee to systems that are leased through Sunrun </font>.&nbsp; <font color="#f52887"> Through September 30, 2016, our obligation under the production guarantees has not been significant. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><u><em>Leasing Agreements</em></u></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to 2014, we leased systems primarily to commercial customers through our subsidiaries and three entities in which we have a 30% interest. When we leased systems, the leases are operating leases and we own the systems, which we lease primarily to commercial customers. <font color="#f52887"> Although we </font> no longer lease new systems<font color="#f52887"> , we continue </font> to own the equipment subject to the existing leases.<font color="#f52887"> The leases do not include a production guarantee. At the end of the lease, the customer has an option to purchase the equipment at its then fair market value. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We have not leased systems for our account after 2014. Instead, we use a third party leasing company. In January 2015, we entered into a channel agreement with Sunrun pursuant to which Sunrun appointed us as its sales representative to solicit orders for Sunrun&rsquo;s products in portions of southern California. Pursuant to this agreement, we introduce potential leasing customers to Sunrun. Sunrun pays us for our services in connection with the projects. Upon a customer signing a Sunrun lease, we purchase the equipment from Sunrun or other vendor from a listing of preapproved equipment by Sunrun. We then perform the design and EPC work until the system receives the permit to operate. Sunrun pays us 80% of the purchase price of the system after the system receives the city sign off and the final 20% after receiving the permit to operate. Similar to the solar systems that we sell directly to residential and commercial customers, we recognize the revenue on the solar systems sold to Sunrun when the permit to operate is received. Sunrun owns the equipment, leases the equipment and services the lease. When we complete the installation of the system, Sunrun performs an inspection to ensure the system meets Sunrun&rsquo;s quality standards, and we are fix any issues as identified by Sunrun if they are caused by us. </font></p>
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our relationship with the residential customer is only during the sales and installation process, although we continue to have obligations under our warranty that relates to the EPC services that we perform. We have no warranty obligation with respect to the equipment, which is provided by the equipment manufacturer. Our agreement with Sunrun prohibits us from marketing, selling or constructing solar systems to be leased to customers other than through Sunrun. These restrictions do not affect our financing operations. The agreement, which commenced in January 2015, as a term of three years. Sunrun may terminate the agreement if we fail to meet specified minimum volume requirements. Sunrun also has the right to terminate certain incentives contained in the agreement at any time. As a result, Sunrun was the largest customer during the year ended December 31, 2015 and was the largest customer for our Untied States segment for the nine months ended September 30, 2016. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> <em><u>Power Purchase Agreements</u></em> </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Although we no longer offer power purchase agreements, prior to 2015 we entered into solar power purchase agreements with some commercial customers, and many of these agreements remain in effect. Pursuant to these agreement, we were responsible for the design, permitting, financing and installation of a solar energy system on a customer&rsquo;s property after which we sells the power generated to the customer at an agreed upon rate. To the extent that we do not generate sufficient power to meet our obligations, we may have to purchase power from the local utility, which will be a cost of revenues. We receive the income from the sales of electricity pursuant to these agreement as well as any tax credits and other incentives generated from the system, and we are responsible for the operation and maintenance of the system for the duration of the agreement. At the end of the term, a customer may be able to extend the agreement, have us remove the system or buy the solar energy system from us. We have generated nominal revenue from power purchase agreements.
<p style="MARGIN: 0px">
<p style="MARGIN: 0px; TEXT-INDENT: 45px"> </font>&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em><u>Seasonality</u></em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Since<font color="#f52887"> the </font> inception of our business in 2008, we have experienced different levels of seasonality for our residential sales, small commercial and large commercial projects.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our residential sales are particularly prone to seasonal fluctuations. It has been our experience that we generate a larger percentage of sales in March and April, when residential customers focus on possible tax advantages of solar energy, and in the summer months of July and August, when utility rates and bills typically increase. We believe that the increase in residential sales during March and April results from consumers&rsquo; increased awareness of the tax benefits of solar energy system systems. We believe that the higher volume of sales in the summer months results from typically higher electrical bills in the summer, when electricity use is highest, which we think heightens consumers&rsquo; awareness of the opportunity to reduce their energy costs in the future through the use of solar energy.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have historically experienced a slight increase for small commercial projects during the summer season. As in the case with residential sales, we attribute higher volume in small commercial sales to small business owners&rsquo; reaction to the generally higher electricity bills during the summer months.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have generally not experienced any significant seasonal fluctuations for our large commercial projects in the United States. We suspect that customers committing to large commercial purchases or leases of solar energy systems have generally made more studied decisions, which are therefore less sensitive to seasonal variations or immediate market conditions. The negotiation period for larger projects may range from a couple of months to a year or more. We therefore believe that the timing of the execution of large commercial deals depends largely on the progress of contract negotiations.</p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Financing Activities</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We generate financing revenue from the interest on loans that were made to our customers by SolarMax Financial to assist them in the purchase of our solar systems, and from installment sale contracts financing sales of solar systems, backup battery systems and LED systems. SolarMax Financial is licensed in California as a finance lender pursuant to the California Finance Lenders Law. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our ability to generate revenue from our financing activities is dependent upon our ability to generate installment sales contracts and our ability to provide either debt or equity financing for SolarMax Financial.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following table sets forth customer loan receivables as <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 and 2014 (in thousands):</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center"><strong><font color="#f52887"> September </font> 30, </strong></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>December 31,</strong>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center"><strong>2016</strong></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loan receivable, gross</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,949 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,906</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,274</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Less, allowance for loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (589 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(440</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(265</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,360 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,466</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36.009</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Less, current portion, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,469 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,655</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,304</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, long &#8211;term</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 31,891 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35,811</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30,705</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Because we believe that the high cost of buying and installing solar energy systems remains a major barrier for a typical residential customer, we have developed financing programs to enable customers who meet our credit standards to finance the purchase of our solar energy systems through SolarMax Financial. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Before providing financing to potential customers, we evaluate the suitability of customers for participation in our financing program based on our assessment of the customer&rsquo;s ability to make payments, a verification of the customers&rsquo; income, the likelihood that the customer will continue to make payments, the customer&rsquo;s credit history, the amount of the down payment and security we will receive and such other factors as we may deem appropriate. Since we have recently developed our financing business, and we do not have a history of successful financing operations, we anticipate that, on an ongoing basis we will refine our procedures and criteria to reflect our experience. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Based on our evaluation, we would either approve the application, conditionally approve the application, reject the application or defer a decision pending receipt of additional information.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">If we approve the application, we will notify the applicant and send the applicant a financing contract for signature.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">If we approve application conditionally (that is, on the terms different from the terms of requested by the applicant), we will send the applicant the proposal amortization table as well as an Adverse Action Notice and Risk Based Pricing Disclosure, as required by the Fair and Accurate Credit Transactions Act.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">If we reject the application, we will notify the applicant within ten days of the decision.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">If we defer a decision on the application because we need additional information, we will request additional information. The decision process will be completed if and when the additional information is received. If we do not receive the information within a reasonable time, we would treat the application to be abandoned by the applicant.</td></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Finally, we would prepare the contract and payment schedule based on the anticipated completion date. The first contract payment would usually be due on the first of the month following 30 days after the completion date.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">To manage our financial risks, we have developed a pricing matrix for setting the interest rate percentages based on the applicant&rsquo;s FICO score and the down payment percentage. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>LED Systems</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We provides LED products that will serve to help customers save money by saving electricity costs through the advanced technology of LED light bulbs. The energy-saving incandescent bulbs use about 25% less energy than traditional varieties, while the LED light bulbs use 75% less energy, last 40 times longer, and are considered safer to use. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have relationships with a number of LED system manufacturers, which provide us with access to a variety of high performance products and ultimately enables it to meet customers&rsquo; energy needs and budget. Our LED streetlight system has ETL mark under our company name and cannot be used by another company. ETL Mark is evidence that the product complies with North American safety standards, which is a requirement for contracts with municipal customers.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">There are several steps to completing an LED installation with a customer. The first step is to review the previous year&rsquo;s power bill and to look at the three-year financial statements. Then the next step is to gather statistics by conducting a lighting survey to effectively present an energy saving proposal to the potential customers. Although the clients will save in the long run, the up-front costs can be much higher. Therefore, we offer financing services similar to our solar system financing. Some commercial projects require us to engage a third party vendor to help install the LED lighting systems for our clients while other projects customers want to be responsible for the installation of the system. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> We are </font> working to establish contracts with various public and private entities. <font color="#f52887"> On June 14, 2016, we were awarded the LED Luminaires bid program from the California Department of Transportation in the amount of approximately $4.3 million. On July 15, 2016, we received the purchase order for the specified LED products pursuant to the award with a completion date on or before July 18, 2017. The products are required to comply with the design, performance, technical and quality requirements outlined in the purchase order. We are required to provide a warranty against loss of performance and defects in materials and workmanship for the luminaires for a period of 84 months after acceptance </font>. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Marketing</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 33.75pt" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have an in-house sales and marketing staff of 45 people, of which 40 market solar and battery backup projects and five market LED products and systems. While we utilize a variety of marketing and advertising tools, we believe that word of mouth is one of our most effective marketing strategy. We estimate that approximately 40% of our sales are generated through referrals by our customers.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We also participate in industry trade shows, use telemarketing, radio, television and Internet advertising as well as participating in local community events such as local festivals and door-to-door sales.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Personal meetings with prospective customers and site visits at the feasibility stage are also part of our advertising budget. In our experience, on average, we make three to four visits at the feasibility stage before we can generate a contract from the customer, although the customer may decide not to purchase a system or to purchase a system from a competitor. As we expand the breadth of our operations, we plan to hire additional professionals and general sales personnel to market our systems to a larger number of prospective customers. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our marketing effort includes our ability to offer financing in connection with purchases of our systems. We do not have a separate marketing staff for our financing activities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Competition</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Solar energy systems in general compete with both the local or regional providers of electricity as well as a number of independent companies that offer to provide electricity at prices that are lower than the regional utility. Our primary competition is with the local utilities that supply power to our potential customers. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Within the solar energy industry, we face intense and increasing competition from other solar energy system providers. The solar energy industry is highly fragmented, consisting of many small, privately-held companies with limited resources and operating histories, and we believe that no solar energy provider has a significant percentage of the California market. We also compete with major companies, such as SolarCity, as well as a large number of smaller companies. We have experienced price erosion as a result of increased competition<font color="#f52887"> which has affected our gross margin </font>. Since California has much sun and little rain, solar power companies seek to market in California rather than in states with less sun and more rain. We believe that the number of new solar energy installation companies that have entered the industry in California has increased significantly since 2008 when we commenced business, and the increased competition is reflected in lower margins as we may have to reduce our prices to generate business. We expect additional companies to enter the business in the future, considering that the entry barrier in this industry is relatively low and the government incentives currently remain high.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We believe that competition is primarily based on price and, if financing is required, the availability and terms of financing, and, to a lesser extent, the ability to schedule installation to meet the customer&rsquo;s schedule. Some of our competitors may offer financing with payments over a longer period and with either a lower down payment or no down payments, which may make them more attractive to potential customers. Although we intend to offer terms which we believe are competitive, if we maintain our proposed underwriting criteria, we may lose business to companies whose standards are less strict.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><strong><em>Government Regulation</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Although we are not a regulated utility, our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, regulations and ordinances. Additionally, our business is materially affected by federal and state programs and policies related to financial incentives for solar energy users and providers. The local utilities work with all solar companies to connect their systems to the grid. California Title 24 governs energy savings and efficiency standards for new and remodel construction for indoor and outdoor lighting requirements. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><strong><em>Construction Licenses and Permits</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a company performing general contractor and design work, we must ensure that our employees obtain and timely renew appropriate general contractor and other required licenses. In connection with each installation, we are required to obtain building permits and comply with local ordinances and building codes for each project. Our operations are also subject to generally applicable laws and regulations relating to discharge of materials into the environment and protection of the environment. We are also subject to federal and state occupational health and safety regulations. We may also be subject to federal or state wage requirements, at least in connection with any solar projects on government land or buildings or other public works projects.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><strong><em>Consumer Protection Laws</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In negotiating and entering into contracts with our residential customers, we must comply with state and federal consumer protection laws. In conducting our marketing campaigns, we must comply with the federal Telemarketing and Consumer Fraud and Abuse Prevention Act, and Telemarketing Sales Rule promulgated by the Federal Trade Commission, as well as state regulations governing telemarketing and door-to-door sales practices. In negotiating and entering into contracts with our residential customers, we must comply with a number of state regulations governing home solicitation sales, home improvement contracts and installment sales contracts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><strong><em>Consumer Financing Regulations</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">SolarMax Financial operates in California as a California finance lender pursuant to a license issued by the California Department of Corporations, which regulates and enforces laws relating to consumer finance companies. SolarMax Financial must comply with regulations pertaining to consumer financing. Such rules and regulations generally provide for licensing of consumer finance companies, limitations on the amount, impose duration and charges, including finance charge rates, for various categories of contracts, requirements as to the form and content of the loans and other documentation, and restrictions on collection practices and creditors&rsquo; rights. As a licensed finance lender, SolarMax Financial will be subject to periodic examination by state regulatory authorities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">80</td></tr>
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">SolarMax Financial will also be subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act, Fair Debt Collection Practices Act and the Fair Credit Reporting Act. These laws require SolarMax Financial to provide certain disclosures to prospective customers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against loan applicants on the basis of race, color, sex, age, or marital status, among other things. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, lenders are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. The Fair Credit Reporting Act requires SolarMax Financial to provide certain information to consumers whose applications were not approved or were conditionally approved on terms materially less favorable than the most favorable terms normally offered on the basis of a report obtained from a consumer-reporting agency.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In addition, SolarMax Financial will be subject to the provisions of the federal Gramm-Leach-Bliley financial reform legislation, which imposes additional privacy obligations on SolarMax Financial with respect to our applicants and our customers. SolarMax Financial has prepared appropriate policies in order to comply with these additional obligations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><strong><em>Government Subsidies and Incentives</em></strong></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The solar energy industry depends on the continued effectiveness of various government subsidies and tax incentive programs existing at the federal and state level to encourage the adoption of solar power. Government policies, in the form of both regulation and incentives, have accelerated the adoption of solar technologies by businesses and consumers. We and our customers benefit from these regulations in the form of federal tax incentives, state utility rebates and depreciation. Because of the high cost of installing solar energy systems, the existence of tax incentives as well as regulations requiring the utility to purchase excess power from solar energy systems connected to the grid are important incentives to the installation of a solar energy system.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><u>Federal Tax Incentive.</u> On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act that gives effect to the Residential Renewable Energy Tax Credit and the Business Energy Investment Tax Credit programs. The Residential Renewable Energy Tax Credit is described as a personal tax credit, whereas the Business Energy Investment Tax Credit is identified as a corporate tax credit. These programs may allow the owner of the system a federal income tax credit of up to 30% of the approved cost of the installation of a solar energy system which was initially set to expire in 2016. Congress passed in late December 2015, the tax credit is now available to homeowners in some form through 2021. The tax credit remains at 30% of the cost of the system for 2016 through 2019. Owners of new residential and commercial solar can deduct 26% of the cost of the system from their taxes in 2020. This percentage decreases to 22% in 2021 and 10% in 2022.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><u>State Incentives and Utility Rebates.</u> In addition to the federal income tax credit, utility companies in California and other states offer various incentives and rebate programs. Capital cost rebates provide funds to customers based on the cost of size of a customer&rsquo;s solar energy system. The value of the rebate is subtracted from the total purchase price, resulting in a net adjusted cost for the purpose of determining the value of the federal tax credit. Performance-based rebates provide funding to customers based on the energy produced by their systems. Under a feed-in tariff subsidy, the government sets prices that regulated utilities are required to pay for renewable electricity generated by end-users. Under that subsidy program, prices are set above market rates and may be differentiated based on system size or application. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><u>Depreciation.</u> Solar projects typically qualify for a five-year accelerated depreciation, which provides a major financial incentive for our commercial customers. The depreciation of these systems can be up to 50% of the purchase price in the first year and 12.5% in each of the succeeding four years. In December 2015, Congress passed a five-year extension of bonus depreciation, including a phase-out that is structured as follows: 2015-2017: 50% bonus depreciation; 2018: 40%; 2019: 30%, 2020 and beyond: 0%.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><u>Tariffs and Trade Policies.</u> The solar energy industry has recently experienced decreasing prices in solar panels, a principal component in any solar energy system. Most solar panels are imported and the price of the solar panels is impacted by trade policies, such as tariffs and quotas. The U.S. government has imposed tariffs on solar cells manufactured in China. Based on determinations by the U.S. government under the 2012 solar trade case, the anti-dumping and countervailing tariff rates range from approximately 33%-255%. Such anti-dumping and countervailing tariffs are subject to annual review and may be increased or decreased. These tariffs have increased the price of solar panels containing Chinese-manufactured solar cells. We do not purchase panels from China or Taiwan for our United States operations. The purchase price of solar panels containing solar cells manufactured in China reflects these tariff penalties. While solar panels containing solar cells manufactured outside of China are not subject to these tariffs, the prices of these solar panels are, and may continue to be, more expensive than panels produced using Chinese solar cells, before giving effect to the tariff penalties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">While the state and federal incentives benefit our industry by making solar energy systems more affordable and attractive to consumers, they also expose the industry to the risk of negative consequences should these incentives be discontinued or reduced. The market for solar energy products is, and will continue to be, heavily dependent on public policies that support growth of solar energy. There can be no assurances that such policies will continue. Decreases in the level of rebates, incentives or other governmental support for solar energy would materially and adversely affect the demand for solar energy products, including our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Intellectual Property</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We do not have any material intellectual property that is material to our business.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Litigation</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On June 24, 2015, Michael McCaffrey, our former chief financial officer, filed a lawsuit against us, our chief executive officer, our chief financial officer and our executive vice president, chief strategy officer and treasurer <font color="#f52887"> and others </font>in the Los Angeles Superior Court and various claims alleging violation of the California labor code, discrimination based on national origin, ancestry, ethnicity and race, retaliation, harassment based on national origin, ancestry, ethnicity and race, failure to take all reasonable steps to prevent discrimination and harassment, wrongful termination in violation of public policy, failure to pay wages and intentional infliction of emotional distress and included allegations of financial improprieties and fraudulent and illegal activities. We believe that all of the claims are without merit and we are currently vigorously defending these claims. We petitioned the court to transfer the matter to arbitration pursuant to our agreement with Mr. McCaffrey, and the court ordered the matter to be submitted to arbitration. The arbitration is scheduled to start on May 30, 2017. The ultimate outcome of the arbitration cannot be determined at the present time. Management does not expect the ultimate outcome will have a material adverse effect on our consolidated financial position or results of operations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In the ordinary course of its business, we are involved in various legal proceedings involving contractual relationships, product liability claims, and a variety of other matters. We do not believe there are any pending legal proceedings that will have a material impact on our financial position or results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Employees</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As of <font color="#f52887"> December 31, </font> 2016, we had <font color="#f52887"> 159 </font> employees in the United States, of which <font color="#f52887"> seven </font> are executive, <font color="#f52887"> 46 </font> are in sales and marketing, <font color="#f52887"> 74 </font> are in operations and installation and <font color="#f52887"> 32 </font> are in accounting and administrative, and we had <font color="#f52887"> 62 </font> employees in China, of which six are executive, ten are in sales and marketing, <font color="#f52887"> 34 </font> are in operations and engineering and <font color="#f52887"> twelve </font> are in accounting and administrative.&nbsp;None of our employees <font color="#f52887"> are </font>represented by a labor union. We consider our employee relations to be good. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Property</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We do not own any real property. The following table sets forth information as to the real property leased by us:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Location</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Square Feet</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Current Annual Rent</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="center">
<p style="MARGIN: 0px"><strong>Expiration date</strong></p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">3080 12th Street, Riverside, CA1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">101,556</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">978,672</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">12/31/2026</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">3230 Fallow Field Dr., Diamond Bar, CA2</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">9,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">229,272</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">10/31/2026</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">8825 Production Avenue, San Diego, CA</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,271</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,858</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">9/30/2019</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Floor 4, Building C1, Suyuan Rd., Jiangning Jiulonghu International Corporate Headquarters, Nanjing, China</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">12,439</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">110,661</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">11/25/2017</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Room 1602, Floor 16, No 1600 West Zhongshan Rd., Shanghai, China </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,403</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">74,032</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">9/15/2018</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Room 901, Floor 9, No 1600 West Zhongshan Rd., Shanghai, China </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,417</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">59,402</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">5/31/2018</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Room 405, Floor 4, Building 2, No.2 West Tianhe Street, Chengdu, China</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">851</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,877</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">3/10/2017</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Floor 3,Building 19,No 26 West Outer Ring Rd, Beijing, China</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">646</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,699</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">6/9/2016</p></td>
<td width="1%">&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak3f43cea2-7043-495c-bce8-77cacfa68e06" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">82</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="3%">1</td>
<td valign="top">The property is owned by SMX Properties, LLC. The owners and principal management group of SMX Properties is. David Hsu, our chief executive officer and director, Simon Yuan, our chief financial officer and director, and Ching Liu, our executive vice president, chief strategy officer and treasurer and director. The lease is subject to an annual 2.99% increase in the base rent and provides us with one option to renew the lease for a five-year term at the then current base rent with a 2.99% escalation in each year. The rent in the table reflects the rent effective January 1, 2017, pursuant to a lease dated September 1, 2016. Our present lease, which is dated November 28, 2012, provides for a base annual rent of $603,876.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top">2</td>
<td valign="top">The property is owned by Fallow Field, LLC, which is owned and managed by Mr. Hsu and Ms. Liu and one other stockholder who is not a 5% stockholder. The lease provides for annual increase of 2.99%. We have the right to renew the lease for one five-year period upon the expiration of the current term.</td></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="MANAGEMENT">MANAGEMENT</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Executive Officers and Directors </strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Set forth below is certain information with respect to our directors and executive officers: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Name</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Age</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" align="center">
<p style="MARGIN: 0px" align="left"><strong>Position</strong></p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">David Hsu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="10%" align="right">
<p style="MARGIN: 0px" align="center">53</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="45%">
<p style="MARGIN: 0px">Chief executive officer and director</p></td>
<td width="1%">&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Simon Yuan</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">62</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Chief financial officer and director</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Ching Liu</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">48</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Executive vice president, chief strategy officer, treasurer and director</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Richard (YuMin) Gu</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">53</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">President, China operations</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Dee Balch</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">53</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Senior vice president, chief accounting officer</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Wei Yuan Chen</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">57</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Director</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Jinxi Lin</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">57</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Director</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Edwin Chan, MD</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">62</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Director</p></td>
<td>&nbsp;</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">ChungJen Tsai</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px" align="center">67</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Director</p></td>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">David Hsu, together with Simon Yuan and Ching Liu, are our founders. Mr. Hsu has served as our chief executive officer and director since our organization in February 2008. Mr. Hsu has more than 20 years of experience in sales, international business development and management in the automotive and energy industries. Before starting SolarMax in 2008, Mr. Hsu served as a consultant to China Sunergy a leading photovoltaic panel manufacturer and solar energy company. Mr. Hsu&rsquo;s solar energy industry experience and his relationships with industry experts qualify him to serve as a director.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Simon Yuan, one of our founders, has served as our chief financial officer and director since February 2008. In 1989, Mr. Yuan founded Simon &amp; Edward, LLP, a PCAOB registered public accounting firm of which he has been managing partner since its founding. Prior to founding Simon &amp; Edward, Mr. Yuan was employed by Wells Fargo Bank as a senior internal auditor and by the State of California as a tax auditor. Mr. Yuan was also a supervising senior auditor with the international accounting firm of Moore Stephens. Mr. Yuan&rsquo;s professional experience encompasses more than 30 years of public accounting, with expertise in a broad range of business accounting and auditing, and international taxation, estate planning, business merger and acquisition, and general business consulting. Mr. Yuan is an active leader, officer and participant of many professional and charitable organizations. He is a director of the Sino-American Certified Public Accountants Association and also served as its president in 1998. Mr. Yuan received a masters of accountancy from Ohio State University.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakdecce341-d7fc-4cbb-9e9c-16e0ec4f325f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">83</td></tr>
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<tr>
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<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Ching Liu, one of our founders, has served as executive vice president and a director since February 2008. Ms. Liu has served as chief strategy officer and treasurer since October 2016. Ms. Liu has more than 20 years of experience in global private equity investments. In April 2000, she became vice president of wealth management at Merrill Lynch. From 1994 to 2000, she was the vice president and premier banking manager of the Asian segment at Wells Fargo Bank. Ms. Liu has experience in asset-based financing and asset management for both private investors and Asian-based institutions. Ms. Liu has extensive experience in U.S. Non-Resident Alien investment vehicles and has worked with high net worth Asian clients with complex <font color="#f52887"> non-resident alien </font> taxation issues.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Richard (YuMin) Gu has served as the president of our operations in China since its founding in 2015. Mr. Gu has more than 30 years of experience in sales, international business development, engineering and management in the electronic manufacturing and solar industries. Before joining us, Mr. Gu served as vice president of sales and marketing of China Sunergy (Nanjing) Co., Ltd, which was a global high-tech company providing high-performance solar cells and modules. Prior to China Sunergy, Mr. Gu worked for DuPont, managing its Asia-Pacific business department. Mr. Gu received a Bachelor&rsquo;s of Electrical Engineering degree from Xi&#096;an Jiaotong University.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Dee Balch has served as our senior vice president, chief accounting officer since September 2015. Ms. Balch is a Certified Public Accountant with more than 20 years of financial operations, accounting and SEC reporting experience. Ms. Balch was our consultant from January 2015 through September 2015. Ms. Balch served as vice president, accounting for Alexandria Real Estate Equities, Inc., a publicly-traded real estate investment trust from September 2013 to December 2014; as chief financial officer, treasurer, secretary and director for Strategic Realty Trust, Inc., a real estate investment trust from April 2012 to August 2013; as senior vice president, finance and accounting for Buchanan Street Partners, a privately-held real estate investment management company, from January 2010 to February 2012. Ms. Balch&rsquo;s career also includes 15 years with Ernst and Young LLP, an international public accounting firm, from 1996 to 2010 with her last position there as executive director overseeing the assurance practice. Ms. Balch earned a bachelor of science in systems analysis and a master of business administration from the University of Miami. Ms. Balch also received a bachelor of science in accounting from Florida Atlantic University. Ms. Balch is licensed as a certified public accountant in California and Florida, and is a member of the American Institute of Certified Public Accountants and the California Society of CPAs. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Wei Yuan Chen has served as a director since April 2010. Mr. Chen, who is semi-retired, was the chief designer and director for Xing Rong Project Management Company, Shanghai, China, a position he has held since from 1990 to 2010. In 2002, Mr. Chen received the &ldquo;Design and Build&rdquo; of the year award for designing the headquarters of Applied Material, Shanghai, China. Mr. Chen earned his degree from the College of Urban Planning and Public Affairs, Illinois, in 2003. Mr. Chen brings to us his project management knowledge and 20 years of experience of implementation and integration of renewable sources into his architectural designs.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Jinxi Lin has been a director since 2014. Mr. Lin serves as the chairman and chief executive officer of Changzhou Almaden, a publicly traded solar panel manufacturer in Asia and the Middle East and our of our major stockholders. Mr. Lin founded Almaden in 2006 and has served as its chairman and chief executive officer since its formation. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Edwin Chan MD has served as a director since January 2011. Dr. Chan earned his MD degree from the Taipei Medical University, Taiwan, and did his residency in a transitional program at The University of Texas, Medical School of Houston, and his residency in Brazos Valley Family Practice at the Texas A&amp;M Medical School. During his 35 years in medical practice, Dr. Chan has served as chief of medical staff, division of neurology, department of internal medicine at Min-Shen General Hospital in Taiwan and as a visiting research fellow at UCLA neurophysiology laboratory. Dr. Chan has been in private practice since 2001. Dr. Chan brings to us his experience in the medical field and his dedication to renewable energy resources in pursuit of clean and sustainable living.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">ChungJen Tsai has served as a director since January 2011. Mr. Tsai is the president of Max Group Corporation, a position he has held since 1985. Mr. Tsai graduated from National Tsing Hua University Nuclear Engineering Department, specializing in Nuclear Power Plants and related energy fields. While in the United States, Mr. Tsai founded, Max Group Corporation, an information technology distribution company. As the president of Max Group Corporation, he supervises in sales channel, warehousing, logistics, and inventory control. Mr. Tsai brings to us his broad experience in the field of energy and information technology.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak95d0fe52-4a55-4734-90b0-56d54b631dc4" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">84</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Information about the Board of Directors</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our board of directors oversees our business and affairs and monitors the performance of management. In accordance with corporate governance principles, the board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with our chief executive officer, other key executives and by reading the reports and other materials that we send them and by participating in board and committee meetings. Our directors hold office for a term of one year and until their successors have been elected and qualified unless the director resigns or by reasons of death or other cause is unable to serve in the capacity of director.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Director Independence</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We believe that three of our directors, Mr. Chen, Dr. Chan and Mr. Tsai, are independent directors using the NASDAQ definition of independence. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Committees of the Board of Directors</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our board of directors intends to create three committees - the audit committee, the compensation committee and the nominating and corporate governance committee.&nbsp; Each of the committees will have a charter which meets the NASDAQ requirements and will be composed of three independent directors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Audit Committee</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our board of directors will establish an audit committee upon the completion of this offering. The audit committee will be comprised of Mr. Tsai, Dr. Chan and Mr. Chen. Our audit committee consists entirely of directors who will qualify as independent directors. At least one member of our audit committee will be an &ldquo;audit committee financial expert.&rdquo; We will include on the audit committee at least one member who will satisfy the definition of &ldquo;audit committee financial expert.&rdquo; An &ldquo;audit committee financial expert&rdquo; is defined as a person who, based on his or her experience, possesses the attributes outlined in such rules. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The audit committee will oversee, review, act on and report on various auditing and accounting matters to our board of directors, including: the selection of our independent accountants, the scope of our annual audits, fees to be paid to the independent accountants, the performance of our independent accountants and our accounting practices. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Compensation Committee</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The compensation committee will oversee the compensation of our chief executive officer and our other executive officers and review our overall compensation policies for employees generally. If so authorized by the board of directors, the committee may also serve as the granting and administrative committee under any option or other equity-based compensation plans which we may adopt. The compensation committee does not delegate its authority to fix compensation; however, as to officers who report to the chief executive officer, the compensation committee will consult with the chief executive officer, who may make recommendations to the compensation committee. Any recommendations by the chief executive officer are accompanied by an analysis of the basis for the recommendations. The committee will also discuss compensation policies for employees who are not officers with the chief executive officer and other responsible officers. The compensation committee has the responsibilities and authority relating to the retention, compensation, oversight and funding of compensation consultants, legal counsel and other compensation advisers, as well as the requirement to consider six independence factors before selecting, or receiving advice from, such advisers.&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Nominating and Corporate Governance Committee</em></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The nominating and corporate governance committee will identify, evaluate and recommend qualified nominees to serve on our board of directors; develop and oversee our internal corporate governance processes; and maintain a management succession plan. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Compensation Committee Interlocks and Insider Participation</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">None of our executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on our board or compensation committee. No member of our board is an executive officer of a company in which one of our executive officers serves as a member of the board of directors or compensation committee of that company.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak9ea5cf06-2c4f-47b9-aec1-28165c798fcb" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">85</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Code of Business Conduct and Ethics</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to the completion of this offering, our board of directors will adopt a code of business conduct and ethics applicable to our employees, directors and officers, in accordance with applicable U.S. federal securities laws and the NASDAQ regulations. Any waiver of this code may be made only by our board of directors and will be promptly disclosed as required by applicable federal securities laws and the NASDAQ corporate governance rules.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="EXECUTIVE COMPENSATION">EXECUTIVE COMPENSATION</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following table sets forth information regarding the compensation awarded to, earned by, or paid to our chief executive officer and the two most highly paid executive officers other than the chief executive officer during the years ended December&nbsp;31, <font color="#f52887"> 2016 </font> and <font color="#f52887"> 2015. </font> These three officers are referred to as our &ldquo;Named Executive Officers.&rdquo;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>Summary Compensation Table</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Name&nbsp;and&nbsp;<br>principal&nbsp;position</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" align="center">
<p style="MARGIN: 0px"><strong>Year</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Salary&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Bonus&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Stock&nbsp;<br>Awards&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Option&nbsp;<br>Awards&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Non-Equity&nbsp;<br>Incentive&nbsp;Plan</strong></p>
<p style="MARGIN: 0px"><strong><font color="#f52887"> Compensation </font>&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong><font color="#f52887"> Non-qualified </font>&nbsp;<br>Deferred&nbsp;<br><font color="#f52887"> Compensation </font>&nbsp;<br>Earnings&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>All&nbsp;Other&nbsp;<br><font color="#f52887"> Compensation </font>&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="7%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Total&nbsp;<br>($)</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">David Hsu, chief executive officer</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2016 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="7%" align="right">240,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 58,806 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,350,000<sup>1</sup> </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,648,806 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2015 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 240,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 55,636 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 295,636 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Ching Liu, executive vice president</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2016 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">210,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 50,406 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,000,000<sup>2</sup> </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 1,260,406 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2015 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 210,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 47,688 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 257,688 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Simon Yuan, chief financial officer</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2016 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">120,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 600,000<sup>3</sup> </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="7%" align="right">--</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 720,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2015 </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 120,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="7%" align="right"><font color="#f52887"> 120,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">________&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="3%"><sup>1 </sup></td>
<td valign="top">Mr. Hsu received a restricted stock grant of 1,350,000 shares of common stock which were issued in 2016 pursuant to the 2016 long-term incentive plan and were issued subject to the forfeiture provisions described under &ldquo;Management &#8211; Employee Benefit Plans.&rdquo; We accrued compensation of $1,350,000 for 2016 relating to this grant. The value of the shares, based on the price paid in the October/November private placement, is $6,750,000.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top"><sup>2 </sup></td>
<td valign="top">Ms. Liu received a restricted stock grant of 1,000,000 shares of common stock which were issued in 2016 pursuant to the 2016 long-term incentive plan and were issued subject to the forfeiture provisions described under &ldquo;Management &#8211; Employee Benefit Plans.&rdquo; We accrued compensation of $1,000,000 for 2016 relating to this grant. The value of the shares, based on the price paid in the October/November private placement, is $5,000,000.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top"><sup>3 </sup></td>
<td valign="top">Mr. Yuan received a restricted stock grant of 600,000 shares of common stock which were issued in 2016 pursuant to the 2016 long-term incentive plan and were issued subject to the forfeiture provisions described under &ldquo;Management &#8211; Employee Benefit Plans.&rdquo; We accrued compensation of $600,000 for 2016 relating to this grant. The value of the shares, based on the price paid in the October/November private placement, is $3,000,000.</td></tr></tr></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak318011ce-5f8e-4403-9708-64548acd4a7a" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">86</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp; </font></p>
<p style="MARGIN: 0px"><strong>Employment Agreements</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On October 7, 2016, we entered into an employment agreement with David Hsu pursuant to which we agreed to employ Mr. Hsu as our chief executive officer for a five-year term commencing January 1, <font color="#f52887"> 2017, </font>and continuing on a year-to-year basis unless terminated by us or Mr. Hsu on not less than 90 days&rsquo; notice prior to the expiration of the initial term or any one-year extension. We agreed to include Mr. Hsu as a nominee of the board of directors for election as a director during the term of his agreement, and, upon his election as a director, Mr. Hsu is to serve as chairman of the board. The agreement provides for an annual salary, commencing January 1, 2017 of $600,000, with an increase of not less than 3% on January 1st of each year, commencing January 1, 2018. Mr. Hsu is entitled to an annual bonus, commencing with the year ending December 31, 2017, equal to a percentage of consolidated revenues for the year based on the following table:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td style="BORDER-BOTTOM: black 1px solid" valign="top">
<p style="MARGIN: 0px"><strong>Revenue </strong></p></td>
<td width="2%"></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="top">
<p style="MARGIN: 0px"><strong>Bonus as a Percentage of Revenues</strong></p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">Less than $30 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">0%</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">More than $30 million but less than $50 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">$250,000</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">More than $50 million but less than $100 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">0.55%</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">More than $100 million but less than $200 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">0.60%</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">More than $200 million but less than $300 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">0.75%</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px">More than $300 million</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">1.00%</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The bonus payable for any calendar year shall be paid 70% in restricted stock and 30% in cash, and shall be paid not later than the earlier of (i) 30 days following the issuance of our audited financial statements for the calendar year in which the bonus is earned or (ii) the last business day of December of such next following calendar year. Our audited financial statement shall be deemed to be issued on the date we file our annual report on Form 10-K; provided, that if we are not a reporting company, our financial statements are deemed issued on the date of the auditors&rsquo; report. The equity component of the bonus shall be based on the average closing market price of the common stock on the principal exchange or market on which our common stock is traded for the period beginning on the first day of the quarter in which the bonus is payable and ending on the third trading day prior to the date payment is made; except that, if our common stock is not publicly traded, the common stock shall be valued at the most recent price at which the common stock was sold in a private placement to non-affiliated investors. The restricted stock will vest immediately on issuance. Mr. Hsu is eligible for restricted stock grants or stock options, which shall not exceed 1.5% of our outstanding common stock prior to the grant. The agreement also provides Mr. Hsu with $2 million of life insurance, medical and dental insurance and long-term disability insurance providing monthly benefits of not less than $25,000. In the event of Mr. Hsu&rsquo;s termination in the event of a disability and in the event of his death, we will pay Mr. Hsu or his beneficiary severance payments or death benefits equal to his highest compensation, which is his salary plus bonus, during the three calendar years prior to the year in which the termination of employment for a disability or death occurs, multiplied by the number of full years Mr. Hsu has been employed by us. Mr. Hsu&rsquo;s employment commenced in February 2008. <font color="#f52887"> These termination </font> payments shall be made in annual installments each equal to one year&rsquo;s total compensation. In the event of a termination not for cause or in the event of a termination by Mr. Hsu for good cause or in the event of a termination of employment within 18 months of a change of control, we shall pay Mr. Hsu, a lump sum termination payment equal to two times his highest annual compensation for the three years preceding the year in which the termination of employment occurs multiplied by the number of full years that Mr. Hsu was employed by us.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On October 7, 2016, we entered into an employment agreement with Ching Liu pursuant to which we agreed to employ Ms. Liu as our executive vice president, chief strategy officer and treasurer for a five-year term commencing January 1, 2017, and continuing on a year-to-year basis unless terminated by us or Ms. Liu on not less than 90 days&rsquo; notice prior to the expiration of the initial term or any one-year extension. We agreed to include Ms. Liu as a nominee of the board of directors for election as a director during the term of her agreement, and, upon her election, she is to serve as vice chair of the board. The agreement provides for an annual salary of $560,000, with a 3% increase on January 1st of each year, commencing January 1, 2018. Ms. Liu in entitled to an annual bonus, commencing with the year ended December 31, 2017, equal to a percentage of consolidated revenues for the year based on the following table:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak54056ecc-cffa-425a-8ab3-ca64538913b2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">87</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Revenue </strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Bonus as a Percentage of Revenues</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less than $30 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">More than $30 million but less than $50 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">200,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">More than $50 million but less than $100 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.45</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">More than $100 million but less than $200 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.50</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">More than $200 million but less than $300 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.65</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">More than $300 million</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.90</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The bonus payable for any calendar year shall be paid 70% in restricted stock and 30% in cash, and shall be paid not later than the earlier of (i) 30 days following the issuance of our audited financial statements for the calendar year in which the bonus is earned or (ii) the last business day of December of such next following calendar year. The equity component of the bonus shall be based on the average closing market price of the common stock on the principal exchange or market on which our common stock is traded for the period beginning on the first day of the quarter in which the bonus is payable and ending on the third trading day prior to the date payment is made; except that, if our common stock is not publicly traded, the common stock shall be valued at the most recent price at which the common stock was sold in a private placement to non-affiliated investors. The restricted stock will vest immediately on issuance. Ms. Liu is eligible for restricted stock grants or stock options, which shall not exceed 1.0% of the outstanding common stock prior to the grant. The agreement also provides Ms. Liu with $2 million of life insurance, medical and dental insurance and long-term disability insurance providing monthly benefits of not less than $25,000. In the event of Ms. Liu&rsquo;s termination in the event of a disability and in the event of her death, we will pay Ms. Liu or her beneficiary severance payments or death benefits equal to her highest compensation during the three years prior to the year in which the termination of employment for a disability or death occurs, multiplied by the number of full years Ms. Liu has been employed by us. Ms. Liu&rsquo;s employment commenced in February 2008. The <font color="#f52887"> termination </font> payments shall be made in annual installments each equal to one year&rsquo;s compensation. In the event of a termination not for cause or in the event of a termination by Ms. Liu for good cause or in the event of a termination within 18 months of a change of control, we shall pay Ms. Liu, a lump sum termination payment equal to two times her highest annual compensation for the three years preceding the year in which the termination of employment occurs multiplied by the number of full years that Ms. Liu was employed by us.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On June 22, 2016, <font color="#f52887"> SolarMax Shanghai </font> entered into a two-year employment agreement with Richard Gu<font color="#f52887"> , the president of our China operations, </font> pursuant to which <font color="#f52887"> we pay him </font> an annual salary of RMB 360,000 (approximately $53,000). <font color="#f52887"> This contract supersedes an employment agreement SolarMax Shanghai entered into with Mr. Gu in February 2015. In addition to his compensation pursuant to his employment agreement with SolarMax Shanghai, we pay Mr. Gu </font> $85,000 from our United States segment.<font color="#f52887"> Mr. Gu&rsquo;s total compensation for 2016 was approximately $138,000. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Employee Benefit Plans</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October 2016, our board of directors <font color="#f52887"> adopted, and in November 2016, our stockholders </font>approved<font color="#f52887"> , </font> the 2016 long-term incentive plan, pursuant to which a maximum of 6,500,000 shares of common stock may be issued pursuant to restricted stock grants, incentive stock options, non-qualified stock options and other equity-based incentives may be granted. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October 2016, the board of directors granted 3,816,000 shares, of which 3,050,000 shares were granted to officers and directors. The following table set forth information relating to the restricted stock grants.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Name</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>No. of </strong><strong>Restricted</strong></p>
<p style="MARGIN: 0px"><strong>Shares</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">David Hsu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="15%" align="right">1,350,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Ching Liu</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,000,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Simon Yuan</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">600,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">ChungJen Tsai</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">100,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" align="right">766,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" align="right">3,816,000</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">
<table id="pagebreak860f6216-cc49-45eb-9455-036f63252cb6" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">88</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The grantees of the restricted stock grants have all rights of ownership with respect to the shares, including the right to vote the shares and to receive dividends and distributions with respect to the shares until and unless a forfeiture event shall occur; provided, however, that prior to a forfeiture termination event, (i) the grantees shall have no rights to sell, encumber or otherwise transfer the shares, and (ii) any shares of any class or series of capital stock which are issued to the grantee as a holder of the shares as a result of a stock dividend, stock split, stock distribution, reverse split, recapitalization, or similar event, shall be subject to the same forfeiture provisions as the shares. A forfeiture termination event shall mean such date as is six months following a public stock event<font color="#f52887"> , which is the vesting date with respect to the shares </font>. The definition of a public stock event includes the effectiveness of the registration statement of which this prospectus is a part. The shares are forfeited and are to be conveyed to us for no consideration if a public stock event has not occurred by December 31, 2017, although the board of directors has the right to extend that date.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October 2016, the board of directors also granted non-qualified stock options to purchase 1,950,000 shares and incentive stock options to purchase 325,000 shares <font color="#f52887"> at an exercise price of $5.00 per share </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Outstanding Equity Awards at December 31, <font color="#f52887"> 2016 </font></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">None of the Named Executive Officers held any outstanding equity awards as December 31, <font color="#f52887"> 2016, except to the extent that the stock grants under the 2016 long-term incentive plan may be deemed outstanding awards because of the forfeiture provisions. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Director Compensation</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> The following table sets forth information as to the compensation paid to our directors, other than those named in the Summary Compensation Table: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Name</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Cash Compensation</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Stock Awards </strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>Total</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Wei Yuan Chen </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Dr. Edwin Chan </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Jinxi Lin </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Chunglen Tsai </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> -- </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 100,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> * </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 100,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">_________</p>
<p style="MARGIN: 0px"><font color="#f52887"> * Mr. Tsai&rsquo;s received a stock award of 100,000 shares of common stock pursuant to the 2016 long-term incentive plan, which were issued subject to the forfeiture provisions described under &ldquo;Management &#8211; Employee Benefit Plans.&rdquo; The shares are valued at $500,000, based on the price paid in the October/November private placement, and we accrued compensation of $100,000 for 2016 relating to this grant. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS">CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">David Hsu, our chief executive officer and a director, Simon Yuan, our chief financial officer and a director, and Ching Liu, our executive vice president, chief strategy officer and treasurer and a director, are also the principal management group of SMX Properties, LLC and Inland Empire Renewable Energy Regional Center and its subsidiaries: Clean Energy Center, Clean Energy Funding, LP, and Clean Energy Funding II, LP. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On January 3, 2012, Clean Energy Center entered into a loan agreement with us pursuant to which Clean Energy Center agreed to make a loan to us in an amount not to exceed $45,000,000. The proceeds of the loan are advanced in increments of $2,500,000 and Clean Energy Center may determine in its sole and absolute discretion a lesser amount. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Each advanced principal amount is due and payable 48 months from the advance date or the U.S. Immigration Form I-829 approval date if longer. The principal loan balance was $45,000,000 at December 31, 2015 and <font color="#f52887"> September </font> 30, 2016. The Form I-829 relates to a loan to us made pursuant to United States Citizen and Immigration EB-5 program which is designed to stimulate the U.S. economy through job creation and capital investment by foreign investors. The Form I-829 petition is filed by the immigrant investor and is the final step of the EB-5 visa process for immigrant investors to become lawful permanent residents of the United States. The I-829 petition includes evidence that the immigrant investor successfully met all United States Citizenship and Immigration Services requirements of the EB-5 program. Once the I-829 is approved, the investor&rsquo;s conditional residency restriction is removed so that the investors, their spouse and their unmarried children under the age of 21 can live in the United States permanently. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakcf5acda6-f776-4244-8f1d-daf308e94430" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">89</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On August 26, 2014, Clean Energy Funding II entered into a loan agreement with us for up to $13,000,000. The proceeds of the loan would be used by our LED subsidiary for its operations. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Principal is due and payable in 48 months or the U.S. Immigration Form I-829 approval date if longer. The principal loan balance was $1,000,000 at December 31, 2015 and $<font color="#f52887"> 4,000,000 </font> at <font color="#f52887"> September </font> 30, 2016. In August and September 2016, an aggregate of additional $3,000,000 was drawn under the loan to provide for funds needed on a significant LED contract that we won in a competitive bid.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On December 29, 2015, ZHPV entered into an unsecured loan agreement with Changzhou Holysolar Technology, Co., Ltd., one of our equity-method investees<font color="#f52887"> in which we have a 22.5% equity interest </font>. Under the agreement, ZHPV can borrow up to $308,086 (RMB 2 million) from Changzhou SolarMax Technology, an entity in which we have a 30% equity interest, with a 6% fixed annual interest rate for three months. The outstanding balance on the loan was RMB 1.5 million (approximately $231,064) as of December 31, 2015. An additional RMB 500,000 (approximately $77,021) was drawn down on January 10, 2016. The entire loan was repaid on March 10, 2016 in the total amount of RMB 2,022,917 (approximately $311,616) including principal and interest.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We provide asset management and accounting services to three joint ventures (Alliance Capital 2, LLC, Alliance Capital 3, LLC and Alliance Capital 4, LLC) in which we have a 30% equity interest pursuant to management contract and business services agreement dated January 20, 2011 between us and one of these entities, pursuant to which we are to receive 3% of revenues collected from Solar Renewable Energy Certificate (SREC) and payments from public utilities received by the three entities. The 70% interest in these entities is held by a Chinese public company that is not affiliated with us. The agreement covers services rendered for all three entities, although there is no written agreement executed by two of these entities. Total fees earned by us from these three included in consolidated revenues was $2,976 for the year ended December 31, 2015 and $<font color="#f52887"> 21,442 </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">From time to time, we made advances for expenses related to the three Alliance entities. We had a receivable from Alliance 1 relating to insurance premiums advanced by us of $34,461 at December 31, 2015 and $<font color="#f52887"> 39,709 </font> at <font color="#f52887"> September </font> 30, 2016.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On November 28, 2012, we entered into a lease agreement with SMXP for our corporate headquarters in Riverside, California. The lease term has a term of four years commencing on January 1, 2013, with an annual base rent of $603,876. In September 2016, we entered into a new lease for our corporate headquarters effective January 1, 2017 for a 10-year term with one five-year renewal option at then current rental plus an annual 2.99% increase. The annual base rent under the new lease is $978,672 and is subject to a 2.99% annual escalation. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We had a receivable from SMX Properties in the amount of $36,901 at December 31, 2015 and $<font color="#f52887"> 39,709 </font> at <font color="#f52887"> September </font> 30, 2016 which related to advances by us for utilities and certain operating expenses on behalf of another tenant of SMX Property. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">On January 2, 2015, we, through two of our consolidated affiliates, entered into two lease agreements for our Diamond Bar, California office with Fallow Field LLC, each for a five-year term commencing January 1, 2015 at a total annual base rent of $177,600 with a 2% base rent increase each year for the two leases. On September 1, 2016, we entered into two new lease agreements which amended the existing lease agreements with Fallow Field. The amended terms commenced on November 1, 2016 and are for ten years with one five-year renewal option at an initial annual base rent of $229, 272 plus our share of utilities. The base rent is subject to an annual increase of 2.99%. Fallow Field is owned and managed by the Mr. Hsu, Ms. Liu and one of our stockholders who is not a 5% stockholder.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Total related party rental expense included in general and administrative expenses was $718,572 for the year ended December 31, 2015 and $<font color="#f52887"> 541,593 </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">90</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">ZHTH, acquired, through a subsidiary, the rights to construct a solar farm in Guizhou, China. Guizhou <font color="#f52887"> Phase 1s </font> one of the southern provinces in China. In February 2016, we entered into an agreement to sell 100% of our equity interest in the subsidiary to a company owned by AMD, a <font color="#f52887"> related party, </font> for $152,000. AMD, a publicly-traded company in China, is one of our principal stockholders and Jinxi Lin, one of our directors, is chairman and chief executive officer of AMD. In February 2016, we signed an agreement with AMD pursuant to which AMD engaged ZHPV to perform the EPC services for its Guizhou solar farm. The solar farm was initially designed to generate 70 MW of power and the contract price, inclusive of VAT, was approximately RMB 518 million (approximately $80 million). Due to the limitation of available land use, the size of the project was reduced to 55MW, with a contract price of RMB 425 million (approximately $64 million).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In October 2016, ZHPV executed an EPC contract with a <font color="#f52887"> different </font>subsidiary of AMD for a 50MW solar farm project in Guizhou, China<font color="#f52887"> , which is the Guizhou Phaase 2 project </font>. The contract price is RMB <font color="#f52887"> 322.5 million (approximately $49 million). In connection with this contract, we sold the equity in a different permit subsidiary to the AMD subsidiary for approximately $150,000. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In 2015, we engaged Simon &amp; Edward, LLP, a registered public accounting firm, to perform certain accounting and tax services. Simon &amp; Edward is owned by the Mr. Yuan, our chief financial officer. Total professional fees and expenses paid to Simon &amp; Edward was $1,535 for 2015.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">From April 29, 2015 to December 31, 2015, ZHTH has engaged a CPA firm located in Nanjin, PRC to perform certain professional services. An executive employee of ZHPV who is not one of our directors or officers is one of its partners. The total professional fees and expenses paid to this firm during this period was approximately $30,808 with a payable of $15,404 as of December 31, 2015. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">From April 29, 2015 to December 31, 2015, our Chinese subsidiary provided certain professional services to Changzhou, an entity in which we have a 22.5% equity interest. The professional fee earned was $68,874 and recognized under other income for the year ended December 31, 2015.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="PRINCIPAL STOCKHOLDERS">PRINCIPAL STOCKHOLDERS</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following table sets forth information with respect to the beneficial ownership of our common stock as of <font color="#f52887"> January 31, 2017, </font> and as adjusted for the sale of the 7,000,000 shares offered hereby, assuming the underwriters do not exercise their option to purchase additional shares, by:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td width="3%"></td>
<td valign="top" width="3%">
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN: 0px">each person known to us to beneficially own more than 5% of common stock;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN: 0px">each member of our board of directors;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN: 0px">each of our Named Executive Officers; and</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px"><font style="FONT-FAMILY: Symbol">&#183;</font></p></td>
<td valign="top">
<p style="MARGIN: 0px">all of our directors and executive officers as a group.</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">All information with respect to beneficial ownership has been furnished by the respective 5% or more stockholders, directors or executive officers, as the case may be. Unless otherwise noted, the mailing address of each listed beneficial owner is 3080 12th Street, Riverside, California 92507.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>Percentage<sup>1</sup></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>Name of </strong><strong>Beneficial Owner</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Shares Beneficially Owned</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Prior to Offering</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>After Offering</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">David Hsu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,250,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10.1</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Jinxi Lin<sup>2</sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,571,428</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6.9</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Changzhou Almaden Co. Ltd.<sup>2</sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,571,428</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6.9</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Ching Liu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,400,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7.6</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6.6</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Dong Pu<sup>3</sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.8</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Simon Yuan</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,800,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6.2</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.4</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Wei Yuan Chen</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,760,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3.9</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3.4</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Dr. Edwin Chan</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">400,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">&nbsp;*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">ChungJen Tsai<sup>4</sup></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">150,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">&nbsp;*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right">*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">All officers and directors as a group<sup>2,4</sup> (seven individuals owning stock)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17,331,428</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38.7</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">33.5</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak0a07dcff-a66d-4075-b542-1c31b2cba913" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">91</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">________&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">* Less than 1%</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><sup>1</sup> The percentages are based on 44,803,928 shares, which includes the 3,816,000 shares held subject to forfeiture under certain conditions as described under &ldquo;Management &#8211; Employee Benefit Plans.&rdquo;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><sup>2</sup> The shares beneficially owned by Jinxi Lin represent the 3,571,428 shares owned by AMD, of which Mr. Lin is chairman and chief executive officer and has the right to vote and dispose of the shares. The address for Mr. Lin and AMD is No. 639, Qinglong East Road, Changzhou, Jiangsu, China. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><sup>3</sup> The address for Dong Pu is Room 2001, 20th Floor, Suhe Yihao, Hengfeng Road No.638, Jing'an District, Shanghai. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><sup>4</sup> Includes 50,000 shares owned by Mr. Tsai&rsquo;s wife, as to which Mr. Tsai disclaims beneficial ownership.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Except as otherwise indicated each person has the sole power to vote and dispose of all shares of common stock listed opposite his name. Each person is deemed to own beneficially shares of common stock that are issuable upon exercise of warrants or upon conversion of convertible securities if they are exercisable or convertible within 60 days of <font color="#f52887"> January </font> 31, <font color="#f52887"> 2017. </font> None of the persons named in the table owns any options or convertible securities. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="DESCRIPTION OF CAPITAL STOCK">DESCRIPTION OF CAPITAL STOCK</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following description of our capital stock reflects our restated articles of incorporation which were approved by the directors, subject to stockholder approval.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our authorized capital stock consists of 15,000,000 shares of preferred stock, par value $0.001 per share, and 500,000,000 shares of common stock, par value $0.001 per share. As of the date of this prospectus there were no shares of preferred stock and 44,803,928 shares of common stock outstanding, including 3,816,000 shares which were issued as restricted stock grants. After giving effect to the sale of the 7,000,000 shares offered hereby, without giving effect to any shares issued pursuant to the underwriters&rsquo; over-allotment option, there will be 51,803,928 shares of common stock outstanding. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The following summary of the capital stock and our certificate of incorporation and bylaws does not purport to be complete and is qualified in its entirety by reference to the provisions of applicable law and to our certificate of incorporation and by-laws, which are filed as exhibits to the registration statement of which this prospectus is a part. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="left"><strong>Common Stock</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Voting Rights.</em>&nbsp;Holders of shares of common stock are entitled to one vote per share held of record on all matters to be voted upon by the stockholders. The holders of common stock do not have cumulative voting rights in the election of directors. Our bylaws provide that one-third of the outstanding shares constitutes a quorum.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Dividend Rights.</em>&nbsp;Holders of shares of our common stock are entitled to ratably receive dividends when and if declared by our board of directors out of funds legally available for that purpose, subject to any statutory or contractual restrictions on the payment of dividends and to any prior rights and preferences that may be applicable to any outstanding preferred stock.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Liquidation Rights.</em>&nbsp;Upon our liquidation, dissolution, distribution of assets or other winding up, the holders of common stock are entitled to receive ratably the assets available for distribution to the stockholders after payment of liabilities and the liquidation preference of any of our outstanding shares of preferred stock.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><em>Other Matters.</em>&nbsp;The shares of common stock have no preemptive or conversion rights and are not subject to further calls or assessment by us. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of our common stock, including the common stock offered in this offering, are fully paid and non-assessable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">92</td></tr>
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<tr>
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<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><strong>Preferred Stock</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our certificate of incorporation gives our board of directors the power to issue shares of preferred stock in one or more series without stockholder approval. Our board of directors has the discretion to determine the rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, of each series of preferred stock. The purpose of authorizing our board of directors to issue preferred stock and determine its rights and preferences is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or could discourage a third party from acquiring, a majority of our outstanding voting stock. We have no present plans to issue any shares of preferred stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Nevada Anti-Takeover Provisions</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Nevada law, NRS Sections 78.411 through 78.444, regulate business combinations with interested stockholders. Nevada law defines an interested stockholder as a beneficial owner (directly or indirectly) of 10% or more of the voting power of the outstanding shares of the corporation. Pursuant to Sections NRS 78.411 to 78.444, combinations with an interested stockholder remain prohibited for three years after the person became an interested stockholder unless (i)&nbsp;the transaction is approved by the board of directors or the holders of a majority of the outstanding shares not beneficially owned by the interested party, or (ii)&nbsp;the interested stockholder satisfies certain fair value requirements. NRS 78.434 permits a Nevada corporation to opt-out of the statute with appropriate provisions in its articles of incorporation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">NRS Sections 78.378 to 78.3793 regulates the acquisition of a controlling interest, as defined, in an issuing corporation. An issuing corporation is defined as a Nevada corporation which has 200 or more stockholders of record, of which at least 100 stockholders have addresses of record in Nevada and does business in Nevada directly or through an affiliated corporation. NRS Section 78.379 provides that an acquiring person and those acting in association with an acquiring person obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders of the corporation, approved at a special or annual meeting of the stockholders. Stockholders who vote against the voting rights have dissenters&rsquo; rights in the event that the stockholders approve voting rights. NRS Section 378 provides that a Nevada corporation&rsquo;s certificate of incorporation or by-laws may provide that these sections do not apply to the corporation. Our certificate of incorporation provides that these sections do not apply. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Certificate of Incorporation and <font color="#f52887"> Bylaw Provisions </font></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Provisions of our certificate of incorporation and bylaws may delay or discourage transactions involving an actual or potential change in control or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that our stockholders might otherwise deem to be in their best interests. Therefore, these provisions could adversely affect the price of our common stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td></td>
<td valign="top" colspan="2"><font style="FONT-FAMILY: Symbol"></font>Among other things, our certificate of incorporation <font color="#f52887"> or </font> bylaws will:</td></tr>
<tr>
<td width="3%"></td>
<td width="3%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">permit our board of directors to issue up to 15,000,000 shares of preferred stock, with such rights, preferences and privileges as the board may designate;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">provide that the authorized number of directors may be changed only by resolution of the board of directors;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum<font color="#f52887"> , and not by the stockholders </font>;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">eliminate the personal liability of our directors for damages as a result of any act or failure to act in his or her capacity as a director or officer except as described below;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> provide that stockholders can only call a special meeting if the request is made by the holders of two-thirds of the entire capital entitled to vote; </font></td></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreaka7f37bf7-2198-49c6-bb51-549ebd59c741" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">93</td></tr>
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<tr>
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<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> provide that, if a matter is to be brought before a meeting of stockholders which is not specified in the notice of meeting or brought at the direction of the board of directors, it can only be brought up at the meeting if brought by stockholders of record holding two-thirds of the outstanding stock; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> provide that our bylaws may be amended only by either the affirmative vote of two-thirds of the stockholders entitled to vote or by the board of directors; </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner, and also specify requirements as to the form and content of a stockholder&rsquo;s notice;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> does </font>not provide for cumulative voting rights, therefore allowing the holders of a majority of the shares of common stock entitled to vote in any election of directors to elect all of the directors standing for election, if they should so choose; and</td></tr></tr></tr></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our bylaws also provide that any person who acquires equity in us shall be deemed to have notice and consented to the forum selection provision of our bylaws, which require actions to be brought only in Riverside County, California, which is where our executive offices are located. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Further, NRS Section 78.335 provides that any director or one or more of the incumbent directors may be removed from office by the vote of stockholders representing not less than two-thirds of the voting power of the issued and outstanding stock entitled to vote<font color="#f52887"> . Our bylaws have a similar provision </font>.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Limitation of Liability and Indemnification</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our certificate of incorporation provides that, except as otherwise provided by law, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that, (a) the director&rsquo;s or officer&rsquo;s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and (b) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our certificate of incorporation provides that we shall provide indemnification to our directors and officers to the maximum extent permitted by law. We shall pay advancements of expenses in advance of the final disposition of the action, suit, or proceedings upon receipt of an undertaking by or on behalf of the director or officer to repay the amount even if it is ultimately determined that he or she is not entitled to be indemnified by the corporation. Our by-laws also provides for indemnification of our directors and officers. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Under Nevada law, NRS 78.7502, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys&rsquo; fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person (i) is not liable pursuant to Nevada law; or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, the corporation shall indemnify him or her against expenses, including attorneys&rsquo; fees, actually and reasonably incurred by him or her in connection with the defense. Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Pursuant to NRS 78.751, any discretionary indemnification, unless ordered by a court or advanced by the Corporation in a matter as permitted by Nevada law, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made (i) by the stockholders; (ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (iii) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We intend to enter into indemnification agreements with each of our current and future directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Nevada law against liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Transfer Agent </strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The transfer agent for our common stock is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Listing</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We intend to apply to list our common stock for quotation on The NASDAQ Stock Market under the symbol &ldquo;SMXT&rdquo;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="SHARES ELIGIBLE FOR FUTURE SALE1">SHARES ELIGIBLE FOR FUTURE SALE </a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to this offering, there has been no public market for our common stock. Future sales of our common stock in the public market, or the availability of such shares for sale in the public market, could adversely affect the market price of our common stock prevailing from time to time. As described below, only a limited number of shares will be available for sale shortly after this offering due to contractual and legal restrictions on resale. Nevertheless, sales of a substantial number of shares of our common stock in the public market after such restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity-related capital at a time and price we deem appropriate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Upon completion of this offering, we will have outstanding an aggregate of 51,803,928 shares of common stock. Of these shares, all of the 7,000,000 shares of common stock to be sold in this offering, or 8,050,000 shares if the underwriters&rsquo; overallotment option is exercised in full, will be freely tradable without restriction or further registration under the Securities Act, unless the shares are held by any of our &ldquo;affiliates&rdquo; as such term is defined in Rule 144 under the Securities Act. All of the remaining 44,803,928 shares of common stock held by existing stockholders, which constitute approximately 86.5% of the outstanding shares of common stock, assuming the over-allotment option is not exercised, will be deemed &ldquo;restricted securities&rdquo; as such term is defined under Rule 144. The restricted securities were issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration, including exemptions provided by Rule 144 or Rule 701 under the Securities Act.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of the lock-up agreements described below and the provisions of Rule 144 and Rule 701 under the Securities Act, the shares of our common stock (excluding the shares to be sold in this offering) that will be available for sale in the public market are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">no shares will be eligible for sale on the date of this prospectus or prior to 90 days after the date of this prospectus;</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">[number of shares not subject to lock-up] shares will be eligible for sale pursuant to Rule 144 commencing 90 days from the date of this prospectus, except that the 3,900,000 shares that we sold in October and November 2016 may not be sold prior to six months from the date such shares were purchased; and</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">[number of shares held by officers, directors and major shareholders subject to lock-up agreements] shares will be eligible for sale upon the expiration of the lock-up agreements, beginning 180 days after the date of this prospectus and when permitted under Rule 144 or Rule 701, with the managing underwriter having the right to permit shares to be sold during such 180 day period.</td></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In addition, as of the date of this prospectus, a total of 2,984,000 shares of common stock are subject to options or may be issued pursuant to the 2016 long-term incentive plan. We intend to register the sale of these shares on a Form S-8, approximately six months from the date of this prospectus.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Lock-up Agreements</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">All of our directors and officers and certain of our principal stockholders have agreed not to sell any common stock for a period of 180 days from the date of this prospectus. See &ldquo;Underwriting&rdquo; for a description of these lock-up provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>Rule 144</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In general, under Rule 144 under the Securities Act as currently in effect, once we have been subject to the public company reporting requirements for at least 90 days, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for a least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person (who has been unaffiliated for at least the months prior to the sale) who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock reported by The NASDAQ Stock Market during the four calendar weeks preceding the filing of notice of the sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">No shares may be sold pursuant to Rule 144 until we have been subject to the reporting requirements of the Securities Exchange Act for at least 90 days. We will become subject to these reporting requirements on the effective date of the registration statement of which this prospectus forms a part.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="UNDERWRITING">UNDERWRITING</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">[name of managing underwriter] is serving as book-running manager of the offering and as representatives of the underwriters named below. Subject to the terms and conditions of the underwriting agreement, the underwriters named below have severally agreed to purchase from us on a firm commitment basis the following respective number of shares of common stock at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td style="BORDER-BOTTOM: black 1px solid" width="35%">
<p style="MARGIN: 0px">Underwriter</p></td>
<td width="5%"></td>
<td style="BORDER-BOTTOM: black 1px solid">Number of Shares</td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The underwriting agreement provides that the obligations of the underwriters to purchase the shares included in this offering are subject to approval of legal matters by counsel and to other conditions. The underwriters are obligated to purchase all of the shares (other than those covered by the over-allotment option described below) if they purchase any of the shares.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover page of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount from the initial public offering price not to exceed $ per share. If all of the shares are not sold at the initial offering price, the underwriters may change the offering price and the other selling terms. The representative has advised us that the underwriters do not intend to make sales to discretionary accounts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">If the underwriters sell more shares than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this prospectus, to purchase up to [such number that is 15% if the shares offered] additional shares at the public offering price less the underwriting discount. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, each underwriter must purchase a number of additional shares approximately proportionate to that underwriter&rsquo;s initial purchase commitment. Any shares issued or sold under the option will be issued and sold on the same terms and conditions as the other shares that are the subject of this offering.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Our officers and directors and certain major stockholders have agreed that, for a period of 180 days from the date of this prospectus, they will not, without the prior written consent of the representatives of the underwriters offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any shares common stock owned by them other than in private transactions to persons who agree to be bound by the provisions of the lock-up agreement. The representative of the underwriters in its sole discretion may release any of the securities subject to these lock-up agreements at any time without notice.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Prior to this offering, there has been no public market for our securities. Consequently, the initial public offering price for the shares was determined by negotiations between us and the representatives.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The determination of our per share offering price was determined by negotiation between us and the underwriters and does not necessarily bear any relationship to our book value, results of operations, cash flows or other indicia of value. Among the factors considered in determining the initial public offering price were the history and prospects of the company our management, our capital structure, and currently prevailing general conditions in equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure you, however, that the price at which the shares will sell in the public market after this offering will not be lower than the initial public offering price or that an active trading market in our shares will develop and continue after this offering.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We expect our shares to be listed on NASDAQ under the symbol &ldquo;<font color="#f52887"> SMXT </font>.&rdquo; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In addition, we have agreed to pay for the FINRA-related fees and expenses of the underwriters&rsquo; legal counsel, not to exceed $20,000.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In connection with the offering, the underwriters may purchase and sell shares in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the over-allotment option, and stabilizing purchases.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak60d70ee7-e728-4421-a5bb-1acae939b23d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">&ldquo;Covered&rdquo; short sales are sales of shares in an amount up to the number of shares represented by the underwriters&rsquo; over-allotment option.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">&ldquo;Naked&rdquo; short sales are sales of shares in an amount in excess of the number of shares represented by the underwriters&rsquo; over-allotment option.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Covering transactions involve purchases of shares either pursuant to the over-allotment option or in the open market after the distribution has been completed in order to cover short positions.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">To close a naked short position, the underwriters must purchase shares in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">To close a covered short position, the underwriters must purchase shares in the open market after the distribution has been completed or must exercise the over-allotment option. In determining the source of shares to close the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the over-allotment option.</td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Stabilizing transactions involve bids to purchase shares so long as the stabilizing bids do not exceed a specified maximum.</td></tr></tr></tr></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the shares. They may also cause the price of the shares to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We estimate that our portion of the total expenses of this offering payable by us will be $ , excluding underwriting commissions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make because of any of those liabilities.&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="LEGAL MATTERS1">LEGAL MATTERS </a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The validity of the issuance of the common stock offered by us in this offering will be passed upon for us by Ellenoff Grossman and Schole, LLP, New York, New York. The underwriters have been represented by [name of underwriters&rsquo; counsel] New York, New York. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="EXPERTS1">EXPERTS </a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Our </font> audited consolidated financial statements as of December 31, 2015 and 2014, and for the years then ended have been included herein in reliance upon the report of Marcum LLP, independent registered public accounting firm and upon the report of such firm given upon the authority of said firm as experts in accounting and auditing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> The audited financial statements of ZHPV as of December 31, 2014 and for the year then ended have been included herein in reliance upon the report of Marcum Bernstein &amp; Pinchuk LLP, independent registered public accounting firm and upon the report of such firm given upon the authority of said firm as experts in accounting and auditing. </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Certain information concerning the laws of the PRC is included in this prospectus in reliance of the opinion of AllBright Law Offices, Shanghai, China, who are licensed attorneys in the PRC. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="WHERE YOU CAN FIND MORE INFORMATION">WHERE YOU CAN FIND MORE INFORMATION</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">We have filed with the SEC a registration statement on Form S-1 (including the exhibits, schedules and amendments thereto) under the Securities Act, with respect to the shares of our common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to us and the common stock offered hereby, we refer you to the registration statement and the exhibits and schedules filed therewith. Statements contained in this prospectus as to the contents of any contract, agreement or any other document are summaries of the material terms of this contract, agreement or other document. With respect to each of these contracts, agreements or other documents filed as an exhibit to the registration statement, reference is made to the exhibits for a more complete description of the matter involved. A copy of the registration statement, and the exhibits and schedules thereto, may be inspected without charge at the Public Reference Room of the SEC at 100 F Street N.E., Washington, DC 20549. Copies of these materials may be obtained from such office, upon payment of a duplicating fee. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the Public Reference Room. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">As a result of this offering, we will become subject to information requirements of the Exchange Act. We will fulfill our obligations with respect to such requirements by filing periodic reports and other information with the SEC. We intend to furnish our stockholders with annual reports containing financial statements certified by an independent public accounting firm.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreak0d9088ec-1763-4152-91ce-2c284111ecaa" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">99</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC1">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="TOC2">INDEX TO FINANCIAL STATEMENTS </a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="85%">
<p style="MARGIN: 0px">SolarMax Technology, Inc. for the years ended December 31, 2015 and 2014</p></td>
<td valign="top" width="14%"></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#INDEPENDENT AUDITORS&rsquo; REPORT">Independent Auditors&rsquo; Report </a></p></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="11%">
<p style="MARGIN: 0px">F-2</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#bal1">Consolidated balance sheets as of December 31, 2015 and 2014</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-3</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#loss1">Consolidated statements of operations <font color="#f52887"> and comprehensive loss </font>for the years ended December 31, 2015 and 2014</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-5</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#equity1">Consolidated statements of changes in stockholders&rsquo; equity for the years ended December 31, 2015 and 2014</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-6</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#cash1">Consolidated statements of cash flows for the years ended December 31, 2015 and 2014</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-7</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#notes1">Notes to consolidated financial statements</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-9</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="85%">
<p style="MARGIN: 0px">SolarMax Technology, Inc. for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015</p></td>
<td valign="top" width="14%"></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#bal3">Consolidated balance sheets as of <font color="#f52887"> September </font>30, 2016 (unaudited) and December 31, 2015</a></p></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="11%">
<p style="MARGIN: 0px">F-<font color="#f52887"> 43 </font></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#loss3">Consolidated statements of <font color="#f52887"> operations and comprehensive loss </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 (unaudited)</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-<font color="#f52887"> 45 </font></p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#equity3">Consolidated statements of changes in stockholders&rsquo; equity for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 (unaudited)</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-46 </font></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#cash3">Consolidated statements of cash flows for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 (unaudited)</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-<font color="#f52887"> 47 </font></p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><a href="#notes3">Notes to consolidated financial statements (unaudited)</a></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">F-<font color="#f52887"> 49 </font></p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Jiangsu Zhonghong Photovoltaic Engineering Technology Limited Company </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#report">Independent Auditors&rsquo; Report</a> </font></p></td>
<td valign="top" width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="11%">
<p style="MARGIN: 0px"><font color="#f52887"> F-87 </font></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#bal 4">Consolidated Balance sheet as of December 31, 2014</a> </font></p></td>
<td valign="top"></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-88 </font></p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#loss4">Consolidated statement of operations and comprehensive loss for year ended December 31, 2014</a> </font></p></td>
<td valign="top"></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-90 </font></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#equity4">Consolidated statement members&rsquo; deficit for the year ended December 31, 2014</a> </font></p></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-91 </font></p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#cash4">Consolidated statements of cash flows for the year ended December 31, 2014</a> </font></p></td>
<td valign="top"></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-92 </font></p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> <a href="#notes4">Notes to consolidated financial statements </a> </font></p></td>
<td valign="top"></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> F-94 </font></p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak2b8c6ccf-475b-4908-9fd4-9fb380c3926f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-1</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong><a name="INDEPENDENT AUDITORS&rsquo; REPORT">INDEPENDENT AUDITORS&rsquo; REPORT</a></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">To the Board of Directors and Stockholders of&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">SolarMax Technology, Inc. and subsidiaries</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">We have audited the accompanying consolidated balance sheets of SolarMax Technology, Inc. and subsidiaries (the &ldquo;Company&rdquo;) as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive loss, changes in stockholders&rsquo; equity and cash flows for the years then ended. These financial statements are the responsibility of the Company&rsquo;s management. Our responsibility is to express an opinion on these financial statements based on our audits. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and in accordance with auditing standards generally accepted in the United States of America.&nbsp; Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.&nbsp; The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company&rsquo;s internal control over financial reporting. Accordingly, we express no such opinion.&nbsp; An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.&nbsp; We believe that our audits provide a reasonable basis for our opinion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SolarMax Technology, Inc. and subsidiaries, as of December 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">/s/ Marcum LLP</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Irvine, CA <br>July 29, 2016 </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreakd6be261b-2db4-4b57-b5b2-b1d9af8edcad" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-2</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="bal1">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Balance Sheets</b></p>
<p style="MARGIN: 0px" align="center"><b>December 31, 2015 and 2014</b></p>
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>2015</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Assets</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Current assets</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Cash and cash equivalents</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,982,141 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,445,832</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accounts receivable, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,362,094 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,558,181</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accounts receivable - related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 71,362 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">321,575</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, current portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,654,789 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,304,270</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,872,621 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">645,466</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Inventories, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,572,724 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,891,832</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,970,144 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">545,165</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deferred tax asset - current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,767,061 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total current assets</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 27,252,936 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">21,712,321</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Property and equipment</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Automobiles</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 937,382 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">693,128</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Furniture and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,128,798 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,935,488</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar systems leased to customers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,607,803 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,071,815</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Leasehold improvements</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,145,428 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">957,165</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,819,411 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">9,657,596</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less: accumulated depreciation and amortization</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,369,671 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(2,280,787</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Property and equipment, net</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,449,740 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">7,376,809</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Goodwill</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,260,219 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">320,079</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Intangible assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,707,738 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">364,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Investments in unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,190,019 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,427,301</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 35,810,901 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30,704,440</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Other assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 391,791 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">176,422</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total assets</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> <strong>$</strong> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <strong>82,063,344</strong> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><strong>64,081,372</strong></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Liabilities and Stockholders&rsquo; Equity</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Current liabilities</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accounts payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,491,061 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,435,163</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Bank and auto loans - current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,567,784 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,060,873</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Term loan</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,142,474 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties - current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,231,064 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deposits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,872,263 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,369,221</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accrued expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,067,195 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,301,608</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total current liabilities</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 18,371,841 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">6,166,865</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreakb1345cfc-106d-4281-83b6-c46ed06113e2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-3</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Balance Sheets (Continued)</b></p>
<p style="MARGIN: 0px" align="center"><b>December 31, 2015 and 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Bank and auto loans &#8211; noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 59,238 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,949,877</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties - noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 45,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,168,371 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,224,295</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total liabilities</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <strong>65,599,450</strong> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><strong>51,841,037</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Commitments and Contingencies (Note 12)</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Stockholders&rsquo; equity</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Common stock, par value $0.001 per share; 500,000,000 shares authorized, 38,087,928 and 32,587,928 shares issued, 37,087,928 and 31,587,928 shares outstanding as of December 31, 2015 and 2014, respectively</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,088 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32,588</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Additional paid-in capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 40,459,392 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22,530,884</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Less: equity subscription receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,509,998 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less: treasury stock at cost &#8211; 1,000,000 shares </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,800,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,800,000</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accumulated deficit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (16,273,579 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,795,418</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accumulated other comprehensive loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (630,029 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total stockholders&rsquo; equity attributable</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,283,874 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11,968,054</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>to SolarMax Technology, Inc.</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Noncontrolling interest in SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 180,020 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">272,281</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total stockholders&rsquo; equity</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <strong>16,463,894</strong> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><strong>12,240,335</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total liabilities and stockholders&rsquo; equity</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> <strong>$</strong> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <strong>82,063,344</strong> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><strong>64,081,372</strong></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="left"><em>See accompanying notes to consolidated financial statements.</em></p>
<table id="pagebreakba894995-0b70-4749-a7ab-3a778ee8e57c" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-4</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="loss1">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statements of Operations and Comprehensive Loss</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Revenue</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,242,275</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">38,110,331</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cost of revenue</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">25,586,158</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">27,869,894</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Gross profit</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,656,117</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,240,437</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Operating expenses</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">General and administrative</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16,506,403</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16,312,764</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Impairment loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,130,154</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,299,608</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Operating loss</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(6,980,440</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(7,371,935</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Other income (expense)</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Interest income</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">29,946</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32,154</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Interest expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,602,498</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,208,833</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Equity income (loss) of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">350,718</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(83,381</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Other income</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">74,375</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">22,210</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Total other expenses, net</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(1,147,459</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(1,237,850</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Loss before income taxes</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,127,899</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,609,785</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">(Benefit) provision for income taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(557,477</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">266,274</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Net loss</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,570,422</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,876,059</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less: net loss attributable to </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">noncontrolling interest</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(92,261</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(45,579</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Net loss attributable</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,478,161</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,830,480</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>to SolarMax Technology, Inc.</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Other comprehensive loss</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Foreign currency translation adjustments</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(630,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Comprehensive loss attributable</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>to SolarMax Technology, Inc.</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(8,108,190</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(8,830,480</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss per share attributable to stockholders</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">of SolarMax Technology, Inc. -</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(0.20</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(0.27</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Weighted average shares - </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">37,409,024</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">32,587,928</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>See accompanying notes to consolidated financial statements.</em></p>
<table id="pagebreakd7ce7282-066e-4d2b-99a1-a4b9885879ef" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-5</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="equity1">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statements of Changes in Stockholders&rsquo; Equity </b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></b>&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="5" align="center">
<p style="MARGIN: 0px" align="center"><strong>Common Stock</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Additional </strong><strong>Paid-in </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Equity Subscription </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="5" align="center">
<p style="MARGIN: 0px" align="center"><strong>Treasury Stock</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Retained Earnings (Accumulated </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Accumulated other comprehensive </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Noncontrolling </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Shares </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Amount </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Capital</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Receivable</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Shares</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Amount</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Deficit)</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><strong>loss</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Interest</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center"><strong>Total</strong></p></td>
<td></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" width="18%">
<p style="MARGIN: 0px" align="left"><strong>Balance at December 31, 2013 </strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="6%" align="right">32,587,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">32,588</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">22,596,442</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="6%" align="right">(1,000,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">(1,800,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">35,062</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="7%" align="right">317,860</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">21,181,952</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Stock-based compensation (forfeiture)</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(65,558</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-.</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(65,558</td>
<td valign="bottom">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Net loss</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(8,830,480</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(45,579</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(8,876,059</td>
<td valign="bottom">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><strong>Balance at December 31, 2014</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">32,587,928</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">32,588</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">22,530,884</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,800,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(8,795,418</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">272,281</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" align="right">12,240,335</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Shares issued to acquired ZHTH</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">2,400,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">2,400</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">7,437,600</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="right">-</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">7,440,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Shares issued to acquired ZHPV</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,000,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">3,099,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">3,100,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Shares issuance</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">2,100,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">2,100</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">7,347,900</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px" align="right">(5,509,998)</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,840,002</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Cancellation of warrants</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(117,000</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(117,000</td>
<td valign="bottom">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Stock-based compensation</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">161,008</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">161,008</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Net loss</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(7,478,161</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(92,261</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(7,570,422</td>
<td valign="bottom">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">Currency translation adjustments</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(630,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(630,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><strong>Balance at December 31, 2015</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">38,087,928</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">38,088</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">40,459,392</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(5,509,998</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,800,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(16,273,579</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(630,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">180,020</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">16,463,894</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px" align="left">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>See accompanying notes to consolidated financial statements.</em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak8a791e1d-a5a8-4dcc-ab1a-bfdf842cf7b9" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-6</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="cash1">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statements of Cash Flow</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Cash flows from operating activities</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,570,422</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,876,059</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Adjustments to reconcile net loss to net cash used</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">in operating activities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Equity in (income) loss of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(350,718</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">83,381</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Depreciation and amortization expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,731,049</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,021,151</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Impairment loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,130,154</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,299,608</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Provision for bad debts and rebates write-off</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">114,343</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">918,248</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Provision for loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">293,725</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">386,604</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Inventory reserve</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">290,390</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">132,084</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Warranty reserve</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">307,214</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">303,277</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Deferred income taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(610,413</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">262,052</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Gain on cancellation of warrants</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(41,400</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Stock-based compensation expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">161,008</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(65,558</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Changes in operating assets and liabilities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Accounts receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,014,449</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,100,484</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Accounts receivable - related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">250,213</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(132,721</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(470,877</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(429,024</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Inventories</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,559,688</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,476,621</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(58,874</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">407,783</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Other assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,356,552</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(148,389</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Accounts payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(2,658,498</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(316,987</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Accrued expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(418,796</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(747,721</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Deposits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,528,919</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,039,856</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Arbitration settlement payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(500,000</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px">Other liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">422,005</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,408,184</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net cash used in operating activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(3,733,393</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(2,456,838</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cash flows from investing activities</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Distributions from unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">819,153</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">102,400</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Cash obtained through acquisitions of ZHTH &amp; ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">233,267</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Increase in customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(16,345,417</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(20,606,231</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Payments received from customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">9,594,712</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,244,436</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Purchase of property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(335,202</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(4,404,746</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net cash used in investing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(6,033,487</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(18,664,141</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cash Flows from financing activities:</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Cash proceeds from shares issuance </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,840,002</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Payment made for warrants cancelled</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(75,600</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Proceeds from new borrowings</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,034,562</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Principal repayment on borrowings</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,166,205</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(996,907</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Proceeds from new borrowings from related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">3,739,125</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">20,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net cash provided by financing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,371,884</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19,003,093</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Effect of exchange rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(68,695</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net decrease in cash and cash equivalents</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(3,463,691</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(2,117,886</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak1f0f6f36-35d7-4824-a2d6-f7e8e7709e52" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-7</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statements of Cash Flow (Continued)</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cash and cash equivalent, beginning of the year</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">7,445,832</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">9,563,718</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cash and cash equivalent, end of the year</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">3,982,141</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">7,445,832</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Non-cash activities for investing and financing activities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Shares issued to acquire ZHTH &amp; ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">10,540,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Additional auto loans entered</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">12,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Supplemental disclosures of cash flow information:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest paid in cash</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,604,128</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">980,137</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Income taxes paid in cash</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">4,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">4,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>See accompanying notes to consolidated financial statements.</em></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak8575d940-709e-49cf-ac39-fe5e34efebc0" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-8</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="notes1">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p><br>
<p style="MARGIN: 0px"><strong>1. Business and Basis of Presentation</strong></p>
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><strong><em>Description of Business</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">SolarMax Technology, Inc. (&ldquo;SolarMax&rdquo; or the &ldquo;Company&rdquo;) <font color="#f52887"> is a Nevada corporation formed in January 2008, with operations and headquarters located in California. The Company has three wholly-owned and one 93.75%-owned subsidiaries in the United States. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">SolarMax Renewable Energy Provider, Inc.<font color="#f52887"> , a California corporation (&ldquo;SREP&rdquo;) </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Financial, Inc., a California corporation (&ldquo;SolarMax Financial&rdquo;)&nbsp; </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax LED, Inc., a California corporation (&ldquo;LED&rdquo;) </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SMX Capital, Inc., a New Jersey corporation (&ldquo;SMX Capital&rdquo;) </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SMX Capital </font> is a 93.75% owned subsidiary <font color="#f52887"> of the Company, and its financial statements are consolidated in SolarMax&rsquo; consolidated financial statements. The </font> 6.25% <font color="#f52887"> minority </font>interest is held by <font color="#f52887"> the president </font> of the Company&rsquo;s PRC <font color="#f52887"> operations. The minority interest </font> is reflected as <font color="#f52887"> non-controlling </font> interests in the accompanying consolidated financial statements.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px"><font color="#f52887"> The Company&rsquo;s wholly-owned subsidiaries outside the United States are as follows: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Accumulate Investment Co. Ltd. (&ldquo;Accumulate&rdquo;), a British Virgin Islands corporation, which is wholly owned by SolarMax. The Company acquired Accumulate as part of its acquisition of Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. (&ldquo;ZHPV&rdquo;) in April 2015. See Note 3. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> SolarMax Technology Holdings (Hong Kong) Limited (&ldquo;SolarMax Hong Kong&rdquo;), which was established under the laws of Hong Kong on October 27, 2014. </font></td></tr>
<tr>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> Golden Solarmax Finance Co., Ltd., (&ldquo;Golden SolarMax&rdquo;), which was organized under the laws of the Peoples&rsquo; Republic of China (&ldquo;China&rdquo; or the &ldquo;PRC&rdquo;) on June 1, 2015. </font></td></tr></tr></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px"></font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Accumulate has one wholly-owned subsidiary, Accumulate Investment Co., Limited (HK), an entity organized under the laws of Hong Kong (&ldquo;Accumulate Hong Kong&rdquo;). Accumulate Hong Kong has one wholly-owned subsidiary, ZHPV. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Hong Kong has one wholly-owned subsidiary, SolarMax Technology (Shanghai) Co., Ltd. (&ldquo;SolarMax Shanghai&rdquo;), which is organized under the laws of the PRC and was formed on February 3, 2015. SolarMax Shanghai is a wholly foreign-owned entity, which is referred to as a WFOE. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> SolarMax Shanghai has two wholly-owned subsidiaries, Chengdu Zhonghong Tianhao Technology Co., Ltd., (&ldquo;ZHTH&rdquo;) which was acquired in April 2015 (see Note 3), and Jiangsu Honghao Electricity Technology Co. Ltd. (&ldquo;Jiangsu Honghao&rdquo;), which was organized on September 21, 2015. Jiangsu Honghao is engaged in the project operation and maintenance business and may form a subsidiary for each project for which it provides the project operation and maintenance service. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> ZHTH is engaged in project development. ZHTH has three wholly-owned subsidiaries located in Beijing, Chengdu and Shanghai. ZHTH&rsquo;s Shanghai subsidiary, as well as ZHPV, own subsidiaries (each, a &ldquo;permit subsidiary&rdquo;) that individually owns or will own the solar farm and the permit. ZHPV&rsquo;s core business is to provide engineering, procurement and construction (&ldquo;EPC&rdquo;) services. When a buyer of a project is identified, the subsidiary that owns the permit subsidiary may sell to the buyer the equity in the permit subsidiary that holds the permit for that specific solar farm project, and the buyer of the project engages ZHPV for the EPC work. The purchase price for the permit subsidiary is an amount approximating the permit subsidiary&rsquo;s net assets. Accordingly, the Company does not generate a material gain or loss from the sale of the permit subsidiaries. The sale of the equity in the permit subsidiaries is part of the normal course of the Company&rsquo;s operations in China. Because government regulations prohibit the sale of the permit relating to a solar farm, it is necessary for the Company to sell the equity in the permit subsidiary to effectuate the transfer of the ownership of the solar farm and the permit to the buyer. </font></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On April 28, 2015, the Company acquired the <font color="#f52887"> ownership of ZHTH, through a share exchange agreement among the Company, SolarMax Shanghai, and the equity owners of ZHTH. ZHTH was formed on March 21, 2014 and the entity became a wholly-owned subsidiary of SolarMax Shanghai as a result of the acquisition. See Note 3. </font>&nbsp;</p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Also on April 28, 2015, the Company acquired the ownership of ZHPV through a share exchange agreement between the Company and the holders of the stock of Accumulate. After the acquisition, the Company owns all of the stock of Accumulate, which, in turn, through Accumulate Hong Kong, owns all of the stock of ZHPV. ZHPV was formed on December 30, 2009. See Note 3. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Basis of Accounting</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> The accompanying consolidated financial statements of the Company include the consolidated operations of its United States-based subsidiaries which include SREP, SolarMax Financial, SMX Capital, and LED; SolarMax Hong Kong and its PRC-based subsidiaries, which include Golden Solarmax, ZHTH, and ZHPV since the date they were acquired by the Company. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (&ldquo;GAAP&rdquo;).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Principles of Consolidation</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The accompanying consolidated financial statements have been prepared in conformity with GAAP, and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. In accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810,&nbsp;Consolidation, the Company consolidates any variable interest entity, or VIE, of which it is the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE&rsquo;s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company evaluates its relationships with all the VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary. <font color="#f52887"> As of December 31, 2016 and 2015, there were no VIEs whose financial statements are required to be included in the Company&rsquo;s consolidated financial statements. </font>All intercompany transactions and balances have been eliminated in consolidation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The accompanying consolidated financial statements include the accounts of SolarMax and its wholly owned subsidiaries: SREP, <font color="#f52887"> SolarMax </font>Financial, LED, <font color="#f52887"> SolarMax Hong Kong </font>, Golden Solarmax, ZHTH and its PRC subsidiaries, ZHPV and its PRC subsidiaries, and its 93.75% owned subsidiary, SMX<font color="#f52887"> Capital </font>. All significant inter-company accounts and transactions have been eliminated in consolidation. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Variable Interest Entity Not Consolidated</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">SolarMax evaluated its involvement with <font color="#f52887"> SMX Property, LLC (&ldquo;SMXP&rdquo;) </font> under the requirements of ASC 810, Variable Interest Entities, and <font color="#f52887"> as discussed below, </font>determined that <font color="#f52887"> the Company </font> is not the primary beneficiary and therefore has not consolidated the financial information of SMXP.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">SolarMax is the lessee under an operating lease of its Riverside<font color="#f52887"> , CA </font> headquarters facility with SMXP (see Note 10 &#8211; Other Related Party Transactions). <font color="#f52887"> SMXP is a private entity owned by the Company&rsquo;s founders who are also executives of the Company. </font>The lease term <font color="#f52887"> was initially </font> for four years <font color="#f52887"> expiring on December 31, 2016, and was extended in September 2016 for a ten-year term, with one five-year renewal option </font>. SolarMax does not have any ownership interest in SMXP. Other than the common ownership and the operating lease, SolarMax does not have any economic arrangements with SMXP such that SolarMax will have an obligation to support the operations of SMXP. Further, SolarMax does not have the power to direct and control the activities of SMXP as such power to direct and control resides with SMXP&rsquo;s principals. Accordingly, SolarMax is not considered to be the primary beneficiary of SMXP and has not consolidated SMXP. At December 31, 2015 and 2014, SMXP reported total assets of $12.6 and $12.6 million, total liabilities of $13.2 and $13.2 million, and a net loss of $153,025 and $77,972, respectively (amounts are unaudited).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px"><strong><em>Liquidity and Management&rsquo;s Plan</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company incurred significant net losses and did not achieve positive cash flows from operations for the years ended December 31, 2015 and 2014, which are factors that raise substantial doubt about the Company&rsquo;s ability to continue as a going concern. Contributing to the 2015 consolidated net loss is the $2.7 million net loss from the Company&rsquo;s newly acquired PRC segment. The PRC segment&rsquo;s net loss is primarily attributable to the lack of substantial completion of the PRC segment&rsquo;s long-term construction contracts as of December 31, 2015. However, the Company anticipates positive results of operations and cash flows from the PRC segment, as substantial work on the long term construction contracts in process began at the beginning of 2016 and substantial completion is expected to occur during the year ending December 31, 2016. As for the U.S. segment, the Company anticipates earning positive cash flows that will be sufficient to meet its debt service requirement. Although the U.S segment entered into a substantial commitment to purchase solar panels, as described in Note 18, the Company plans to satisfy its purchase commitment through achieving positive results of operations and seeking alternative sources of financing. The Company is continuing to explore alternatives for additional sources of financing to fund the Company&rsquo;s U.S. operations including securing borrowing facilities from a bank in the PRC, disposing of a portion of the Company&rsquo;s loan portfolio to financial institutions based in the U.S. and obtaining additional funding through investors under federal immigration programs. While there can be no assurance that positive cash flows will be achieved or that alternative sources of financing will be made available to the Company if and when needed and under favorable terms, the Company&rsquo;s management believes that its plan mitigates substantial doubt about the Company&rsquo;s ability to continues as a going concern, and the Company will have sufficient cash flows to satisfy its planned operations for a period of one year after the date the consolidated financial statements are issued.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>2. Summary of Significant Accounting Policies</strong></p>
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><strong><em>Revenue Recognition</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Solar Energy Systems and Components Sales</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> In the United States, the Company&rsquo;s customers purchase solar energy systems from the Company under fixed-price contracts or lease solar energy systems with unaffiliated leasing companies arranged by the Company. For these leases, the leasing company pays the full purchase price of the system to the Company upon system delivery and acceptance by the ultimate customer, and the leasing company acquires title to the system and leases the system to the customer. The Company has no ongoing relationship with the ultimate customer, except to the extent that the Company has warranty obligation with respect to the system it installed. The Company recognizes revenue on sale to the leasing company in the same manner as it recognizes revenue on sales of its solar systems directly to end users. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> A residential customer that meets the Company&rsquo;s financing standards and purchases a solar energy system has the option to pay the full purchase price for the system at the time of purchase or finance the purchase through Financial, a wholly owned subsidiary of the Company. From time to time, the Company also arranges customer financings through a local credit union, in which case the credit union would pay the full purchase price of the system to the Company upon system delivery and acceptance by the ultimate customer. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For solar energy systems and components sales for which customers pay the full purchase price upon delivery of the system, the Company recognizes revenue, net of any applicable governmental sales taxes, in accordance with ASC&nbsp;605-10-S99, Revenue Recognition&#8212;Overall. The Company recognizes revenue when (1)&nbsp;persuasive evidence of an arrangement exists, (2)&nbsp;delivery has occurred or services have been rendered, (3)&nbsp;the sales price is fixed or determinable and (4)&nbsp;collection of the related receivable is reasonably assured. Components are comprised of photovoltaic panels and solar energy system monitoring hardware. The Company recognizes revenue when the Company installs a solar energy system and it passes inspection by the utility or the authority having jurisdiction and the permit to operate has been issued, provided all other revenue recognition criteria have been met. Costs incurred on residential installations before the solar energy systems are completed are included in inventories as work in progress in the Company&rsquo;s consolidated balance sheets. </p>
<p style="MARGIN: 0px">&nbsp;
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-11</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For solar energy systems sold under an installment contract, the Company has completed an extensive review of the customer&rsquo;s credit history prior to approving the customer for an installment sale which provides the Company with reasonable assurance of the collectability of the related installment sale receivable over the installment term. Accordingly, the Company recognizes the revenue from the installment sale of a solar energy system when the Company delivers a system that has passed inspection by the utility or the authority having jurisdiction and the permit to operate has been issued.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u>Long-term Construction Contracts</u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Long-term construction contracts are related to the Company&rsquo;s operation in the PRC. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company recognizes design, engineering, procurement and construction contract revenue using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the Company is responsible for the ultimate acceptability of the project. Contracts are generally segmented between types of services, <font color="#f52887"> which are </font>primarily design <font color="#f52887"> services </font>and separately engineering, procurement and construction<font color="#f52887"> services, which are known as EPC services and are separate from design service. Accordingly </font>, gross margin related to each activity is recognized as those separate services are rendered. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined. Pre-contract costs are expensed as incurred. Revenue recognized in excess of amounts billed would be classified as a current asset under contract work in progress. Advances that are payments on account of contract work in progress would be deducted from contract work in progress. Amounts billed to clients in excess of revenue recognized to date would be classified as a current liability under advance billings on contracts. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">At December 31, 2015, the Company did not have substantial construction activity other than the amount paid to the Chinese government agencies for the land lease of $535,815 which was included in inventories as construction work in progress. Such amount is expected to be reimbursed by the customers when the contracts are entered into in 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company generally provides limited warranties for work performed under its construction contracts. The warranty periods typically extend for a limited duration for up to 12 months following substantial completion of the Company's work on a project. Typically five percent of the contractual amount is withheld by customers until the warranty periods expire. As of December 31, 2015, $835,174 was the amount of receivable related to such warranty on a contract that was completed prior to the acquisition date of ZHPV. The warranty deposit receivable included in accounts receivable is expected to be received in October 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u><em>Operating Leases and Power Purchase Agreements</em></u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> From 2010 to 2014, the Company constructed and offered built-to-suit commercial-grade photovoltaic systems for commercial and not-for-profit customers in California, Hawaii, Colorado and New Jersey; under long-term leases and power purchase agreements, with terms of up to 20 years. Under these arrangements, the Company owns the systems and receives the 30% federal grant, as well as any state and utility company rebates on the systems it owns. Upfront rebates and incentives were applied to reduce the cost of the systems to the Company. All other annual rebates and performance-based incentive rebates are recognized in revenue when received. In connection with the Company&rsquo;s ownership of solar systems primarily in New Jersey, the Company owns a number of Solar Renewable Energy Certificates (&ldquo;SREC&rdquo;). There is currently no assigned monetary value to an SREC and the prices are ultimately determined by market forces within the parameters set forth by the state. The Company recognizes the revenue of the SREC when it is sold. The Company has not offered long-term leases and power purchase agreements for its own account subsequent to 2014. </font></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Under the long-term leases, the </font> Company is the lessor <font color="#f52887"> of </font> solar energy systems, which are accounted for as operating leases in accordance with ASC&nbsp;840,&nbsp;Leases<font color="#f52887"> , since these lease agreements do not provide for the ownership transfer to the lessee at the end of lease, the arrangement does not contain a bargain purchase option, the lease term does not exceed the economic life of the underlying solar system which is typically 35-40 years, and the net present value of the lease payments does not exceed 90% of the original investment. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For solar energy systems where customers purchase electricity from the Company under power purchase agreements, the Company has determined that these agreements should be accounted for, in substance, as operating leases pursuant to ASC&nbsp;840. The Company recognizes revenue based upon the amount of electricity delivered at rates specified under the contracts, assuming all other revenue recognition criteria are met.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company capitalizes initial direct costs from the origination of solar energy systems leased to customers (the incremental cost of contract administration, referral fees and sales commissions) as an element of solar energy systems, leased and to be leased, and subsequently amortize these costs over the term of the related lease or power purchase agreement, which generally ranges from 10 to 20 years.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> Third-Party Leasing Arrangements </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font color="#f52887"> The Company no longer enters into leases for solar systems. In January 2015, the Company entered into a channel agreement with Sunrun, Inc. pursuant to which Sunrun appoints the Company as its sales representative to solicit orders for Sunrun&rsquo;s products in portions of southern California. Pursuant to this agreement, the Company introduces potential leasing customers to Sunrun. Sunrun pays the Company for its services in connection with the projects. Upon a customer signing a Sunrun lease, the Company purchases the equipment from Sunrun or other vendor from a listing of preapproved equipment by Sunrun. The Company then perform the design and EPC services until the system receives the permit to operate. Sunrun pays the Company 80% of the purchase price of the system after the system receives the city sign off and the final 20% after receiving it receives the permit to operate. Similar to the solar system sold directly to residential and commercial customers, the Company recognizes the revenue on the solar systems sold to Sunrun when the permit to operate is received. Sunrun owns the equipment, leases the system and also services the lease. The Company&rsquo;s relationship with the residential customer is only during the sales and installation process. The agreement with Sunrun prohibits the Company from marketing, selling or constructing solar systems to be leased to customers other than through Sunrun. These restrictions do not affect the Company&rsquo;s financing operations. The agreement has a term of three years, which commenced in January 2015. Sunrun may terminate the agreement if the Company fails to meet specified minimum volume requirements. Sunrun also has the right to terminate certain incentives contained in the agreement at any time. As a result, Sunrun was the Company&rsquo;s largest customer during the year ended December 31, 2015. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Upon the completion of the system, Sunrun performs the inspection to ensure the system meets Sunrun&rsquo;s quality standards, and the Company is responsible to fix any issues as identified by Sunrun if they are caused by the Company. Sunrun covers all warranty issues with the system and may also contract with the Company to perform the work to fix any potential future issues with the system. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><u>LED Projects</u></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company&rsquo;s revenue recognition policy as related to LED products and services is in accordance with ASC 605-10-S99, Revenue Recognition-Overall-SEC Materials. The Company recognizes revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. The Company recognizes its LED revenue upon the completion of the installation and the final acceptance from the customer, provided all other revenue recognition criteria have been met. Prior to the completion and the final acceptance, all costs incurred are included in inventories as work in progress in the Company&rsquo;s consolidated balance sheet.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><u>Financing Loan Contracts</u></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company also provides financing to qualified customers to purchase residential or commercial photovoltaic systems, as well as LED projects. Customer loans receivable are classified as held-for-investment based on management&rsquo;s intent and ability to hold the loans for the foreseeable future or to maturity. Loans held-for-investment are carried at amortized cost and are reduced by an allowance for estimated credit losses as necessary. The Company recognizes interest income on loans, including the amortization of discounts and premiums, using the interest method. The interest method is applied on a loan-by-loan basis when collectability of the future payments is reasonably assured. Premiums and discounts are recognized as yield adjustments over the term of the related loans. Loans are transferred from held-for-investment to held-for-sale when management&rsquo;s intent is to no longer hold the loans for the foreseeable future. Loans held-for-sale are recorded at the lower of cost or fair value. There were no loans held-for-sale at December 31, 2015 and 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em><u>Summary of Revenues</u></em> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table summarizes the Company&rsquo;s net revenue by business line for the years ended December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>2015</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar &#8211; residential systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 30,390,759 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">33,794,365</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar &#8211; commercial systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,666,788 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,343,718</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar - others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 179,148 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">278,666</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">LED</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 569,444 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">955,254</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Financing related</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,436,136 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">1,738,328</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 36,242,275 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">38,110,331</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Cost of Revenue</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Solar energy systems and components sales and LED cost of revenue includes direct and indirect material, labor and related labor benefits costs, sales commissions and bonuses, operation and finance commissions and bonuses, freight, insurance allocated to operations and installations, warranty expense, inventory reserve, and other overhead costs allocated to operations, installation and warehouse.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Use of Estimates</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. &nbsp;Significant accounting estimates reflected in the Company&rsquo;s consolidated financial statements include the collectability of accounts receivable and loans receivable, the useful lives and impairment of property and equipment, goodwill and intangible assets, the fair value of stock options granted and stock-based compensation expense, the fair value of assets acquired and liabilities assumed in a business combination, warranty and customer care reserve, the valuation of deferred tax assets, inventories and provisions for income taxes. Actual results could differ materially from those estimates.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Concentration Risk</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><u>Major Customers</u></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table provides information as to sales to one customer under the United States Segment (&ldquo;US Segment&rdquo;) who accounted for at least 10% of the Company&rsquo;s consolidated revenue for the year ended December 31, 2015 and the accounts receivable at December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Revenue</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Revenue</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Accounts Receivable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Accounts Receivable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer B </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,819,429</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16.1</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">250,961</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4.5</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakdcd5f69f-ec4e-4346-b80e-e56564158442" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-14</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table provides information as to sales to another customer under US Segment who accounted for at least 10% of the Company&rsquo;s consolidated revenue for the year ended December 31, 2014 and the accounts receivable at December 31, 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Revenue</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Revenue</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Accounts Receivable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Accounts Receivable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer A </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,452,019</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19.6</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">231,435</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11.1</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><u>Major Suppliers</u></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table provides information as to purchases from one major supplier under US Segment who accounted for 10% or more of the Company&rsquo;s consolidated purchases for the year ended December 31, 2015 and the accounts payable at December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Purchase</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Purchase</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Accounts Payable </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Accounts Payable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" width="52%">
<p style="MARGIN: 0px">Supplier A</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,620,032</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">26.2</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">508,207</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7.8</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table provides information as to purchases from two major suppliers under US Segment who accounted for 10% or more of the Company&rsquo;s consolidated purchases for the year ended December 31, 2014 and the accounts payable at December 31, 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Purchase</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Purchase</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Accounts Payable </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px">Percentage of Total Accounts Payable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Supplier A</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,064,557</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">21.1</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">834,982</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">58.2</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Supplier B</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,447,355</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Cash and Cash Equivalents</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Cash and cash equivalents consist of deposit accounts and highly liquid investments purchased with an original maturity of three months or less. The carrying amounts reported on the consolidated balance sheets for cash and cash equivalents approximate fair value. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The standard insurance coverage for noninterest-bearing transaction accounts in the United States is $250,000 per depositors under the FDIC's general deposit insurance rules. At December 31, 2015 and 2014, uninsured cash balances in domestic U.S. financial institutions was $1,597,565 and $5,990,883, respectively. The Company&rsquo;s deposits in banks located in the PRC and Hong Kong are not fully protected by issuance or the FDIC and such uninsured amount totaled $901,513 and $0 as of December 31, 2015 and 2014, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Restricted Cash</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Restricted cash of $109,998 and $0 at December 31, 2015 and 2014, respectively, which is a component of other assets, consists of a cash account held by a financial institution as collateral for the business credit cards. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Accounts Receivable, net</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Accounts receivable are reported at the outstanding principal balance due from customers as well as state and utility rebates due from government agencies and utility companies. Under certain arrangements with customers, the customers typically would assign the collection of incentive rebates to the Company.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak34a9ab24-4a06-46a0-837d-0e1c832f4a7b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-15</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Accounts receivable are recorded at net realizable value. The Company maintains allowances for the applicable portion of receivables when collection becomes doubtful. The Company estimates anticipated losses from doubtful accounts based upon the expected collectability of all accounts receivable, which take into account the number of days past due, collection history, identification of specific customer exposure, and current economic trends. Once a receivable is deemed to be uncollectible, it is written&nbsp;off against the allowance. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The write off related to rebate receivables are recorded as a reduction to revenues. During the years ended December 31, 2015 and 2014, the write off of rebate receivables amounted to $48,518 and $133,462, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The activity of the allowance for bad debts for the years ended December 31, 2015 and 2014 are as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; beginning of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">211,469</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Provision for bad debts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">65,825</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">257,498</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Addition from acquisition of ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11,047</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Receivables written off </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(100,920</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(46,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; end of year </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">187,421</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">211,469</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Accounts receivable, net consist of the following at December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer receivables</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,185,435</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">829,478</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Rebates receivable </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">364,080</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">940,172</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Allowance for bad debts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(187,421</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(211,469</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">5,362,094</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,558,181</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Customer Loans Receivable</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company offers its customers <font color="#f52887"> who meet the Company&rsquo;s credit eligibility standards </font>the option to finance the purchase of solar energy systems through installment loans provided by <font color="#f52887"> SolarMax </font>Financial. <font color="#f52887"> SolarMax </font>Financial also provides secured financing for solar energy systems sold by other unrelated companies. <font color="#f52887"> All </font> loans are secured by the solar energy systems financed. The outstanding loan balance is presented net of an allowance for loan losses. In determining the allowance for loan losses, the Company identifies significant customers with known disputes or collection issues and considers its historical level of credit losses and current economic trends that might impact the level of future credit losses. Customer loans receivable that are individually impaired are charged off against the allowance for loan losses. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The activity in the allowance for loan losses for the years ended December 31, 2015 and 2014 are as follow: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; beginning of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">264,766</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Provision for loan losses </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">293,725</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">386,604</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Loans receivable charged off</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(118,657</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(121,838</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; end of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">439,834</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">264,766</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreaka4e9da70-cb78-46fb-a196-34fc3a288890" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-16</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Advances to suppliers</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Advances to suppliers consist primarily of advance payments to suppliers for the purchases of solar panels, inverters and components. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Inventories, net</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Inventories consist of (a) work in progress representing costs incurred on solar installations prior to completion of solar energy systems and (b) components principally consisting of photovoltaic modules, inverters, and construction materials, which are stated at the lower of cost (first-in first-out method) or market value. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The estimate for excess and obsolete inventories is based on historical sales experience together with a review of the current status of existing inventories. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The activity in the reserve for excess and obsolete inventories for the years ended December 31, 2015 and 2014 are as follow: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; beginning of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">23,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Provision for excess and obsolete inventories</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">290,390</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">132,084</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Inventories written-off</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(227,314</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(109,084</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; end of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">86,076</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">23,000</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Business Combinations</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Business combinations are accounted for using the acquisition method in accordance with ASC Topic 805, Business Combinations (&ldquo;ASC 805&rdquo;). Under the acquisition method of accounting, the Company allocates the purchase price of a business acquisition based on the fair value of the identifiable tangible and intangible assets. The difference between the total cost of the acquisition and the sum of the fair values of the acquired tangible and identifiable intangible assets less liabilities is recorded as goodwill or bargain purchase gain. Management used third party appraisers to assist in estimating fair values, including the business enterprise value, which is based on estimated future cash flows (including timing) which are estimated using the income approach and discount rates reflecting the risk inherent in the future cash flows. Under ASC 805, acquisition related transaction costs (such as advisory, legal, valuation, and other professional fees) are expensed as incurred. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Goodwill and Intangible Assets</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The indefinite-lived intangible asset represents a license to operate the Company&rsquo;s LED business under US Segment. The definite-lived intangible asset consists of permit backlog, acquired through the acquisition of ZHTH business under PRC Segment and would be amortized proportionately with the future revenues earned on the backlog.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> The Company reviews </font> indefinite-lived intangible asset <font color="#f52887"> including goodwill </font> for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount may be impaired. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company performs its annual impairment test of goodwill each fiscal year or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. When assessing goodwill for impairment, the Company uses qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350 (&ldquo;ASC 350&rdquo;),&nbsp;Goodwill. The Company also considers its enterprise value and if necessary, the Company&rsquo;s discounted cash flow model, which involves assumptions and estimates, including the Company&rsquo;s future financial performance, weighted-average cost of capital and interpretation of currently enacted tax laws. Circumstances that could indicate impairment and require the Company to perform a quantitative impairment test include a significant decline in the Company&rsquo;s financial results, a significant decline in the Company&rsquo;s enterprise value relative to its net book value, an unanticipated change in competition or the Company&rsquo;s market share and a significant change in the Company&rsquo;s strategic plans. </p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakb696a02c-83d1-4fe2-bd29-86a3727939fa" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-17</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Based on the projected cash flows and operations of the Company&rsquo;s LED business during the annual impairment test, the Company recognized an impairment loss of $320,079 related to goodwill associated with LED for the year ended December 31, 2015. There was no impairment loss associated with goodwill during the year ended December 31, 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Property and Equipment</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Property and equipment is initially stated at cost less accumulated depreciation and amortization. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are charged to operations as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. The estimated useful lives of the major classification of property and equipment are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="bottom" width="30%">
<p style="MARGIN: 0px">Automobiles</p></td>
<td valign="bottom" width="47%">
<p style="MARGIN: 0px" align="right">5 years</p></td></tr>
<tr height="15">
<td valign="bottom" width="30%">
<p style="MARGIN: 0px">Furniture and equipment</p></td>
<td valign="bottom" width="47%">
<p style="MARGIN: 0px" align="right">5-10 years</p></td></tr>
<tr height="15">
<td valign="bottom" width="30%">
<p style="MARGIN: 0px">Leasehold improvements</p></td>
<td valign="bottom" width="47%">
<p style="MARGIN: 0px" align="right">Shorter of the asset&rsquo;s useful life or lease term </p></td></tr>
<tr height="15">
<td valign="bottom" width="30%">
<p style="MARGIN: 0px">Solar systems leased to customers</p></td>
<td valign="bottom" width="47%">
<p style="MARGIN: 0px" align="right">10-15 years</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, depreciation expense was $1,731,049 and $1,021,151, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Impairment of Long-Lived Assets</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company&rsquo;s long-lived assets include property, plant and equipment which include solar energy systems, leased and to be leased, and intangible assets acquired through business combinations. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In accordance with ASC 360,&nbsp;Property, Plant, and Equipment, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of a long-lived asset, or group of assets, as appropriate, may not be recoverable. If the aggregate undiscounted future net cash flows expected to result from the use and the eventual disposition of a long-lived asset is less than its carrying value, then the Company would recognize an impairment loss based on the excess of the carrying value over the fair value.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">During the year ended December 31, 2014, the Company recorded an impairment loss of $263,713 under US Segment, representing the carrying value of the CRM software that was acquired but was subsequently determined to be incompatible and therefore not usable. There was no impairment identified related to the CRM software for the year ended December 31, 2015. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">During the years ended December 31, 2015 and 2014, the Company recorded impairment losses under US Segment of $810,075 and $1,035,895, respectively, related to certain solar systems that are leased to customers for which the carrying values of such systems were determined to be in excess of the estimated fair value. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Investments in Unconsolidated Joint Ventures</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company uses the cost method of accounting for investments in companies in which it holds an interest of less than 20% and over which it does not have the ability to exercise significant influence. For entities in which the Company holds an interest of greater than 20% or in which the Company does have the ability to exercise significant influence, the Company uses the equity method of accounting for such investments. </p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak86ebc380-29c2-4386-b58d-2f34f7e6cc5a" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-18</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company&rsquo;s investments include privately-held companies where quoted market prices are not available and as a result, the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is above the fair value of an investment at the end of any period, the investment is considered for impairment. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. As of December 31, 2015 and 2014, no impairment charge was recorded.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong><em>Customer </em></strong> </font><strong><em>Deposits</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> Customer deposits represent customer down payments and progress payments received prior to the completion of the Company&rsquo;s earnings process. The amount paid by the customer is refundable during the state and federally required cancellation period. Once the cancellation period has passed, the customer still may cancel the project but the Company is entitled to collect, or retain, for work that was completed and materials that were delivered. </font>As of December 31, 2015 and 2014, customer deposits <font color="#f52887"> included in deposits amounted to </font> $1,216,302 and $1,369,221, respectively<font color="#f52887"> and relate primarily to the customer deposits received from the US customers for the solar system and LED purchases. The Company accounts for customer deposits as liabilities and applies the deposits to the customer receivables when the revenues are recognized. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong><em>Vendor Bid Deposits</em></strong> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Vendor bid deposits represent cash deposits received by <font color="#f52887"> ZHPV </font> on sealed bids from trade contractors interested in <font color="#f52887"> working </font> on the <font color="#f52887"> EPC </font> construction projects. <font color="#f52887"> Vendor bid deposits are 100% refundable. As of December 31, 2015, vendor bid deposits included in deposits amounted to $1,655,971. There were no vendor bid deposits at December 31, 2014. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Warranty liability</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> For the U.S. segment, the </font> Company provides a limited installation services warranty that warrants the installation services related to the system owner&rsquo;s photovoltaic modules and inverters (collectively, the &ldquo;solar system&rdquo;) to be free from defects in the installation services under normal application, use and service conditions for a period of 10 years from the first date of the original installation services. The manufacturer&rsquo;s warranty on the solar energy systems&rsquo; components<font color="#f52887"> (primarily solar panels and inverters) </font>, which is typically passed-through to the customers, <font color="#f52887"> is for 25 years. The Company records the accrual for its potential liability under the limited installation services warranty based on certain percentage of monthly revenues plus $300 per system that has undergone a permit to operate for the month. Management periodically reviews the accrual for the potential liability based on the past claims and payments in determining if the liability is adequate to cover future claims and if adjustments are required for the future monthly accrual. There is no separate warranty accrual provided by the Company for the manufacturer&rsquo;s warranty since such warranty is covered by the equipment manufacturers </font>. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For <font color="#f52887"> one </font> solar <font color="#f52887"> system </font>, the Company entered into <font color="#f52887"> a </font>long-term commitment <font color="#f52887"> contract </font> to maintain and clean the solar systems for a <font color="#f52887"> period </font> of 20 years. <font color="#f52887"> The liability under this commitment included in other liabilities is $82,500 and $0 at December 31, 2015 and 2014, respectively. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Beginning in March 2015, the Company guarantees certain specified minimum solar energy production output for certain systems sold to customers generally for a term of up to ten years. The Company monitors the solar energy systems to ensure that these outputs are being achieved. The Company evaluates if any amounts are due to its customers and makes any payments periodically as specified in the customer contracts. <font color="#f52887"> Since this output guarantee was implemented in March 2015, the first measurement date and the resulting claims if any, would be a year from the program inception date which would be March 2016. As of December 31, 2015, the Company has not provided any specific accrual for this output guarantee and believes that the existing accrual for the limited installation service warranty would be adequate to cover the claims related to the systems that are subject to this output guarantee. Management is to monitor the claims under this program for the foreseeable future as more data becomes available in order to develop a separate estimate for this output guarantee. </font></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak633597ae-c755-4a7c-a27d-54b90258de4b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-19</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b>&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, the activities of the warranty <font color="#f52887"> liability to cover the limited installation services warranty, a long-term commitment as well as the production output guarantee </font> recorded under other liabilities are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; beginning of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 229,131 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">43,398</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Additional reserve</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 307,214 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">303,277</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Expenditures </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (153,430 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(117,544</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; end of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 382,915 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">229,131</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Deferred Revenues</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company records as deferred revenue any amounts that are collected from customers, including lease prepayments, until the earnings process has been completed. As of December&nbsp;31, 2015 and 2014, deferred revenue included in other liabilities related to customer prepayments, amounted to $741,417 and $677,766, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Income Taxes</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company accounts for income taxes pursuant to the FASB ASC Topic 740. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company records net deferred tax assets to the extent they believe these assets will more likely than not be realized. In making such determination, they consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company has determined it is more likely than not that its deferred tax assets will not be realizable and has recorded a full valuation allowance against its deferred tax assets. In the event the Company is able to realize its deferred income tax assets in the future in excess of their net recorded amount, we would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Topic 740-10 clarifies the accounting for uncertainty in income taxes recognized in the Company&rsquo;s consolidated financial statements in accordance with GAAP. The calculation of the Company's tax provision involves the application of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company&rsquo;s estimates are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company recognizes interest and penalties related to unrecognized tax positions as income tax expense. As of December 31, 2015 and 2014 the Company did not incur any related interest and penalties.</p>
<p style="MARGIN: 0px">&nbsp;<br>The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Fair Value Measurements</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">ASC Topic 820, Fair Value Measurements and Disclosures (&ldquo;ASC 820&rdquo;), defines a framework for determining fair value, establishes a hierarchy of information used in measuring fair value, and enhances the disclosure information about fair value measurements. ASC 820 provides that the &ldquo;exit price&rdquo; should be used to value an asset or liability, which is the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale at the measurement date. ASC 820 also provides that relevant market data, to the extent available and not internally generated or entity specific information, should be used to determine fair value.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakd3f680f5-13bb-43e4-9150-c20d9e4fbb9f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-20</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px">ASC 820 requires the Company to estimate and disclose fair values on the following three-level hierarchy that prioritizes market inputs.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px">Level 1: Quoted prices in active markets for identical assets or liabilities.&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px">Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px">Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The carrying amount of cash and cash equivalents, accounts receivable, inventories, other current assets, accounts payable, deposits, taxes payable, and accrued payroll and expenses approximates fair value because of the short maturity of these instruments. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table presents the fair value and carrying value of the Company&rsquo;s loans receivable and borrowings as of December&nbsp;31, 2015:</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">
</table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="10">
<p style="MARGIN: 0px" align="center"><strong>Fair Value</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Carrying</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level 1</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level&nbsp;2</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level&nbsp;3</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Value</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong><u>Assets</u></strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,465,690</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,465,690</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong><u>Liabilities</u></strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Bank and auto loans</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,627,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,627,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Term loan</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,900,301</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,142,474</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,413,257</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">46,231,064</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>&nbsp;
<p style="MARGIN: 0px">The following table presents the fair value and carrying value of the Company&rsquo;s loans receivable and borrowings as of December&nbsp;31, 2014:&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">
</table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="10">
<p style="MARGIN: 0px" align="center"><strong>Fair Value</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="center"><strong>Carrying</strong></p></td>
<td>
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level 1</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level&nbsp;2</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level&nbsp;3</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Value</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong><u>Assets</u></strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,008,710</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,008,710</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong><u>Liabilities</u></strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Bank and auto loans</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,010,750</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,010,750</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">35,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>&nbsp;
<p style="MARGIN: 0px">Customer loans receivable -&nbsp;The fair value of customer loans receivable is calculated based on the carrying value and unobservable inputs which include the credit risks of the customers, the market interest rates and the contractual terms. The Company&rsquo;s underwriting policies for the customer loans receivable have not changed significantly since the origination of these loans. The overall credit risk of the portfolio&nbsp;also has not significantly fluctuated as evidenced by the minimal historical write-offs, and lastly the market interest rates have remained relatively consistent since the origination of the loans.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Bank loan and auto loans - The fair value of such loans payable had been determined based on the variable nature of the interest rates and the proximity to the issuance date. </p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak5390b156-63ef-400d-8ba1-abf2f478e1f7" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-21</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Other loan &#8211; The fair value of other loan payable had been determined based on 8.3% weighted average interest rate on the recent borrowings from lenders in PRC.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Loans from related parties &#8211; The related party loans were issued at the fixed annual interest rates of 3% in US Segment and 6% in PRC Segment, and the fair value of the loans has been estimated by applying the prevailing borrowing annual interest rates at the corresponding segment for a comparable loan term which the Company estimated to be 4.8% in US Segment and 8.3% in PRC Segment to the estimated cash flows through the maturities of the loans.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company follows ASC Subtopic 825-10 (&ldquo;ASC 825-10&rdquo;), Fair Value Option. ASC 825-10 permits entities to elect to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any assets or liabilities, which were not previously carried at fair value. Accordingly, the adoption of ASC 825-10 had no impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u>Non-recurring fair value measurement</u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">During the years ended December 31, 2015 and 2014, the Company recorded impairment charges related to the solar systems of $810,075 and $1,035,895 under US Segment, respectively. The adjustments fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine the fair values. The fair values were determined using a discounted cash flow method, and the amount and timing of future cash flows within the analysis were based on the stipulated lease payments and management&rsquo;s estimate of the value of electricity the asset will generate beyond the lease term. The fair values of the solar assets included in property and equipment were determined to be $125,582 and $1,220,715 as of December 31, 2015 and 2014, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Advertising Costs</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company charges advertising and marketing costs related to radio, internet and print advertising to operations as incurred. Advertising and marketing costs which is a component of general and administrative expenses for the years ended December 31, 2015 and 2014 were <font color="#f52887"> $ </font><font color="#f52887"> 2,020,732 </font> and $2,456,458, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Stock-Based Compensation</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company accounts for stock-based compensation costs under the provisions of ASC&nbsp;718, Compensation&#8212;Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all share-based payments granted to employees, net of estimated forfeitures, over the employee requisite service period based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or canceled during the periods reported.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Foreign Currency</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Amounts reported in the consolidated financial statements are stated in United States <font color="#f52887"> dollars, </font> unless stated otherwise. The Company&rsquo;s subsidiaries in the PRC use the Chinese renminbi <font color="#f52887"> (&ldquo;RMB&rdquo;) </font>as their functional currency and all other subsidiaries use the <font color="#f52887"> United States dollar </font> as their functional currency. For subsidiaries that use the local currency as the functional currency, all assets and liabilities are translated to <font color="#f52887"> United States dollars </font> using exchange rates in effect at the end of the respective periods and the results of operations have been translated into <font color="#f52887"> United States dollars </font> at the weighted average rates during the periods the transactions were recognized. Resulting translation gains or losses are recognized as a component of other comprehensive income (loss).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> In accordance with ASC 830, Foreign Currency Matters, the Company translates the assets and liabilities into United States dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into United States dollar are recorded in stockholders&rsquo; equity as part of accumulated other comprehensive income. </font></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak88dc1eb3-8019-4c03-a08b-af6fdf8d49f4" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-22</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Comprehensive Income (Loss)</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company accounts for comprehensive income (loss) in accordance with ASC&nbsp;220, Comprehensive Income. Under ASC&nbsp;220, the Company is required to report comprehensive income (loss), which includes net income (loss) as well as other comprehensive income (loss). The only significant component of other comprehensive income (losses) as of December 31, 2015 is the currency translation adjustment. There were no significant other comprehensive income (losses) component as of December 31, 2014. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Segment Information</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company&rsquo;s chief operating decision maker is the executive team, which is comprised of the chief executive officer and the chief financial officer. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has two operating and reporting segments as of and for the year ended December 31, 2015: United States and PRC. The Company has one operating and reporting segment as of and for the year ended December 31, 2014 which is United States. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Net income (loss) per share</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company calculates net income (loss) per share by dividing earnings (losses) allocated to common stockholders by the weighted average number of common shares outstanding for the period. Diluted weighted average shares is computed using basic weighted average shares plus any potentially dilutive securities outstanding during the period using the treasury-stock-type method and the if-converted method, except when their effect is anti-dilutive. Potentially dilutive securities are excluded from the computation of dilutive EPS for the years ended December 31, 2015 and 2014 in which the effect would be antidilutive. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Reclassifications</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Certain reclassifications have been made to the prior year&rsquo;s financial statements to conform to the current year&rsquo;s presentation. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Recent Accounting Standards </em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In January 2016, the FASB issued ASU 2016-01, Financial Instruments&#8212;Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, affecting public and private companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The ASU will take effect for fiscal years beginning after December 15, 2017. The Company is currently assessing the adoption and impact of ASU on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes that companies that present a classified balance sheet are required to classify all deferred taxes as non-current assets or noncurrent liabilities. The standard is effective for interim and annual periods beginning after December 15, 2016. The adoption of ASU 2016-01 will not have a material impact on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustment from a business combination. GAAP currently requires that during the measurement period, the acquirer retrospectively adjust provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. The acquirer must revise comparative information for prior periods presented in financial statements as needed. ASU 2015-16 eliminates the requirement to retrospectively account for those adjustments. ASU 2015-16 is effective for annual periods beginning after December 15, 2016. The adoption of ASU 2015-16 will not have a material impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak6c955cf9-b24b-4888-9fd3-cbf0abdc79e2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-23</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In July 2015, the FASB issued ASU 2015-11 Simplifying the Measurement of Inventory, whose objective is to simplify the subsequent measurement of inventory by using only the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The Company is currently assessing the adoption and impact of this ASU on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In August 2014, the Financial Accounting Standards Board issued (ASU) No.&nbsp;2014-15, Presentation of Financial Statements&nbsp;&#8212; Going Concern (Subtopic&nbsp;205-40) , to provide guidance within GAAP requiring management to evaluate whether there is substantial doubt about an entity&rsquo;s ability to continue as a going concern and requiring related disclosures. The ASU is effective for annual periods ending after December&nbsp;15, 2016. The adoption of ASU 2014-15 will not have a material impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In May 2014, the FASB issued FASB ASU No. 2014-09, &ldquo;Revenue from Contracts with Customers (Topic 606).&rdquo; The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle. In August 2015, the FASB issued FASB ASU No. 2015-14, &ldquo;Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date&rdquo;, which deferred the effective date of ASU 2014-09 by one year. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In March 2016, the FASB issued FASB ASU No. 2016-08, &ldquo;Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)&rdquo;. ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, &ldquo;Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.&rdquo; ASU 2016-10 clarifies the implementation guidance in Topic 606 for identifying performance obligations and determining when to recognize revenue on licensing agreements for intellectual property. In May 2016, the FASB issued ASU No. 2016-11, &ldquo;Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting.&rdquo; ASU 2016-11 rescinds certain SEC staff comments previously made in regard to these ASU&rsquo;s. We are currently evaluating the effect that the adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016- 10 and ASU 2016-11 will have on our consolidated financial statements.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>3. Business Combinations</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">As discussed in Note 1, on April 28, 2015 the Company acquired the <font color="#f52887"> equity </font> of ZHTH through a share exchange agreement. On the same date, the Company also acquired the <font color="#f52887"> equity </font> of ZHPV through a share exchange agreement. The share exchange agreement for ZHPV was amended on May 12, 2016 to revise certain terms including adjusting the total consideration retroactively to the original acquisition date of April 28, 2015.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The purchase price for ZHTH consisted of cash of RMB 200,000 (approximately $32,786) and 2,400,000 shares of <font color="#f52887"> the Company&rsquo;s </font> common stock of SolarMax valued at $3.10 per share<font color="#f52887"> , </font> or $7,440,000 in aggregate, to be earned and vested upon achieving specified milestones related to procurement of solar system projects through December 31, 2017. The specified milestones had been met as of December 31, 2015 and accordingly, all shares of the common stock paid related to the transaction are fully vested as of December 31, 2015. ZHTH is <font color="#f52887"> engaged </font> in the business of identifying and procuring solar system projects for resale to third party developers and related services in the PRC.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The purchase price for ZHPV consisted of 1,000,000 shares of the common stock of SolarMax valued at $3.10 per share or $3,100,000 in aggregate pursuant to the share exchange agreement<font color="#f52887"> , as </font> amended<font color="#f52887"> . </font> The 1,000,000 shares are pledged to the Company pursuant to a stock pledge agreement dated April 28, 2015 between the Company and the previous owners of ZHPV to ensure compliance of certain seller post-closing obligations. The ZHPV share exchange agreement, as amended, also includes a contingency for the Company to pay the sellers&rsquo; liquidated damages of RMB 10,000,000 (approximately $1.6 million) in the event the Company fails to file a registration statement on Form S-1 with the United States Securities Exchange Commission within one year from the effective date of the amendment or May 12, 2017. ZHPV is engaged in the business of engineering, procuring and constructing solar systems in the PRC.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakab46caab-fb89-4a71-909e-55455fd60235" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-24</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Effective on May 12, 2016, in conjunction with the execution of the amendment to the share exchange agreement for ZHPV, ZHPV entered into a debt settlement agreement (the &ldquo;Debt Settlement Agreement&rdquo;) with one of the former owners of ZHPV, Uonone Group Co., Ltd., (&ldquo;Uonone Group&rdquo;)<font color="#f52887"> pursuant to which </font> both parties agreed to settle a list of pending business transactions entered by the two parties during the period from December 31, 2012 to December 31, <font color="#f52887"> 2015, and Uonone Group agreed to pay ZHPV RMB 8,009,715.61 on or before November 30, 2016. </font>The financial impact of the Debt Settlement Agreement was retrospectively adjusted to the acquisition date of April 28, 2015 which reflects a receivable balance from Uonone Group in the amount of $<font color="#f52887"> 1,570,107 based on the exchange rate on the acquisition date. </font> As of December 31, 2015, the receivable balance due from the Uonone Group was $1,661,740 which is expected to be repaid on or before November 30, 2016 pursuant to the Debt Settlement Agreement. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The fair value of the Company&rsquo;s common stock priced of $3.10 per share on the acquisition date was based on the fair value of the common stock as of December 31, 2014 determined by an independent valuation specialist taking into account the Company&rsquo;s cash flow projections primarily on the US Segment. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The acquisitions were recorded as business combinations under ASC 805, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The Company recorded the tangible and identified intangible assets purchased and liabilities assumed based on their estimated fair values as of the acquisition date and allocated the remaining purchase consideration to goodwill. Goodwill is attributable to the workforce of the acquired businesses at ZHTH and ZHPV and the expected synergies expected to arise after SolarMax&rsquo;s acquisitions. All acquisition related costs were expensed as incurred and were not material.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The purchase price allocations are as follows based in the currency exchange rate on the acquisition date:&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>ZHTH </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>ZHPV </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Total</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Assets - </strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Cash</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,110</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">257,943</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">266,053</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accounts receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,243,158</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,243,158</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">385</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">824,283</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">824,668</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Due from seller</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,252,793</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,252,793</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,755</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">265,409</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">270,164</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,575,107</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,575,107</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Investment in unconsolidated joint venture</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">237,701</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">237,701</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Goodwill</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,410,132</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,380,358</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,790,490</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Permit backlog</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,430,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,430,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">2,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">301,525</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">304,025</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>Total asset acquired</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>7,855,882</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>13,338,277</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>21,194,159</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak813f7f24-1d07-4f62-99e9-450cbe711072" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-25</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>ZHTH</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>ZHPV</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Total</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Liabilities - </strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accounts payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,135,091</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,135,091</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Taxes payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(38</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,003,113</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,003,151</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accrued expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,902,844</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,902,844</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Other current liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(25,558</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(197,229</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(222,787</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Deferred tax liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(357,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(357,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>Total liabilities assumed</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>(383,096</strong></td>
<td valign="bottom" width="1%"><strong>)</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>(10,238,277</strong></td>
<td valign="bottom" width="1%"><strong>)</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>(10,621,373</strong></td>
<td valign="bottom" width="1%"><strong>)</strong></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px"><strong>Total consideration</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><strong>7,472,786</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><strong>3,100,000</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><strong>10,572,786</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u>Permit Backlog</u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> On the acquisition date, ZHTH held a number of permits for the approved solar farm projects. </font>The permit backlog valued at $1,430,000 represents a total of 130 Megawatt (&ldquo;MW&rdquo;) of contract backlog that existed as of the acquisition date that ZHPV anticipated to materialize and receive future cash flows through 2017. The permit backlog intangible asset <font color="#f52887"> and </font>will be amortized proportionately with the cash flows to be earned from these permit backlog through 2017. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Supplemental pro forma data (unaudited)</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following supplemental pro forma data summarizes the consolidated results of operations of the Company for the periods presented, as if the acquisitions were completed as of January 1, 2014. The supplemental pro forma information presented is for information purposes only and is not necessarily indicative of the consolidated financial position or results of operations that would have been realized if the transactions had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future consolidated operating results or financial position. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Supplemental pro forma data for the years ended December 31, 2015 and 2014 is as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,951,357 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">84,853,084</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Cost of Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 26,353,329 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">70,411,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,468,498 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,144,520</td>
<td valign="bottom" width="1%">)</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>4. Customer Loans Receivable</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company provides financing to qualified customers to purchase residential or commercial photovoltaic systems in the United States. Depending on the credit rating of customers, the interest rate ranges from 0.00% to 10.99% per annum and contract terms range from three to fifteen years. The Company acquires security interests in the photovoltaic systems financed. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreakeed5f560-8732-4878-9ca3-3df60c46fbcc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-26</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Customer loans receivable consist of the following at December 31:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, gross</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 42,905,524 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,273,476</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less: allowance for loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (439,834 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(264,766</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 42,465,690 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,008,710</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Less: current portion, net </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,654,789 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5,304,270</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Customer loans receivable, non-current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 35,810,901 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">30,704,440</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company is exposed to credit risk on the customer loans receivable. Credit risk is the risk of loss arising from the failure of customers to meet the terms of their contracts with the Company or otherwise fail to perform as agreed. As of December&nbsp;31, 2015 and 2014, the allowance for loan losses was $439,834 and $264,766, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Principal maturities of the customer loans receivable at December 31, 2015 are summarized as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">Years ending December 31,</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Amount</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,654,789</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2017</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,108,262</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,812,963</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,123,675</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2020</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,495,037</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Thereafter</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">14,710,798</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">42,905,524</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Total interest income on the customer loans receivable that is included in revenues, was $2,424,441 and $1,727,189 for the years ended December&nbsp;31, 2015 and 2014, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>5. Inventories, net</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Inventories at December 31, 2015 and 2014 consist of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Work-in-process</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,862,355 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,371,535</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar panel, inverter and components</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,116,806 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,988,726</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">LED lights</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 679,639 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">554,571</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Reserve for excess and obsolescence</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (86,076 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(23,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total inventories, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,572,724 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5,891,832</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company recorded an expense of $290,390 and $132,084 for the excess and obsolete inventory during the years ended December 31, 2015 and 2014, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreakf8cbc6a0-ed41-4d10-8de4-97730c015549" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-27</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>6. Other Current Assets</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Other current assets consist of the following as of December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Demand promissory note</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 700,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Receivable from sellers of ZHPV </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,661,740 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Prepaid expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 271,783 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">389,543</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Other receivables</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 172,909 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">155,622</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accrued interest receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 163,712 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,970,144 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">545,165</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On August 19, 2015, the Company provided an unsecured demand loan <font color="#f52887"> of $700,000 </font>to an LED customer to finance <font color="#f52887"> its </font> operations on a short-term basis<font color="#f52887"> . The </font> interest rate <font color="#f52887"> was </font> 8% per year. The entire principal and interest totaling $737,737 was repaid on May 3, 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">As discussed in Note 3, on May 12, 2016 ZHPV entered into a debt settlement agreement with Uonone Group, one of the former shareholders of ZHPV pursuant to which Uonone Group agreed to repay the net amount owed by them to ZHPV in the amount of<font color="#f52887"> RMB 8,009,716 (approximately f </font> $1,661,740<font color="#f52887"> ) </font> as of December 31, 2015 on or before November 30, 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0.25in; TEXT-INDENT: -0.25in" align="justify"><b>7. <font style='FONT: 7pt "Times New Roman"'></font></b><b>Goodwill and Intangible Assets, Net </b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Goodwill and intangible assets, net consisted of the following components:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="10">
<p style="MARGIN: 0px" align="center"><b>December 31, 2015</b></p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="10">
<p style="MARGIN: 0px" align="center"><b>December 31, 2014</b></p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="bottom"></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="center"><b>Gross</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Accumulated Amortization</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> Net Carrying Amount </font></b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Gross Carrying Value</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2">
<p style="MARGIN: 0px" align="center"><b>Accumulated Amortization</b></p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><b>Net Carrying Amount</b></p></td>
<td></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px" align="left"><b>Definite-lived intangible assets</b></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" width="28%">
<p style="MARGIN: 0px">Permit backlog</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,343,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,343,738 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><b>Indefinite -lived intangible assets</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" colspan="9">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">License (LED)</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 364,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total<b></b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">1,707,738</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right"><font color="#f52887"> 1,707,738 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">364,000</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">364,000</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Goodwill</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">8,260,219</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right"><font color="#f52887"> 8,260,219 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">320,079</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" align="right">320,079</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">As of December 31, 2015, the Company performed an annual goodwill impairment test on the $320,079 goodwill derived from the acquisition of Act One and determined that an impairment existed that requires the entire amount of goodwill to be impaired. Accordingly, an impairment loss was recorded for $320,079 for the year ended December 31, 2015. There was no impairment of goodwill recorded for the year ended December 31, 2014. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak717391b6-d67c-4606-868e-dc7c72a398a2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-28</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Activity of goodwill for the years ended December 31, 2015 and 2014 is as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; beginning of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 320,079 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">320,079</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Addition from acquisitions (PRC Segment)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,790,490 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Impairment (US Segment)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (320,079 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Effect of exchange rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (530,271 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance &#8211; end of year</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,260,219 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">320,079</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">No amortization expense has been recorded for the year ended December 31, 2015 since no revenue related to the permit backlog has been recognized. The permit backlog balance as of December 31, 2015 is expected to be amortized during 2016 and 2017 proportionately with the cash flows earned from these permit backlogs through 2017. .</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0.25in; TEXT-INDENT: -0.25in" align="justify"><b>8. <font style='FONT: 7pt "Times New Roman"'></font></b><b>Investments in Unconsolidated Joint Ventures</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">At December 31, 2015 and 2014, the Company has the following unconsolidated joint ventures accounted under the equity method of accounting: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">
</table></p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">Investee</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Equity Investment Ownership</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Profit rate of distribution</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 1, LLC (&ldquo;A#1&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 2, LLC (&ldquo;A#2&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 3, LLC (&ldquo;A#3&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Changzhou SolarMax Technology (&ldquo;Changzhou&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30</td>
<td valign="bottom" width="1%">%</td></tr></table>&nbsp;
<p style="MARGIN: 0px">Activity in investments on unconsolidated joint ventures for the year ended December 31, 2015 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">Type</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="center">
<p style="MARGIN: 0px">Investees</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Balance December 31, 2014</p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Distribution </p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Share of Investee&rsquo;s Net Income</p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Balance December 31, 2015</p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">981,348</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(294,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">198,906</td>
<td valign="bottom" width="1%">*</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">886,254</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#2</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,241,312</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(207,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">13,814</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,048,126</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#3</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">434,061</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(87,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">11,153</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">358,214</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px">Changzhou</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">770,580</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">126,845</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">897,425</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">3,427,301</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(588,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">350,718</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">3,190,019</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">* <font color="#f52887"> The Company&rsquo;s share </font> of investee&rsquo;s net income for A#1 investee includes an adjustment of $222,026 of additional A#1&rsquo;s net income attributable to the Company. This adjustment represents the impact of the basis difference in certain property, plant and equipment of A#1.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> In connection with the acquisition of ZHPV in April 2015, the Company acquired a 29% investment in Ejinaqi Enfei New Energy Co., Ltd., a PRC company. In November 2015, ZHPV disposed of its entire investment and received its original amount of investment in cash of RMB 1,450,000 (approximately $231,153). No gain or loss was recognized in connection with the disposal of this investment. There were no profits or losses from this entity during 2015 since it has been inactive since its inception in March 2013. </font></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakf9f8acd8-2116-4657-b372-48140d45ef2b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-29</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Activity in investments on unconsolidated joint ventures for the year ended December 31, 2014 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px">Type</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="center">
<p style="MARGIN: 0px"><strong>Investee</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Balance December 31, 2013</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Distribution </strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Share of Investee&rsquo;s Net Loss</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Balance December 31, 2014</strong></p></td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,009,809</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(28,461</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">981,348</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#2</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,353,813</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(102,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(10,501</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,241,312</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">A#3</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">452,993</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,932</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">434,061</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Alliance Capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">400</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(400</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Changzhou</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">795,455</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(24,875</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">770,580</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td style="BORDER-BOTTOM: black 1px solid" valign="top">
<p style="MARGIN: 0px">Cost</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px">Other</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">611</td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(611</td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="BORDER-BOTTOM: black 1px solid; PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,613,081</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(102,400</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(83,380</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,427,301</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following tables present the summary of the condensed combined financial statements for the Company&rsquo;s four unconsolidated joint ventures as of and for the years ended December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px"><strong><em>Balance Sheets (Unaudited)</em></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,185,363 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,613,452</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Non-current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 10,617,962 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">8,738,263</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,803,325 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">12,351,715</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Current liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,265,923 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,008,605</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Members&rsquo; capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,537,402 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">11,343,110</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Liabilities and members&rsquo; capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,803,325 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">12,351,715</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: 1px solid" valign="top">
<p style="MARGIN: 0px" align="left"><strong style="MARGIN: 0px"><em>Income Statements (Unaudited)</em></strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,832,739 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,460,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Gross profit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,988,444 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,919,351</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net income (loss)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 358,619 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(341,355</td>
<td valign="bottom" width="1%">)</td></tr></table>
<table id="pagebreak206b4e07-5137-4c45-9b23-a1f29ef609ab" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-30</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>9<em>. </em>Financing Arrangements</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">At December 31, 2015 and 2014, the Company had the following borrowings:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">A $5,000,000 term loan payable to Cathay Bank dated July 17, 2013, interest accrues at variable rate (5.0% and 4.75% at December 31, 2015 and 2014, respectively) and matures July 20, 2016. The loan is secured by certain assets of the Company. </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,510,637 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,827,336</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">A $1,000,000 variable interest revolver loan from Cathay Bank dated July 17, 2013 and matures November 30, 2016. No amounts were drawn as of December 31, 2015 and 2014.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Various auto loans payable, interest accrues at 4.34%-4.69% with maturities in 2017 and 2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 116,385 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">183,414</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">A RMB 20.4 million term loan from a third party, due on June 30, 2016, non-interest bearing. The loan was repaid on April 19, 2016,</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,142,474 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">A RMB 50 million line of credit from the same third party above, due on June 30, 2016 with a 12% annual fixed interest rate. No amounts were outstanding as of December 31, 2015.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,769,496 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">4,010,750</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On December 23, 2015, the $1,000,000 revolver loan with Cathay Bank with the original maturity of December 31, 2015 was temporarily extended to February 29, 2016. On January 22, 2016, the Company repaid $1,000,000 of the outstanding principal balance on the Cathay Bank term loan with the proceeds from the revolver loan. After this payment, the term loan has a remaining unpaid balance of $420,049 which would be repaid through the loan maturity date of July 20, 2016. On March 30, 2016, the Company completed the renewal of the revolver loan which further extends the maturity from February 29, 2016 to November 30, 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On October 19, 2015, ZHPV entered into a line of credit agreement with an unrelated party (the &ldquo;Unrelated Creditor&rdquo;) to borrow up to a maximum amount of RMB 50 million (approximately $7.7 million) (&ldquo;LOC&rdquo;). The LOC bore a fixed interest rate at 12% per annum and matured on June 30, 2016. The line of credit was guaranteed by a PRC-based company which is also one of SolarMax&rsquo;s significant stockholders (&ldquo;AMD&rdquo;). The RMB 30 million loan was drawn down in 2015 and repaid on December 31, 2015. Total interest incurred and paid on the loan through December 31, 2015 was $95,650.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On November 15, 2015, ZHPV entered into a term loan agreement with the Unrelated Creditor to borrow RMB 20.4 million (approximately $3.1 million). The maturity date of the loan was June 30, 2016 and the loan was non-interest bearing. The loan was repaid on April 19, 2016.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Total interest expense incurred was $1,602,498 and $1,208,833 (including interest on loans from related parties) for the years ended December&nbsp;31, 2015 and 2014 and accrued interest payable was $2,536 and $6,060 at December 31, 2015 and 2014, respectively. The weighted average interest rates on short-term loans outstanding for SolarMax were 7.51% and 4.74%, respectively, as of December 31, 2015 and 2014. The Company has certain financial covenants associated with the Cathay <font color="#f52887"> Bank </font> loans and was not in compliance with certain of these covenants as of December 31, 2015 and 2014. The Company received waivers for these covenant violations as of December 31, 2015 and 2014 from Cathay Bank.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In conjunction with the $3,000,000 and $2,000,000 term loans entered into with Cathay Bank in August 2011, the Company issued to the lender warrants to purchase 70,000 shares of the Company&rsquo;s common stock. On October 22, 2015, the warrants were cancelled following a settlement payment by the Company in the amount of $75,600. The related gain on cancellation of the warrants of $41,400 is included in other income.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakfafb64e4-819f-4aab-81df-bc6b3dc4c322" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-31</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Loans from related parties</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>2015 </strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Loan from related parties - current portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,231,064 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties, non-current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 45,000,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">41,500,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 46,231,064 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">42,500,000</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The principal stockholders of the Company consist of its <font color="#f52887"> chief executive officer, chief financial officer and executive vice president, </font> who are also the <font color="#f52887"> owners and </font> management of SMX Properties, LLC (&ldquo;SMXP&rdquo;) and Inland Empire Renewable Energy Regional Center (&ldquo;IERE&rdquo;) and its subsidiaries: Clean Energy Center (&ldquo;CEC&rdquo;), Clean Energy Funding, LP (&ldquo;CEF&rdquo;), and Clean Energy Funding II, LP (&ldquo;CEF II&rdquo;). The Company&rsquo;s <font color="#f52887"> chief executive officer and executive vice president </font>, and one of its<font color="#f52887"> minority </font> stockholders are also the principals of Fallow Field, LLC. SMXP, IERE and Fallow Field are not consolidated by the Company. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On January 3, 2012, CEF entered into a loan agreement with SREP, a wholly-owned subsidiary of the Company. Under the agreement, CEF agreed to make a loan to SREP in an amount not to exceed $45,000,000. The proceeds of the loan are advanced in increments of $2,500,000 and CEF may determine in its sole and absolute discretion <font color="#f52887"> to advance </font>a lesser amount. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Each advanced principal amount is due and payable 48 months from the advance date or the U.S. Immigration Form I-829 approval date if longer. As of December 31, 2015 and 2014, the principal loan balance was $45,000,000 and $42,500,000, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On August 26, 2014, CEF II entered into a loan agreement with LED, a wholly-owned subsidiary of the Company, for up to $13,000,000. The proceeds of the loan would be used by LED for its operations. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Principal is due and payable in 48 months or the U.S. Immigration Form I-829 approval date if longer. As of December 31, 2015 and 2014, the principal loan balance was $1,000,000 and $0, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On December 29, 2015, ZHPV entered into an unsecured loan agreement with Changzhou, one of the 30% equity-method investees of SolarMax. Under the agreement, ZHPV can borrow up to<font color="#f52887"> RMB 2 million (approximately </font> $308,086) from Changzhou with a 6% fixed annual interest rate for three months. The outstanding balance on the loan was RMB 1.5 million<font color="#f52887"> (approximately $231,064 </font>) as of December 31, 2015. Another RMB 0.5 million<font color="#f52887"> (approximately $77,021 </font>) was drawn down subsequently on January 10, 2016. The entire loan was repaid on March 10, 2016 in the total amount of RMB 2,022,917 million<font color="#f52887"> (approximately $311,616 ), </font>including principal and interest.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, total interest expense incurred on related party loans was $1,349,877 and $980,137, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Principal maturities for the financing arrangements as of December 31, 2015 are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Term Loan</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Auto Loans</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Other Loan</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Related Party Loans</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Total</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,510,637</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">57,147</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,142,474</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,231,064</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,941,322</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2017</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52,116</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14,052,116</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,122</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,507,122</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">25,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">25,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2020</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">1,510,637</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">116,385</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">3,142,474</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">46,231,064</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">51,000,560</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakddcc4d81-5ec5-4504-ae37-5fce65b03f03" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-32</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>10. Other Related Party Transactions</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Revenue </em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Between 2011 and 2013, the Company entered into several commercial sales construction contracts with Alliance Capital 2, LLC, Alliance Capital 3 LLC, and Alliance Capital 4 LLC, and the last Alliance project was completed in 2013. The Company has a 30% equity interest in each of the Alliance entities. There was no open projects and revenue earned from construction contracts with any of the Alliance entities during the year ended December 31, 2014. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The receivable and payable balances from Alliance entities and related activities during the year ended December 31, 2014 were as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>December 31, 2013</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="6" align="center">
<p style="MARGIN: 0px"><strong>2014 Activities</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Receivable</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Payable</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Collected</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>Written Off</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 1, LLC</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">21,672</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(21,672</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 2, LLC</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">167,182</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(760,480</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(167,182</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">760,480</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 3, LLC</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,171,267</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,171,267</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Alliance Capital 4, LLC</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">116,501</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(116,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Totals</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,476,622</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(760,480</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(188,854</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(527,287</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">During the year ended December 31, 2014, the Company reached a verbal agreement with the Alliance entities that the balances owed by the Alliance entities would not be repaid and such balances may be used to offset the payable balance due from the Company. Accordingly, the Company wrote off the net receivable balance due from the Alliance entities in the amount of $527,287 as of December 31, 2014 which was recorded as provision under the bad debts. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company provides asset management and accounting services to the three Alliance joint ventures under the management contract and business services agreement dated January 20, 2011 between Alliance Solar Capital I, LLC and the Company, pursuant to which the Company is to receive 3% of revenues collected from SREC and payments from public utilities received by the Alliance entities. The provisions of this agreement also extend to services rendered for A#2 and A#3, however, there is no formal agreement executed for these entities. Total fees earned by the Company from the Alliance entities included in consolidated revenues during the years ended December 31, 2015 and 2014 were $2,976 and $13,443, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">From time to time, the Company made advances for expenses related to the three Alliance entities. At December 31, 2015 and 2014, the Company had a receivable from Alliance 1 related to the insurance premiums paid by the Company on behalf of Alliance 1 in the amount of $34,461 and $21,575, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Lease Agreements</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On November 28, 2012, the Company entered into a lease agreement with SMXP to lease the building that is currently the Company&rsquo;s <font color="#f52887"> corporate headquarters </font>. The general terms of the lease are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="3%"></td>
<td valign="top" width="3%">I.</td>
<td valign="top">Term: Four-year lease commencing on January 1, 2013 and ending on December 31, 2016.</td></tr>
<tr>
<td></td>
<td valign="top">II.</td>
<td valign="top">Base Rent: $50,323/per month, payable on the first of day of each month commencing on June 1, 2013.</td></tr>
<tr>
<td></td>
<td valign="top">III.</td>
<td valign="top">Security Deposit: $100,000</td></tr>
<tr>
<td></td>
<td valign="top">IV.</td>
<td valign="top">Tenant improvements allowance: $300,000</td></tr>
<tr>
<td></td>
<td valign="top">V</td>
<td valign="top">Right to holdover: the Company has the right to renew the lease at the end of the lease term. SolarMax can purchase the property at the fair market value of the property on the date of purchase at the discretion of SMXP.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On April 28, 2014, the Company, through its consolidated affiliates entered into two sublease agreements for its Diamond Bar office with IERE. The terms of the leases were for five years commencing on May 1, 2014 with a total base monthly rent of $11,200. These leases were cancelled effective on January 1, 2015 and replaced with new leases entered into on January 2, 2015 with Fallow Field, LLC discussed below.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakb3672730-e28b-4b4c-b759-1889588610eb" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-33</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">At December 31, 2015 and 2014, the Company had a receivable from SMXP in the amount of $36,901 related to advances by SREP for utilities and certain operating expenses on behalf of SMXP&rsquo;s tenant, and $300,000 related to tenant improvements under the lease, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On January 2, 2015, the Company, through its consolidated affiliates entered into two lease agreements for its Diamond Bar office with Fallow Field, LLC. Fallow Field, LLC is owned and managed by the <font color="#f52887"> Company&rsquo;s chief executive officer, executive vice president </font> and a <font color="#f52887"> minority stockholder </font> of the Company. The general terms of the leases as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="3%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top" width="3%">I.</td>
<td valign="top">Term: Five-year lease commencing on January 1, 2015 and ending on December 31, 2019.</td></tr>
<tr>
<td valign="top" width="3%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top" width="3%">II.</td>
<td valign="top">Base Rent: a total of $14,800/per month for leases with 2% base rent increase each subsequent year.</td></tr>
<tr>
<td valign="top" width="3%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top" width="3%">III.</td>
<td valign="top">Right to holdover: the Company has the right to extend the lease for one five-year period upon the termination of the lease term.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, total related party rental expense included in general and administrative expenses for the Riverside, CA <font color="#f52887"> corporate headquarters </font> and the Diamond Bar, CA office, was approximately $718,572 and $630,572, respectively. At December 31, 2015 and 2014, the Company had a receivable from SMXP related to the unpaid tenant improvements allowance of $0 and $300,000, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company entered into a facility lease for its City of Industry office with MaxGroup Corporation from May 1, 2009 through July 31, 2014. MaxGroup Corporation is owned by a board member and a shareholder of the Company. Total rental expense incurred by the Company for the facility lease with MaxGroup Corporation was $14,000 for the year ended December 31, 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Professional Services</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company has been engaging Simon &amp; Edward, LLP to perform certain accounting and tax services. Simon &amp; Edward, LLP is owned by the Company&rsquo;s CFO. Total professional fees and expenses paid to the two professional firms were approximately $1,535 and $75,000 for the years ended December 31, 2015 and 2014, respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">From April 29, 2015 to December 31, 2015, ZHTH has engaged a CPA firm located in Nanjin, PRC to perform certain professional services for which an executive employee of ZHPV is one of its partners. The total professional fees and expenses paid to this CPA firm during this period was approximately $30,808 with a payable of $15,404 as of December 31, 2015. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">From April 29, 2015 to December 31, 2014, Golden SolarMax provided certain professional services to Changzhou, the 30% equity method investee of SolarMax in the PRC. The professional fee earned was $68,874 and recognized under other income for the year ended December 31, 2015.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakbd02eb54-755d-4436-bfec-68c76dae46bc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-34</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p><font color="#f52887"> <br> </font>
<p style="MARGIN: 0px"><strong>11. Accrued Expenses</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Accrued expenses consist of the following as of December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accrued payroll and commissions</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 497,775 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">126,361</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accrued professional and other expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 885,903 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">358,531</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Credit card payable and others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 572,183 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">558,026</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,866 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,060</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">VAT tax payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 500,057 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Sales and other taxes payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 501,411 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">252,630</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,067,195 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">1,301,608</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company recognizes its revenue in the PRC net of value-added taxes (&ldquo;VAT&rdquo;). The Company is subject to VAT<font color="#f52887"> at the rate of 17% </font> which is <font color="#f52887"> levied </font> on the procurement cost <font color="#f52887"> for materials purchased and collected at </font> the invoiced value of sales<font color="#f52887"> provided to customers. The Company accounts for VAT on a net basis </font>. The contractual amount related to the designing, and <font color="#f52887"> EPC </font> provided is subject to 3% sales tax and other taxes which is included as part of cost of revenue<font color="#f52887"> . Effective May 1, 2016, the service provided related to the designing, engineering and construction is subject to 6% VAT pursuant to the new Tax Law enacted in the PRC </font>. As of December 31, 2015 and 2014, VAT tax payable were $500,057 and $0, respectively. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>12. Commitments and Contingencies</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Operating Leases</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company has operating leases for office facilities and office equipment both in the United States and in the PRC. The lease payments are fixed for the initial term of the leases. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Future minimum lease commitments for office facilities and equipment as of December 31, 2015, are as follows: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><em>Years ending December 31,</em></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Related Parties</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Others</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">725,820</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">492,708</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,218,528</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2017</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">184,848</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">342,144</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">526,992</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">184,848</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,868</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">225,716</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">184,848</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">30,650</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">215,498</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total lease payments</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">1,280,364</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">906,370</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">2,186,734</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, rent expense for office facilities and equipment was $947,649 and $837,029, respectively (including the related party rental expense &#8211; see Note 10). </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><i>Legal Settlement</i></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On May 16, 2013, the Company (&ldquo;Respondent&rdquo;) and China Sunergy (&ldquo;Nanjing&rdquo;) Co., Ltd. (&ldquo;Claimant&rdquo;) concluded arbitration through China International Economic and Trade Arbitration Commission (&ldquo;CIETAC&rdquo;) which resulted in a settlement in the amount of $2,500,000. The settlement was related to a payment dispute originated in 2010 from a series of solar sales contracts between the parties. The settlement is to be made in three installments; $1,000,000 on May 31, 2013, $1,000,000 on December 31, 2013, and $500,000 on or before June 30, 2014. An amount of $500,000 was accrued for at December 31, 2013 and was fully paid in 2014.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak8c92cf3b-707e-4b6b-8169-7784254ffed4" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-35</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Pending Litigation</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On June 24, 2015, Michael McCaffrey, the <font color="#f52887"> Company&rsquo;s </font><font color="#f52887"> former chief financial officer </font>, filed a lawsuit against the Company, its <font color="#f52887"> chief executive officer, its current chief financial officer, and its executive vice president </font> with various claims related to violation of California labor code, discrimination based on national origin, ancestry, ethnicity and race, retaliation, harassment based on national origin, ancestry, ethnicity and race, failure to take all reasonable steps to prevent discrimination and harassment, wrongful termination in violation of public policy, failure to pay wages and intentional infliction of emotional distress<font color="#f52887"> and included allegations of financial improprieties and fraudulent and illegal activities </font>. Management of the Company believes all of the claims are without merit and is currently working with its counsel to vigorously defend on these claims. The&nbsp;<font color="#f52887"> Company petitioned the court to transfer the matter to arbitration </font> pursuant to <font color="#f52887"> its </font> agreement <font color="#f52887"> with </font> Mr. McCaffrey<font color="#f52887"> , and the court ordered the matter to be submitted to arbitration </font>. &nbsp;An <font color="#f52887"> arbitrator </font> has been selected and agreed upon by both parties. The arbitration is scheduled to start on <font color="#f52887"> May 30, 2017. </font> The ultimate outcome of the arbitration cannot be determined at the present time. Management does not expect the ultimate outcome will have a material adverse effect on the Company&rsquo;s consolidated financial position or results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In the ordinary course of its business, the Company is involved in various legal proceedings involving contractual relationships, product liability claims, and a variety of other matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company&rsquo;s financial position or results of operations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <em><strong>Employment Agreement</strong></em> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> On February 3, 2015, the Company entered into a two-year employment agreement with the president of the Company&rsquo;s China operations, pursuant to which the Company pays him an annual salary of RMB 360,000 (approximately $53,000). The Company also pays the president of the China operations approximately $85,000 from its United States segment. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>1<font color="#f52887"> 3 </font>. General and Administrative Expenses</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">General and administrative expenses consist of the following as of December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>2015</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Compensation and benefits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,824,635 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,008,799</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Depreciation and amortization</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,731,049 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,021,151</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Selling and marketing expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,020,732 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,456,458</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Leasing and rental expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 964,758 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">837,029</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other operating expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,965,229 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3,989,327</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,506,403 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">16,312,764</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>14. Stockholders&rsquo; Equity </strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em><strong>Stock Option Plan</strong></em></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">From time to time, the Company grants non-qualified stock options to its employees and consultants for their services. Option awards are generally granted with an exercise price equal to the estimated fair value of the Company&rsquo;s stock at the date of grant; those option awards vest between 18 months and 36 months of continuous service and have contractual terms ranging from three to five years. The vested options are exercisable for three months after the termination date unless (i) termination is due to optionee&rsquo;s death or disability, in which case the option shall be exercisable for 12 months after the termination date, or (ii) the optionee is terminated for cause, in which case the option will terminate. </p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak6a1356a3-432b-4287-ad98-76e71db253fe" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-36</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">SolarMax estimates the fair value of stock options using a Black-Scholes option pricing model. The model requires input of assumptions regarding the expected term, expected volatility, dividend yield, and a risk- free interest rate. Options were granted at the fair value of the Company&rsquo;s common stock on grant dates and a simplified method used to estimate the expected term of the options granted during the year ended December 31, 2015. There were no grants during the year ended December 31, 2014. The weighted average assumptions that were used to calculate the grant date fair value of employee stock option grants for the years ended December 31, 2015 are as follows: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="70%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Expected term (years)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="12%" align="right">4.79</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Expected volatility</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">89.7</td>
<td valign="bottom">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Risk-free interest rate</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1.5</td>
<td valign="bottom">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Dividend yield</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">0</td>
<td valign="bottom">%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Expected Volatility. </em>The expected volatility rate used to value stock option grants is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the solar industry in a similar stage of development to the Company.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Expected Term.</em> The Company elected to utilize the &ldquo;simplified&rdquo; method for &ldquo;plain vanilla&rdquo; options to value stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Risk-free Interest Rate. </em>The risk-free interest rate assumption was based on zero-coupon U.S. Treasury instruments that had terms consistent with the expected term of the Company&rsquo;s stock option grants.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><em>Expected Dividend Yield.</em> The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Forfeitures are accounted for as actual forfeitures occur.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On June 19, 2015, the board of directors (the &ldquo;Board&rdquo;) of SolarMax <font color="#f52887"> extended </font> the terms of all stock options outstanding to seven years from the granting dates. As a result, <font color="#f52887"> options to purchase </font>102,000 shares of <font color="#f52887"> common stock </font> held by four employees were extended and $67,421 of additional stock-based compensation expense was recognized for the year ended December 31, 2015. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The compensation cost that has been charged (credited) to income related to stock options granted was $161,008 and $(65,558) for the years ended December 31, 2015 and 2014 respectively, which included the impact of the 2014 forfeitures and the 2015 modifications.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table id="pagebreak7fc0fe91-bc85-46c8-a871-49d8df9694d8" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-37</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">A summary of option activity during the years ended December 31, 2015 and 2014 is as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Number of <font color="#f52887"> Shares Subject to </font>Options</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Weighted Average Exercise Price</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Weighted Average Remaining Contractual (years)</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Aggregate Intrinsic Value</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Outstanding at December 31, 2013</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">367,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.54</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.13</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">168,300</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Nonvested as of December 31, 2013</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">197,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.94</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.39</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Exercisable as of December 31, 2013</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">169,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.07</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.82</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">158,300</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Exercised</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Cancelled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">315,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Outstanding at December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">52,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">1.14</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">1.24</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">96,800</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Nonvested as of December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">2.00</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">0.29</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Exercisable as of December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">47,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.05</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.80</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">91,800</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">280,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.89</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Exercised</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Cancelled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Outstanding at December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">332,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3.07</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">6.00</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">142,800</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Nonvested as of December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">207,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3.43</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">6.57</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">15,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Exercisable as of December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">124,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">2.47</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5.07</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">127,800</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>&nbsp;
<p style="MARGIN: 0px">The aggregate intrinsic value represents the total pretax intrinsic value, based upon the Company&rsquo;s private placement of the Company&rsquo;s common stock in October 2015 at an issue price of $3.50 per share, which would have been received by the option holders had all option holders exercised their option awards as of that date. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong><em>Non-vested Option Awards</em></strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table summarizes the Company&rsquo;s nonvested option awards activity for the years ended December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Shares</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Balance at December 31, 2013</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">197,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Replaced</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Vested</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,000</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Cancelled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(187,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Balance at December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">280,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Replaced</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Vested</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(77,500</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Canceled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">207,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Balance at December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">As of December 31, 2015 and 2014, there was approximately $560,738 and $10,000 of total unrecognized compensation cost related to <font color="#f52887"> outstanding </font>nonvested share-based compensation arrangements, respectively. That cost is expected to be recognized over a weighted-average period of 2.40 and 2.0 years, respectively. The total fair value of options vested during the years ended December 31, 2015 and 2014 were $271,250 and $30,000, respectively.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakde0ac0a4-115f-4fbc-ad42-bf5c8eb5bfc1" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-38</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> <strong><em>2015 Private Placement</em></strong> </font></p>
<p style="MARGIN: 0px"><strong><em>&nbsp;</em></strong></p>
<p style="MARGIN: 0px">During the third quarter of 2015, the Company raised additional equity through a private placement to issue up to 3,000,000 shares of its common stock at a purchase price of $3.50 per share for an aggregate maximum gross offering proceeds of $10,500,000. As of December 31, 2015, the total commitments received was $7,350,000 for 2,100,000 shares, of which $1,840,003 was paid. Subsequently in February 2016, an additional $14,997 of unpaid commitments was paid.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>15. Income Tax</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Income tax liability (asset) and income tax expenses (benefits) as of and for the year ended December 31, 2015 consist of:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">Year ended December 31, 2015</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Federal </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">State</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Foreign</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (44,426 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">96,849</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">52,423</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deferred</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,142,101 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(499,452</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(609,900</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(4,251,453</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Change in valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,142,101 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">499,452</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3,641,553</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (44,426 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">96,849</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(609,900</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(557,477</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Income tax liability and income tax expenses (benefits) as of and for the year ended December 31, 2014 consist of:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">Year ended December 31, 2014</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Federal </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">State</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deferred</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,993,928 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(515,706</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(3,509,634</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Change in valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,221,202 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">550,706</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3,771,908</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 227,274 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">39,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">266,274</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Significant components of the Company&rsquo;s deferred tax assets and liabilities for federal income taxes at December 31, 2015 and 2014 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px">Deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Investment Credit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,142,922 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,142,922</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Net operating loss carry-forward</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,952,368 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,779,309</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,286,596 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">362,164</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 10,381,886 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,284,395</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,413,461 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">(3,771,908</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Net deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,968,425 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,512,487</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Deferred tax liability</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Depreciation</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,201,365 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(2,512,487</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">Intangible asset</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (335,934 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Deferred tax, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,431,126 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">A 100% valuation allowance was provided for the deferred tax assets related to the US segment as of December 31, 2015 and 2014. The deferred tax assets related to the PRC segment of $1,767,061 are reflected on the consolidated balance sheet as of December 31, 2015. The deferred tax liability of $335,934 related to the PRC segment was included in other liabilities on the consolidated balance sheet at December 31, 2015.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak3b032bd5-5732-4383-abc3-17e1995946d9" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-39</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table reconciles the US statutory rates to the Company&rsquo;s effective tax rate for the years ended December 31, 2015 and 2014:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><strong>2014</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">US statutory rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">State taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.8</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.8</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.9</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Foreign differential</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(9.0</td>
<td valign="bottom" width="1%">)%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Change in valuation allowance </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(23.9</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(43.8</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)%</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Effective tax rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(6.9</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(3.1</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)%</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">As of December 31, 2015, the Company has federal and state income tax net operating loss (&ldquo;NOL&rdquo;) carryforwards of $13,596,751 and $13,740,327, respectively, which will expire at various dates from 2031 through 2035. Additionally, the Company has investment credit of $1,142,922 as of December 31, 2015 for building qualifying energy properties and projects under IRC section 48, which will expire at various dates from 2033 through 2034. In addition, the use of net operating loss and tax credit carryforwards may be limited under Section 382 of the Internal Revenue Code in certain situations where changes occur in the stock ownership of a company. In the event that the Company has had a change in ownership, utilization of the carryforwards could be restricted. As of December 31, 2015, the Company had unused net operating loss carryforward from its PRC subsidiaries in the amount of approximately $7,068,244 which may be applied against future taxable income and begins to expire after the year of 2019.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company is subject to income tax in the U.S. Federal and certain state jurisdictions. The Company is no longer subject to federal or state examinations by tax authorities for years prior to 2011.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company<font color="#f52887"> &rsquo;s PRC Subsidiaries are </font> subject to a 25% statutory income tax rate according to the Income Tax Laws of the PRC. Tax regulations are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. All tax positions taken, or expected to be taken, continue to be more likely than not ultimately settled at the full amount claimed. The Company&rsquo;s tax filings are subject to the PRC tax bureau&rsquo;s examination for a period up to 5 years. The Company is not currently under any examination by the PRC tax bureau.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. For the year ended December 31, 2015, the Company has not made a tax benefits provision for U.S. or additional foreign withholding taxes on approximately $1.3 million of the earnings deficit of the amount related to the non-U.S. subsidiaries for financial reporting over the tax basis of such investments in foreign subsidiaries. Generally, such amounts become subject to U.S. tax deduction upon recognition and under certain other circumstances. It is not practicable to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. The Company did not have any investments in non-U.S. subsidiaries during the year ended December 31, 2014. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>16. Net Loss per Share</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The following table presents the calculation of the Company&rsquo;s basic and diluted net loss per shares:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> 2015 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Numerator</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px">Net loss attributable to common stockholders</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">of SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,478,161 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(8,830,480</td>
<td valign="bottom" width="1%">)</td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Denominator</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Weighted average shares used to compute net loss per share</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px">available to common stockholders, basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,409,024 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32,587,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Basic and diluted net loss per share</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.20 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(0.27</td>
<td valign="bottom" width="1%">)</td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak4754ce7f-f1bc-45ee-a913-d6764747bb45" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-40</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">For the years ended December 31, 2015 and 2014, <font color="#f52887"> options to purchase </font>52,000 <font color="#f52887"> shares </font>and 207,500 shares <font color="#f52887"> , respectively, </font> were excluded from the computation of diluted net loss per share as the impact of including those shares would be anti-dilutive.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><strong>17. Segment Reporting </strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company use the management approach for segment reporting disclosure, which designates the internal organization that is used by management for making operating decisions and accessing performance as the source of our reporting segments. For the year ended December 31, 2015, the Company operates under two operating segments on the basis of geographical areas: the United States and the People Republic of China. Operating segments are defined as components of an enterprise about which separate financial information is available and that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. For the year ended December 31, 2014, the Company operated under one operating segment which is the United States segment. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company evaluates performance based on several factors, including revenue, cost of revenue, operating expenses, and income from operations. The following tables show the operations of the Company&rsquo;s operating segments for the year ended December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">US</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">PRC</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><strong>Revenue from external customers -</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Installation of solar systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">33,236,695</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">33,236,695</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest revenue of loan receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,436,136</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,436,136</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">569,444</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">569,444</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,242,275</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36,242,275</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><strong>Cost of revenue -</strong></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Installation of solar systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(25,101,734</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(25,101,734</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(484,424</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(484,424</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(25,586,158</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(25,586,158</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Depreciation and amortization expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,619,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">111,121</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,731,049</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest expenses, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,478,643</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(93,909</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,572,552</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity income of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">350,718</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">350,718</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Income tax expense (benefit)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">52,423</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(609,900</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(557,477</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,343,167</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(2,227,255</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(7,570,422</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Investment in unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,190,019</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,190,019</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Capital expenditures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(21,401</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(313,800</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(335,201</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Long-lived assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44,648,789</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,434,125</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">55,082,914</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total reportable assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">61,709,049</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">20,354,295</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">82,063,344</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakb17a6979-f603-42cd-9b62-61289029d6a0" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-41</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center"><b>Notes to Consolidated Financial Statements</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Years Ended December 31, 2015 and 2014</b></p><br>
<p style="MARGIN: 0px"><strong>18. Subsequent Events</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The Company has evaluated subsequent events through July 29, 2016 the date the consolidated financial statements were issued and except as disclosed in Notes 9 and 14, and the following paragraphs noted no other events that require adjustment of, or disclosure in, the consolidated financial statements as of and for the years ended December 31, 2015 and 2014.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On April 18, 2016, ZHPV entered into an agreement to sell its 100% ownership of one of its subsidiaries that holds the entire ownership in a project company related to the Guizhou solar farm project to AMD, one of SolarMax&rsquo;s stockholders, for a total consideration of RMB 1.0 million (approximately $154,000). Effectively upon completion of the ownership transfer, AMD became the owner of the Guizhou solar farm project and ZHPV is engaged to be the EPC contractor of the 70MW solar farm project with the total contract value of RMB 518 million ($80 million). As of June 24, 2016, the Guizhou project is approximately 63% completed. The project is expected to be 100% completed with the total contract revenue of $80 million earned prior to December 31, 2016. The sale of the subsidiary of ZHPV to AMD was completed on June 8, 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On April 18, 2016 and April 28, 2016, the Company made unsecured loans to a prospective panel supplier in the aggregate loan amount of $195,000. The loans have a three-month term with an annual fixed interest rate of 8%. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In June 2016, SolarMax began the launch of a new product line, FLEX Energy Storage System, whereby SolarMax would be the exclusive distributor of the FLEX Energy Storage System in the United States. Management believes this new product line will complement its existing product offerings in residential and commercial solar, and commercial LED lighting, and further positions the Company as a trusted leader in renewable energy. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">In June 2016, SolarMax entered into a <font color="#f52887"> panel purchase </font> agreement <font color="#f52887"> which </font>with a US-based panel supplier to purchase 150 megawatt of solar panels over a three-year period. The agreement stipulates a 30 megawatt minimum amount to be purchased by SolarMax for each year<font color="#f52887"> with the first year being the year beginning June 1, 2016. </font></p>
<p style="MARGIN: 0px">&nbsp;&nbsp;
<table id="pagebreak02859700-be2f-4af8-abc9-4dd4fb16e44f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-42</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><a name="bal3">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Balance Sheets</b></p>
<p style="MARGIN: 0px" align="center"><b>As of September 30, 2016 (Unaudited) and December 31, 2015
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><b><font color="#f52887"> September </font><font color="#f52887"> 30,<br>2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>December 31,<br>2015</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Assets</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Current assets</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cash and cash equivalents</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 23,391,712 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,982,141</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Restricted cash </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,890,279 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 211,469 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accounts receivable, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,247,972 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,598,282 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Costs and estimated earnings in excess of billings on uncompleted contracts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,733,533 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable, <font color="#f52887"> net, </font>current portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,468,905 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,654,789</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,368,076 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,872,621</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Inventories, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,378,935 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,572,724</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,128,867 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,805,318 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred tax asset, current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 909,229 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,767,061</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Total current assets</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,517,508 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 27,464,405 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Property and equipment</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Automobiles</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,005,489 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">937,382</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Furniture and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,148,106 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,128,798 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Solar systems leased to customers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,552,216 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,607,803</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Leasehold improvements</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,175,617 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,145,428 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,881,428 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,819,411</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: accumulated depreciation and amortization</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,887,315 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(3,369,671</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Property and equipment, net</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,994,113 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,449,740</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Goodwill</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,048,136 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,260,219</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Intangible assets, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,197,873 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,707,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Investments in unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,931,515 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,190,019</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable, <font color="#f52887"> net, </font>noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 31,891,111 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35,810,901</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Other assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 376,947 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 180,323 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Total assets</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>104,957,203</b> </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><b>$</b></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><b>82,063,344</b></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Liabilities and Stockholders&rsquo; Equity</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Current liabilities</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Notes and accounts </font> payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 21,977,524 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,491,061</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Bank and auto loans, current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 256,005 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,567,784</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loan from non-financial institutions</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496,005 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,142,474</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loans from related parties, current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,500,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,231,064</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Deposit for share subscription </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,490,757 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deposits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,865,628 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,872,263</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accrued expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,220,690 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">3,067,195</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Total current liabilities</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 47,806,609 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">18,371,841</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px"><br>
<table id="pagebreak1efac99b-f1d3-4797-914d-81d643d327ef" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-43</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SolarMax Technology, Inc. and Subsidiaries</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Balance Sheets </b></p>
<p style="MARGIN: 0px" align="center"><b>As of September 30, 2016 (Unaudited) and December 31, 2015
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></b>&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Bank and auto loans, noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,976 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">59,238</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Loans from related parties, noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 42,500,000 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Other liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,091,701 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">2,168,371</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Total liabilities</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b><font color="#f52887"> 92,411,286 </font></b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b>65,599,450</b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Commitments and Contingencies (Note 13)</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Stockholders&rsquo; equity</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Common stock, par value $0.001 per share; 500,000,000 shares authorized, 38,087,928 shares issued, 37,087,928 shares outstanding as of <font color="#f52887"> September 30 </font>, 2016 and December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,088 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38,088</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Additional paid-in capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 40,588,547 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,459,392</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Less: equity subscription receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,444,998 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,509,998</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Less: treasury stock at cost &#8211; 1,000,000 shares </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,800,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,800,000</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Accumulated deficit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (20,032,601 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(16,273,579</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Accumulated other comprehensive loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (891,706 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(630,029</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b>Total stockholders&rsquo; equity attributable</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,457,330 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16,283,874</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 9pt"><b>to SolarMax Technology, Inc.</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%" colspan="7">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Noncontrolling interest in SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 88,587 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">180,020</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Total stockholders&rsquo; equity</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b><font color="#f52887"> 12,545,917 </font></b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b>16,463,894</b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Total liabilities and stockholders&rsquo; equity</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b><font color="#f52887"> $ </font></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b><font color="#f52887"> 104,957,203 </font></b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>$</b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b>82,063,344</b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><i>See accompanying notes to consolidated financial statements.</i></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px"><b style="MARGIN: 0px">
<table id="pagebreak431735d5-c182-4400-9ace-676b3b55bc5b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-44</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></b></i></p><b style="MARGIN: 0px">
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="loss3">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statements of Operations and Comprehensive Loss</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></b></p>
<p style="MARGIN: 0px" align="justify">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><b><font color="#f52887"> 2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">2015</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Revenue</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 65,852,221 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 26,751,439 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Cost of revenue</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 52,812,621 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 18,301,241 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Gross profit</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,039,600 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,450,198 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Operating expenses</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">General and administrative</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,220,863 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,007,629 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Impairment loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,130,154</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Operating loss</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,181,263 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,687,585 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Other income (expense)</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Interest income</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 74,679 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,941 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Interest expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,877,106 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,143,820 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Equity <font color="#f52887"> in (loss) </font>income of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (34,148 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 333,095 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Other<font color="#f52887"> (expense) </font> income, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (189,190 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 79,139 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Total other expenses, net</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,025,765 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (716,645 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><font color="#f52887"> Loss </font> before income taxes</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,207,028 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,404,230 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="9%" colspan="3" align="right"></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Provision (benefit) for income taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 643,427 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (361,289 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Net loss</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,850,455 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,042,941 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: net loss attributable to </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">noncontrolling interest</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (91,433 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (83,044 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Net loss attributable</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify"><b>to SolarMax Technology, Inc.</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,759,022 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,959,897 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Other comprehensive loss</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Foreign currency translation adjustments<b></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (261,677 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (445,995 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Comprehensive loss attributable</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify"><b>to SolarMax Technology, Inc.</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,020,699 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(5,405,892</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net loss per share attributable to stockholders</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">of SolarMax Technology, Inc. -</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.10 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(0.14</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Weighted average shares - </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,087,928 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 34,505,877 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table></p>
<p style="MARGIN: 0px" align="justify"><i style="MARGIN: 0px"><font color="#f52887"> </font></i>&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i style="MARGIN: 0px"><font color="#f52887"> See </font></i><i><font style="MARGIN: 0px" color="#f52887"> accompanying notes to consolidated financial statements.
<table id="pagebreak7be223aa-1945-4594-b289-f25326c2b810" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-45</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px"> </font></i><b><i></i></b></p>
<p style="MARGIN: 0px" align="center"><b><a name="equity3">SolarMax Technology, Inc. and Subsidiaries</a></b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Consolidated Statement of Changes in Stockholders' Equity</b></p>
<p style="MARGIN: 0px" align="center"><b>For the Nine Months Ended September 30, 2016 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></b>&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="5" align="center">
<p style="MARGIN: 0px" align="center">Common Stock</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Additional Paid-in </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Equity Subscription Receivable</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="5" align="center">
<p style="MARGIN: 0px" align="center">Treasury Stock</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Accumulated</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Accumulated other comprehensive </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Non-controlling </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Amount </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Capital</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Amount</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">&nbsp;Deficit</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">loss</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Interest</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Total</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" width="18%">
<p style="MARGIN: 0px" align="justify"><b>Balance at January 1, 2016</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="6%" align="right">38,087,928</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">38,088</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">40,459,392</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">(5,509,998</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="6%" align="right">(1,000,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">(1,800,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">(16,273,579</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="7%" align="right">(630,029</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">180,020</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="6%" align="right">16,463,894</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Subscription received<b></b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">15,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">15,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Subscription <font style="FONT-SIZE: 12pt; COLOR: ; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US; mso-bidi-font-weight: normal"><font style='FONT-SIZE: 9pt; COLOR: black; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: ZH-CN; mso-bidi-font-weight: bold'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> price adjustment </font></font></font></font><font style="FONT-SIZE: 10pt; COLOR: #494949; mso-bidi-font-weight: bold"></font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(50,000</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">50,000</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font style="FONT-SIZE: 10pt; COLOR: #494949; mso-bidi-font-weight: bold">Stock-based compensation<b></b></font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 179,155 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 179,155 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font style="FONT-SIZE: 10pt; COLOR: #494949; mso-bidi-font-weight: bold">Net loss<b></b></font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> (3,759,022 </font></td>
<td valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> (91,433 </font></td>
<td valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> (3,850,455 </font></td>
<td valign="bottom"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font style="FONT-SIZE: 10pt; COLOR: #494949; mso-bidi-font-weight: bold">Currency translation adjustments<b></b></font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (261,677 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (261,677 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><font style="FONT-SIZE: 10pt; COLOR: #494949">Balance at </font></b><font style="FONT-SIZE: 12pt; FONT-WEIGHT: normal; COLOR: ; mso-bidi-font-size: 10.0pt; mso-fareast-font-family: SimSun; mso-fareast-language: EN-US"><b><font style='FONT-SIZE: 9pt; COLOR: black; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: ZH-CN'><font style='mso-prop-change: "Asher Levitsky" 19000000T0000'><font color="#f52887"> September </font></font></font></b></font><b><font style="FONT-SIZE: 10pt; COLOR: #494949"> 30, 2016 </font></b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">38,087,928</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">38,088</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 40,588,547 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(5,444,998</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(1,800,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (20,032,601 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (891,706 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 88,587 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 12,545,917 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;<i><font style="MARGIN: 0px" color="#f52887"> See accompanying notes to consolidated financial statements.
<table id="pagebreaka87f3fc5-71d0-48de-ac68-374afbd0974f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-46</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p> </font></i>
<p style="MARGIN: 0px" align="center"><strong><a name="cash3">SolarMax Technology, Inc. and Subsidiaries</a></strong></p>
<p style="MARGIN: 0px" align="center"><strong>Consolidated Statements of Cash Flows </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong>&nbsp;</p><font color="#f52887">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>2016</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>2015</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Cash flows from operating activities</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,850,455 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,042,941 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Adjustments to reconcile net loss to net cash provided</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify"><font color="#f52887"> by </font> operating activities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Equity <font color="#f52887"> in loss ( </font>income<font color="#f52887"> ) </font> of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 34,148 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (333,095 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Loss on <font color="#f52887"> disposal </font> of <font color="#f52887"> equity interest in unconsolidated joint venture </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 218,355 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Depreciation and amortization expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,605,059 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,375,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Amortization of permit backlog</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 480,383 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Impairment loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,130,154</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Provision for bad debts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 63,316 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 84,609 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Provision for loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 215,612 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 155,414 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify"><font color="#f52887"> Provision for excess and obsolete inventories </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 272,604 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 44,726 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify"><font color="#f52887"> Provision for warranty, customer care and production guaranty </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 208,814 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 264,310 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Deferred income taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 701,529 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (338,274 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Stock-based compensation expense</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 179,155 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 92,165 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15px" align="justify">Changes in operating assets and liabilities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px"><font color="#f52887"> Restricted cash </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,911,346 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Accounts receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,746,792 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,622,431 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Costs and estimated earnings in excess of billings on uncompleted contracts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,825,629 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 492,837 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,691 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Inventories</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,663,852 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,420,018 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,742 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,404 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Other assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (193,572 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (810,076 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify"><font color="#f52887"> Notes and accounts </font> payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 22,671,546 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (380,909 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Deposits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (875,910 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,205,982 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Accrued expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (674,169 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (509,462 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Other liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,426 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 581,712 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net cash provided by operating activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,464,801 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,687,859 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Cash flows from investing activities</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Proceeds from sale of Chinese <font color="#f52887"> subsidiary </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 151,322 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Cash obtained through acquisitions of ZHTH &amp; ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">266,053</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px"><font color="#f52887"> Distributions from unconsolidated joint ventures </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 588,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px"><font color="#f52887"> Proceeds from disposal of unconsolidated PRC joint venture </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 232,819 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Additions to customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,638,060 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (10,732,089 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Payments received from customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,528,122 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,931,979 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify">Purchase of property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (224,573 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (293,701 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 0px" align="justify">Net cash provided by (used in) investing activities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,816,811 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,006,939 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px"><br>
<table id="pagebreak81543333-cbd4-4a81-bd93-7c05b1b00024" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-47</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p></font>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Consolidated Statements of Cash Flows </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)</strong></p><font color="#f52887"> <font size="+0"><b>
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</b></font> </font></p>
<p style="MARGIN: 0px" align="left">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash Flows from financing activities: </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 17.1pt"><font color="#f52887"> Cash received from equity issuances </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,505,757 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,225,000 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 20pt"><font color="#f52887"> Proceeds from new borrowings </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,259,435 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 20pt"><font color="#f52887"> Principal repayment on borrowings </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (11,119,146 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,096,839 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 20pt"><font color="#f52887"> Proceeds from new borrowings from related party </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,000,000 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,500,000 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 20pt"><font color="#f52887"> Repayment of related party loan </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (227,956 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Net cash provided by financing activities </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,418,090 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,628,161 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Effect of exchange rate </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (290,131 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (110,217 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net increase (decrease) in cash and cash equivalents </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,409,571 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (801,136 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash and cash equivalents, beginning of the period </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,982,141 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,445,832 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash and cash equivalents, end of the period </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 23,391,712 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,644,696 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Supplemental disclosures of cash flow information: </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 10pt"><font color="#f52887"> Interest paid in cash </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,520,547 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,127,584 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 10pt"><font color="#f52887"> Income taxes (refunded) paid in cash </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (57,739 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 750 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr></table></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Non-cash activities for investing and financing activities:</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Shares issued to acquire ZHTH &amp; ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">10,540,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px"><i style="MARGIN: 0px"></i>&nbsp;</p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">See accompanying notes to consolidated financial statements.</i></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<table id="pagebreakec14100e-27ff-4324-a2ef-9379413f957d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-48</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></i>
<p style="MARGIN: 0px" align="center"><strong><a name="notes3">SolarMax Technology, Inc. and Subsidiaries</a></strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i>
<p style="MARGIN: 0px"><strong>1.&nbsp; Description of Business<font color="#f52887"> </font></strong>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax Technology, Inc. (&ldquo;SolarMax&rdquo; or the &ldquo;Company&rdquo;) is a Nevada corporation formed in January 2008, with operations and headquarters located in California. The Company has three wholly-owned and one 93.75% owned subsidiaries in the United States. </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax Renewable Energy Provider, Inc., a California corporation (&ldquo;SREP&rdquo;) </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax Financial, Inc., a California corporation (&ldquo;SolarMax Financial&rdquo;) </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax LED, Inc., a California corporation (&ldquo;LED&rdquo;) </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SMX Capital, Inc., a New Jersey corporation (&ldquo;SMX Capital&rdquo;) </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SMX Capital is a 93.75% owned subsidiary of the Company, and its financial statements are consolidated in SolarMax&rsquo; consolidated financial statements. The 6.25% minority interest is held by the president of the Company&rsquo;s PRC operations. The minority interest is reflected as non-controlling interests in the accompanying consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company&rsquo;s wholly-owned subsidiaries <font color="#f52887"> outside </font> the United States<font color="#f52887"> are as follows: </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> Accumulate Investment Co. Ltd. (&ldquo;Accumulate&rdquo;), a British Virgin Islands corporation. The Company acquired Accumulate as part of its acquisition of Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. (&ldquo;ZHPV&rdquo;) in April 2015. See Note 3. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> SolarMax Technology Holdings (Hong Kong) Limited (&ldquo;SolarMax Hong Kong&rdquo;), which was established under the laws of Hong Kong on October 27, 2014. </font></td></tr>
<tr>
<td><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<tr>
<td><font color="#f52887"> </font></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"><font color="#f52887"> Golden </font>Solarmax Finance Co., Ltd., (&ldquo;Golden SolarMax&rdquo;), which was organized under the laws of the Peoples&rsquo; Republic of China (&ldquo;China&rdquo; or the &ldquo;PRC&rdquo;) on June 1, 2015.</font></td></tr></tr></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Accumulate has one wholly-owned subsidiary, Accumulate Investment Co., Limited (HK), an entity organized under the laws of Hong Kong (&ldquo;Accumulate Hong Kong&rdquo;). Accumulate Hong Kong has one wholly-owned subsidiary, ZHPV. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax Hong Kong has one wholly-owned subsidiary, SolarMax Technology (Shanghai) Co., Ltd. (&ldquo;SolarMax Shanghai&rdquo;), which is organized under the laws of the PRC and was formed on February 3, 2015. SolarMax Shanghai is a wholly foreign-owned entity, which is referred to as a WFOE. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax Shanghai has two wholly-owned subsidiaries, Chengdu Zhonghong Tianhao Technology Co., Ltd., (&ldquo;ZHTH&rdquo;) which was acquired in April 2015 (see Note 3), and Jiangsu Honghao Electricity Technology Co. Ltd. (&ldquo;Jiangsu Honghao&rdquo;), which was organized on September 21, 2015. Jiangsu Honghao is engaged in the project operation and maintenance business, and forms a subsidiary for each project for which it provides the project operation and maintenance service. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> ZHTH is engaged in project development. ZHTH has three wholly-owned subsidiaries located in Beijing, Chengdu and Shanghai. ZHTH&rsquo;s Shanghai subsidiary, as well as ZHPV, own subsidiaries (each, a &ldquo;permit subsidiary&rdquo;) that individually owns or will own the solar farm permits. ZHPV&rsquo;s core business is to provide engineering, procurement and construction (&ldquo;EPC&rdquo;) services. When a buyer of a project is identified, the subsidiary that owns the permit subsidiary sells to the buyer the equity in the permit subsidiary that holds the permit for that specific solar farm project, and the buyer of the project engages ZHPV for the EPC work. The purchase price for the permit subsidiary is an amount approximating the permit subsidiary&rsquo;s net assets. Accordingly, the Company does not generate a material gain or loss from the sale of the permit subsidiaries. The sale of the equity in the permit subsidiaries is part of the normal course of the Company&rsquo;s operations in China. Because government regulations prohibit the sale of the permit relating to a solar farm, it is necessary for the Company to sell the equity in the permit subsidiary to effectuate the transfer of the ownership of the solar farm permit to the buyer. </font></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify">On April 28, 2015, the Company acquired the <font color="#f52887"> ownership </font> of ZHTH<font color="#f52887"> , </font> through a share exchange agreement<font color="#f52887"> among the Company, SolarMax Shanghai and the equity owners of ZHTH. ZHTH was formed on March 21, 2014, and ZHTH became a wholly-owned subsidiary of SolarMax Shanghai as a result of the acquisition. See Note 3. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Also on April 28, 2015, the Company </font> acquired the <font color="#f52887"> ownership </font> of ZHPV through a share exchange agreement <font color="#f52887"> between the Company and the holders of the stock of Accumulate. After the acquisition, the Company owns all of the stock of Accumulate, which, in turn, through Accumulate Hong Kong, owns all of the stock of ZHPV. ZHPV was formed on December 31, 2009. See Note 3. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">At <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the Company&rsquo;s <font color="#f52887"> major subsidiaries and the related </font>core business <font color="#f52887"> consist </font> of the following:</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px">
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<td width="4%"></td>
<td valign="top" width="4%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">SREP was established on July 19, 2011 and is engaged in the business of selling and installing <font color="#f52887"> integrated </font> photovoltaic systems for residential and commercial markets in the United States.</td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top"><font color="#f52887"> SolarMax </font>Financial was established on September 9, 2009 and is engaged in the business of providing secured loans to purchasers of residential and commercial photovoltaic systems, and servicing installment sales for SREP customers in the United States.</td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">SMX <font color="#f52887"> Capital </font>was acquired by the Company in June 2011. SMX<font color="#f52887"> Capital </font> is engaged in the business of owning and funding renewable energy projects in the United States, and operates its business through operating leases and power purchase agreements primarily in the commercial markets. Its business is conducted directly and indirectly through a 30% equity interest in three companies (See Note <font color="#f52887"> 9 </font> &#8211; Investments in Unconsolidated Joint Ventures).<font color="#f52887"> SMX Capital has not been engaged in leasing new systems since 2014 and its business is primarily the ownership and maintenance of systems under existing leases. </font></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">LED was established on July 15, 2013 and is engaged in the business of LED light integration in the United States.</td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">ZHTH was acquired on April 28, 2015 and is engaged in the business of identifying, procuring and marketing solar energy farms in the PRC.</td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">ZHPV was acquired on April 28, 2015 and is engaged in the <font color="#f52887"> EPC </font>business <font color="#f52887"> for </font> solar energy farms in the PRC.<font color="#f52887"> </font></td></tr>
<tr>
<td></td>
<td valign="top"><font style="FONT-FAMILY: Symbol" color="#f52887"> &#183; </font></td>
<td valign="top"><font color="#f52887"> Jiangsu Honghao was organized on September 21, 2015 and is engaged in the business of operating and maintaining solar farms in the PRC. </font></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In June 2016, the Company entered into an agreement pursuant to which it became the exclusive distributor worldwide, except for Asia, for a new product line, FLEX Energy Storage System. The FLEX Energy Storage System may be sold separately or integrated with the solar energy system. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0in"><b>2. </b><b><font color="#f52887"> Basis of Presentation and Summary of Significant Accounting Policies </font></b><b></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Basis of Accounting</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The <font color="#f52887"> accompanying consolidated financial statements of the Company include the consolidated operations of its wholly-owned and controlled subsidiaries within and outside the United States. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The </font>accounting and reporting policies of the Company are in accordance with accounting principles generally accepted in the United States of America (&ldquo;GAAP&rdquo;).<font color="#f52887"> In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of and for the year ended December 31, 2015 and footnotes. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Use of Estimates </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. </font><font color="#f52887"> Significant accounting estimates reflected in the Company&rsquo;s consolidated financial statements include the percentage of completion of long-term construction contracts, the anticipated costs with respect to long-term contracts, the collectability of accounts receivable and loans receivable, the useful lives and impairment of property and equipment, goodwill and intangible assets, the fair value of stock options granted and stock-based compensation expense, the fair value of assets acquired and liabilities assumed in a business combination, warranty and customer care reserve, the valuation of deferred tax assets, inventories and provisions for income taxes. </font><font color="#f52887"> Actual results could differ materially from those estimates. </font><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify"><b><i>Principles of Consolidation</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The accompanying consolidated financial statements have been prepared in conformity with GAAP, and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. In accordance with the provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, 810, <i>Consolidation</i>, the Company consolidates any variable interest entity, or VIE, of which it is the primary beneficiary. The typical condition for a controlling financial interest ownership is holding a majority of the voting interests of an entity; however, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve controlling voting interests. ASC 810 requires a variable interest holder to consolidate a VIE if that party has the power to direct the activities of the VIE that most significantly impact the VIE&rsquo;s economic performance and the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The Company does not consolidate a VIE in which it has a majority ownership interest when the Company is not considered the primary beneficiary. The Company evaluates its relationships with all the VIEs on an ongoing basis to ensure that it continues to be or becomes the primary beneficiary. All intercompany transactions and balances have been eliminated in consolidation.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The accompanying consolidated financial statements include the accounts of <font color="#f52887"> SolarMax </font> and its wholly owned subsidiaries: SREP,<font color="#f52887"> SolarMax </font> Financial, LED, Holdings, Golden Solarmax, ZHTH and its PRC subsidiaries, ZHPV and its PRC subsidiaries, and its 93.75% owned subsidiary, SMX<font color="#f52887"> Capital </font>. All significant intercompany accounts and transactions have been eliminated in consolidation. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Variable Interest Entity Not Consolidated</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax </font> evaluated its involvement with <font color="#f52887"> SMX Property, LLC (&ldquo;SMXP&rdquo;) </font> under the requirements of ASC 810, <i>Variable Interest Entities</i>, and <font color="#f52887"> as discussed below, </font>determined that <font color="#f52887"> the Company </font> is not the primary beneficiary and therefore has not consolidated the financial information of SMXP<font color="#f52887"> . </font><u></u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax </font> is the lessee under an operating lease of its Riverside<font color="#f52887"> , CA </font> headquarters facility with SMXP (see Note 10 &#8211; Other Related Party Transactions). <font color="#f52887"> SMXP is a private entity owned by the Company&rsquo;s founders who are also executives of the Company. </font>The lease term <font color="#f52887"> was initially </font> for four years <font color="#f52887"> expiring on December 31, 2016, and was extended in September 2016 for a ten-year term, with one five-year renewal option. SolarMax </font> does not have any ownership interest in SMXP. Other than the <font color="#f52887"> common ownership and the </font>operating lease, <font color="#f52887"> SolarMax </font> does not have any economic arrangements with SMXP such that <font color="#f52887"> SolarMax will </font> have an obligation to support the operations of SMXP. Further, <font color="#f52887"> SolarMax </font> does not have the power to direct and control the activities of SMXP as such power to direct and control resides with SMXP&rsquo;s principals. Accordingly, <font color="#f52887"> SolarMax </font> is not considered to be the primary beneficiary of SMXP and has not consolidated SMXP. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">At <font color="#f52887"> September </font> 30, 2016, SMXP reported total assets of $<font color="#f52887"> 12.9 </font> million, total liabilities of $13.3 million. SMXP reported net income of $<font color="#f52887"> 247,352 </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September 30, 2016, of which $405,729 represented lease payments from SolarMax </font> (amounts are unaudited).</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Liquidity</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company has incurred recurring net losses for the years ended December 31, 2015 and 2014, as well as during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016. <font color="#f52887"> For </font> the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, the Company&rsquo;s net loss <font color="#f52887"> has decreased and the Company </font> has achieved positive cash flows from operations including a substantial cash balance at the end of the period. The significant improvement in cash flow from operations for this period resulted primarily from <font color="#f52887"> the Company&rsquo;s </font> expansion into China which occurred following <font color="#f52887"> the </font> April 2015 <font color="#f52887"> acquisitions of ZHTH and ZHPV </font>. Accordingly, management believes the Company will have sufficient cash flows to meet its obligations over the next twelve months.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify"><b><i>Revenue Recognition</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u>Long-term Construction Contracts</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Long-term construction contracts are primarily related to the Company&rsquo;s operation in the PRC. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company recognizes <font color="#f52887"> EPC </font> contract revenue using the percentage-of-completion method, based primarily on contract cost incurred to date compared to total estimated contract cost. <font color="#f52887"> Although the contracts include value added tax, or VAT, the Company does not recognize VAT as either revenue or cost of revenue. Customer-furnished materials, labor and equipment and, in certain cases, subcontractor materials, labor and equipment, are included in revenue and cost of revenue when management believes that the Company is responsible for the ultimate acceptability of the project. Contracts are generally segmented between types of services, which are primarily design services and EPC services, which are separate from design service. Accordingly, gross margin related to each activity is recognized as those separate services are rendered. Changes to total estimated contract cost or losses, if any, are recognized in the period in which they are determined. Pre-contract costs are expensed as incurred. Revenue recognized in excess of amounts billed would be classified as a current asset under contract work in progress. Advances that are payments on account of contract work in progress would be deducted from contract work in progress. Amounts billed to customers in excess of revenue recognized to date would be classified as a current liability under advance billings on contracts. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> For EPC contracts whereby the contract duration is less than four months and the contract value is under $2.0 million, the Company&rsquo;s policy is to recognize the revenue on this contract using the completed contract method. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">During the <font color="#f52887"> nine months ended September </font> 30, 2016, the Company&rsquo;s construction activities were attributed to the Guizhou phase I<font color="#f52887"> project </font>, which was a <font color="#f52887"> 55 </font>MW solar farm project with <font color="#f52887"> a subsidiary of Changzhou Almaden Co., Ltd. (&ldquo;AMD&rdquo;), a related party, </font> with the total contract value <font color="#f52887"> of </font> RMB 425 million (approximately $64 million)<font color="#f52887"> . AMD is a related party since it owns more than 5% of the Company&rsquo;s common stock and its chairman and chief executive officer is a director of the Company. As of September </font> 30, 2016, the Guizhou project is <font color="#f52887"> 79.3% completed and $43.7 </font> million of the contract revenue was recognized for the&nbsp;<font color="#f52887"> nine months ended September 30, 2016. During the quarter ended September 30, 2016, certain land usage issues were encountered resulting in both a delay in the construction and a reduction in the project scope from the original 64 MW to 55MW, with a reduction in the contract price. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Information concerning uncompleted contracts at <font color="#f52887"> September 30, 2016 accounted for on percentage of completion basis </font> is as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Costs incurred on uncompleted <font color="#f52887"> contracts </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 36,232,227 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Estimated earnings thereon </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,429,368 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,661,595 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Add: Value Added Tax (&ldquo;VAT&rdquo;) </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,402,434 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: <font color="#f52887"> billings </font> to date<font color="#f52887"> &#8211; EPC project </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (36,913,320 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> VAT billings </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (5,325,079 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net underbilling</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,825,630 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font>
<table id="pagebreak2fb39713-e95e-457e-ac4f-9f50360e3380" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Included in the accompanying balance sheet under the following caption: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net underbilling on uncompleted contracts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,825,630 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Billings in excess of costs and estimated earnings on uncompleted contracts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: cash received in excess of billings on uncompleted contract</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Effect of exchange rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (92,097 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Costs and estimated earnings<font color="#f52887"> and taxes </font> in excess of billings on uncompleted contracts </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,733,533 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u><font color="#f52887"> Solar Energy Systems and Components Sales </font></u><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In the United States, the Company&rsquo;s customers purchase solar energy systems from the Company under fixed-price contracts. The Company&rsquo;s largest United States customer for the nine months ended September 30, 2016 and the Company&rsquo;s largest customer for the nine months ended September 30, 2015 is a leasing company with which the Company has an agreement whereby the Company introduces the customer to the leasing company, which, in turn, engages the Company to perform EPC services. The leasing company leases the system directly the customer. The Company recognized revenue on sales to the leasing company in the same manner as it recognizes revenue on sales to residential customers. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> A residential customer that meets the Company&rsquo;s financing standards and purchases a solar energy system from the Company has the option to pay the full purchase price for the system at the time of purchase or finance the purchase through SolarMax Financial. From time to time, the Company also arranges customer financings through a local credit union, in which case the credit union would pay the full purchase price of the system to the Company upon system delivery and acceptance by the ultimate customer. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> For solar energy systems and components sales for which customers pay the full purchase price upon delivery of the system, the Company recognizes revenue, net of any applicable governmental sales taxes, in accordance with ASC 605, </font><i><font color="#f52887"> Revenue Recognition&#8212;Overall </font></i><font color="#f52887"> . The Company recognizes revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. Components are comprised of photovoltaic panels and solar energy system monitoring hardware and may include FLEX Energy Storage System. The Company recognizes revenue when the Company installs a solar energy system and it passes inspection by the utility or the authority having jurisdiction and the permit to operate has been issued, provided all other revenue recognition criteria have been met. Costs incurred on residential installations before the solar energy systems are completed are included in inventories as work in progress in the Company&rsquo;s consolidated balance sheets. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> For solar energy systems sold under an installment contract, the Company has completed an extensive review of the customer&rsquo;s credit history prior to approving the customer for an installment sale which provides the Company with reasonable assurance of the collectability of the related installment sale receivable over the installment term. Accordingly, the Company recognizes the revenue from the installment sale of a solar energy system when the Company delivers a system that has passed inspection by the utility or the authority having jurisdiction and the permit to operate has been issued. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i><u>Operating Leases and Power Purchase Agreements<font color="#f52887"> </font></u></i></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> From 2010 to 2014, the Company constructed and offered built-to-suit commercial-grade photovoltaic systems for certain commercial and not-for-profit customers in California, Hawaii, Colorado and New Jersey; under long-term leases and power purchase agreements, with terms of up to 20 years. Under these arrangements, the Company owns the systems and receives the 30% federal grant, as well as any state and utility company rebates on the systems it owns. Upfront rebates and incentives were applied to reduce the cost of the systems. All other annual rebates and performance-based incentive rebates are recognized in revenue when received. In connection with the Company&rsquo;s ownership of solar systems primarily in New Jersey, the Company owns a number of Solar Renewable Energy Certificates (&ldquo;SREC&rdquo;). There is currently no assigned monetary value to an SREC and the prices are ultimately determined by market forces within the parameters set forth by the state. The Company recognizes the revenue of the SREC when it is sold. Subsequent to 2014, the Company did not enter into any new leases solar systems. All leasing is transactions are conducted by an independent leasing company. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
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<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Under the long-term leases, the </font> Company is the lessor <font color="#f52887"> of </font> solar energy systems, which are accounted for as operating leases in accordance with ASC 840, Leases<font color="#f52887"> , since the lease does not provide for the ownership transfer to the lessee at the end of lease, the arrangement does not contain a bargain purchase option, the lease term does not exceed the economic life of the underlying solar system which is typically 35-40 years, and the net present value of the lease payments does not exceed 90% of the original investment </font>. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For solar energy systems where customers purchase electricity from the Company under power purchase agreements, the Company has determined that these agreements should be accounted for, in substance, as operating leases pursuant to ASC <font color="#f52887"> 840 since the power purchase agreement does not provide for the ownership transfer to the other party at the end of lease, the arrangement does not contain a bargain purchase option, the term of the power purchase agreement does not exceed the economic life of the underlying solar system which is typically 35-40 years, and the net present value of the payments under the power purchase agreement does not exceed 90% of the original investment. </font> The Company recognizes revenue based upon the amount of electricity delivered at rates specified under the contracts, assuming all other revenue recognition criteria are met.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company capitalizes initial direct costs from the origination of solar energy systems leased to customers (the incremental cost of contract administration, referral fees and sales commissions) as an element of solar energy systems, leased and to be leased, and subsequently amortize these costs over the term of the related lease or power purchase agreement, which generally ranges from 10 to 20 years.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Subsequent to 2014, the Company did not enter into any direct leases for solar systems. The Company has a channel agreement with an independent leasing company to which the Company refers potential lease customers and to whom the Company sells the system, as discussed under &ldquo;Solar Energy Systems and Components Sales.&rdquo; </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i><u>LED Projects</u></i></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company&rsquo;s revenue recognition policy as related to LED products and services is in accordance with ASC 605-10-S99, Revenue Recognition-Overall-SEC Materials. The Company recognizes revenue when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. The Company recognizes its LED revenue upon the completion of the installation and the final acceptance from the customer, provided all other revenue recognition criteria have been met. Prior to the completion and the final acceptance, all costs incurred are included in inventories as work in progress in the Company&rsquo;s consolidated balance sheet.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i><u>Financing Loan Contracts</u></i></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company also provides financing to qualified customers to purchase residential or commercial photovoltaic systems, <font color="#f52887"> FLEX Energy Storage Systems, </font>as well as LED<font color="#f52887"> products and </font> projects. Customer loans receivable are classified as held-for-investment based on management&rsquo;s intent and ability to hold the loans for the foreseeable future or to maturity. Loans held-for-investment are carried at amortized cost and are reduced by an allowance for estimated credit losses as necessary. The Company recognizes interest income on loans, including the amortization of discounts and premiums, using the interest method. The interest method is applied on a loan-by-loan basis when collectability of the future payments is reasonably assured. Premiums and discounts are recognized as yield adjustments over the term of the related loans. Loans are transferred from held-for-investment to held-for-sale when management&rsquo;s intent is to no longer hold the loans for the foreseeable future. Loans held-for-sale are recorded at the lower of cost or fair value. There were no loans held-for-sale at <font color="#f52887"> September </font> 30, 2016 and December 31, 2015.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i><u><font color="#f52887"> Operation and Maintenance Revenue </font></u></i><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company provides operation and maintenance service on solar farm projects in the PRC after the projects are completed, pursuant to separate operation and maintenance contracts. Revenue is recognized as earned over the term of the underlying contract which is generally quoted based on a specific amount per watt per year. The Company may be entitled to additional performance incentives if specified performance targets are met, which will be recognized when those targets are achieved. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreake47bea86-e6f5-457d-91cb-bb8b19ba2688" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On June 6, 2016, the Company entered into an operations and maintenance contract with a subsidiary of AMD, a related party, relating to the operations and maintenance on the Phase I Guizhou solar farm project. The term of the contract is for five years ending on June 21, 2021 and the fee to be paid will be RMB 0.05 per watt with a minimum contract amount of RMB 3.0 million (approximately $451,000) per year for the phase I of the project. Payment of 50% of the base annual contract amount for the first year was paid upon contract signing and the balance would be paid on a quarterly basis. The Company is also entitled to additional payments of up to RMB 100,000 (approximately $15,000) if the Company meets certain specified performance targets. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><i><u><font color="#f52887"> Summary of Revenues </font></u></i><i><u></u></i></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table summarizes the Company&rsquo;s revenue by business line for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2016</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Solar farm projects<font color="#f52887"> * </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,754,142 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Solar &#8211; residential <font color="#f52887"> and </font> commercial systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 20,099,132 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 24,862,981 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">LED</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 305,912 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 188,282 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Financing related</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,693,035 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,700,176 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 65,852,221 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 26,751,439 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;_____________</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> * Includes revenue of approximately $93,000 from operations and maintenance services for the 44MW portion of the Phase 1 Guizhou project beginning in June 2016. </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In the table above, solar farm projects and operation and maintenance services relate to the Company&rsquo;s China segment and the other categories of revenue relate to the United States segment. Only the revenue from solar farm projects is recognized on a percentage-of-completion basis. </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p><b><i></i></b>
<p style="MARGIN: 0px" align="justify"><b><i>Cost of Revenue</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u>Solar </u><u><font color="#f52887"> Energy Systems </font></u><u> and </u><u><font color="#f52887"> Components Sales </font></u><u> and LED </u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Cost of revenue includes direct and indirect material, labor and related labor benefits costs, sales commissions and bonuses, operation and finance commissions and bonuses, freight, insurance allocated to operations and installations, warranty expense, inventory reserve, and other overhead costs allocated to operations, installation and warehouse.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u>Solar </u><u><font color="#f52887"> Farm Projects </font></u><u></u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In applying the percentage-of-completion method, the Company uses the actual costs incurred relative to the total estimated costs (including module costs<font color="#f52887"> but excluding VAT </font>) in order to determine the progress towards completion and <font color="#f52887"> calculates </font> the corresponding amount of revenue and profit to recognize. Costs incurred include direct materials, solar modules, labor, subcontractor costs, and those indirect costs related to contract performance, such as indirect labor and supplies. <font color="#f52887"> SolarMax </font> recognizes direct material and solar module costs as incurred when the direct materials and solar modules have been installed in the project. The Company considers direct materials and solar modules to be installed when they are permanently placed or affixed to a PV solar power system as required by engineering designs. Solar modules owned by the Company that will be used in our systems remain within inventory until such modules are installed in a system.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The percentage-of-completion method of revenue recognition requires us to make estimates of net contract revenues and costs to complete our projects. In making such estimates, management judgments are required to evaluate significant assumptions including the amount of net contract revenues, the cost of materials and labor, expected labor productivity, the impact of potential variances in schedule completion, and the impact of any penalties, claims, change orders, or performance incentives. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak51390812-12b3-4fde-97b9-4b9a525902a1" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-55</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited)
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"></strong><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify">If estimated total costs on any contract are greater than the net contract revenues, <font color="#f52887"> SolarMax </font> recognizes the entire estimated loss in the period the loss becomes known. The cumulative effect of the revisions to estimates related to net contract revenues and costs to complete contracts, including penalties, claims, change orders, performance incentives, anticipated losses, and others are recorded in the period in which the revisions to estimates are identified and the amounts can be reasonably estimated. The effect of the changes on future periods are recognized as if the revised estimates had been used since revenue was initially recognized under the contract. Such revisions could occur in any reporting period, and the effects may be material depending on the size of the contracts or the changes in estimates.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Concentration Risk</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u>Major Customers</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table provides information as to sales to two customers<font color="#f52887"> for the nine months ended September </font> 30, 2016:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Revenue </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Revenue</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Accounts Receivable </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Accounts Receivable</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer A* </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,661,595 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 66.3 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 632,124 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 26.0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer B</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,363,639 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 14.2 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 103,850 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4.3 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top" colspan="17">
<p style="MARGIN: 0px 0px 0px 45px" align="justify">*Customer A is <font color="#f52887"> a related party and </font>an affiliate of supplier A under the <font color="#f52887"> Major Suppliers </font> table.</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> No </font> customer accounted for at least 10% of the Company&rsquo;s consolidated revenue for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Effective January 25, 2015, the Company, through SREP, entered into a three-year <font color="#f52887"> channel </font> agreement<font color="#f52887"> with Customer B pursuant to which Customer B appoints the Company as its sales representative to solicit orders for its products in portions of southern California. Pursuant to this agreement, the Company introduces potential leasing customers to Customer B. Customer B pays the Company for EPC services in connection with the projects </font>. The agreement may be terminated for cause by either party and by <font color="#f52887"> Customer B </font> if it determines the Company <font color="#f52887"> does not </font> meet the required minimum volume commitments stipulated in the agreement for a period of time. As a result, <font color="#f52887"> Customer B was the Company&rsquo;s </font> second largest customer<font color="#f52887"> , and the largest customer </font> of the <font color="#f52887"> U.S. Segment </font> during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u>Suppliers</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table provides information as to purchases from two major suppliers <font color="#f52887"> for the nine </font> months ended <font color="#f52887"> September </font> 30, 2016:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Purchase </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Purchase</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Accounts Payable </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Accounts Payable</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Supplier A<font color="#f52887"> * </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 21,621,695 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 40.3 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,202,756 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 54.8 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Supplier B </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,069,138 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 20.6 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,491,024 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12.2 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top" colspan="17">
<p style="MARGIN: 0px"><font color="#f52887"> * Supplier </font><font color="#f52887"> A is a panel supplier for SolarMax, and Supplier B is a subcontractor. </font><font color="#f52887"> </font></p></td></tr></table>&nbsp;
<p style="MARGIN: 0px" align="justify">
<table id="pagebreak2246a972-6f6d-4f76-810b-76a9ad9dfe38" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-56</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">The following table provides information as to purchases from <font color="#f52887"> one major supplier for the nine months ended September </font> 30, 2015: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Purchase </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Purchase</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Accounts Payable </p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Percentage of Total Accounts Payable</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Supplier <font color="#f52887"> C* </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,851,434 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 21.1 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,018,272 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 15.7 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> * </font>Supplier C<font color="#f52887"> provides SolarMax installation materials. </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>&nbsp;
<p style="MARGIN: 0px" align="justify"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Cash and cash equivalents consist of deposit accounts and highly liquid investments purchased with an original maturity of three months or less. The carrying amounts reported on the consolidated balance sheets for cash and cash equivalents approximate fair value. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The standard insurance coverage for <font color="#f52887"> non-interest </font>bearing transaction accounts in the United States is $250,000 per <font color="#f52887"> depositor </font> under the FDIC's general deposit insurance rules. As of <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016, </font> and December 31, 2015 uninsured cash balances in domestic U.S. financial institutions was $<font color="#f52887"> 2,795,235 </font> and $1,597,565, respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The standard insurance coverage for <font color="#f52887"> non-interest </font>bearing transaction accounts in the <font color="#f52887"> PRC </font> is RMB500,000 (approximately $<font color="#f52887"> 74,960 </font>) per <font color="#f52887"> depositor </font> per bank under the <font color="#f52887"> applicable </font>Chinese general deposit insurance rules. The uninsured amount <font color="#f52887"> including the balance classified in restricted cash, was $21,271,369 </font> and $901,513 at <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, respectively.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Cash at September 30, 2016 included $7.5 million as an advance payment toward the subscription of stock in October 2016 private placement (See Note 19). </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Restricted Cash</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Restricted cash <font color="#f52887"> at September </font> 30, 2016 and December 31, <font color="#f52887"> 2015 consists of: </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> December 31,<br>2015 </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> A certificate of deposit held by a US financial institution as collateral for a letter of credit issued for purchases </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,350,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 211,469 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Deposits held by a PRC bank for the notes payable issued </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,540,279 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> A cash account held by a US financial institution as collateral for business credit cards </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,989 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,989 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,000,268 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 321,458 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Less: current portion </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,890,279 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (211,469 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Noncurrent portion </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,989 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 109,989 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Accounts Receivable, net</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Accounts receivable are reported at the outstanding principal balance due from customers. Under certain arrangements with customers, the customers <font color="#f52887"> may </font> assign the collection of incentive rebates <font color="#f52887"> due from government agencies or utility companies to the Company, however the customers would remain accountable for the ultimate payment if the amount of incentive rebates are not collectible from such government agencies or utility companies </font>.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Accounts receivable are recorded at net realizable value. The Company maintains allowances for the applicable portion of receivables when collection becomes doubtful. The Company estimates anticipated losses from doubtful accounts based upon the expected collectability of all accounts receivable, which take into account the number of days past due, collection history, identification of specific customer exposure, and current economic trends. Once a receivable is deemed to be uncollectible, it is written off against the allowance. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p><font style="MARGIN: 0px" color="#f52887">
<table id="pagebreak03742d9c-7c42-48ff-9dd9-8d7c43363bca" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-57</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px"> </font>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">The activity of the allowance for bad debts are as follow for the <font color="#f52887"> nine </font> months ended:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2016</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; beginning of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">187,421</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">211,469</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Provision for bad debts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 63,316 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 84,609 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Addition from acquisition of ZHPV</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,281 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Receivables written off </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (68,042 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (87,863 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Effect of exchange rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (296 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 233 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; end of period </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 182,399 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 219,730 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Accounts receivable, net consist of the following as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2016</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">December 31,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer receivables</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,288,128 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,421,623</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Rebates receivable </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 142,243 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">364,080</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Allowance for bad debts</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (182,399 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(187,421</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,247,972 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,598,282 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The bad debt expense related to rebates receivable are recorded as a reduction to revenues. During the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, the write off of rebate receivables amounted to $<font color="#f52887"> 68,042 </font> and $<font color="#f52887"> 87,863 </font><font color="#f52887"> , </font> respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Retainage for Warranty Deposits</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Certain of <font color="#f52887"> the Company&rsquo;s EPC </font> contracts for solar power plants contain retainage provisions. Retainage refers to the portion of the contract price earned <font color="#f52887"> the Company </font> for work performed, but held for payment by our customer as a form of security until we reach certain construction milestones<font color="#f52887"> are met </font>, typically for a duration of up to twelve months after the substantial completion of the project. The amount withheld is typically about <font color="#f52887"> 5% </font> of the contractual amount. The Company considers whether collectability of such retainage is reasonably assured in connection with <font color="#f52887"> its </font> overall assessment of the collectability of amounts due or that will become due under our EPC contracts. Retainage expected to be collected within 12 months is classified within &ldquo;<font color="#f52887"> other current assets </font>&rdquo; on the consolidated balance sheets. Retainage expected to be collected after 12 months is classified within &ldquo;other assets&rdquo; on the consolidated balance sheets. After <font color="#f52887"> the Company </font> has met the EPC contract requirements to bill for retainage, the Company will reclassify such amounts to &ldquo;accounts receivable&rdquo;<font color="#f52887"> Provided that all of the other revenue recognition criteria are met. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">At <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, retainage for warranty <font color="#f52887"> deposits </font> related to the Guizhou <font color="#f52887"> Phase 1 </font>project included were $<font color="#f52887"> 1,146,962 </font> and $0, respectively, and are expected to be received on or about <font color="#f52887"> July </font> 2017. In addition, the amounts of retainage related to a project completed <font color="#f52887"> by ZHPV </font>prior to the <font color="#f52887"> Company&rsquo;s </font> acquisition <font color="#f52887"> of ZHPV in April 2015 </font>were $<font color="#f52887"> 812,822 </font> and $835,174, respectively <font color="#f52887"> as of September </font> 30, 2016 and December 31, 2015, and are expected to be received on or about <font color="#f52887"> February 2017. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Customer Loans Receivable</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company offers its customers <font color="#f52887"> who meet the Company&rsquo;s credit eligibility standards </font>the option to finance the purchase of solar energy systems through installment loans provided by <font color="#f52887"> SolarMax </font>Financial.<font color="#f52887"> SolarMax </font> Financial also provides secured financing for solar energy systems sold by other unrelated companies. <font color="#f52887"> All </font> loans are secured by the solar energy systems <font color="#f52887"> or other projects being </font>financed. The outstanding<font color="#f52887"> customer </font> loan<font color="#f52887"> receivable </font> balance is presented net of an allowance for loan losses. In determining the allowance for loan losses, the Company identifies significant customers with known disputes or collection issues and considers its historical level of credit losses and current economic trends that might impact the level of future credit losses. Customer loans receivable that are individually impaired are charged off against the allowance for loan losses. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak5c29e3fd-1877-4b56-975b-2be78282fbe6" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">The activity in the allowance for loan losses are as follow for the <font color="#f52887"> nine </font> months ended: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; beginning of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 439,834 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">264,766</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Provision for loan losses </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 215,612 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 155,414 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Recoveries from loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,789 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loans receivable charged off</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (76,663 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(65,249</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; end of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 588,572 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 354,931 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Advances to suppliers</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Advances to suppliers consist primarily of advance payments to suppliers for the purchases of solar panels, inverters and components<font color="#f52887"> , and other products </font>. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Inventories, net</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Inventories consist of (a) work in progress representing costs incurred on installations prior to completion of systems<font color="#f52887"> or projects </font> and (b) components principally consisting of photovoltaic modules, inverters, construction <font color="#f52887"> and other </font>materials, <font color="#f52887"> and LED products, </font>which are stated at the lower of cost <font color="#f52887"> or market value under the </font>first-in first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The estimate for excess and obsolete inventories is based on historical sales<font color="#f52887"> and usage </font> experience together with a review of the current status of existing inventories. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The activity in the reserve for excess and obsolete inventories are as follow for the <font color="#f52887"> nine </font> months ended:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; beginning of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 86,076 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">23,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Provision for excess and obsolete inventories</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 272,604 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 44,726 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Inventories written-off</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (144,988 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,190 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; end of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 213,693 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 66,536 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p><b><i></i></b>
<p style="MARGIN: 0px" align="justify"><b><i>Business Combinations</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Business combinations are accounted for using the acquisition method in accordance with ASC Topic 805, <i>Business Combinations</i> (&ldquo;ASC 805&rdquo;). Under the acquisition method of accounting, the Company allocates the purchase price of a business acquisition based on the fair value of the identifiable tangible and intangible assets. The difference between the total cost of the acquisition and the sum of the fair values of the acquired tangible and identifiable intangible assets less liabilities is recorded as goodwill or bargain purchase gain. Management used third party appraisers to assist in estimating fair values, including the business enterprise value, which is based on estimated future cash flows (including timing) which are estimated using the income approach and discount rates reflecting the risk inherent in the future cash flows. Under ASC 805, acquisition related transaction costs (such as advisory, legal, valuation, and other professional fees) are expensed as incurred. <b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Goodwill and Intangible Assets</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. <font color="#f52887"> The Company&rsquo;s goodwill at September 30, 2016 and December 31, 2015 was derived from the acquisition of ZHTH and ZHPV in April 2015. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">The indefinite-lived intangible asset represents a license to operate the Company&rsquo;s LED business under<font color="#f52887"> the </font> US Segment. The definite-lived intangible asset consists of permit backlog, acquired through the acquisition of ZHTH under <font color="#f52887"> the </font>PRC Segment and <font color="#f52887"> is being </font> amortized proportionately with the future revenues earned on the backlog.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak31da9859-4745-4bb8-8e39-8217a27fcdcb" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-59</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company reviews </font> indefinite-lived intangible asset <font color="#f52887"> including goodwill </font> for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount may be impaired. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company performs its annual impairment test of goodwill each <font color="#f52887"> December 31 </font> or whenever events or circumstances change or occur that would indicate that goodwill might be impaired. When assessing goodwill for impairment, the Company uses qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350 (&ldquo;ASC 350&rdquo;), Goodwill. The Company also considers its enterprise value and if necessary, the Company&rsquo;s discounted cash flow model, which involves assumptions and estimates, including the Company&rsquo;s future financial performance, weighted-average cost of capital and interpretation of currently enacted tax laws. Circumstances that could indicate impairment and require the Company to perform a quantitative impairment test include a significant decline in the Company&rsquo;s financial results, a significant decline in the Company&rsquo;s enterprise value relative to its net book value, an unanticipated change in competition or the Company&rsquo;s market share and a significant change in the Company&rsquo;s strategic plans. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Based on the projected cash flows and operations of the Company&rsquo;s LED business, the Company recognized an impairment loss of $320,079 related to goodwill associated with the LED business during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015. No impairment of goodwill was recognized for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016.<b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Property and Equipment</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Property and equipment is initially stated at cost less accumulated depreciation and amortization. The costs of additions and betterments are capitalized and expenditures for repairs and maintenance are charged to operations as incurred. Depreciation is calculated using the straight-line method over the estimated useful life of the asset. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life of the asset. The estimated useful lives of the major classification of property and equipment are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#cceeff">
<td valign="bottom" width="50%">
<p style="MARGIN: 0px" align="justify">Automobiles</p></td>
<td valign="bottom" width="50%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 4- </font>5 years</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="bottom">
<p style="MARGIN: 0px" align="justify">Furniture and equipment</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="right">5-10 years</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td valign="bottom">
<p style="MARGIN: 0px" align="justify">Leasehold improvements</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="right">Shorter of the asset&rsquo;s useful life or lease term </p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td valign="bottom">
<p style="MARGIN: 0px" align="justify">Solar systems leased to customers</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="right">10-<font color="#f52887"> 25 </font> years</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, depreciation <font color="#f52887"> and amortization </font>expense was $<font color="#f52887"> 1,605,059 </font> and $<font color="#f52887"> 1,375,000, </font> respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Impairment of Long-Lived Assets</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company&rsquo;s long-lived assets include property, plant and equipment which include solar energy systems, leased and to be leased, and intangible assets acquired through business combinations. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In accordance with ASC 360, Property, Plant, and Equipment, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of a long-lived asset, or group of assets, as appropriate, may not be recoverable. If the aggregate undiscounted future net cash flows expected to result from the use and the eventual disposition of a long-lived asset is less than its carrying value, then the Company would recognize an impairment loss based on the excess of the carrying value over the fair value.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, the Company recorded impairment losses under the US Segment of $0 and $810,075, respectively, related to certain solar systems that are leased to customers for which the carrying values of such systems were determined to be in excess of the estimated fair value. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Investments in Unconsolidated Joint Ventures</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company uses the cost method of accounting for investments in companies in which it holds an interest of less than 20% and over which it does not have the ability to exercise significant influence. For entities in which the Company holds an interest of greater than 20% or in which the Company does have the ability to exercise significant influence, the Company uses the equity method of accounting for such investments. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakfdc4a770-4258-4921-8af7-641de8b05124" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-60</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">The Company&rsquo;s investments<font color="#f52887"> in unconsolidated joint ventures </font> include privately-held companies where quoted market prices are not available and as a result, the cost method, combined with other intrinsic information, is used to assess the fair value of the investment. If the carrying value is above the fair value of an investment at the end of any period, the investment is <font color="#f52887"> reviewed to determine if the </font> impairment<font color="#f52887"> is other than temporary </font>. Investments are considered to be impaired when a decline in fair value is judged to be other-than-temporary. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded and a new cost basis in the investment is established. <font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Bank </font></i></b><b><i><font color="#f52887"> Notes </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> From time to time, ZHPV issues notes to suppliers and subcontractors, which are guaranteed by various banks in the PRC. The terms of these notes vary depending on the negotiations with the suppliers. Typical terms are in the range of three to six months. Prior to the expiration dates of the notes, the note holders can present these notes to the banks to draw on the note amounts if the Company does not settle the outstanding amount payable to these suppliers. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> As of September 30, 2016, ZHPV issued multiple bank notes in the total amount of approximately RMB10.27 million (approximately $1,540,279) through a PRC bank to its vendors and subcontractors. The notes have a six-month term, are due on various dates from December 2016 to April 2017. The same amount of cash was deposited at the same PRC bank as the collateral for the notes. There were no notes outstanding as of December 31, 2015. </font><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Customer </font></i></b><b><i>Deposits</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Customer deposits represent customer down payments and progress payments received prior to the completion of the Company&rsquo;s earnings process. The amount paid by the customer is refundable during the state and federally required cancellation period. Once the cancellation period has passed, the customer still may cancel the project but the Company is entitled to collect, or retain, for work that was completed and materials that were delivered. As of September </font> 30, <font color="#f52887"> 2016, </font> and December 31, 2015, customer deposits <font color="#f52887"> included in deposits amounted to $1,528,308 </font> and $1,216,302, respectively<font color="#f52887"> and relate primarily to the customer deposits received from the US customers for the solar system and LED purchases. The Company accounts for customer deposits as liabilities and applies the deposits to the customer receivables when the revenues are recognized. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Vendor Bid Deposits </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Vendor bid deposits represent cash deposits received by ZHPV on sealed bids from trade contractors <font color="#f52887"> who are proposing to </font> work on the EPC construction projects. <font color="#f52887"> Vendor bid deposits are 100% refundable when the bid process is concluded. As of September 30, 2016 and December 31, 2015, vendor bid deposits included in deposits amounted to $337,320 and $1,655,961, respectively. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Stock Subscription Deposit </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> At September 30, 2016, the Company held $7.5 million of prospective investor deposits related to the private placement of common stock closed in October and November 2016 (See Note 19). </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Warranty </i></b><b><i><font color="#f52887"> and production guaranty </font></i></b><b><i>liability</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Under the <font color="#f52887"> U.S. </font> Segment, the Company provides a limited installation services warranty that warrants the installation services related to the system owner&rsquo;s photovoltaic modules and inverters (collectively, the &ldquo;solar system&rdquo;) to be free from defects in the installation services under normal application, use and service conditions for a period of 10 years from the first date of the original installation services. The manufacturer&rsquo;s warranty on the solar energy systems&rsquo; components<font color="#f52887"> (primarily solar panels and inverters) </font>, which is typically passed-through to the customers, <font color="#f52887"> is for 25 years. The Company records the accrual for its potential liability under the limited installation services warranty based on certain percentage of monthly revenues plus $300 per system that has received a permit to operate in the month. Management periodically reviews the accrual for the potential liability based on the past claims and payments in determining if the liability is adequate to cover future claims and if adjustments are required for the future monthly accrual. There is no separate warranty accrual provided by the Company for the manufacturer&rsquo;s warranty since such warranty is covered by the equipment manufacturers </font>. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
<table id="pagebreak6b1a87d1-1e52-4673-83fe-6e87474635ce" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-61</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">For <font color="#f52887"> one </font> solar <font color="#f52887"> system </font>, the Company entered into <font color="#f52887"> a </font>long-term commitment <font color="#f52887"> contract </font> to maintain and clean the solar systems for a duration of 20 years.<font color="#f52887"> The liability under this commitment included in other liabilities is $78,375 and $82,500 at September 30, 2016 and December 31, 2015, respectively. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Beginning in March 2015, the Company guarantees certain specified minimum solar energy production output for certain systems sold to customers generally for a term of up to ten years. The Company monitors the solar energy systems to ensure that these outputs are being achieved. The Company evaluates if any amounts are due to its customers and makes any payments periodically as specified in the customer contracts. <font color="#f52887"> Since this output guarantee was implemented in March 2015, the first measurement date and the resulting claims if any, would be a year from the program inception date which would be March 2016. As of September 30, 2016, the Company has not provided any specific accrual for this output guarantee since the amount is estimated not to be material, and the Company believes that the existing accrual for the limited installation service warranty is adequate to cover the claims related to the systems that are subject to this output guarantee. Management is monitoring the claims under this program for the foreseeable future as more data becomes available in order to develop a separate estimate for this output guarantee. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> For the nine months ended September 30, 2016 and 2015, the </font> activities of the warranty <font color="#f52887"> liability to cover the limited installation services warranty, a long-term commitment as well as the production output guarantee </font> recorded under other liabilities are as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; beginning of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 382,915 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">229,131</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Provision </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 208,814 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 264,310 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Expenditures </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (152,329 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (88,620 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; end of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 439,400 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 404,821 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Deferred Revenues</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company records as deferred revenue any <font color="#f52887"> advance payments </font> collected from customers, <font color="#f52887"> primarily related to </font> lease prepayments, until the earnings process has been completed. As of <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016, </font> and December 31, 2015 deferred revenue included in other liabilities related to customer <font color="#f52887"> lease </font>prepayments, amounted to $<font color="#f52887"> 769,775 </font> and $741,417, respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Income Taxes</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company accounts for income taxes pursuant to the FASB ASC Topic 740. The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company records net deferred tax assets to the extent they believe these assets will more likely than not be realized. In making such determination, <font color="#f52887"> the Company considers </font> all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. The Company has determined it is more likely than not that its deferred tax assets <font color="#f52887"> related to its United States operation </font>will not be realizable and has recorded a full valuation allowance against its deferred tax assets. In the event the Company is able to realize <font color="#f52887"> such </font> deferred income tax assets in the future in excess of <font color="#f52887"> the </font> net recorded amount, <font color="#f52887"> the Company </font> would make an adjustment to the valuation allowance, which would reduce the provision for income taxes.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreake2f60e1b-931c-4100-ab15-5b94b2c69603" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">Topic 740-10 clarifies the accounting for uncertainty in income taxes recognized in the Company&rsquo;s consolidated financial statements in accordance with GAAP. The calculation of the Company's tax provision involves the application of complex tax rules and regulations within multiple jurisdictions. The Company's tax liabilities include estimates for all income-related taxes that the Company believes are probable and that can be reasonably estimated. To the extent that the Company&rsquo;s estimates are understated, additional charges to the provision for income taxes would be recorded in the period in which the Company determines such understatement. If the Company's income tax estimates are overstated, income tax benefits will be recognized when realized.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company recognizes interest and penalties related to unrecognized tax positions as income tax expense. For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 the Company did not incur any related interest and penalties.</p>
<p style="MARGIN: 0px" align="justify"><br>The Company considers the earnings of the non-U.S. subsidiaries to be indefinitely invested outside the United States on the basis of estimates that future domestic cash generation will be sufficient to meet future domestic cash needs.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Fair Value Measurements</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">ASC Topic 820, <i>Fair Value Measurements and Disclosures </i>(&ldquo;ASC 820&rdquo;), defines a framework for determining fair value, establishes a hierarchy of information used in measuring fair value, and enhances the disclosure information about fair value measurements. ASC 820 provides that the &ldquo;exit price&rdquo; should be used to value an asset or liability, which is the price at which an asset could be sold or a liability could be transferred in an orderly process that is not a forced liquidation or distressed sale at the measurement date. ASC 820 also provides that relevant market data, to the extent available and not internally generated or entity specific information, should be used to determine fair value.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">ASC 820 requires the Company to estimate and disclose fair values on the following three-level hierarchy that prioritizes market inputs.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px" align="justify"><i>Level 1</i>: Quoted prices in active markets for identical assets or liabilities.</p>
<p style="MARGIN: 0px 0px 0px 45px" align="justify"><i>Level 2</i>: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that can be corroborated by observable market data for substantially the full term of the assets or liabilities.</p>
<p style="MARGIN: 0px 0px 0px 45px" align="justify"><i>Level 3</i>: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The carrying amount of cash and cash equivalents, accounts receivable, inventories, other current assets, accounts payable, deposits, taxes payable, and accrued payroll and expenses approximates fair value because of the short maturity of these instruments. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table presents the fair value and carrying value of the Company&rsquo;s loans receivable and borrowings as of <font color="#f52887"> September </font> 30, 2016:</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p><font style="MARGIN: 0px" color="#f52887">
<table id="pagebreakc1cfa52b-6dbe-43cd-b70d-da3a677d9a79" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-63</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px"> </font>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i> </font></p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><b>Fair Value</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Carrying</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Level 1</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> Level 2 </font></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Level 3</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Value</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><u>Assets</u></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,360,016 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,360,016 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><u>Liabilities</u></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Bank and auto loans</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="justify">$</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 268,981 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 268,981 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Loan from non-financial institutions </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,404,406 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496,005 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loans from related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 43,400,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table presents the fair value and carrying value of the Company&rsquo;s loans receivable and borrowings as of December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><strong>Fair Value</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Carrying</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level 1</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level 2</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Level 3</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Value</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><u>Assets</u></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,465,690</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,465,690</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><u>Liabilities</u></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Bank and auto loans</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,627,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,627,022</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Loan from non-financial institutions </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,900,301</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,142,474</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loans from related parties</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,413,257</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">46,231,064</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Customer loans receivable - The fair value of customer loans receivable is calculated based on the carrying value and unobservable inputs which include the credit risks of the customers, the market interest rates and the contractual terms. The Company&rsquo;s underwriting policies for the customer loans receivable have not changed significantly since the origination of these loans. The overall credit risk of the portfolio also has not significantly fluctuated as evidenced by the minimal historical write-offs, and lastly the market interest rates have remained relatively consistent since the origination of the loans.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Bank loan and auto loans - The fair value of such loans payable had been determined based on the variable nature of the interest rates and the proximity to the issuance date. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Term loan <font color="#f52887"> and line of credit </font>&#8211; The fair value of <font color="#f52887"> the term </font> loan <font color="#f52887"> and the line of credit </font> had been determined based on 12.0% weighted average interest rate on the recent borrowings from lenders in PRC.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Loans from related parties &#8211; The related party loans were issued at the fixed annual interest rates of 3% in the US Segment, and the fair value of the loans has been estimated by applying the prevailing borrowing annual interest rates for a comparable loan term which the Company estimated to be 4.8% to the estimated cash flows through the maturities of the loans.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company follows ASC Subtopic 825-10 (&ldquo;ASC 825-10&rdquo;), <i>Fair Value Option</i>. ASC 825-10 permits entities to elect to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any assets or liabilities, which were not previously carried at fair value. Accordingly, the adoption of ASC 825-10 had no impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><u>Non-recurring fair value measurement</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, the Company recorded impairment charges related to the solar systems of $0 and $810,075 under the US Segment, respectively. The adjustments fall within Level 3 of the fair value hierarchy due to the use of significant unobservable inputs to determine the fair values. The fair values were determined using a discounted cash flow method, and the amount and timing of future cash flows within the analysis were based on the stipulated lease payments and management&rsquo;s estimate of the value of electricity the asset will generate beyond the lease term. The fair values of the solar assets included in property and equipment were determined to be $125,582 as of December 31, 2015.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Advertising Costs</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company charges advertising and marketing costs related to radio, internet and print advertising to operations as incurred. Advertising and marketing costs which is a component of general and administrative expenses for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 were $<font color="#f52887"> 2,358,044 </font> and $<font color="#f52887"> 1,540,935 </font> respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Stock-Based Compensation</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company accounts for stock-based compensation costs under the provisions of ASC 718, Compensation&#8212;Stock Compensation, which requires the measurement and recognition of compensation expense related to the fair value of stock-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all share-based payments granted to employees, net of estimated forfeitures, over the employee requisite service period based on the grant date fair value estimated in accordance with the provisions of ASC 718. ASC 718 is also applied to awards modified, repurchased, or canceled during the periods reported.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Foreign Currency</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Amounts reported in the consolidated financial statements are stated in United States <font color="#f52887"> dollars </font>, unless stated otherwise. The Company&rsquo;s subsidiaries in the PRC use the Chinese renminbi ("RMB") as their functional currency and all other subsidiaries use the <font color="#f52887"> United States dollar </font> as their functional currency. For subsidiaries that use the local currency as the functional currency, all assets and liabilities are translated to USD using exchange rates in effect at the end of the respective periods and the results of operations have been translated into <font color="#f52887"> United States dollars </font> at the weighted average rates during the periods the transactions were recognized. Resulting translation gains or losses are recognized as a component of other comprehensive income (loss). <b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In accordance with ASC 830, Foreign Currency Matters, the Company translates the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the balance sheet date and the statements of operations and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation from RMB into United States dollar are recorded in stockholders&rsquo; equity as part of accumulated other comprehensive income. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Comprehensive Income (Loss)</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company accounts for comprehensive income (loss) in accordance with ASC 220, Comprehensive Income. Under ASC 220, the Company is required to report comprehensive income (loss), which includes net income (loss) as well as other comprehensive income (loss). The only significant component of other comprehensive income (losses) as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 is the currency translation adjustment. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Segment Information</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Operating segments are defined as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Company&rsquo;s chief operating decision maker is the executive team, which is comprised of the chief executive officer and the chief financial officer. Based on the financial information presented to and reviewed by the chief operating decision maker in deciding how to allocate the resources and in assessing the performance of the Company, the Company has determined that it has two operating and reporting segments (United States and PRC) as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 and for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><b><i>Net income (loss) per share</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company calculates net income (loss) per share by dividing earnings (losses) allocated to common stockholders by the weighted average number of common shares outstanding for the period. Diluted weighted average shares is computed using basic weighted average shares plus any potentially dilutive securities outstanding during the period using the treasury-stock-type method and the if-converted method, except when their effect is anti-dilutive. Potentially dilutive securities are excluded from the computation of dilutive <font color="#f52887"> earning per share </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 in which the effect would be antidilutive. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Recent Accounting Standards <font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In November 2016, the FASB issued ASU No. </font><i><font color="#f52887"> 2016-18, </font></i><font color="#f52887"> " </font><i><font color="#f52887"> Sta </font></i><i><font color="#f52887"> tement of Cash Flows (Topic 230): Restricted Cash </font></i><font color="#f52887"> &rdquo; </font><i><font color="#f52887"> ("ASU 2016-18"), </font></i><font color="#f52887"> which amends the current accounting guidance </font><i><font color="#f52887"> . </font></i><font color="#f52887"> The amendments in this update require the amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual periods beginning after December 15, 2017, and interim periods </font><font color="#f52887"> within those annual periods. The adoption of ASU 2016-18 is not expected to have a material impact on the Company&rsquo;s consolidated financial statements. </font><b><i><font color="#f52887"> </font></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In August 2016, the FASB issued ASU No. 2016-15, " </font><i><font color="#f52887"> Statement of Cash Flows (Topic 230): Classification of Certain Cash Rec </font></i><i><font color="#f52887"> eipts and Cash Payments </font></i><font color="#f52887"> (" </font><i><font color="#f52887"> ASU 2016-15" </font></i><font color="#f52887"> ), which amends the current accounting guidance. This amendments include specific guidance on the eight cash flow classification issues which was not clear or includes in the current accounting guidance. ASU 2016-15 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The adoption of ASU 2016-15 is not expected to have a material impact on the Company&rsquo;s consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In June 2016, the FASB issued ASU No. 2016-13, "<i>Financial Instruments -Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments</i><i>("ASU 2016-13"</i>), which amends the current accounting guidance and requires all expected losses<font color="#f52887"> to be determined </font> based on historical experience, current conditions and reasonable and supportable forecasts. This guidance amends the accounting for credit losses for available-for-sale securities and purchased financial assets with credit deterioration. ASU 2016-13 is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods. The Company has not yet determined the effect of this guidance on <font color="#f52887"> the Company&rsquo;s consolidated </font> financial <font color="#f52887"> statements </font>.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In January 2016, the FASB issued ASU 2016-01, <i>Financial Instruments&#8212;Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities</i>, affecting companies, not-for-profit organizations, and employee benefit plans that hold financial assets or owe financial liabilities. The ASU will take effect for fiscal years beginning after December 15, 2017. The Company is currently assessing the adoption and impact of <font color="#f52887"> this </font>ASU on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In November 2015, the FASB issued ASU 2015-17, <i>Balance Sheet Classification of Deferred Taxes</i> that companies that present a classified balance sheet are required to classify all deferred taxes as non-current assets or noncurrent liabilities. The standard is effective for interim and annual periods beginning after December 15, 2016. The adoption of ASU 2016-01 is not expected to have a material impact on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In September 2015, the FASB issued ASU 2015-16, S<i>implifying the Accounting for Measurement-Period Adjustment </i>from a business combination. GAAP currently requires that during the measurement period, the acquirer retrospectively adjust provisional amounts recognized at the acquisition date with a corresponding adjustment to goodwill. The acquirer must revise comparative information for prior periods presented in financial statements as needed. ASU 2015-16 eliminates the requirement to retrospectively account for those adjustments. ASU 2015-16 is effective for annual periods beginning after December 15, 2016. The adoption of ASU 2015-16 will not have a material impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak50d46530-fe84-4b32-94a9-86e6bd28340c" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-66</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">In July 2015, the FASB issued ASU 2015-11 <i>Simplifying the Measurement of Inventory</i>, whose objective is to simplify the subsequent measurement of inventory by using only the lower of cost or net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. ASU 2015-11 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The Company <font color="#f52887"> does not expect </font> the adoption of this ASU <font color="#f52887"> to have a material impact </font>on the Company&rsquo;s consolidated financial statements. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In August 2014, the Financial Accounting Standards Board issued (ASU) No. 2014-15,<i> Presentation of Financial Statements &#8212; Going Concern (Subtopic 205-40)</i> , to provide guidance within GAAP requiring management to evaluate whether there is substantial doubt about an entity&rsquo;s ability to continue as a going concern and requiring related disclosures. The ASU is effective for annual periods ending after December 15, 2016. The <font color="#f52887"> Company does not expect the </font>adoption of <font color="#f52887"> the new </font>ASU will have a material impact on the Company&rsquo;s consolidated financial statements.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In May 2014, the FASB issued FASB ASU No. 2014-09, &ldquo;<i>Revenue from Contracts with Customers (Topic 606)</i>.&rdquo; The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance provides a five-step process to achieve that core principle. In August 2015, the FASB issued FASB ASU No. 2015-14, &ldquo;<i>Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date</i>&rdquo;, which deferred the effective date of ASU 2014-09 by one year. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. In March 2016, the FASB issued FASB ASU No. 2016-08, &ldquo;Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)&rdquo;. ASU 2016-08 clarifies the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU No. 2016-10, &ldquo;Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing.&rdquo; ASU 2016-10 clarifies the implementation guidance in Topic 606 for identifying performance obligations and determining when to recognize revenue on licensing agreements for intellectual property. In May 2016, the FASB issued ASU No. 2016-11, &ldquo;Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates 2014-09 and 2014-16 Pursuant to Staff Announcements at the March 3, 2016 EITF Meeting.&rdquo; ASU 2016-11 rescinds certain SEC staff comments previously made in regard to these ASU&rsquo;s. We are currently evaluating the effect that the adoption of ASU 2014-09, ASU 2015-14, ASU 2016-08, ASU 2016-10 and ASU 2016-11 will have on our consolidated financial statements.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>3. </b><b>Business Combinations</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On </font> April 28, 2015 the Company acquired ZHTH through a share exchange agreement <font color="#f52887"> </font><font color="#f52887"> among the Company, SolarMax Shanghai and the equity owners of ZHTH. </font>On the same date, the Company acquired ZHPV through a share exchange agreement<font color="#f52887"> among the Company and the equity owners of Accumulate, which, through Accumulate Hong Kong, is the sole stockholder of ZHPV. </font>The share exchange agreement for ZHPV was amended on May 12, 2016 to revise certain terms including adjusting the total consideration retroactively to the original acquisition date of April 28, 2015.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The purchase price for ZHTH consisted of cash of RMB 200,000 (approximately $32,786) and 2,400,000 shares of <font color="#f52887"> the Company&rsquo;s </font> common stock of <font color="#f52887"> SolarMax </font> valued at $3.10 per share or $7,440,000 in aggregate, to be earned and vested upon achieving specified milestones related to procurement of solar system projects through December 31, 2017. The specified milestones had been met as of December 31, 2015 and accordingly, all shares of the common stock <font color="#f52887"> issued in connection with the acquisition </font> are fully vested as of December 31, 2015. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The purchase price for ZHPV consisted of 1,000,000 shares of the Company&rsquo;s common stock valued at $3.10 per share<font color="#f52887"> , </font> or $3,100,000 in aggregate<font color="#f52887"> , </font> pursuant to the share exchange agreement <font color="#f52887"> as </font> amended<font color="#f52887"> . </font>The 1,000,000 shares are pledged to the Company pursuant to a stock pledge agreement dated April 28, 2015 between the Company and the previous owners of ZHPV to ensure compliance of certain seller post-closing obligations. The ZHPV share exchange agreement, as amended, also includes a contingency for the Company to pay the sellers&rsquo; liquidated damages of RMB 10,000,000 (approximately $1.6 million) in the event the Company fails to file a registration statement on Form S-1 with the United States Securities Exchange Commission within one year from the effective date of the amendment<font color="#f52887"> , which will be </font> May 12, 2017. </p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakcd4a2981-52e9-4c9a-9979-8a0a69a9aece" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-67</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">Effective on May 12, 2016, in conjunction with the execution of the amendment to the share exchange agreement for ZHPV, ZHPV entered into a debt settlement agreement (the &ldquo;Debt Settlement Agreement&rdquo;) with one of the former owners of ZHPV, Uonone Group Co., Ltd., (&ldquo;Uonone Group&rdquo;)<font color="#f52887"> , pursuant to which ZHPV and Uonone Group </font> agreed to settle a list of pending business transactions entered <font color="#f52887"> into </font>by <font color="#f52887"> them </font> during the period from December 31, 2012 to December 31, <font color="#f52887"> 2015, and Uonone Group agreed to pay ZHPV an amount of RMB 8,009,715.61 on or before November 30, 2016. </font> The financial impact of the Debt Settlement Agreement was retrospectively adjusted to the acquisition date of April 28, 2015 which reflects a receivable balance from Uonone Group in the amount of $<font color="#f52887"> 1,570,107 based on the exchange rate on the acquisition date. As of September </font> 30, 2016 and December 31, 2015, the receivable balance due from the Uonone Group was $<font color="#f52887"> 1,650,578 </font> and $1,661,740, respectively<font color="#f52887"> . See Note 19. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The value of the Company&rsquo;s common stock of $3.10 per share on the acquisition date was based on the fair value of the common stock as of December 31, 2014 determined by an independent valuation specialist taking into account the Company&rsquo;s cash flow projections primarily on the US Segment. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The acquisitions were recorded as business combinations under ASC 805, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values on the acquisition date. The Company recorded the tangible and identified intangible assets purchased and liabilities assumed based on their estimated fair values as of the acquisition date and allocated the remaining purchase consideration to goodwill. Goodwill is attributable to the workforce of the acquired businesses at ZHTH and ZHPV and the expected synergies expected to arise after SolarMax&rsquo;s acquisitions. All acquisition related costs were expensed as incurred and were not material.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The purchase price allocations are as follows based on the currency exchange rate on the acquisition date:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>ZHTH </b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>ZHPV </b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Total</b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Assets - </b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cash</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,110</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">257,943</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">266,053</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accounts receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,243,158</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,243,158</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Advances to suppliers</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">385</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">824,283</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">824,668</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Due from seller</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,252,793</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,252,793</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Other current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,755</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">265,409</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">270,164</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,575,107</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,575,107</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Investment in unconsolidated joint venture</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">237,701</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">237,701</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Goodwill</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,410,132</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,380,358</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,790,490</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Permit backlog</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,430,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,430,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Property and equipment</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">2,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">301,525</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">304,025</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify"><b>Total asset acquired</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><b>7,855,882</b></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><b>13,338,277</b></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><b>21,194,159</b></td>
<td valign="bottom" width="1%"><b>
<p style="MARGIN: 0px">&nbsp;</p></b></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> ZHTH </font></b><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> ZHPV </font></b><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> Total </font></b><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><b style="MARGIN: 0px"><font color="#f52887"> Liabilities - </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Accounts payable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,135,091 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,135,091 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Taxes payable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (38 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,003,113 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,003,151 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Accrued expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,902,844 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,902,844 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Other current liabilities </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (25,558 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (197,229 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (222,787 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Deferred tax liabilities </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (357,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (357,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><b><font color="#f52887"> Total liabilities assumed </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>(383,096</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>)</b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>(10,238,277</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>)</b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>(10,621,373</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>)</b> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><b><font color="#f52887"> Total consideration </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>7,472,786</b> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>3,100,000</b> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>10,572,786</b> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
<table id="pagebreakfae419e1-a4c3-4ee4-ac3d-7488e5b72067" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-68</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><u>Permit Backlog</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On the acquisition date, ZHTH held a number of permits for the approved solar farm projects. </font>The permit backlog valued at $1,430,000 represents a total of 130 Megawatt (&ldquo;MW&rdquo;) of contract backlog that existed as of the acquisition date that ZHPV anticipated to materialize and receive future cash flows through 2017. The permit backlog intangible asset is being amortized proportionately with the cash flows to be earned from these permit backlog through 2017. For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, the amortization expense related to the permit backlog recorded under cost of revenue was $<font color="#f52887"> 480,382. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p><b><i></i></b>
<p style="MARGIN: 0px" align="justify"><b><i>Supplemental pro forma data (unaudited)</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following supplemental pro forma data summarizes the consolidated results of operations of the Company for the <font color="#f52887"> nine months ended September 30, 2015, </font> as if the acquisitions were completed as of January 1, 2015. The supplemental pro forma information presented is for information purposes only and is not necessarily indicative of the consolidated results of operations that would have been realized if the transactions had been completed on the date indicated, does not reflect synergies that might have been achieved, nor is it indicative of future consolidated operating results or financial position. The pro forma adjustments are based upon currently available information and certain assumptions the Company believes are reasonable under the circumstances. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Supplemental pro forma data for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 is as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">2015 </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 28,452,280 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cost of Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,864,132 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net loss</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,536,224 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>4. </b><b>Sale of Chinese Subsidiary<font color="#f52887"> </font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In the course of the Company&rsquo;s business in the PRC, ZHTH or ZHPV may acquire permits to operate solar farms in the PRC. ZHTH or ZHPV will acquire permit through a permit subsidiary, which holds the right to the solar farm. A separate permit subsidiary is formed for each permit. Since the permit may not be transferred, the subsidiary that owns the permit subsidiary sells the equity in the permit subsidiary to the buyer, who becomes the owner of the solar farm project and ZHPV seeks to obtain the EPC contract for the project from the project owner. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On April 18, 2016, <font color="#f52887"> ZHTH </font> entered into an agreement to sell its 100% ownership of <font color="#f52887"> the subsidiary </font> that holds the <font color="#f52887"> permit relating </font> to the Guizhou <font color="#f52887"> Phase 1 </font>solar farm project to a <font color="#f52887"> company owned by AMD </font>, <font color="#f52887"> a related party, </font>for a total consideration of RMB 1.0 million (approximately $152,000). Effective upon completion of the <font color="#f52887"> transfer of the </font>ownership <font color="#f52887"> of the permit subsidiary, which became owned by a subsidiary of AMD, </font> ZHPV was engaged to be the EPC contractor of the Guizhou <font color="#f52887"> Phase 1 </font>solar farm project. <font color="#f52887"> The project owner subsequently entered into an operation and maintenance agreement with Jiangsu Honghao with respect to the project. </font>The legal transfer of the sale of the <font color="#f52887"> permit </font>subsidiary was completed on June 8, 2016 and the consideration was paid on April 25, 2016.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The assets and liabilities disposed as of April 18, 2016 are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Amount</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cash</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">649</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Inventories</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">512,356</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Other current liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(366,763</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">146,242</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Consideration </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">152,253</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Gain on sale</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">6,012</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak947d9129-73b2-48c2-b46a-797980fb6c1d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-69</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><b>5. </b><b>Customer Loans Receivable </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company provides financing to qualified customers to purchase residential or commercial photovoltaic systems<font color="#f52887"> , as well as other products the Company offers </font> in the United States. Depending on the credit rating of customers, the interest rate <font color="#f52887"> generally </font>ranges from 0.00% <font color="#f52887"> (for financing under a very short term) </font>to 10.99% per annum <font color="#f52887"> with financing </font> terms <font color="#f52887"> ranging </font> from three to fifteen years. <font color="#f52887"> At September 30, 2016 and December 31, 2015, the Company&rsquo;s loan portfolio with a 0% interest rate is approximately 0.2% and 0.3%, respectively. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company acquires security interests in the photovoltaic systems <font color="#f52887"> and other products </font>financed. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Customer loans receivable consist of the following as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">December 31,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable, gross</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,948,588 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,905,524</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: allowance for loan losses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (588,572 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(439,834</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,360,016 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">42,465,690</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: current portion, net </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,468,905 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">6,654,789</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Customer loans receivable, non-current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 31,891,111 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">35,810,901</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company is exposed to credit risk on the customer loans receivable. Credit risk is the risk of loss arising from the failure of customers to meet the terms of their contracts with the Company or otherwise fail to perform as agreed. As of <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016, </font> and December 31, 2015, the allowance for loan losses was $<font color="#f52887"> 588,572 </font> and $439,834, respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Principal maturities of the customer loans receivable at <font color="#f52887"> September </font> 30, 2016 are summarized as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><font color="#f52887"> Period </font> ending <font color="#f52887"> December </font><font color="#f52887"> 31, </font></i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Amount</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><i><font color="#f52887"> 2016 (remaining months) </font></i><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,654,402 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><i>2017</i></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,393,512 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,024,947 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,393,058 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2020</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,637,427 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Thereafter</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,845,242 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total loans receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,948,588 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Total interest income on the customer loans receivable included in revenues, was $<font color="#f52887"> 1,682,679 </font> and $<font color="#f52887"> 1,691,631 </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>6. </b><b>Inventories, net</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Inventories consist of the following as of:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>September 30,<br>2016</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31,<br>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Work-in-process</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4,661,453</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,862,355</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Solar panel, inverter and components</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,377,701 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,116,806</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">LED lights</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 553,474 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">679,639</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Reserve for excess and obsolescence</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (213,693 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(86,076</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total inventories, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">7,378,935</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">4,572,724</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company recorded <font color="#f52887"> a provision </font> of $<font color="#f52887"> 272,604 </font> and $<font color="#f52887"> 44,756 </font> for the excess and obsolete <font color="#f52887"> inventories </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, respectively. <b></b></p><b></b>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakb9f21077-c2cf-465c-8401-8fb6439a119b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-70</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><b>7. </b><b>Other Current Assets</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Other current assets consist of the following as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31,<br>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Demand promissory note</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>-</b> </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">700,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Receivable from sellers of ZHPV (See Note 3)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,650,578 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,661,740</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Retainage </font> for <font color="#f52887"> warranty deposits (See Note 2) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,959,783 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 835,174 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Prepaid expenses and others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,400,770 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">444,692</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accrued interest receivable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 117,736 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">163,712</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,128,867 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,805,318 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On August 19, 2015, the Company provided an unsecured demand loan <font color="#f52887"> of $700,000 </font>to an LED customer to finance <font color="#f52887"> its </font> operations on a short-term basis<font color="#f52887"> . The </font> interest rate <font color="#f52887"> was </font> 8% per year. The entire principal and interest<font color="#f52887"> , </font> totaling $<font color="#f52887"> 737,737, </font> was repaid on May 3, 2016. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">As discussed in Note 3, on May 12, <font color="#f52887"> 2016, </font> ZHPV entered into a debt settlement agreement with Uonone Group, one of the former shareholders of ZHPV pursuant to which Uonone Group agreed to repay the net amount owed to ZHPV in the amount of <font color="#f52887"> RMB 8,009,715.61 (approximately $1,650,578 </font> as of <font color="#f52887"> September </font> 30, 2016<font color="#f52887"> ) </font> on or before November 30, 2016.<font color="#f52887"> See Note 19. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>8. </b><b>Goodwill and Intangible Assets, Net </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Goodwill and intangible assets, net consisted of the following components:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr style="MARGIN: 0px">
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px">&nbsp;<strong><font color="#f52887"> September </font></strong><b> 30, 2016 </b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><b>December 31, 2015</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Gross</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Accumulated Amortization</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">&nbsp;<strong><font color="#f52887"> Net Carrying Amount </font></strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Gross Carrying Value</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Accumulated Amortization</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Net Carrying<br>Amount</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px"><b>Definite-lived intangible assets</b></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Permit backlog</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,307,774 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (473,901 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 833,873 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,343,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,343,738</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Indefinite -lived intangible assets</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">License (LED)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 364,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">364,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total<b></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,671,774 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (473,901 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,197,873 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">1,707,738</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">1,707,738</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Goodwill</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,048,136 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,048,136 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">8,260,219</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right">8,260,219</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>&nbsp;
<p style="MARGIN: 0px" align="justify">As of <font color="#f52887"> September </font> 30, 2015, $320,079 of goodwill derived from the acquisition of Act One was impaired. Accordingly, an impairment loss was recorded for $320,079 for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015. No impairment of goodwill was recognized for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Activity of goodwill for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 is as follow:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> September </font> 30,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; beginning of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,260,219 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">320,079</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Addition from acquisitions (PRC Segment)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8,790,490</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Impairment (US Segment)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(320,079</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Effect of exchange rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (212,083 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(31,949</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance &#8211; end of period</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,048,136 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">8,758,541</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakf724360c-96e0-43f4-96fc-abea34d93b76" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-71</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">During the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016, $<font color="#f52887"> 480,383 </font> permit backlog was amortized as a <font color="#f52887"> component of cost </font> of revenue. The remaining balance of the permit backlog as of <font color="#f52887"> September </font> 30, 2016 is expected to be amortized during the remainder of the 2016 and 2017 proportionately with the cash flows earned from these permit backlogs.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">No amortization expense has been recorded for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 since no revenue related to the permit backlog has been recognized. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>9. </b><b>Investments in Unconsolidated Joint Ventures</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">At <font color="#f52887"> September </font> 30, 2016, the Company has the following unconsolidated joint ventures accounted under the equity method of accounting: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify">Investee</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Equity Investment Ownership</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Profit rate of distribution</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Alliance Capital 1, LLC (&ldquo;A#1&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Alliance Capital 2, LLC (&ldquo;A#2&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Alliance Capital 3, LLC (&ldquo;A#3&rdquo;)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">30.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Changzhou Holysolar Technology, Co., Ltd. (&ldquo;Changzhou&rdquo;)*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22.5</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22.5</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">*On January 5, 2016, the ownership of Changzhou was adjusted through the addition of a new <font color="#f52887"> stockholder, who is </font> the <font color="#f52887"> chief executive officer </font> of Changzhou and the <font color="#f52887"> president </font> of the Company&rsquo;s PRC <font color="#f52887"> operations. No consideration was received </font> as a result of the ownership change. Subsequent to the ownership change, the Company&rsquo;s ownership percentage was <font color="#f52887"> reduced </font> from <font color="#f52887"> 30.0 </font>% to 22.5%. All major decisions concerning the operations of Changzhou would continue to be based upon the ownership interest of each shareholder. <font color="#f52887"> The Company recognized a loss in connection with the reduction of its ownership in the amount of $224,356 which is included in other income (expense), net for the nine months ended September 30, 2016. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Activity in investments on unconsolidated joint ventures for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Type</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" align="center">
<p style="MARGIN: 0px" align="center">Investees</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Balance<br>December 31,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Distribution <font color="#f52887"> / Decrease in Investment </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Share of Investee&rsquo;s Net (loss) Income</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Balance <br><font color="#f52887"> September </font> 30,<br>2016</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="12%">
<p style="MARGIN: 0px" align="left">A#1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">886,254</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (22,807 </font></td>
<td valign="bottom" width="2%"><font color="#f52887"> )* </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 863,447 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="left">A#2</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,048,126</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 39,297 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 1,087,423 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="left">A#3</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">358,214</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">-</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 27,354 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" align="right"><font color="#f52887"> 385,568 </font></td>
<td valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px" align="left">Changzhou</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">897,425</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (224,356 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (77,991 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 595,077 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px" align="left">Total</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">3,190,019</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (224,356 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> (34,148 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887"> ) </font></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right"><font color="#f52887"> 2,931,515 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">* <font color="#f52887"> The Company&rsquo;s share </font> of investee&rsquo;s net loss for A#1 investee includes an adjustment of $<font color="#f52887"> 82,847 in </font> A#1&rsquo;s net income attributable to the Company. This adjustment represents the impact of the basis difference in certain property, plant and equipment of A#1.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Activity in investments on unconsolidated joint ventures for the year ended December 31, 2015 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify">Type</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="center">
<p style="MARGIN: 0px" align="center">Investees</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Balance<br>December 31,</p>
<p style="MARGIN: 0px" align="center">2014</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Distribution </p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Share of Investee&rsquo;s Net Income</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Balance<br>December 31,<br>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="12%">
<p style="MARGIN: 0px" align="justify">A#1</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">981,348</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(294,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">198,906</td>
<td valign="bottom" width="1%">*</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">886,254</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="justify">A#2</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,241,312</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(207,000</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">13,814</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">1,048,126</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="justify">A#3</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">434,061</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">(87,000</td>
<td valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">11,153</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" align="right">358,214</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Equity</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px" align="justify">Changzhou</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">770,580</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">126,845</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">897,425</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">3,427,301</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">(588,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">)</td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">350,718</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">$</td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" align="right">3,190,019</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakbb1c1451-752e-48f4-97e0-392196722ecc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-72</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">* <font color="#f52887"> The Company&rsquo;s share </font> of investee&rsquo;s net income for A#1 investee includes an adjustment of $222,026 <font color="#f52887"> in </font> A#1&rsquo;s net income attributable to the Company. This adjustment represents the impact of the basis difference in certain property, plant and equipment of A#<font color="#f52887"> 1 resulting from an accounting error in a prior period. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In connection with the acquisition of ZHPV in April 2015, ZHPV held a 29% investment in Ejinaqi Enfei New Energy Co., Ltd., a PRC company. In November 2015, ZHPV disposed of its entire investment and received its original amount of investment in cash of RMB 1,450,000 (approximately $231,153). No gain or loss was recognized in connection with the disposal of this investment. There were no profits or losses from this entity during 2015 since it has been inactive since its inception in March 2013. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">
<table id="pagebreak5f7d31df-8cb5-4931-838d-e8795fb7cb17" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-73</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">The following tables present the summary of the condensed combined financial statements for the Company&rsquo;s unconsolidated joint ventures as of and for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and <font color="#f52887"> as of and </font>for the year ended December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><strong>Balance Sheets (Unaudited)</strong></i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> <strong>September 30,<br>2016</strong> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31,<br>2015 </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,719,433 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,185,363</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Non-current assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,138,229 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">10,617,962</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,857,662 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">12,803,325</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Current liabilities</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,759,603 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,265,923</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Members&rsquo; capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,098,058 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">9,537,402</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Liabilities and members&rsquo; capital</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,857,662 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">12,803,325</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><strong>Income Statements (Unaudited)</strong></i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> <strong>For the<br></strong> </font><font color="#f52887"> <strong>Nine Months Ended<br>September 30,<br>2016</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>For the Year Ended December 31,<br>2015 </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,641,112 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">6,832,739</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Gross profit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,446,239 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,988,444</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net income (loss)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (388,594 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">358,619</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>10. </b><b>Financing Arrangements</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">As of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the Company had the following borrowings:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><b><font color="#f52887"> September 30,<br>2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31,<br>2015 </strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">A $5,000,000 term loan payable to Cathay Bank dated July 17, 2013, interest <font color="#f52887"> accrued </font> at 5.0% and <font color="#f52887"> matured </font> July 20, 2016. The loan <font color="#f52887"> was </font> secured by certain assets of the Company. The loan was fully paid off as of June 30, 2016.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,510,637</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">A $1,000,000 revolver loan from Cathay Bank dated July 17, 2013, variable interest rate (5% at <font color="#f52887"> September </font> 30, 2016 and December 31, 2015)<font color="#f52887"> . The revolver matured </font> and <font color="#f52887"> was repaid </font><font color="#f52887"> on </font> November 30, 2016. </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 200,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Various auto loans payable, interest accrues at 4.34%-4.69% with maturities in 2017 and 2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 68,981 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">116,385</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">A RMB 20.4 million term loan from a third party, due on June 30, 2016, non-interest bearing. The loan was repaid on April 19, 2016.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,142,474</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">A RMB 50 million line of credit from the same third party above, <font color="#f52887"> RMB 40 million </font>due on October 27, 2016 and<font color="#f52887"> RMB 10 million due on </font> January 1, 2017 with a 12% annual fixed interest rate. </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496,005 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>7,764,986</b> </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><strong>4,769,496</strong></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><strong>&nbsp;</strong></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Less: current portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (7,752,010 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(4,710,258</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Non-current </font> portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>12,976</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><strong>59,238</strong></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak3848c216-97c0-4e6b-8a47-335ae93d9565" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-74</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">On January 22, 2016, the Company repaid $1,000,000 of the outstanding principal balance on the Cathay Bank term loan with the proceeds from the revolver loan from Cathay Bank. The remaining <font color="#f52887"> $200,000 </font>balance of the Cathay Bank <font color="#f52887"> revolver </font> loan was repaid <font color="#f52887"> on December 1, </font> 2016. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On October 19, 2015, ZHPV entered into a line of credit agreement with an unrelated party) to borrow up to a maximum amount of RMB 50 million (approximately $7.7 million). The <font color="#f52887"> line of credit </font> bore a fixed interest rate at 12% per annum and matured<font color="#f52887"> originally </font> on June 30, 2016. RMB 30 million was drawn down from the <font color="#f52887"> line of credit </font> and<font color="#f52887"> was </font> repaid on December 31, 2015. <font color="#f52887"> During 2016, </font> the maturity date<font color="#f52887"> of the line of credit was </font> extended to October 2016 <font color="#f52887"> with respect to RMB 40 million, and to January 2017 with respect to RMB 10 million. </font> The line of credit <font color="#f52887"> is </font> guaranteed by <font color="#f52887"> AMD, a related party. </font> As of <font color="#f52887"> September </font> 30, 2016, RMB <font color="#f52887"> 50.0 </font> million ($<font color="#f52887"> 7,496,005 </font>) was drawn down <font color="#f52887"> and </font> outstanding. Total interest incurred and paid on the loan during the <font color="#f52887"> nine months ended September 30, 2016 was $495,419. In October 2016 pursuant to the first maturity date, ZHPV repaid RMB 40 million ($5,996,804), and the remaining balance of RMB 10 million was repaid by the Company in November 2016. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On November 15, 2015, ZHPV entered into a term loan agreement with the <font color="#f52887"> same unrelated party </font> to borrow RMB 20.4 million (approximately $3.1 million). The maturity date of the loan was June 30, 2016 and the loan was non-interest bearing. The loan was repaid on April 19, 2016.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Total interest expense incurred was $<font color="#f52887"> 1,877,106 </font><u></u>and $<font color="#f52887"> 1,143,820 </font> (including interest on loans from related parties) for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, respectively. The weighted average interest rates on short-term loans outstanding <font color="#f52887"> for SolarMax </font>were <font color="#f52887"> 7.8 </font>% and 7.5%, respectively, as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015. The Company has certain financial covenants associated with the Cathay <font color="#f52887"> Bank </font> loans and was not in compliance with certain of these covenants as of December 31, 2015. The Company received waivers for these covenant violations as of December 31, 2015 from Cathay Bank. There was no violation of the financial covenants associated with the Cathay <font color="#f52887"> Bank </font> revolver loan as of <font color="#f52887"> September </font> 30, 2016. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Loans from related parties</i></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> <strong>September 30,<br>2016</strong> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>December 31,<br>2015 </strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loan from related parties, current portion</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,500,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,231,064</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Loans from related parties, noncurrent</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 42,500,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">45,000,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><strong>$</strong></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">46,231,064</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The principal stockholders of the Company consist of its <font color="#f52887"> chief executive officer, chief financial officer and executive vice president, </font> who are also the <font color="#f52887"> owners and </font> management of SMX Properties, LLC (&ldquo;SMXP&rdquo;) and Inland Empire Renewable Energy Regional Center (&ldquo;IERE&rdquo;) and its subsidiaries: Clean Energy Center (&ldquo;CEC&rdquo;), Clean Energy Funding, LP (&ldquo;CEF&rdquo;), and Clean Energy Funding II, LP (&ldquo;CEF II&rdquo;). The Company&rsquo;s <font color="#f52887"> chief executive officer and executive vice president </font>, and one of its<font color="#f52887"> minority </font> stockholders are also the principals of Fallow Field, LLC. SMXP, IERE and Fallow Field are not consolidated by the Company. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On January 3, 2012, CEF entered into a loan agreement with SREP, a wholly-owned subsidiary of the Company. Under the agreement, CEF agreed to make <font color="#f52887"> loans </font> to SREP in an amount not to exceed $45,000,000. The proceeds of the <font color="#f52887"> loans </font> are advanced in increments of $2,500,000 and CEF may determine in its sole and absolute discretion<font color="#f52887"> to advance </font> a lesser amount. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Each advanced principal amount is due and payable 48 months from the advance date or the U.S. Immigration Form I-829 approval date if longer. As of <font color="#f52887"> both September </font> 30, 2016 and December 31, 2015, the principal loan balance was $<font color="#f52887"> 45,000,000. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On August 26, 2014, CEF II entered into a loan agreement with LED, a wholly-owned subsidiary of the Company, for up to $13,000,000. The proceeds of the loan would be used by LED for its operations. The loan accrues interest at a fixed interest rate of 3% per annum, payable quarterly in arrears. Principal is due and payable in 48 months or the U.S. Immigration Form I-829 approval date if longer. <font color="#f52887"> In August and September 2016, LED borrowed additional $3,000,000 under the loan, the proceeds of which were used to fulfill the purchases required related to the recently won $4.3 million LED contract. As of September </font> 30, 2016 and December 31, 2015, the principal loan balance was $<font color="#f52887"> 4,000,000 </font> and $1,000,000, respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak969bde8d-6dec-402f-b5aa-9fd1b624ff96" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-75</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">On December 29, 2015, ZHPV entered into an unsecured loan agreement with Changzhou, one of the equitymethod investees<font color="#f52887"> of SolarMax </font>. Under the agreement, ZHPV can borrow up to RMB 2 million<font color="#f52887"> (approximately $308,086 </font>) from Changzhou with a 6% fixed annual interest rate for three months. The outstanding balances on the loan were $0 and RMB 1.5 million<font color="#f52887"> (approximately $231,064 </font>) as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, respectively. Another RMB 0.5 million<font color="#f52887"> (approximately $77,021 </font>) was drawn down on January 10, 2016. The entire loan was repaid on March 10, 2016 in the total amount of RMB 2,022,917 <font color="#f52887"> (approximately $311,616 </font>) including principal and interest.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, total interest expense incurred on related party loans was $<font color="#f52887"> 1,049,437 </font> and $<font color="#f52887"> 1,347,034, </font> respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Principal maturities for the financing arrangements as of <font color="#f52887"> September </font> 30, 2016 are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Period ending December 31, </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Term Loan</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Auto Loans</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Bank Loan</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Related Party Loans</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center"><strong>&nbsp;</strong></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong>Total</strong></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> 2016 (remaining three months) </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,697 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 200,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 500,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 708,697 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2017 </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496,005 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 34,789 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> - </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 19,530,794 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 25,494 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,025,494 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,000,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2020</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">22,500,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">22,500,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,496,005 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 68,981 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 200,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 49,000,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 56,764,986 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>11. </b><b>Other Related Party Transactions</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Revenue </i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company provides asset management and accounting services to the three Alliance joint ventures under the management contract and business services agreement dated January 20, 2011 between Alliance Solar Capital I, LLC and the Company, pursuant to which the Company is to receive 3% of revenues collected from SREC and payments from public utilities received by the Alliance entities. The provisions of this agreement also <font color="#f52887"> extend </font> to services rendered for A#2 and A#3, however, there is no formal agreement executed for these entities. Total fees earned by the Company from the Alliance entities included in consolidated revenues during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015 were $<font color="#f52887"> 21,442 </font> and $<font color="#f52887"> 25,318, </font> respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">From time to time, the Company made advances for expenses on behalf of the three Alliance entities. At <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the Company had a receivable from Alliance 1 related to the insurance premiums paid on behalf of Alliance 1 in the amount of $<font color="#f52887"> 39,709 </font> and $34,461, respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Lease Agreements</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On November 28, 2012, the Company entered into a lease agreement with SMXP to lease <font color="#f52887"> its headquarters in Riverside, CA. The </font> lease <font color="#f52887"> term was for four years </font> commencing on January 1, 2013 and ending on December 31, <font color="#f52887"> 2016, with an annual base rent of $603,867. In September 2016, the Company executed a new lease that would be effective January 1, 2017. The lease term is for ten years with one five-year renewal option. The annual base rent under the new lease is $978,672 plus the Company&rsquo;s share of the utilities. The base rent is subject to an annual escalation of 2.99%. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0.5in; TEXT-INDENT: 0px">
<p style="MARGIN: 0px">
<table id="pagebreak065c0afc-8028-4c7d-96ed-65d5c241f2e6" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-76</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">On April 28, 2014, the Company, through its consolidated affiliates entered into two sublease agreements for its Diamond Bar office with IERE. The terms of the leases were for five years commencing on May 1, 2014 with a total <font color="#f52887"> annual </font>base rent of $<font color="#f52887"> 134,400. </font> These leases were cancelled effective on January 1, 2015 and replaced with new leases entered into on January 2, 2015 with Fallow Field, LLC discussed below. On January 2, 2015, the Company, through its consolidated affiliates entered into two lease agreements for its Diamond Bar office with Fallow Field, LLC. Fallow Field, LLC is owned and managed by the <font color="#f52887"> Company&rsquo;s chief executive officer, executive vice president </font> and a <font color="#f52887"> minority stockholder </font> of the Company. The lease<font color="#f52887"> term was for five years </font> commencing on January 1, 2015 and ending on December 31, <font color="#f52887"> 2019, with an annual base rent of $177,600. In September 2016, the Company entered into a lease amendment related to its two leases at the Diamond Bar office. The amended terms commence on November 1, 2016 and are for ten years with one five-year renewal option. The initial annual base rent is $229,272 plus the Company&rsquo;s share of utilities. The base rent is subject to an annual escalation of 2.99%. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, <font color="#f52887"> the </font>total related party rental expense included in general and administrative expenses for the Riverside, CA <font color="#f52887"> corporate headquarters </font> and the Diamond Bar, CA office, was approximately $<font color="#f52887"> 541,593 </font> and $<font color="#f52887"> 586,107, </font> respectively. At <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the Company had a receivable from SMXP in the amount of $<font color="#f52887"> 31,709 </font> and $36,901 related to advances by SREP for utilities and certain operating expenses on behalf of SMXP&rsquo;s tenant, respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>12. </b><b>Accrued Expenses</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Accrued expenses consist of the following as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> September 30,<br>2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><strong><font color="#f52887"> December 31,<br> </font>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accrued payroll and commissions</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 436,842 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">497,775</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Accrued professional and other expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 942,592 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">885,903</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Credit card payable and others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 242,195 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">572,183</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Interest payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 361,967 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">109,866</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">VAT and other taxes payable</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 237,094 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">1,001,468</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,220,690 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3,067,195</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company recognizes its revenue in the PRC net of value-added taxes (&ldquo;VAT&rdquo;). The Company is subject to VAT <font color="#f52887"> at the rate of 17% </font>which is <font color="#f52887"> levied </font> on the procurement cost <font color="#f52887"> for materials purchased and collected at </font> the invoiced value of sales<font color="#f52887"> provided to customers. The Company </font><font color="#f52887"> accounts for VAT on a net basis </font>. The contractual amount related to the designing<font color="#f52887"> and EPC services </font> is subject to 3% sales tax and other taxes <font color="#f52887"> for the amount invoiced before May 1, 2016 </font>which is included as part of cost of revenue. <font color="#f52887"> Effective May 1, 2016, EPC service are subject to 6% VAT pursuant to the new Tax Law enacted in the PRC. As of September </font> 30, 2016 and December 31, 2015, VAT tax <font color="#f52887"> (receivable) </font>payable were $<font color="#f52887"> (186,764) </font> and $500,057, respectively. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>13. </b><b>Commitments and Contingencies</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Operating Leases</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company has operating leases for office facilities and office equipment both in the United States and in the PRC. The lease payments are fixed for the initial term of the leases. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Future minimum lease commitments for office facilities and equipment as of <font color="#f52887"> September </font> 30, 2016, are as follows: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><font color="#f52887"> Periods </font> ending <font color="#f52887"> December </font><font color="#f52887"> 31, </font></i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Related Parties</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">&nbsp;<font color="#f52887"> Others </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2016 (remaining three months) </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 188,859 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 86,288 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 275,147 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2017</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 327,266 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,535,210 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2018</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 133,805 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,341,749 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2019</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 30,651 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,238,595 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">2020</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2021 </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,207,944 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Thereafter </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,230,780 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,230,780 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total lease payments</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,459,359 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 578,010 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 13,037,369 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak33ae67c6-500d-43ae-996a-48fc83d6369f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
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<tr></tr>
<tr>
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<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, rent expense for office facilities and equipment was $<font color="#f52887"> 919,714 </font> and $<font color="#f52887"> 922,723, </font> respectively (including the related party rental expense &#8211; see Note 10). <font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Panel Purchase Agreement </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax has a panel purchase agreement with a Sunspark Technologies Inc. pursuant to which the Company agreed to purchase 150 megawatts of solar panels over a three-year period at a price to be negotiated not to exceed 110% of the preceding three-month rolling average market price per watt for an estimated total commitment of approximately $84.0 million based on the most recent price paid on a purchase order from Sunspark. The agreement stipulates a 30 megawatt minimum amount to be purchased by SolarMax for each year, which will cost approximately $16.8 million based on the most recent price paid on a purchase order from Sunspark, with the first year being the year beginning June 1, 2016. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Energy Storage System Distribution Agreement </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On July 29, 2016, the Company entered into a distribution agreement with Li-Max Technology, Inc. with an effective date of June 9, 2016. The agreement has a five-year term during which the Company would be the exclusive distributor of Li-Max Energy Storage System within all countries and other areas of the world, other than Asia (including but not limited to the Republic of China and the Peoples&rsquo; Republic of China). The agreement contains an initial purchase commitment of 375 units, approximately $1.1 million of Li-Max Energy System within the first six months of the term of the agreement. In the event that the Company fails to purchase 60% of this commitment within such six month period, Li-Max can require the Company to purchase 60% of the target number within 60 days, failing which Li-Max has the right to terminate the agreement. The agreement also contains a warranty provision for all the systems purchased from Li-Max for ad period of ten years. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Pending Litigation</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On June 24, 2015, Michael McCaffrey, the Company<font color="#f52887"> &rsquo;s former chief financial officer </font>, filed a lawsuit against the Company, its <font color="#f52887"> chief executive officer, its current chief financial officer, and its executive vice president </font> with various claims related to violation of California labor code, discrimination based on national origin, ancestry, ethnicity and race, retaliation, harassment based on national origin, ancestry, ethnicity and race, failure to take all reasonable steps to prevent discrimination and harassment, wrongful termination in violation of public policy, failure to pay wages and intentional infliction of emotional distress<font color="#f52887"> and included allegations of financial improprieties and fraudulent and illegal activities </font>. Management of the Company believes all of the claims are without merit and is currently working with its counsel to vigorously defend on these claims. The <font color="#f52887"> Company petitioned the court to transfer the matter to arbitration </font> pursuant to <font color="#f52887"> its </font> agreement <font color="#f52887"> with </font> Mr. McCaffrey<font color="#f52887"> , and the court ordered the matter to be submitted to arbitration </font>. An Arbitrator has been selected and agreed upon by both parties. The arbitration is scheduled to start on May 30, 2017. The ultimate outcome of the arbitration cannot be determined at the present time. Management does not expect the ultimate outcome will have a material adverse effect on the Company&rsquo;s consolidated financial position or results of operations.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In the ordinary course of its business, the Company is involved in various legal proceedings involving contractual relationships, product liability claims, and a variety of other matters. The Company does not believe there are any pending legal proceedings that will have a material impact on the Company&rsquo;s financial position or results of operations.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Employment Agreement </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On February 3, 2015, the Company entered into a two-year employment agreement with the president of the Company&rsquo;s China operations, pursuant to which the Company pays him an annual salary of RMB 360,000 (approximately $53,000). In June 2016, the agreement was extended for one additional year. The Company also pays the president of the China operations approximately $85,000 from its U.S. segment. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak511ef25e-10a9-41d3-b0b3-9eb9469744c5" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-78</td></tr>
<tr></tr>
<tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><b>14. </b><b>General and Administrative Expenses</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">General and administrative expenses consist of the following for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><b><font color="#f52887"> September 30,<br>2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2015 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Compensation and benefits</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,110,746 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 5,116,230 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Depreciation and amortization</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,379,353 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,375,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Selling and marketing expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,358,044 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,540,935 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Leasing and rental expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,064,766 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,084,004 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Professional services </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,931,588 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,521,304 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Other operating expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,376,366 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,370,156 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,220,863 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,007,629 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>15. </b><b>Stockholders&rsquo; Equity </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Stock Option Plan</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">From time to time, the Company grants non-qualified stock options to its employees and consultants for their services. Option awards are generally granted with an exercise price equal to the estimated fair value of the Company&rsquo;s stock at the date of grant. The<font color="#f52887"> options have exercise periods and vesting schedules determined by the board at the time of grant. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> SolarMax </font> estimates the fair value of stock options using a Black-Scholes option pricing model. The model requires input of assumptions regarding the expected term, expected volatility, dividend yield, and a risk- free interest rate. Options were granted at the fair value of the Company&rsquo;s common stock on grant dates and a simplified method<font color="#f52887"> was </font> used to estimate the expected term of the options granted during the year ended December 31, 2015. There were no grants during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016. The weighted average assumptions that were used to calculate the grant date fair value of employee stock option grants for the year ended December 31, 2015 are as follows: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="85%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Expected term (years)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">4.79</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Expected volatility</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">89.7</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Risk-free interest rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.5</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Dividend yield</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0</td>
<td valign="bottom" width="1%">%</td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i>Expected Volatility</i>. The expected volatility rate used to value stock option grants is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the solar industry in a similar stage of development to the Company.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i>Expected Term</i>. The Company elected to utilize the &ldquo;simplified&rdquo; method for &ldquo;plain vanilla&rdquo; options to value stock option grants. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i>Risk-free Interest Rate</i>. The risk-free interest rate assumption was based on zero-coupon U.S. Treasury instruments that had terms consistent with the expected term of the Company&rsquo;s stock option grants. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><i>Expected Dividend Yield</i>. The Company has never declared or paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak00fb6fdd-bbd0-4bf3-af7d-87ec55713dbc" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-79</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify">Forfeitures are accounted for as actual forfeitures occur.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On June 19, 2015, the board of directors <font color="#f52887"> (the &ldquo;Board&rdquo;) of SolarMax </font>extended the terms of all stock options<font color="#f52887"> outstanding </font> to seven years from <font color="#f52887"> their original </font> grant<font color="#f52887"> dates </font>. As a result, options to purchase 102,000 shares <font color="#f52887"> of common stock </font>held by four employees were extended and $43,921 of additional stock-based compensation expense was recognized for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The compensation cost that has been charged to income related to stock options granted was $<font color="#f52887"> 179,155 </font> and $<font color="#f52887"> 92,165 </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, respectively, which included the impact of 2015 modifications. <font color="#f52887"> During the nine months ended September 30, 2016, options to purchase 12,000 shares of common stock were cancelled. There were </font> no forfeitures during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">A summary of option activity is as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Number of</p>
<p style="MARGIN: 0px" align="center">Options</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Weighted Average Exercise Price</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Weighted Average Remaining Contractual (years)</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Aggregate Intrinsic Value</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Outstanding at December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.14</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.24</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">96,800</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Nonvested as of December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.00</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.20</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Exercisable as of December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">47,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1.05</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.80</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">91,800</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">280,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.89</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Exercised</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cancelled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Outstanding at December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">332,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3.07</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">6.00</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">142,800</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Nonvested as of December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">207,500</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">3.43</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">6.57</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">15,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Exercisable as of December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">124,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">2.47</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.07</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">127,800</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Exercised</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Cancelled or forfeited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(12,000</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">0.60</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Outstanding at <font color="#f52887"> September </font> 30, 2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">320,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3.16 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">5.58</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 588,000 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Nonvested as of <font color="#f52887"> September </font> 30, 2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 177,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 3.44 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6.10 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 276,250 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Exercisable as of <font color="#f52887"> September </font> 30, 2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 142,500 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2.81 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4.95 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 311,750 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The aggregate intrinsic value represents the total pretax intrinsic value. The aggregate intrinsic <font color="#f52887"> values </font> as of <font color="#f52887"> September 30, 2016 and </font> December 31, 2015 <font color="#f52887"> are </font> based upon the <font color="#f52887"> value per share of $5.00 and $3.50, respectively, used in the </font>Company&rsquo;s private <font color="#f52887"> placements </font> of <font color="#f52887"> its common stock on October 2016 and October 2015, respectively. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i>Non-vested Option Awards</i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table summarizes the Company&rsquo;s nonvested option awards activity for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and the year ended December 31, 2015:</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak4ccdf30c-7315-4729-8e01-9862d8f8fde3" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-80</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance at December 31, 2014</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">280,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Replaced</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Vested</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(77,500</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Forfeited </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance at December 31, 2015</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">207,500</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Granted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Replaced</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Vested</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (30,000 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Forfeited </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Balance at <font color="#f52887"> September </font> 30, 2016</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 177,500 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">As of <font color="#f52887"> September </font> 30, <font color="#f52887"> 2016, </font> and December 31, 2015, there was approximately $<font color="#f52887"> 380,206 </font> and $<font color="#f52887"> 560,738, respectively, </font> of total unrecognized compensation cost related to <font color="#f52887"> outstanding </font>nonvested share-based compensation arrangements. That cost is expected to be recognized over a weighted-average period of <font color="#f52887"> 1.7 </font> and 2.4 years, respectively. The total fair value of options vested during the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 was $<font color="#f52887"> 150,000. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> 2015 Private Placement </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">During the third quarter of 2015, the Company raised equity through a private placement to issue up to 3,000,000 shares of its common stock at a purchase price of $3.50 per share for an aggregate maximum gross offering proceeds of $10,500,000. As of <font color="#f52887"> September </font> 30, 2016, the <font color="#f52887"> Company had </font> received <font color="#f52887"> subscriptions for </font> $7,300,000 for 2,100,000 shares, of which $<font color="#f52887"> 2,030,003 has been paid and the balance of $5,444,998 is reflected as an equity subscription receivable and is expected to be paid by March 31, 2017. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>16. </b><b>Income </b><b><font color="#f52887"> Taxes </font></b><b></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Provision (benefit) for </font> income <font color="#f52887"> taxes </font> for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 consist of:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><font color="#f52887"> Nine </font> months ended <font color="#f52887"> September </font> 30, 2016</i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Federal </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">State</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Foreign </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Total&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (57,739 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (57,739 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (857,116 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (18,425 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 701,166 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (174,375 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Change in valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 857,116 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 18,425 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 875,541 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (57,739 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 701,166 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 643,427 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Provision (benefit) for </font> income for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2015 consist of:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify"><i><font color="#f52887"> Nine </font> months ended <font color="#f52887"> September </font> 30, 2015</i></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Federal </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">State</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Foreign </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Total</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Current</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 51,087 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">51,087</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,032,630 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (327,311 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (412,375 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,772,316 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Change in valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,032,630 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 327,311 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,359,940 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 51,087 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (412,375 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (361,289 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table><font style="MARGIN: 0px" color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakdc9f8199-e5bd-4e5a-bb9f-1ee571bccf6e" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-81</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr style="MARGIN: 0px">
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p> </font>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font style="MARGIN: 0px" color="#f52887"><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px"></font>Significant components of the deferred tax assets and liabilities for federal income taxes as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 consisted of the following:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> September 30,<br>2016 </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> December 31,<br> </font>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Investment credit</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,037,362 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,142,922</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Net operating loss carry-forward</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,183,020 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,952,368</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify"><font color="#f52887"> Other </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 939,867 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,286,596 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 10,160,249 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 10,381,886 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Valuation allowance</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (8,289,002 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(7,413,461</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net deferred tax assets</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,871,248 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,968,425 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred tax liability</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Depreciation</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (962,018 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,201,365 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Intangible asset</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (179,269 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(335,934</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Deferred tax, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 729,960 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">$</td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">1,431,126</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">A 100% valuation allowance was provided for the deferred tax assets related to the US segment as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015. The deferred tax assets related to the PRC segment of $<font color="#f52887"> 693,390 </font> and $<font color="#f52887"> 1,767,061 </font> are reflected on the consolidated balance <font color="#f52887"> sheets </font> as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, respectively. The deferred tax liability of $<font color="#f52887"> 215,838 </font> and $335,934 related to the PRC segment was included in other liabilities on the consolidated balance <font color="#f52887"> sheets </font> at <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, respectively.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table reconciles the US statutory rates to the Company&rsquo;s effective tax rate for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> September 30,<br> </font></b>2016</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> September 30,<br> </font></b>2015</p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">US statutory rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34.0</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34.0</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">State taxes</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.8</td>
<td valign="bottom" width="1%">%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5.8</td>
<td valign="bottom" width="1%">%</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Foreign differential</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(9.0</td>
<td valign="bottom" width="1%">)%</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(9.0</td>
<td valign="bottom" width="1%">)%</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Change in valuation allowance </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (50.9 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> )% </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (24.1 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> )% </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Effective tax rate</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (20.1 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> )% </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 6.7 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">As of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015, the Company has federal and state income tax net operating loss (&ldquo;NOL&rdquo;) carryforwards of $<font color="#f52887"> 18,241,077 </font> and $13,596,751, respectively, which will expire at various dates from 2031 through 2036. Additionally, the Company has investment <font color="#f52887"> tax credits </font> of $1,037,362 and $1,142,922 as of <font color="#f52887"> September </font> 30, 2016 and December 31, <font color="#f52887"> 2015, respectively, </font> for building qualifying energy properties and projects under IRC section 48, which will expire at various dates from 2033 through 2034. <font color="#f52887"> The </font> use of net operating loss and tax credit carryforwards may be limited under Section 382 of the Internal Revenue Code in certain situations where changes occur in the stock ownership of a company. In the event that the Company has had a change in ownership, utilization of the carryforwards could be restricted. As of <font color="#f52887"> September </font> 30, 2016, the Company had unused net operating loss carryforward from its PRC subsidiaries in the amount of <font color="#f52887"> $ </font><font color="#f52887"> 5,289,847 </font> which may be applied against future taxable income <font color="#f52887"> which begin </font> to expire after the year of 2019.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company is subject to income tax in the U.S. Federal and certain state jurisdictions. The Company <font color="#f52887"> has completed a corporation income tax return audits by the U.S. Federal government for the year ended December 31, 2014. The above current and defer tax provisions and deferred tax assets reflects all adjustments as proposed by the U.S. Federal government in connection with the audit. The Company </font>is no longer subject to federal or state examinations by tax authorities for years prior to <font color="#f52887"> 2012. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company<font color="#f52887"> &rsquo;s PRC subsidiaries are </font> subject to a 25% statutory income tax rate according to the <font color="#f52887"> income tax laws </font> of the PRC. Tax regulations are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. All tax positions taken, or expected to be taken, continue to be more likely than not ultimately settled at the full amount claimed. The Company&rsquo;s tax filings are subject to the PRC tax bureau&rsquo;s examination for a period up to <font color="#f52887"> five </font> years. The Company is not currently under any examination by the PRC tax bureau.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreak5b59c556-277f-4b72-9f90-af1b52466687" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-82</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. For the nine months ended September 30, 2016 and 2015, the Company has not made a tax benefits provision for U.S. or additional foreign withholding taxes on approximately $535,000 and $668,000, respectively, of the earnings deficit of the amount related to the non-U.S. subsidiaries for financial reporting over the tax basis of such investments in foreign subsidiaries. Generally, such amounts become subject to U.S. tax deduction upon recognition and under certain other circumstances. It is not practical to estimate the amount of deferred tax liability related to investments in these foreign subsidiaries. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>17. </b><b>Net Loss per Share</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table presents the calculation of the Company&rsquo;s basic and diluted net loss per shares:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b><i>For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30,</i></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> 2016 </font></b></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><strong>2015</strong></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Numerator</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Net loss attributable to common stockholders</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">of SolarMax Technology, Inc.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,759,021 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,959,897 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify"><b>Denominator</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Weighted average shares used to compute net loss per share</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify"><font color="#f52887"> attributable </font> to common stockholders, basic and diluted</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,087,928 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 34,505,877 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Basic and diluted net loss per share </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.10 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (0.14 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and <font color="#f52887"> 2015, options to purchase </font><font color="#f52887"> 142,500 shares and 82,000 shares, respectively, </font> were excluded from the computation of diluted net loss per share as the impact of including those shares would be anti-dilutive.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">18. <b>Segment Reporting </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company use the management approach for segment reporting disclosure, which designates the internal organization that is used by management for making operating decisions and accessing performance as the source of our reporting segments. For the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015, the Company operates under two operating segments on the basis of geographical areas: the United States and the <font color="#f52887"> PRC </font>. Operating segments are defined as components of an enterprise about which separate financial information is available and that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
<table id="pagebreakf4461084-1310-42e9-9783-b86a686e0d29" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-83</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p>
<p style="MARGIN: 0px" align="justify">The Company evaluates performance based on several factors, including revenue, cost of revenue, operating expenses, and income from operations. The following tables show the operations of the Company&rsquo;s operating segments for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><b>2016</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>US </b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>PRC</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Total</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b>Revenue from external customers -</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar farm projects</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">43,754,142</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">43,754,142</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar energy systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">20,099,132</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">20,099,132</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Financing revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,693,035</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,693,035</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">305,912</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">305,912</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">22,098,079</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">43,754,142</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 3px double" valign="bottom" width="9%" align="right">65,852,221</td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Cost of revenue -</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar farm projects</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(36,820,349</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(36,820,349</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar energy systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(15,571,921</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(15,571,912</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(420,352</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(420,352</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(15,992,273</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(36,820,349</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(52,812,622</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Depreciation and amortization expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,432,212</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">653,230</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,085,442</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest expenses, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,062,081</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(740,346</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,802,427</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity income of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(34,148</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(34,148</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Income tax expense (benefit)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">(57,739</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">701,166</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right">643,427</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(5,748,948</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,898,493</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(3,850,455</td>
<td valign="bottom" width="1%">)</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" colspan="10" align="center">
<p style="MARGIN: 0px" align="center"><b>2015</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>US</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>PRC</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><b>Total</b></p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b>Revenue from external customers -</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar farm projects</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar energy systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24,862,981</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24,862,981</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Financing revenue</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">700,176</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,700,176</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">188,282</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">188,282</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">26,751,439</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">26,751,439</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b>Cost of revenue -</b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Solar farm projects</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Solar energy systems</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,042,282</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,042,282</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(258,959</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">-</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(258,959</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,301,241</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(18,301,241</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Depreciation and amortization expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,330,388</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44,612</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,375,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Interest expenses, net</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,116,002</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(12,877</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,128,879</td>
<td valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Equity income of unconsolidated joint ventures</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">333,095</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">-</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">333,095</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Income tax expense (benefit)</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">51,087</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(412,375</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">(361,289</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">)</td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Net loss </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">(3,813,601</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">(1,229,340</td>
<td valign="bottom" width="1%">)</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,042,941</td>
<td valign="bottom" width="1%">)</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</font>&nbsp; </p>
<p style="MARGIN: 0px" align="justify"><b>19. </b><b>Subsequent Events</b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Company has evaluated subsequent events through <font color="#f52887"> February 9, 2017, </font> the date the consolidated financial statements were issued and except as disclosed in Note <font color="#f52887"> 10, </font> and the following paragraphs noted no other events that require adjustment of, or disclosure in, the consolidated financial statements as of <font color="#f52887"> September </font> 30, 2016 and December 31, 2015 and for the <font color="#f52887"> nine </font> months ended <font color="#f52887"> September </font> 30, 2016 and 2015.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><strong><em>Guizhou Phase 2 EPC Contract and Sale of Subsidiary</em></strong></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In October 2016, ZHPV executed <font color="#f52887"> an </font> EPC contract with a subsidiary of AMD, a related party, for a 50MW solar farm project in Guizhou, China<font color="#f52887"> , which project is referred to as Guizhou Phase 2. </font> The contract price is RMB <font color="#f52887"> 322.5 million, inclusive of VAT </font> (approximately $49 million). The <font color="#f52887"> construction of the </font>project<font color="#f52887"> began in the fourth quarter of 2016 and </font> is contractually scheduled to be completed and delivered during the first quarter of 2017.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In connection with the <font color="#f52887"> Guizhou Phase 2 project, </font> ZHPV sold its ownership of the <font color="#f52887"> applicable permit </font>subsidiary to a subsidiary of AMD for RMB 1.0 million (approximately $150,000). <font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakfca371d3-d67a-4022-8790-945c4dc69a83" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-84</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Xinhuang EPC Contract </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On November 30, 2016, ZHPV executed an EPC contract with Xin Huang Duong Minority Poverty Relief Office, a PRC governmental entity, to construct photovoltaic power stations at 11 villages in Xin Huang Dong Minority autonomous county. The total system size for the 11 sites is 660 kilowatts with a contract value of RMB 5,148,000 (approximately $750,000), and is expected to be completed in 60 days. The retainage for the five-year construction warranty would be 10% or RMB 514,800, with 20% of the retainage to be released at the end of each year. </font><font color="#f52887"> This contract will be accounted for under the completed contract method and is expected to begin and be completed in the first quarter of 2017. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> PRC Loan Agreement </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On October 24, 2016, the Company entered into a loan agreement with China Everbright Bank, a PRC-based financial institution, to borrow RMB 38.5 million for a one-year term from October 24, 2016 to October 23, 2017. The interest rate is 3.8% per annum and payable quarterly in arrears. The loan is secured by a fixed deposit held at the bank in the amount of RMB 40 million placed by <font color="#f52887"> an indirect </font> subsidiary<font color="#f52887"> of ZHTH </font>. On the same date, the proceeds of the loan in the amount of $5,660,453 were disbursed into the Company&rsquo;s United States bank account.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Uonone Receivable Payment Extension </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In <font color="#f52887"> December 2016, ZHPV and Uonone Group entered into a supplemental agreement to the debt settlement agreement relating to a receivable from Uonone Group in the amount of $1,650,578 at September 30, 2016. Pursuant to the settlement agreement, Uonone Group agreed to provide and endorse to ZHPV a commercial bill, which is a third-party note, due in August 2017 and guaranteed by Uonone, in the amount of RMB 4.0 million (approximately $588,000), and to pay 50% of the balance or RMB 2.0 million (approximately $294,000) by March 31, 2017, and the remaining balance of RMB 2.0 million (approximately $294,000) by June 30, 2017. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> 2016 Private Equity Placement </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In </font>October and November 2016, the Company sold 3,900,000 shares of common stock in a private placement at a purchase price of $5.00 per share, generating gross proceeds of $19.5 million<font color="#f52887"> , of which $8.5 million has been received as of January 31, 2017. </font> The Company did not engage a broker or placement agent in connection with the private placement.<font color="#f52887"> At September 30, 2016, $7.5 million of the advance payment received for the subscription in the private placement was held as a deposit, a liability on the balance sheet. Upon execution of the private placement subscription agreement the money is treated as proceeds from the sale of stock. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><u></u><b><i><font color="#f52887"> 2016 Long-Term Incentive Plan </font></i></b><u> and New Grants</u></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In October 2016, the Company&rsquo;s board of directors<font color="#f52887"> adopted and in November 2016 the stockholders </font> approved the 2016 long-term incentive plan, pursuant to which a maximum of 6,500,000 shares of common stock may be issued pursuant to restricted stock grants, incentive stock options, non-qualified stock options and other equity-based incentives may be granted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">In October 2016, the board of directors granted 3,816,000 shares, of which 3,050,000 shares were granted to officers and directors as restricted stock grants. The grantees of the restricted stock grants have all rights of ownership with respect to the shares, including the right to vote the shares and to receive dividends and distributions with respect to the shares until and unless a forfeiture event shall occur; provided, however, that prior to a forfeiture termination event, (i) the grantees shall have no rights to sell, encumber or otherwise transfer the shares, and (ii) any shares of any class or series of capital stock which are issued to the grantee as a holder of the shares as a result of a stock dividend, stock split, stock distribution, reverse split, recapitalization, or similar event, shall be subject to the same forfeiture provisions as the shares. A forfeiture termination event shall mean such date as is six months following a public stock event. The definition of a public stock event includes the effectiveness of a registration statement relating to an underwritten public offering by the Company. The shares are forfeited and are to be conveyed to <font color="#f52887"> the Company </font> for no consideration if a public stock event has not occurred by December 31, 2017, although the board of directors has the right to extend that date.<font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In October 2016, the board of directors also granted non-qualified stock options to purchase 1,950,000 shares and incentive stock options to purchase 325,000 shares, at an exercise price of $5.00 per share. </font></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakf3e27d53-f639-4703-a7bf-bea2cda0dcd9" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-85</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><strong>SolarMax Technology, Inc. and Subsidiaries</strong></p>
<p style="MARGIN: 0px" align="center"><strong>Notes to Consolidated Financial Statements </strong></p>
<p style="MARGIN: 0px" align="center"><strong>For the Nine Months Ended September 30, 2016 and 2015 (Unaudited) </strong><font color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule"><strong>&nbsp;</strong></p>
<p style="MARGIN: 0px"><i style="MARGIN: 0px">&nbsp;</i></p> </font>
<p style="MARGIN: 0px" align="justify"><strong><em>Advisory Agreement</em></strong></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">On October 7, 2016, the Company entered into an advisory services agreement with a consultant who has been providing services to the Company <font color="#f52887"> including </font>among other things, business planning, financial strategy and implementation and corporate structure related to the Company&rsquo;s business development, financing and acquisition transactions. The term of the service is for one year, <font color="#f52887"> commencing </font> on June 1, 2016. As compensation<font color="#f52887"> for the service </font>, the consultant received 200,000 <font color="#f52887"> shares of </font> restricted stock <font color="#f52887"> which are subject to forfeiture if the public stock event has not occurred by December 31, 2017. As of September 30, 2016, $307,692 of deferred consulting expense was recognized for services rendered through September 30, 2016. The restricted stock was granted pursuant to the 2016 long-term incentive plan and is subject to restrictions and forfeiture provisions that are applicable to other </font> restricted stock grants <font color="#f52887"> pursuant to the plan as </font>described under &ldquo;<font color="#f52887"> 2016 Long-Term Incentive </font> Plan and New Grants.&rdquo;&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Employment Agreements </font></i></b><b><i></i></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">On October 7, 2016, the <font color="#f52887"> Company entered into employment agreements with its chief executive officer and its executive vice president (collectively, the &ldquo;Executives&rdquo;), each for a five-year term commencing January 1, 2017 and continuing on a year-to-year basis unless terminated by the Company or the Executive on not less than 90 days&rsquo; notice prior to the expiration of the initial term or any one-year extension. The agreements provide for an annual salaries of $600,000 and $560,000, respectively, with an increase of not less than 3% on January 1st of each year, commencing January 1, 2018, and an annual bonus payable in restricted stock and cash, commencing with the year ending December 31, 2017, equal to a specified percentage of consolidated revenues for each year. The bonus is based on a percentage of consolidated revenue in excess of $30 million, ranging from $250,000 and $200,000, respectively, for revenue in excess of $30 million but less than $50 million, to 1.0% and 0.9%, respectively, of revenue in excess of $300,000. The agreements provide for severance payments equal to one or two times, depending on the nature of the termination, of the highest annual total compensation of the three years preceding the year of termination, multiplied by the number of whole years the Executive has been employed by the Company. The employment of both Executives commenced in February 2008. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><b><i><font color="#f52887"> Restated Articles of Incorporate; Preferred Stock </font></i></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On December 1, 2016, the Company filed restated articles of incorporation with the Secretary of State of the State of Nevada. The restated articles provide for the creation of a class or preferred stock, par value $0.001 per share, consisting of 15,000,000 shares with the directors having the to create one or more series of preferred stock and to set forth the rights, preferences, privileges and limitations of the holders of each such series of preferred stock. </font><font color="#f52887"> </font></p><br>
<p style="MARGIN: 0px 0px 0px 0in" align="center">
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<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;<a name="report"><img src="solarmax_s1img2.jpg"></a></p>
<p style="MARGIN: 0px" align="center"><b><font color="#f52887"> Independent Auditors&rsquo; Report </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> To the Board of Directors of </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> We have audited the accompanying consolidated financial statements of Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. and Subsidiary (together the &ldquo;Company&rdquo;), which comprise the consolidated balance sheet as of December 31, 2014, and the related consolidated statements of operation and comprehensive loss, members&rsquo; deficit, and cash flows for the year then ended, and the related notes to the consolidated financial statements. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><b><font color="#f52887"> Management&rsquo;s Responsibility for the Consolidated Financial Statements </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><b><font color="#f52887"> Auditors&rsquo; Responsibility </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor&rsquo;s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity&rsquo;s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity&rsquo;s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> We believe that the audit evidence we have obtained is sufficient and appropriate to providing a basis for our audit opinion. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><b><font color="#f52887"> Opinion </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. and its subsidiary as of December 31, 2014, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="left">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="left"><font color="#f52887"> /s/ </font><font color="#f52887"> Marcum Bernstein &amp; Pinchuk </font><font color="#f52887"> llp </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="left"><font color="#f52887"> New York, New York <br>January 13, 2017 </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font color="#f52887"> </font></b></p><b style="MARGIN: 0px"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><img src="solarmax_s1img3.jpg"></p> </font></b>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font color="#f52887"> NEW YORK OFFICE </font></b><font color="#f52887"> &#183; </font><b><font color="#f52887"> </font></b><font color="#f52887"> 7 Penn Plaza &#183; Suite 830 &#183; New York, New York 10001 &#183; </font><b><font color="#f52887"> Phone </font></b><font color="#f52887"> 646.442.4845 &#183; </font><b><font color="#f52887"> Fax </font></b><font color="#f52887"> 646.349.5200 &#183; </font><b><font color="#f52887"> marcumbp.com </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p><font style="MARGIN: 0px" color="#f52887">
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="right"><a name="bal 4"><i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i></a></p>
<p style="MARGIN: 0px" align="right"><i>For the year ended December 31, 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p></i> </font>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font color="#f52887"> CONSOLIDATED BALANCE SHEET </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font color="#f52887"> December 31, 2014 </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Note </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> ASSETS </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Current Assets </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Cash and cash equivalents </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,313,324 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Notes receivable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,105,083 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Accounts receivable, net of allowance for doubtful accounts of $11,720 </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 6 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,781,069 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Advances to suppliers </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,488,919 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Prepaid expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 116,505 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Other receivables, net of allowance for doubtful accounts of $1,111,293 </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 7 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 57,388 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Total Current Assets </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,862,288 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Non-current Assets </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Long-term investment in equity affiliate </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 4 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 236,967 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Property and equipment, net </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 5 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 110,855 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Long-term accounts receivable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 6 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 846,614 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Deferred tax assets </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 3 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,648,729 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><b><font color="#f52887"> Total Non-current Assets </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,843,165 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> TOTAL ASSETS </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,705,453 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px"><br>
<table id="pagebreak98222b26-52aa-4b99-a2a6-7b846d85655e" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-88</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="right"><font color="#f52887"> <i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i> </font></p>
<p style="MARGIN: 0px" align="right"><i><font color="#f52887"> For the year ended December 31, 2014 </font>
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"></i><b style="MARGIN: 0px"><font color="#f52887"> CONSOLIDATED BALANCE SHEET (CONTINUED) </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font color="#f52887"> December 31, 2014 </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Note </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> LIABILITIES AND MEMBERS&rsquo; DEFICIT </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Current Liabilities </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Accounts payable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 8,576,586 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Amount due to related parties </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 8 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,306,892 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Accrued expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 10 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,350,047 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Other payables </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 11 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,088,813 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Total Current Liabilities </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,322,338 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> TOTAL LIABILITIES </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,322,338 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Commitment and Contingencies </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 12 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Members&rsquo; Deficit </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Members&rsquo; capital </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 9 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,673,410 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Accumulated deficit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,537,552 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px"><font color="#f52887"> Accumulated other comprehensive income </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 247,257 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Total Members&rsquo; Deficit </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,616,885 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> TOTAL LIABILITIES AND MEMBERS&rsquo; DEFICIT </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 12,705,453 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> The accompanying notes are an integral part of the consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="center">
<table id="pagebreakebcd7033-52a6-4b43-ae1e-42a814c1e52c" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-89</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="right"><i></i>&nbsp;</p>
<p style="MARGIN: 0px" align="right"><font color="#f52887"> <a name="loss4"><i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i></a> </font></p>
<p style="MARGIN: 0px" align="right"><i><font color="#f52887"> For the year ended December 31, 2014 </font>
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p></i>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> CONSOLIDATED STAT </font></b><b><font color="#f52887"> EMENT OF OPERATION AND COMPREHENSIVE LOSS </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 5.8pt; TEXT-INDENT: 0px" align="center"><b><font color="#f52887"> Year Ended December 31, 2014 </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Note </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Revenue, net </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 38,317,273 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Cost of revenue </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 42,541,128 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Gross Loss </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,223,855 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Operating Expenses </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Selling and marketing expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,237,411 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> General and administrative expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 720,192 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Total Operating Expenses </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,957,603 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Loss from Operations </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,181,458 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Other Expenses </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Interest income </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,168 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Interest expense </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (202,658 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Other income, net </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 46,414 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Total Other Expenses </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (155,076 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Loss Before Income Tax </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,336,534 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Income tax benefit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 3 </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,567,582 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net Loss </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,768,952 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr height="15" bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td><strong><font color="#f52887"> Other Comprehensive Income </font></strong><font color="#f52887"> </font></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> - </font></b><font color="#f52887"> Foreign exchange translation adjustment </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,469 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Comprehensive Loss </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,764,483 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> The accompanying notes are an integral part of the consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font><font color="#f52887"> </font>
<table id="pagebreakeaebe5cb-b661-45b0-bfe1-61a629794f07" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-90</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="right"><i></i>&nbsp;</p>
<p style="MARGIN: 0px" align="right"><font color="#f52887"> <a name="equity4"><i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i></a> </font></p>
<p style="MARGIN: 0px" align="right"><i><font color="#f52887"> For the year ended December 31, 2014 </font>
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p></i>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> CONSOLIDATED </font></b><b><font color="#f52887"> STA </font></b><b><font color="#f52887"> TE </font></b><b><font color="#f52887"> MENT OF </font></b><b><font color="#f52887"> MEMBERS&rsquo; </font></b><b><font color="#f52887"> DEFICIT </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font color="#f52887"> Year </font></b><b><font color="#f52887"> Ended December 31, 2014 </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Members&rsquo; capital </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Accumulated deficit </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Accumulated other comprehensive income </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Total members&rsquo; deficit </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Balance at December 31, 2013 </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,673,410 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,768,600 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 242,788 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,147,598 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Net loss </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,768,952 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,768,952 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Foreign currency translation adjustments </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,469 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,469 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Balance at December 31, 2014 </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,673,410 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,537,552 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 247,257 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (3,616,885 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> The accompanying notes are an integral part of the consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> &nbsp;<br>
<p style="MARGIN: 0px"> </font>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font><font color="#f52887"> </font>
<table id="pagebreak3797d194-bd7f-45e4-b25a-f13d0d5551f9" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-91</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px" align="right"><i></i>&nbsp;</p>
<p style="MARGIN: 0px" align="right"><font color="#f52887"> <a name="cash4"><i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i></a> </font></p>
<p style="MARGIN: 0px" align="right"><i><font color="#f52887"> For the year ended December 31, 2014 </font>
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p></i>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font color="#f52887"> CONSOLIDATED </font></b><b><font color="#f52887"> STA </font></b><b><font color="#f52887"> TE </font></b><b><font color="#f52887"> MENT </font></b><b><font color="#f52887"> </font></b><b><font color="#f52887"> OF CASH FLOWS </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 20.1pt" align="center"><b><font color="#f52887"> Year Ended December 31, 2014 </font></b></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash Flows From Operating Activities </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Net loss </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (4,768,952 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Adjustment to reconcile net loss to net cash </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> provided by operating activities: </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0.25in"><font color="#f52887"> Provision for doubtful accounts </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 11,741 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0.25in"><font color="#f52887"> Depreciation of property and equipment </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 25,725 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Deferred income taxes </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,567,582 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Changes in operating assets and liabilities: </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Notes receivable </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (2,914,235 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Accounts receivable </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,132,516 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Advances to suppliers </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,491,612 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Prepaid expenses </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (78,559 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Inventories </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 115,625 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Other receivables </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (35,613 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Long-term accounts receivable </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (848,147 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Accounts payable </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6,622,481 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Amount due to related parties </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,143,332 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Accrued expenses </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,115,584 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px; TEXT-INDENT: 15pt"><font color="#f52887"> Other payables </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,544,390 </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net Cash Provided by Operating Activities </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></b></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b><font color="#f52887"> 6,694 </font></b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></b></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash Flows From Investing Activities </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0.25in"><font color="#f52887"> Payment for acquisition of property and equipment </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (71,660 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net Cash Used in Investing Activities </font></b></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><b>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></b></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><b><font color="#f52887"> (71,660 </font></b></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><b><font color="#f52887"> ) </font></b></td></tr></table></p>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887">
<table id="pagebreak22cb44e7-4d12-4e04-8848-26ad0da597a2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-92</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p> </font><font color="#f52887">
<p style="MARGIN: 0px" align="right"><i>JIANGSU ZHONGHONG PHOTOVOLTAIC ELECTRIC</i><i></i><i>CO., LTD.</i></p>
<p style="MARGIN: 0px" align="right"><i>For the year ended December 31, 2014
<p style="MARGIN: 0px">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</i> </font></p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 20.1pt" align="center"><b><font color="#f52887"> CONSOLIDATED </font></b><b><font color="#f52887"> STA </font></b><b><font color="#f52887"> TE </font></b><b><font color="#f52887"> MENT OF CASH FLOWS (CONTINUED) </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 20.1pt" align="center"><b><font color="#f52887"> Year Ended December 31, 2014 </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash Flows From Financing Activities </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Borrowing from related parties </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,669,955 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Repayment of borrowing from related parties </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (818,605 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net Cash Provided by Financing Activities </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>851,350</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Effect of Foreign Exchange Rate on Cash and Cash Equivalents </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>(3,334</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>)</b> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Net Increase in Cash and Cash Equivalents </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>783,050</b> </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top"><b><font color="#f52887"> Cash and Cash Equivalents, </font><font color="#f52887"> Beginning of Year </font></b></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>530,274</b> </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Cash and Cash Equivalents, End of Year </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> <b>$</b> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> <b>1,313,324</b> </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887"> <b>
<p style="MARGIN: 0px">&nbsp;</p></b> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><b><font color="#f52887"> Supplementary Disclosure of Cash Flow Information: </font></b><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Cash paid for income taxes </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Cash paid for interest </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 9,869 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> The accompanying notes are an integral part of the consolidated financial statements. </font></p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> </font><font color="#f52887"> </font>
<table id="pagebreak0bb56f97-b7e2-4708-961d-ce80d276ffd6" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-93</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px"><b style="MARGIN: 0px"><font color="#f52887"> </font></b></p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> </font></b></p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> <a name="notes4">NOTES TO </a> </font></b><b><font color="#f52887"> <a name="notes4">CONSOLIDATED </a> </font></b><b><font color="#f52887"> <a name="notes4">FINANCIAL STATEMENTS</a> </font></b><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> 1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; CORPORATE INFORMATION AND BASIS OF PRESENTATION </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> a)&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> Corporate information </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Jiangsu Zhonghong Photovoltaic Electric Co., Ltd. (the &ldquo;Company&rdquo;) was incorporated in Changzhou, Jiangsu Province of China on December 31, 2009 and obtained its business registration certificate No.320483000259573. The Company&rsquo;s business operating period granted by the authority is from 2009 to 2029, extendable with permission. In 2016, the Company obtained the unified social credit code 91320115699340729P. The Company is mainly engaged in photovoltaic systems engineering design, construction, operation and maintenance; mechanical and electrical construction; solar cell and solar module sales; design and manufacturing and sales of PV systems engineering accessories. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> On December 31, 2012, the Company&rsquo;s owners entered into an ownership transfer agreement and sold 100% of their ownership in the Company to Uonone Group Co., Ltd. (&ldquo;Uonone Group&rdquo;). The Company then became a wholly-owned subsidiary of Uonone Group and changed its registration address to Nanjing, Jiangsu Province of China. In 2014, Uonone Group decreased its ownership of the Company to 67 % by selling part of the ownership to four natural persons. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> On December 19, 2013, the Company incorporated a wholly owned subsidiary, Enfei New Energy (Zhong Ning) Ltd., in Zhongwei, Ningxia Province of China. On September 2, 2014, the Company sold 100% of its shares in Enfei New Energy (Zhong Ning) Ltd. to a third-party entity. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> As of December 31, 2014, the Company owns 29% of Ejinaqi Enfei New Energy Co., Ltd., which is a company incorporated in 2013 in Inner Mongolia, China. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> b) </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> Basis of presentation </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The consolidated financial statements have been prepared and presented </font><font color="#f52887"> in accordance with the accounting principles generally accepted in the United </font><font color="#f52887"> </font><font color="#f52887"> States of America (US GAAP) </font><font color="#f52887"> . </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The consolidated financial statements include the financial statements of the Company and its subsidiary, Enfei New Energy (Zhongning) Co., Ltd. through September 2, 2014. All significant inter-company transactions and balances have been eliminated upon consolidation. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company&rsquo;s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company has suffered an accumulated deficit of US$ 6,537,552 as of December 31, 2014, and the net loss for the year ended December 31, 2014 was US$4,768,952. In addition, the Company had working capital (total consolidated current assets exceeding total consolidated current liabilities) of US$6,460,050 as of December 31, 2014. As of December 31, 2014, the Company had cash and cash equivalents of US$1,313,324. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> These and other factors raise substantial doubt as to the Company&rsquo;s ability to continue as a going concern. The Company&rsquo;s management believes that it has developed a liquidity plan, as summarized below, that, if executed successfully, will provide sufficient liquidity to meet the Company&rsquo;s obligations for a reasonable period of time. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> In order to meet the capital needs for continued operations, the Company&rsquo;s management intends to develop new Engineering Procurement Construction (&ldquo;EPC&rdquo;) contracts, such as Guizhou Qingshuihe 70MW project with a total contract amount of US$ 84.7 million, Puan 50MW project with a total contract amount of US$ 52.7 million. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company believes that the measures in the liquidity plan will be adequate to satisfy its liquidity and cash flow requirements for a reasonable period of time. However, there is no assurance that the liquidity plan will be successfully implemented. Failure to successfully implement the liquidity plan will have a material adverse effect on the Company&rsquo;s business, results of operations and financial position, and may materially adversely affect its ability to continue as a going concern. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The significant accounting policies follows in the preparation of the accompanying consolidated financial statements are as follows. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Use of estimates </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, the use of the percentage of completion method of accounting for revenue recognition, determining the allowance for doubtful accounts, the valuation of inventories, the useful lives of property and equipment, the valuation of deferred tax assets and uncertain tax positions. Actual results could differ significantly from those estimates. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> b)&nbsp;&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> Foreign </font><font color="#f52887"> c </font><font color="#f52887"> urrenc </font><font color="#f52887"> y translation and transactions </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The functional currency of the Company is the Chinese Renminbi (RMB), as determined based on the criteria of ASC 830 </font><i><font color="#f52887"> Foreign Currency Matters </font></i><font color="#f52887"> . The Company uses the U.S. Dollar for </font><font color="#f52887"> consolidated </font><font color="#f52887"> financial reporting purposes </font><font color="#f52887"> . </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Transactions denominated in foreign currencies are measured into RMB at the exchange rate quoted by the People&rsquo;s Bank of China at the transaction date. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenues and expenses are translated using average rates prevailing during each reporting period, and members&rsquo; equity is translated at historical exchange rates. Foreign currency transaction gains and losses are recorded in other income and expense in the consolidated statement of operations and comprehensive loss. Adjustments resulting from the translation of amount presented into consolidated financial statements from RMB into U.S. Dollars are recorded in equity as a part of accumulated other comprehensive income &#8211; foreign currency translation adjustments. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">
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<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, <font color="#f52887"> 2014 </font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Balance sheet items, except for equity accounts </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6.1190 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;
<p style="MARGIN: 0px">
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<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" colspan="2">
<p style="MARGIN: 0px" align="center"><font color="#f52887">Year Ended December 31, <font color="#f52887"> 2014 </font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Items in the statement of operations and </font><font color="#f52887"> comprehensive loss, and statement of cash flows </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 6.1080 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The balance of accumulated other comprehensive income &#8211; foreign currency translation adjustments is US$ </font><font color="#f52887"> 247,25 </font><font color="#f52887"> 7 as of December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cash and cash equivalents </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Cash and cash equivalents consist of cash on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months or less when purchased. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Account receivables and allowance for doubtful accounts </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company records accounts receivable at the invoiced amount less an allowance for doubtful accounts. Accounts receivable do not bear interest. The allowance for doubtful accounts is management&rsquo;s estimate of the amount of probable credit losses in the Company&rsquo;s outstanding accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based upon the information available, management believes that $11,720 is an adequate allowances for doubtful accounts at December 31, 2014. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Fair value of financial instruments </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"><font color="#f52887"> The </font> Company adopted ASC 820</font><font color="#f52887"> </font><i><font color="#f52887"> Fair Value Measurements and Disclosures </font></i><font color="#f52887"> . ASC 820 defines fair value, establishes a framework for measuring fair value, and requires disclosures to be provided on fair value measurement. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px; TEXT-INDENT: 0in"><font face="Wingdings">l </font><font color="#f52887"> Level 1 </font><font color="#f52887"> &#8211; </font><font color="#f52887"> Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets; </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px; TEXT-INDENT: 0in"><font face="Wingdings">l </font><font color="#f52887"> Level 2 </font><font color="#f52887"> &#8211; </font><font color="#f52887"> Include other inputs that are directly or indirectly observable in the marketplace; </font><font color="#f52887"> </font><font color="#f52887"> and </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px"><font face="Wingdings">l </font><font color="#f52887"> Level 3 </font><font color="#f52887"> &#8211; </font><font color="#f52887"> Unobservable inputs which are supported by little or no market activity </font><font color="#f52887"> , </font><font color="#f52887"> therefore requiring an entity to develop its </font><font color="#f52887"> </font><font color="#f52887"> own assumptions. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Due to the short-term nature of the Company&rsquo;s financial instruments, their carrying amounts approximate their fair value. These financial instruments are comprised of cash and cash equivalents, notes receivable, accounts receivable, advances to suppliers and other receivables and payables. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Long-term Investment in equity affiliate </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Affiliated companies are entities over which the Company has significant influence, but which it does not control. The Company generally considers an ownership interest of 20% or higher to represent significant influence. Investments in equity affiliates are accounted for by the equity method of accounting. Under this method, the Company&rsquo;s share of the profits or losses of affiliated companies is recognized in other income and its shares of other comprehensive income are recognized in other comprehensive income. Unrealized gains on transactions between the Company and its affiliated companies are eliminated to the extent of the Company&rsquo;s interest in the affiliated companies; unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. When the Company&rsquo;s share of losses in an affiliated company equals or exceeds its interest in the affiliate company, the Company does not recognize further losses, unless the Company has incurred obligations or made payments on behalf of the affiliated company. An impairment loss is recorded when there has been a loss in value of the investment that is other-than-temporary. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
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<p style="MARGIN: 0px"><font color="#f52887"> </font>&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Inventories </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company purchases and stores materials, modules and other merchandise needed for its solar power integration and construction projects based on management assessment of projected needs. The items that have not been put into the projects are accounted for as inventories. Inventories are valued at the lower of cost or market value at the balance sheet date. Cost is determined using the first-in-first-out method. The Company reviews its inventories periodically for possible excess and obsolescence to determine if any reserves are necessary. As of December 31, 2014, no provision was made for inventory. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Property and equipment </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Property </font><font color="#f52887"> and equipment are </font><font color="#f52887"> stated at cost </font><font color="#f52887"> less accumulated depreciation </font><font color="#f52887"> and are depreciated </font><font color="#f52887"> on </font><font color="#f52887"> the straight-line </font><font color="#f52887"> basis </font><font color="#f52887"> over the estimated useful lives as follows: </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;Category </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;Estimated useful life </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;Estimated residual value </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;Annual </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> depreciation rate </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top"><font color="#f52887"> Office equipment </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td><font color="#f52887"> 3-5 years </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 20-33.33% </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top"><font color="#f52887"> Motor vehicles </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td><font color="#f52887"> 4-5 years </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 20-25% </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top"><font color="#f52887"> Leasehold improvements </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td><font color="#f52887"> 1-3 years </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td colspan="2">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> 33.33-100% </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> &nbsp; </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top"><font color="#f52887"> Software </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td><font color="#f52887"> 4 years </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 0 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp; </font></p></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 25% </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px" align="right"><font color="#f52887"> </font>&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Expenditures for major additions or improvements </font><font color="#f52887"> that </font><font color="#f52887"> extend the useful lives of </font><font color="#f52887"> property and equipment </font><font color="#f52887"> are </font><font color="#f52887"> capitalized </font><font color="#f52887"> as additions to the related assets </font><font color="#f52887"> . </font><font color="#f52887"> Expenditures for m </font><font color="#f52887"> inor replacements, maintenance, and repairs </font><font color="#f52887"> that </font><font color="#f52887"> do not improve or extend the lives of the assets are charged to </font><font color="#f52887"> expense when </font><font color="#f52887"> incurred. </font><font color="#f52887"> Retirement, sales, and d </font><font color="#f52887"> isposals </font><font color="#f52887"> of assets </font><font color="#f52887"> are </font><font color="#f52887"> re </font><font color="#f52887"> corded by removing the </font><font color="#f52887"> cost </font><font color="#f52887"> and </font><font color="#f52887"> accumulated depreciation, </font><font color="#f52887"> with </font><font color="#f52887"> any resulting gain or loss reflected in </font><font color="#f52887"> the income statements </font><font color="#f52887"> . </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Employee benefits </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Full time employees of the Company participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, unemployment insurance, employee housing fund, and other welfare benefits are provided to employees. Chinese labor regulations require the Company to make contributions to the government for these benefits based on a specific percentage of the employees&rsquo; salaries up to a maximum of three times the average annual salary for the city in which the Company operates for the prior year. The Company has no legal obligation for the benefits beyond the contributions made. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive income </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> ASC Topic 220, <i>Comprehensive Income,</i> establishes standards for reporting and displaying comprehensive income or loss, its components and accumulated balances. Comprehensive income or loss as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income or loss, as presented in the accompanying statement of changes in members&rsquo; deficit, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font style="MARGIN: 0px" color="#f52887">
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<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Impairment of long-lived assets </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company&rsquo;s long-lived assets include property and equipment. The Company evaluates the long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. These events include but are not limited to significant current period operating or cash flow losses associated with the use of a long-lived asset or group of assets combined with a history of such losses, significant changes in the manner of use of assets and significant negative industry or economic trends. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. No impairments were recorded for long-lived asset for the year ended December 31, 2014. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contingencies </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Liabilities for loss contingencies arising from claims, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. Costs associated with contingencies are charged to expense. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Revenue recognition </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company&rsquo;s business scope permits the Company to earn revenues from providing project construction services and sales of products. For all its revenue-generating operations, the Company recognized revenue in accordance with ASC 605 <i>Revenue Recognition</i>, which requires that four basic criteria be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the seller&rsquo;s price to the buyer is fixed and determinable; and (4) collection is reasonable assured. Appropriate methods are adopted based on the nature of the revenue earning activities. Revenues presented in the statement of income are net of value added taxes and other sales related taxes and charges. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Revenues and profits from the Company&rsquo;s solar power construction contracts are recognized using the percentage-of-completion method pursuant to ASC 605-35 <i>Revenue Recognition</i>, based primarily on contract cost incurred to date compared to total estimated contract cost.&nbsp;The total estimated cost to complete the project is adjusted based on management&rsquo;s assessment of the project status, material and labor market conditions and changes, and other factors. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Provisions for estimated losses on uncompleted contracts are charged to operations in the period in which such losses are determined. Changes in job conditions, job performance and estimated profitability, including those arising from final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revisions are determined. An amount equal to contract cost attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> If certain requirements are met, revenue from a claim is recorded only to the extent that contract costs relating to the claim have been incurred. For the year ended December 31, 2014, the Company had no billed or unbilled amount representing claims or other similar items subject to uncertainty concerning their determination or ultimate realization. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Cost of revenues includes all direct costs of material, labor, and subcontract costs and those indirect costs related to contract performance such as suppliers, tools, warehouses, equipment costs and others. Interest on loans specifically for supporting the construction projects during the construction period, with other capitalization conditions met, are charged to project costs and cost of revenues accordingly. </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font style="MARGIN: 0px" color="#f52887"> &nbsp;
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-98</td></tr>
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<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p> </font>
<p style="MARGIN: 0px"><font color="#f52887"> n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income </font><font color="#f52887"> taxes </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company accounts for income taxes using the asset and liability method whereby the Company calculates the deferred tax assets or liabilities at the balance sheet date using enacted tax laws and rates expected to apply in the periods in which the deferred tax assets or liabilities are expected to be realized or settled. The Company establishes a valuation allowance to reduce deferred tax assets to the extent it is more likely than not that such deferred tax assets will not be realized. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Income tax expense includes (i) deferred tax expense, which generally represents the net change in the deferred tax assets and liabilities during the year plus any change in valuation allowances and (ii) current tax expense, which represents the amounts of tax currently payable to or receivable from the taxing authorities. The Company only recognizes tax benefits related to uncertain tax positions when such positions are more likely than not of being sustained upon examination. For such positions, the amount of tax benefit that the Company recognizes is the largest amount of tax benefit that is more than fifty percent likely of being sustained upon the ultimate settlement of such uncertain tax position. The Company records interest and penalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated income statements. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Concentrations </font><font color="#f52887"> of credit risk </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash, notes receivable, accounts receivable, long-term accounts receivable and advances to suppliers. The Company&rsquo;s investment policy requires cash and cash equivalents and investments to be placed with high-quality financial institutions and to limit the amount of credit risk from any one issuer. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Before conducting business with customers, the Company conducts credit evaluations of these customers. The Company records an allowance for doubtful accounts primarily based on the specific evaluation of the individual account&rsquo;s collectability and recoverability risk, previous loss history and the counterparties&rsquo; current ability to fulfill its obligation. The Company generally has not required collateral or other security interests from its suppliers but it performs ongoing credit evaluations and communication with these suppliers of their financial condition and capability for goods delivery. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> As of December 31, 2014, the Company has no f </font><font color="#f52887"> inancial instruments </font><font color="#f52887"> that </font><font color="#f52887"> potentially subject the Company to significant concentrations of credit risk. </font><font color="#f52887"> All of the Company's cash was managed by financial institutions located in China, which management believes are of high credit quality. The Company&rsquo;s top customers that the Company maintains trade and note receivables are listed below. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Top notes receivable that account for a majority of the outstanding balances is: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2<font color="#f52887"> 014 </font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom"></td>
<td valign="bottom" width="1%" colspan="4">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Customer A </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,105,083 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> &nbsp; </font><font style="MARGIN: 0px" color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-99</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"> </font><font color="#f52887"> Top account receivable, including long-term receivables, that accounts for a majority of the outstanding balances is: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Customer A </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,590,035 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company&rsquo;s management consistently monitors the receivables and takes measures to ensure their collectability. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The top customer that accounts for a majority of the Company&rsquo;s net revenue is: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> Year ended </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Customer A </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 35,963,196 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> p)&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> Reclassification </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Certain immaterial amounts in the consolidated financial statements for 2014 have been reclassified to conform with the current presentation. These reclassifications did not have an impact on reported members&rsquo; deficit. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> q)&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> Recent Accounting Pronouncements </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> As of January 13, 2017, the Financial Accounting Standards Board (&ldquo;FASB&rdquo;) has issued Accounting Standards Update (&ldquo;ASU&rdquo;) ASU No. 2014-01 through ASU No. 2017-02, which are not expected to have a material impact on the consolidated financial statements upon adoption except for the following ASU: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> In March 2016, the FASB issued ASU No.&nbsp;2016-08, </font><i><font color="#f52887"> Revenue from Contracts with Customers </font></i><font color="#f52887"> </font><i><font color="#f52887"> (Topic 606). </font></i><font color="#f52887"> Under the new guidance, revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Accordingly, an entity should apply five steps: 1) identify the contract(s) with a customer; 2) identify the performance obligations in the contract; 3) determine the transaction price; 4) allocate the transaction price to the performance obligations in the contract; 5) recognize revenue when (or as) the entity satisfied a performance obligation. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The Company is evaluating this ASU and has not determined the effect of this standard on its ongoing financial reporting. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 3.&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> INCOME TAXES </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> Pursuant to the China&rsquo;s Corporate Income Tax Laws, which became effective on January 1, 2008 and relevant regulations, </font><font color="#f52887"> the C </font><font color="#f52887"> ompan </font><font color="#f52887"> y </font><font color="#f52887"> </font><font color="#f52887"> is </font><font color="#f52887"> subject to a uniform income tax rate of 25%. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">Year Ended December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom" width="1%" colspan="5">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Components of income tax expense </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Current income tax expense </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Deferred income tax benefit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,567,582 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total income tax expense benefit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,567,582 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px" align="justify"><br>
<table id="pagebreak5a57b1cd-b659-4576-a42d-677a4e29ac7f" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-100</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> A reconciliation of the provision for income taxes with amounts determined by applying the statutory income tax rate to loss before income taxes is as follows: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> Year Ended December 31, 2014 </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Loss before tax </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (6,336,534 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Statutory income tax rate </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 25 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> % </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Computed income tax at statutory rate </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,584,133 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Expenses not deductible for tax purposes </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 16,551 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total income tax benefit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,567,582 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td colspan="5">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Allowance for doubtful account receivable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,930 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Accrued expenses </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 337,512 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Tax loss carried forward </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,308,287 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,648,729 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Realization of the net deferred tax assets is dependent on factors including future reversals of existing taxable temporary differences and adequate future taxable income, exclusive of reversing deductible temporary differences and tax loss or credit carry forwards. Valuation allowances were provided against deferred tax assets in entities where it was determined it was more likely than not that the benefits of the deferred tax assets will not be realized. The Company had deferred tax assets which consisted of tax loss carry-forwards, which can be carried forward to offset future taxable income. The Company&rsquo;s management has determined it is more likely than not that these deferred tax assets could be recognized, thus no valuation allowance was made as of December 31, 2014. The deferred tax assets arising from net operating losses will begin to expire in 2020 if not utilized. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 4.&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> LONG-TERM INVESTMENT IN EQUITY AFFILIATES </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On March 12, 2013, the Company invested RMB 1,450,000 (approximately US$ 233,160) in Ejinaqi Enfei New Energy Co., Ltd., owning 29% of this entity. Ejinaqi Enfei New Energy Co., Ltd. has not engaged in active business operations in 2014. Due to the inactive operation and insignificant operating results, the Company did not recognize its share of profits or losses of the affiliated company for the year ended December 31, 2014. As of December 31, 2014, the investment balance has not changed and no impairment of the investment was recorded as of December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On December 19, 2013, the Company invested RMB 1,000,000 and incorporated a wholly owned subsidiary, Enfei New Energy (Zhong Ning) Ltd., in Zhongwei, Ningxia Province of China. Enfei New Energy (Zhong Ning) Ltd. did not engage in active business operations and incurred an insignificant amount of expenses and loss in and 2014. On September 2, 2014, the Company entered into an ownership transfer agreement with a third-party entity and sold 100% of its ownership in Enfei New Energy (Zhong Ning) Ltd. According to the ownership transfer agreement, the consideration for the ownership purchase is the price equal to the value of the net assets of Enfei New Energy (Zhong Ning) Ltd. on the transaction date. If the net asset is a negative balance, the negative amount will be deducted from the prices of future contracts under which Enfei New Energy (Zhong Ning) Ltd. would engage the Company to complete construction projects. Thus there&rsquo;s no gain or loss from disposal of Enfei New Energy (Zhong Ning). The operating losses of Enfei New Energy (Zhong Ning) Ltd. in 2014 of US$ 201,484 were included in the consolidated statement of operations or comprehensive loss for the year ended December 31, 2014. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font>
<table id="pagebreak4875bd77-d26e-46cc-ba63-762fc43bfa91" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-101</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> PROPERTY AND EQUIPMENT, NET </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The cost and accumulated depreciation of p </font><font color="#f52887"> roperty </font><font color="#f52887"> </font><font color="#f52887"> and equipment </font><font color="#f52887"> are summarized as </font><font color="#f52887"> follow </font><font color="#f52887"> s </font><font color="#f52887"> : </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> December 31, </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2014 </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Cost </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Motor vehicles </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 85,880 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Office equipment </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 28,865 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Leasehold improvements </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 24,798 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Software </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 14,086 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 153,629 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Less: accumulated depreciation and amortization </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (42,774 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 110,855 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The depreciation and amortization expenses was US$ 25,725 for the year ended December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> There were no impairments of property and equipment provided for the year ended December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 5.&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> ACCOUNTS </font><font color="#f52887"> RECEVABLE </font><font color="#f52887"> , NET </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom" colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> December 31, 2014 </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td colspan="2">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> Contract work quality guarantee deposit </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 846,614 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td><font color="#f52887"> --Current </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> - </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td><font color="#f52887"> --Non-current </font></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 846,614 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> Accounts receivable for project contract work </font><font color="#f52887"> other than quality guarantee deposits </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,792,789 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> Allowance for doubtful trade receivables </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> (11,720 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,627,683 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> Total of long-term accounts receivable, net </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 846,614 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top" colspan="2">
<p style="MARGIN: 0px"><font color="#f52887"> Total of accounts receivable, net </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,781,069 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company&rsquo;s solar power construction projects usually have quality guarantee deposit terms. A percentage of the contract price is usually held by the contracting party and paid to the Company after a specified period of time after the construction and production of the project. The quality guarantee period is usually one year. The Company&rsquo;s accounts receivable as of December 31, 2014 include quality guarantee deposits, which amounted to US$ 846,614. Management expects to receive these deposits upon the expiration of the guarantee period. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" colspan="5">
<p style="MARGIN: 0px"><font color="#f52887"> The aging analysis of accounts receivable, net is as follows: </font><font color="#f52887"> </font></p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Within 1 year </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,743,421 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 1-2 years </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 37,648 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total of accounts receivable, net </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,781,069 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Management considers the carrying amounts recognized in the consolidated balance sheet to be reasonable approximation of their fair value due to the short term duration. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;
<table id="pagebreak773e45f4-a85f-401e-9147-7abbb578c1e0" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-102</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 6.&nbsp;&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> OTHER RECEIVABLES, NET </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> December 31, 2014 </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Lending to the former member </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,111,293 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Others </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 57,388 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Allowance for doubtful receivable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> (1,111,293 </font></td>
<td valign="bottom" width="1%"><font color="#f52887"> ) </font></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 57,388 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company lent RMB 6.8 million (equivalent to US$ 1,111,293 as of December 31, 2014) to the former shareholder, UE Solar Co., Ltd., before 2013. Due to the deterioration of the former member&rsquo;s financial situation, the Company made a full provision for bad debt in 2013. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 7.&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> RELATED PARTY TRANSACTIONS </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> As of and for the </font><font color="#f52887"> year </font><font color="#f52887"> </font><font color="#f52887"> en </font><font color="#f52887"> ded </font><font color="#f52887"> December 31, 2014 </font><font color="#f52887"> , the principal related parties with which the Company had transactions are listed as follows: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td style="BORDER-BOTTOM: 1px solid" width="62%">
<p style="MARGIN: 0px"><font color="#f52887"> Name </font><font color="#f52887"> </font></p></td>
<td width="2%"></td>
<td style="BORDER-BOTTOM: 1px solid" width="35%">
<p style="MARGIN: 0px"><font color="#f52887"> Relationship </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td width="62%">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="35%">
<p style="MARGIN: 0px"><font color="#f52887"> Ultimate holding company </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td valign="bottom" width="62%">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Jiangsu Electric Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="35%">
<p style="MARGIN: 0px"><font color="#f52887"> Under common control </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td valign="bottom" width="62%">
<p style="MARGIN: 0px"><font color="#f52887"> Jiangsu Weitong Electrical Equipment Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="35%">
<p style="MARGIN: 0px"><font color="#f52887"> Under common control </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td valign="bottom" width="62%">
<p style="MARGIN: 0px"><font color="#f52887"> Ejinaqi Enfei new energy Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td width="2%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="35%">
<p style="MARGIN: 0px"><font color="#f52887"> Investee under equity method </font><font color="#f52887"> </font></p></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company engaged in the following significant </font><font color="#f52887"> related part </font><font color="#f52887"> y transactions during the year ended December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> (a)&nbsp; </font>&nbsp;&nbsp;&nbsp; <font color="#f52887"> Amount due to related parties </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The balances of amount due to related parties are summarized as below. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887"> December 31, </font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center"><font color="#f52887"> 2014 </font><font color="#f52887"> </font></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 3,943,607 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Jiangsu Electric Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 201,273 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Jiangsu Weitong Electrical Equipment Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 162,012 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 4,306,892 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> (b)&nbsp;&nbsp; </font>&nbsp;&nbsp; <font color="#f52887"> Related party transactions </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><i><font color="#f52887"> Purchase from related parties </font></i><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company purchases from related parties various modules and materials needed for its solar power construction projects. Purchases </font><font color="#f52887"> of goods from related parties during the year ended December 31, 2014 are summarized below. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakbe52ccb1-0519-4195-ba23-fa8cd32bf822" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-103</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">Year ended December 31, <font color="#f52887"> 2014 </font></font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" valign="bottom" width="9%" colspan="2" align="center"></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,380,677 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Uonone Group Jiangsu Electric Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 220,465 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Jiangsu Weitong Electrical Equipment Co., Ltd. </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 341,276 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,942,418 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The outstanding accounts payable to related parties was US$ 1,541,285 as of December 31, 2014, which was included in amount due to related parties. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The deposit received for material quality from </font><font color="#f52887"> related parties was US$ 24,153 as of December 31, 2014 which was included in the amount due to related parties. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><i><font color="#f52887"> Borrowing from related parties </font></i><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The Company made temporary borrowing of US$ 1,669,955 from Uonone Group Co., Ltd for the year ended December 31 </font><font color="#f52887"> , 2014. During 2014, the Company repaid the borrowings of US$ 818,605. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The borrowing form Uonone Group has no fixed payment term, and was usually interest free except for an interest expense of US$ 102,326 accrued for borrowing of US$ 818,605 in 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> During the year ended December 31, 2014, Uonone Group paid expenses on behalf of the Company of US$ 1,009,595, and received US$ 329,957 from the Company for repayment. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> As of December 31, 2014, the other payable to related parties was US$ 2,741,454 which w </font><font color="#f52887"> as included in the amount due to related parties. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 8.&nbsp;&nbsp;&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> MEMBERS&rsquo; </font><font color="#f52887"> capital </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> On January 4, 2014, the Company&rsquo;s board of directors approved the resolution for Uonone Group Co., Ltd. to sell part of its ownership in the Company to four natural persons. As of December 31, 2014, Uonone Group owns 67% of the Company. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 9.&nbsp;&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> ACCRUED EXPENSES </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Interest of the project </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 456,761 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Performance bonus </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 470,837 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Consulting services </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 310,508 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Payroll and welfare </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 104,748 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Other </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 7,193 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,350,047 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> The accrued interest of US$ 456,761 was interest for Shandong project which was recorded as the cost of the project. The Company financed from third party company for material purchase in 2013. The interest was not paid as of December 31, 2014. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;
<table id="pagebreakdf81c3cb-d250-4917-94cc-5d24cd6a2197" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-104</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 10.&nbsp; </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <font color="#f52887"> OTHER PAYABLES </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> Other payables </font><font color="#f52887"> consist of the following: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Value added tax payable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 1,805,429 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Business tax and surcharges payable </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 223,948 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Deposits payable for project bidding </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 32,686 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Others </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 26,750 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-TOP: 1px solid; BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 2,088,813 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> 11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;COMMITMENTS AND CONTINGENCIES </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px; TEXT-INDENT: 0px"><font color="#f52887"> 1)&nbsp;&nbsp;&nbsp; </font>&nbsp;&nbsp;&nbsp; <font color="#f52887"> Commitments </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px; TEXT-INDENT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px; TEXT-INDENT: 0px" align="justify"><font color="#f52887"> The Company leases its corporate office </font><font color="#f52887"> and plant </font><font color="#f52887"> space under </font><font color="#f52887"> one </font><font color="#f52887"> operating lease agreement, expiring </font><font color="#f52887"> on Novem </font><font color="#f52887"> ber 25, </font><font color="#f52887"> </font><font color="#f52887"> 2017. Fu </font><font color="#f52887"> ture minimum payments under non-cancelable operating leases for buildings as of December 31, 2014 are as follows: </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px"><font color="#f52887">December 31, 2014<font color="#f52887"> </font></font><font color="#f52887"> </font></p></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Within 1year </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 115,918 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 1 to 2 years </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" valign="bottom" width="9%" align="right"><font color="#f52887"> 124,076 </font></td>
<td valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> 2 to 3 years </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 1px solid" valign="bottom" width="9%" align="right"><font color="#f52887"> 111,839 </font></td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Total </font><font color="#f52887"> </font></p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: 3px double" valign="bottom" width="1%"><font color="#f52887"> $ </font></td>
<td id="ffcell" style="BORDER-BOTTOM: 3px double" valign="bottom" width="9%" align="right"><font color="#f52887"> 351,833 </font></td>
<td style="PADDING-BOTTOM: 3px" valign="bottom" width="1%"><font color="#f52887">
<p style="MARGIN: 0px">&nbsp;</p> </font></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> 2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Contingencies </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> The Company built 25MW and 10MW power stations for Weifang Jingshiqian Solar Energy Co., Ltd. (&ldquo;Jingshiqian&rdquo;) and these projects had been completed in 2014. After repeatedly urging, the Company didn&rsquo;t get the rest of the construction funds from Jingshiqian. The Company filed a lawsuit against Jingshiqian for the dispute of construction contract with Shandong Provincial Supreme Court on April 15, 2015, asking Jingshiqian to pay for the contract price and compensation for breach of contract. The dispute was settled and the court issued the mediation letter on November 30, 2015. According to the Civil Mediation Letter (2015) LMYCZ No.19, Jingshiqian should pay US$ 12.58 million to the Company, of which US$ 1.63 million should be paid within 10 days after the receipt of the mediation letter (which was received immediately), US$ 1.63 million should be paid before December 30, 2015, US$ 4.91 million should be paid before the end of March 2016, and US$ 4.41 million should be paid before the end of May 2016. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> However, Jingshiqian did not pay anything after the settlement of lawsuit. On May 12, 2016, a clearance agreement was signed between the Company and Uonone Group. According to the agreement, the rights on the above receivables of US$ 12.58 million were transferred to Uonone Group (see note 13(2)). </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> 12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SUBSEQUENT EVENTS </font></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> In accordance with ASC 855 <i>Subsequent Events</i>, the Company evaluated subsequent events through January 13, 2017, which is the date that the financial statements were available to be issued. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (1)&nbsp;&nbsp;&nbsp;&nbsp; On January 16, 2015, Uonone Group transferred 67% of its ownership on the Company to two natural persons. After the transaction, the Company was 100% owned by five natural persons. </font></p>
<p style="MARGIN: 0px"><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="justify"><font style="MARGIN: 0px" color="#f52887">
<table id="pagebreak311cb39c-a364-4e9c-8bc4-287be0247cfe" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-105</td></tr>
<tr></tr>
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<td>
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">&nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (2)&nbsp;&nbsp;&nbsp;&nbsp; In 2015, the Company entered into a supplementary contract for the Enfei Zhongning 30MW project, increasing the total contract price by US$ 0.57 million to cover the additional cost incurred as the result of the adjustment to the technical plan. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> The Company signed a land lease contract in 2015 as required by local government to pay for occupation of resources, which was expected to cost US$ 0.49 million. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (3)&nbsp; </font>&nbsp;&nbsp;&nbsp; <font color="#f52887"> On April 28, 2015, the Company&rsquo;s owners entered into an ownership transfer agreement and sold 100% of their ownership in the Company to Accumulate Investment Co., Limited (HK), a subsidiary wholly owned by SolaMax Technology Inc.. The Company has completed the business registration change procedures on June 15, 2015. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> On May 12, 2016, the Company signed a clearance agreement with Uonone Group to clear all transactions between them from December 31, 2012 to December 31, 2015. Major contents of the agreement include: 1) the Company transfer of all the right of receivable from Jingshiqian based on the Civil Mediation Letter (2015) LMYCZ No.19 of US$ 12.58 million related to the 25MW and 10MW power stations to Uonone Group, and Uonone Group promises to undertake the all potential debts in connection with these projects; 2) Uonone Group promised to undertake the potential debt for land use fees of US$ 0.49 million in connection with the Enfei Zhongning 30MW project; and 3) Uonone Group waives its receivable from the Company of US$ 1.91 million, and undertakes the liabilities of the Company amounting to US$ 0.23 million. In addition, Uonone Group confirms owing the Company US$ 1.31 million as of December 31, 2015 and promises to repay the money before November 30, 2016. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> On December 29, 2016, the Company entered a supplemental agreement with Uonone Group, and agreed that US$0.66 million of the above US$1.31 million would be settled with commercial bills immediately, and the remaining US$0.67 million would be paid by two equal installments before March 30, 2017 and June 30, 2017. On December 30, 2016, the Company had received commercial bills of US$0.66 million from Uonone Group. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (4)&nbsp;&nbsp;&nbsp;&nbsp; On November 4, 2015, the Company disposed of its 29% equity ownership in Ejinaqi Enfei New Energy Co., Ltd. to a third party company with a consideration of US$ 0.24 million (RMB 1.45 million). No gain or loss was recognized from the disposal of Ejinaqi Enfei New Energy Co., Ltd.. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (5)&nbsp;&nbsp;&nbsp;&nbsp; The Company incorporated Nanjing Yidianhong New Energy Co., Ltd (&ldquo;Yidianhong Company&rdquo;) and set up the project company Xingyi Zhongning New Energy Co., Ltd (&ldquo;Xingyi Company&rdquo;) through Yidianhong Company in 2015 to hold the Qingshuihe 70MW Photovoltaic power generation C project (&ldquo;Qingshuihe Project&rdquo;). The Company signed a construction contract with Xingyi Company for the Qingshuihe Project on February 15, 2016. According to the contract, the contract price is US$ 84.7 million and the project should be completed by June 30, 2016. The Company is committed to obtaining government approval for subsidies of US$ 0.163 per kilowatt for the project. If the Company does not put the power plant in production by June 30, 2016, the Company will be fined to pay the capital cost of Xingyi Company. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify"><font color="#f52887"> On April 16, 2016, the Company entered into an ownership transfer agreement and sold 100% of its ownership in Yidianhong Company to Changzhou Almaden Co., Limited. No gain or loss was recognized from the disposal of Yidianhong Company. </font></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 30px" align="justify"><font color="#f52887"> As of January 13, 2017, the phase I of 44.4MW of the Qingshuihe Project has been completed, and the remaining phase II is still in construction. </font><font color="#f52887"> <br>
<p style="MARGIN: 0px"> </font><font style="MARGIN: 0px" color="#f52887">
<p style="MARGIN: 0px">
<p style="MARGIN: 0px" align="justify">
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<td><i><a href="#TOC2">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (6)&nbsp;&nbsp;&nbsp;&nbsp; The Company incorporated Nanjing Jinghong New Energy Co., Ltd. (&ldquo;Nanjing Jinghong&rdquo;) and set up the project company Puan Zhonghong New Energy Co., Ltd. (&ldquo;Puan Zhonghong&rdquo;) through Nanjing Jinghong in 2015 to hold the Puan 50MW Photovoltaic power generation project (&ldquo;Puan Project&rdquo;). The Company signed a construction contract with Puan Zhonghong for the Puan Project on September 26, 2016. According to the contract, the contract price is US$ 52.7 million and the project should be completed by February 28, 2017. As of January 13, 2017, the Puan Project is still in the construction. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> In November 2016, the Company entered into an ownership transfer agreement and sold 100% of its ownership in Nanjing Jinghong to Changzhou Almaden Co., Limited. </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify"><font color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px 0px 0px 30px"><font color="#f52887"> (7)&nbsp;&nbsp;&nbsp; </font>&nbsp; <font color="#f52887"> On October 9, 2015, the Company entered into a borrowing contract with Shenzhen X-Credit Factoring Co., Ltd. for purchase purpose. The maximum amount of the contract was US$ 8.2 million (RMB 50 million), with an annual interest of 12%. The contract period lasted from October 20, 2015 to October 19, 2016. The Company has repaid all the borrowing from Shenzhen X-Credit Factoring Co., Ltd. as at the maturity date, and there&rsquo;s no balance outstanding as of January 13, 2017. </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px 0px 0px 30px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> The Company had determined there was no other material event that occurred after the date of the balance sheet thereto January 13, 2017. </font></p>
<p style="MARGIN: 0px" align="justify"><font color="#f52887"> </font><font color="#f52887"> </font></p>
<p style="MARGIN: 0px" align="center">
<table id="pagebreak05a13721-478d-4bbc-8d1f-de4d5304e755" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">F-107</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="FONT-SIZE: 1px" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<div style="HEIGHT: 4px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px 0px 2px" name="hrule"></div>
<div style="HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000" name="hrule"></div></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>7,000,000 Shares</b></p>
<p style="MARGIN: 0px" align="center"><b>Common Stock</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font size="4">[SolarMax logo]</font></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font size="4">SolarMax Technology Inc.</font></b></p>
<p style="MARGIN: 0px" align="center"><strong><font size="4"></font></strong>&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 3in" align="center">
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>PROSPECTUS </b></p>
<p style="MARGIN: 0px" align="center"><strong></strong>&nbsp;</p>
<p style="FONT-SIZE: 2px; HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px" name="hrule">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>[Name of Managing Underwriter]</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center">_______&nbsp;, 2016 </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="FONT-SIZE: 1px" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td>
<div style="HEIGHT: 2px; WIDTH: 100%; BACKGROUND: #000000; MARGIN: 0px 0px 2px" name="hrule"></div>
<div style="HEIGHT: 4px; WIDTH: 100%; BACKGROUND: #000000" name="hrule"></div></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p><b style="MARGIN: 0px">
<table id="pagebreaka4d4ccd9-8e25-4fef-9854-253dfda22bf4" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p></b>
<p style="MARGIN: 0px" align="center"><b>PART II&#8212;INFORMATION NOT REQUIRED IN PROSPECTUS </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>Item&nbsp;13. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Expenses of Issuance and Distribution </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following table sets forth an itemized statement of the amounts of all expenses (excluding underwriting discounts and commissions) payable by us in connection with the registration of the common stock offered hereby. With the exception of the SEC registration fee and the FINRA filing fee, the amounts set forth below are estimates. The selling stockholders will not bear any portion of such expenses.&nbsp;</p>
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" colspan="2" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">SEC registration fee</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,930.00</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">FINRA filing fee</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">NASDAQ initial listing fee </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Transfer agent and registrar fees</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Accounting fees and expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Legal fees and expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Printing and engraving expenses</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Miscellaneous</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 12pt; TEXT-INDENT: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 3px double">$</td>
<td style="BORDER-BOTTOM: black 3px double">
<p style="MARGIN: 0px" align="right">*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="2%">
<p style="MARGIN: 0px">*</p></td>
<td valign="top">
<p style="MARGIN: 0px">To be provided by amendment</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>Item&nbsp;14. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indemnification of Directors and Officers </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Our restated articles of incorporation provides that we shall provide indemnification to our directors and officers to the maximum extent permitted by law. We shall pay advancements of expenses in advance of the final disposition of the action, suit, or proceedings upon receipt of an undertaking by or on behalf of the director or officer to repay the amount even if it is ultimately determined that he or she is not entitled to be indemnified by the corporation. Our by-laws also provides for indemnification of our directors and officers. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Under Nevada law, NRS 78.7502, a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys&rsquo; fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with the action, suit or proceeding if the person (i) is not liable pursuant to Nevada law; or acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the conduct was unlawful.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding, the corporation shall indemnify him or her against expenses, including attorneys&rsquo; fees, actually and reasonably incurred by him or her in connection with the defense. Any amendment, repeal or modification of these provisions will be prospective only and would not affect any limitation on liability of a director for acts or omissions that occurred prior to any such amendment, repeal or modification.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
<table id="pagebreake7887fae-4973-4de7-981f-b817398b5962" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">II-1</td></tr>
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<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Pursuant to NRS 78.751, any discretionary indemnification, unless ordered by a court or advanced by the Corporation in a matter as permitted by Nevada law, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made (i) by the stockholders; (ii) by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding; (iii) if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion; or (iv) if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">We intend to enter into indemnification agreements with each of our current and future directors and officers. These agreements will require us to indemnify these individuals to the fullest extent permitted under Nevada law against liability that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>Item&nbsp;15. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recent Sales of Unregistered Securities </b></p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The following is a summary of the issuances of unregistered securities during the past three years.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On November 15, 2013, we sold 3,571,428 shares of common stock to Changzhou Almaden Co. Ltd. for a total consideration of $10,000,000. The issuance of these shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act as sales not involving a public offering. The shares were acquired for investment and not with a view to the sale or distribution thereof. No broker or underwriter was involved in the sales and no brokers&rsquo;, finders&rsquo; or other commission was paid in connection.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In connection with the acquisition of ZHPV and ZHTH in April 2015, we issued a total of 3,400,000 shares of common stock to the former stockholders of these companies.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><u>Name</u></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Lord Link Investment Co., Ltd.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,180,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Hou-De Investment Co., Ltd.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">460,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Jifu Environmental Protection Technology</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">360,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Energy Focus Investment Co., Ltd.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">300,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Green Harbor Investment Co., Ltd</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">80,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Howye Investment Co., Ltd.</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">20,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,400,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 45px" align="justify">All of the former stockholders of ZHPV and ZHTH were residents of the PRC and the agreements were signed in the PRC. None of them is a U.S. Person. The issuance of the shares was exempt from registration pursuant to Regulation S. The shares were acquired for investment and not with a view to the sale or distribution thereof. No broker or underwriter was involved in the sales and no brokers&rsquo;, finders&rsquo; or other commission was paid in connection.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In 2015, we sold a total of 2,100,000 shares of common stock at a purchase price of $3.50 per share, to six individuals, as follows.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="justify"><u>Name</u></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Purchase Price</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Li Jun Pan*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">964,285</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,374,997</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Xiao Ying Liu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">300,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,050,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Guangxing Zhu*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">300,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,050,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Li Sun</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">285,714</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Hsu-Tsun Chen</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">200,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">700,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Richard Lin Yang*</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">50,001</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">175,003</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,100,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">7,350,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px" align="justify">___________&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>* </b>Although the subscription agreement was signed in 2016, payment was made, and the stock was issued, in 2016.</p>
<p style="MARGIN: 0px" align="justify"><b></b>&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak311f5952-47f0-49d6-90c2-26bbcade0354" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">II-2</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 45px" align="justify">The issuance of these shares was exempt from registration pursuant to Regulation S of the SEC. All purchasers were residents of the PRC and the purchase agreements were signed in the PRC. None of the purchasers is a U.S. Person, as defined in Rule 902. The shares were acquired for investment and not with a view to the sale or distribution thereof. No broker or underwriter was involved in the sales and no brokers&rsquo;, finders&rsquo; or other commission was paid in connection.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On October 7, 2016, our board of directors issued 3,816,000 shares of common stock as restricted stock grants pursuant to our 2016 long-term incentive plan. Pursuant to the restricted stock agreement, (i) the grantees have the right to vote the shares and to receive dividends with respect to the shares, and the shares are subject to forfeiture if a public stock event, which includes the effective date of this registration statement, has not occurred by December 31, 2017. The shares were issued as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px"><u>Name</u></p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">No. of Restricted Shares</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">David Hsu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,350,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Ching Liu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Simon Yuan</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">600,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">ChungJen Tsai</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">100,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px">Others</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">766,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px">Total</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,816,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The issuance of the shares was exempt from registration pursuant to Section 4(a)(2) of the Securities Act with respect to the shares issued to the five individuals named in the table. The issuance of the shares to the others was exempt from registration pursuant to Section 4(a)(2) and/or Rule 701 under the Securities Act.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In October and November 2016, we sold 3,900,000 shares of common stock at a purchase price of $5.00 per share to ten investors, as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="90%" align="center" border="0">

<tr>
<td valign="bottom">
<p style="MARGIN: 0px" align="justify">Name</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Shares</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td>
<td id="hdcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" colspan="2" align="center">
<p style="MARGIN: 0px" align="center">Purchase Price</p></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Meiying Li</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Allied Commerce Limited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Gold Embrace Limited</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">5,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Zhimei Yun</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">2,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Chunyong Dai</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">200,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">1,000,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Liren Yang</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">100,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Zhengrong Liu</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">200,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Yan Zhang</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">200,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Hungkun Liang</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Jianghu Wang</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">10,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="9%" align="right">50,000</td>
<td style="PADDING-BOTTOM: 1px" valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Total </p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">3,900,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">$</td>
<td id="ffcell" valign="bottom" width="9%" align="right">19,500,000</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The issuance of the shares was exempt from registration pursuant to Rule 506(b) under the Securities Act. The shares were acquired for investment and not with a view to the sale or distribution thereof. No broker or underwriter was involved in the sales and no brokers&rsquo;, finders&rsquo; or other commission was paid in connection.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; During 2014, 2015 and 2016, we granted non-qualified stock options to purchase a total of 280,000 shares of common stock pursuant to instruments of stock option grant to five key employees, including one officer. The grant of the options was exempt pursuant to Rule 701.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakb8056b57-2fe4-482e-87ea-11ad93024bc4" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">II-3</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On October 7, 2016, we granted non-qualified stock options to purchase 1,950,000 shares of common stock and incentive stock options to purchase 325,000 shares of common stock to our employees and consultants. The exercise price of the options is $5.00 per share. The grant of the options is exempt from registration pursuant to Rule 701. The options agreements provide that they are exercisable only if the issuance is made pursuant to a registration statement on Form S-8.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b>Item&nbsp;16. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exhibits and Financial Statement Schedules </b></p>
<p style="MARGIN: 0px 0px 0px 36.7pt; TEXT-INDENT: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px">(a) Exhibits</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td width="10%"></td>
<td width="2%"></td>
<td width="88%"></td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="center"><b>Exhibit&nbsp;number</b></p></td>
<td></td>
<td style="BORDER-BOTTOM: 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="center"><b>Description</b></p></td></tr>
<tr>
<td></td>
<td></td>
<td></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*1.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Form of underwriting agreement</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">2.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Share exchange agreement dated April 28, 2015, by and among each entity listed under the caption &ldquo;JZH Holder&rdquo; on Exhibit A and the Company.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">2.2</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Acknowledgement and amendment dated May 12, 2016 to share exchange agreement among the JZH Holders and the Company.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">2.3</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Share exchange agreement among the entities listed as CZH Holders, the persons lists as CSH<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup> Transferors, the Company and its subsidiary Shanghai Hongguam Solar Technology Limited.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">3.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> Restated </font> articles of incorporation<font color="#f52887"> . </font><sup><font color="#f52887"> 2 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">3.2</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Bylaws.<sup><font color="#f52887"> 2 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*4.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Form of <font color="#f52887"> common stock certificate </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*5.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Opinion of Ellenoff Grossman &amp; Schole LLP as to the legality of the securities being registered</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> *5.2 </font><font color="#f52887"> </font></p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> Opinion of AllBright Law Officers </font><font color="#f52887"> </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Channel agreement dated January 21, 2015 between Sunrun, Inc. and SolarMax Renewable Energy Provider, Inc.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.2</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> [Deleted] </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.3</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Solar modular supply agreement dated June 1, 2016 between <font color="#f52887"> Sunspark </font> Technology, Inc. and the Company, as amended on June 17, <font color="#f52887"> 2016. </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.4</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Employment agreement dated October 7, 2016 between the Company and David Hsu.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.5</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Employment agreement dated October 7, 2016 between the Company and Ching Liu<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.6</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">English translation of employment agreement between Shanghai Solarmax Technology Co. Ltd. and Gu Yu-Min.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.7</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Form of restricted stock agreement.<sup><font color="#f52887"> 2 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.8</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> [Deleted] </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.9</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">2016 Long-term incentive plan<font color="#f52887"> . </font><font color="#f52887"> </font><font color="#f52887"> &#8224; </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.10</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Distribution agreement dated effective June 9, 2016 between Li-Max Technology, Inc. and the Company<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.11</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Loan agreement dated August 26, 2014, between Clean Energy Funding II, LP and SolarMax LED, Inc.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.12</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Loan agreement dated January 3, 2012, between Clean Energy Funding, LP and SolarMax Renewable Energy Provider, Inc.<sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.13</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">English summary of loan agreement dated October 24, 2016 between the Company and China Everbright Bank<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.14</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Lease dated September 16, 2016 between SMX Property, LLC, and the Company<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.15</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> Lease </font>dated September 1, 2016 between Fallow Field, LLC and the Company<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.16</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Lease dated as of September 1, 2016 between Fallow Field, LLC and SolarMax LED, Inc. (U.S.A.)<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">10.17</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Form of subscription agreement for October/November 2016 private placement<font color="#f52887"> . </font><sup><font color="#f52887"> 1 </font></sup></p></td></tr></table></p>
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<table id="pagebreak93fad2c3-e9a6-47af-b952-bc40953b736e" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">II-4</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#cceeff">
<td width="10%">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> 10.18 </font></p></td>
<td width="2%"></td>
<td>
<p style="MARGIN: 0px" align="left"><font color="#f52887"> Amendment dated February 6, 2017 between the Company and Sunspark Technology, Inc.<sup>2</sup> </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> 10.19 </font><font color="#f52887"> </font></p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> English translation of EPC agreement with Pu'an Zhonghong New Energies Co., Ltd. </font><sup><font color="#f52887"> 2 </font></sup><font color="#f52887"> </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> 10.20 </font><font color="#f52887"> </font></p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> English translation of loan agreement dated October 24, 2016 between the Company and Shanghai Putuo Subbranch of China Everbright Bank. </font><sup><font color="#f52887"> 2 </font></sup><font color="#f52887"> </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> 10.21 </font><font color="#f52887"> </font></p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> English translation of EPC agreement with Xingyi Zhonghong New Energies Co., Ltd. </font><sup><font color="#f52887"> 2 </font></sup><font color="#f52887"> </font></p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> 10.22 </font><font color="#f52887"> </font></p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left"><font color="#f52887"> Form of non-qualified stock option grant. </font><sup><font color="#f52887"> 2 </font></sup><font color="#f52887"> </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">21.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">List of Subsidiaries.</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*23.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Consent of Marcum LLP</p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*23.2</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Consent of Ellenoff Grossman &amp; Schole, LLP (included as part of Exhibit 5.1 hereto)</p></td></tr>
<tr bgcolor="#cceeff">
<td valign="top">
<p style="MARGIN: 0px" align="left">*23.3</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Consent of AllBright Law Offices<font color="#f52887"> (included as part of Exhibit 5.2) </font></p></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="left">24.1</p></td>
<td></td>
<td valign="bottom">
<p style="MARGIN: 0px" align="left">Power of Attorney<sup><font color="#f52887"> 1 </font></sup></p></td></tr></table>&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="4%">
<p style="MARGIN: 0px">*</p></td>
<td valign="top">
<p style="MARGIN: 0px">To be filed by amendment.</p></td></tr>
<tr height="15">
<td valign="top" width="4%">
<p style="MARGIN: 0px"><sup><font color="#f52887"> 1 </font></sup><font color="#f52887"> </font></p></td>
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Previously filed </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td valign="top" width="4%">
<p style="MARGIN: 0px"><sup><font color="#f52887"> 2 </font></sup><font color="#f52887"> </font></p></td>
<td valign="top">
<p style="MARGIN: 0px"><font color="#f52887"> Filed herewith </font><font color="#f52887"> </font></p></td></tr>
<tr height="15">
<td valign="top" width="4%">
<p style="MARGIN: 0px">&#8224;</p></td>
<td valign="top">
<p style="MARGIN: 0px">Compensatory plan or arrangement.</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">(b) Financial Statement Schedules. Financial statement schedules are omitted because the required information is not applicable, not required or included in the financial statements or the notes thereto included in the prospectus that forms a part of this registration statement.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b>Item&nbsp;17. Undertakings</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The undersigned registrant hereby undertakes that:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.</p>
<p style="MARGIN: 0px">&nbsp;</p><b style="MARGIN: 0px">
<table id="pagebreaka5f8b603-8728-411e-bafc-eb9d6c257d6a" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">II-5</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p></b>
<p style="MARGIN: 0px" align="center"><b>SIGNATURES</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the&nbsp;City of Riverside, State of California, on&nbsp;<font color="#f52887"> February 9, 2017. </font></p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td width="50%"></td>
<td width="3%"></td>
<td width="35%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="12%"></td></tr>
<tr height="15">
<td valign="top"></td>
<td colspan="2">
<p style="MARGIN: 0px"><b>SOLARMAX TECHNOLOGY, INC.</b></p></td>
<td></td></tr>
<tr height="15">
<td></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="left">By:&nbsp;&nbsp;</p></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom">
<p style="MARGIN: 0px" align="justify"><em>/s/ David Hsu</em></p></td>
<td></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">David Hsu</p></td>
<td></td></tr>
<tr height="15">
<td></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom">
<p style="MARGIN: 0px">Chief Executive Officer </p></td>
<td></td></tr></table>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>POWER OF ATTORNEY&nbsp;</b>&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the date indicated:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="30%">
<p style="MARGIN: 0px" align="justify"><b>Signature</b></p></td>
<td width="5%"></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="40%">
<p style="MARGIN: 0px" align="justify"><b>Title</b></p></td>
<td width="5%"></td>
<td style="BORDER-BOTTOM: black 1px solid" valign="bottom" width="20%">
<p style="MARGIN: 0px" align="center"><b>Date</b></p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0in"><u>/s/ David Hsu<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px 0px 0px 0in">David Hsu </p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Chief executive officer and director (principal executive officer)</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td></td>
<td></td>
<td></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0in"><u>/s/ Simon Yuan<font color="#f52887"> * </font>&nbsp; </u></p>
<p style="MARGIN: 0px 0px 0px 0in">Simon Yuan</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Executive financial officer and director (principal financial officer)</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td valign="top"></td>
<td></td>
<td valign="top"></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 0in"><u>/s/ Dee Balch<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px 0px 0px 0in">Dee Balch</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Senior vice president and chief accounting officer (principal accounting officer)</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td valign="top"></td>
<td></td>
<td valign="top"></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px"><u>/s/&nbsp;Ching Liu<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px">Ching Liu</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Director</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px"><u>&nbsp;/s/ Jinxi Lin<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px">Jinxi Lin</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Director</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td></td>
<td></td>
<td></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px"><u>&nbsp;/s/ Wei Yuan Chen<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px">Wei Yuan Chen</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Director</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px"><u>/s/ Dr. Edwin Chan<font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px">Dr. Edwin Chan</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">Director</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td valign="top">
<p style="MARGIN: 0px"><u>/s/ ChungJen Tsai <font color="#f52887"> * </font></u></p>
<p style="MARGIN: 0px">ChungJen Tsai</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Director</p></td>
<td></td>
<td valign="top">
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">________&nbsp;</p>
<p style="MARGIN: 0px"><font color="#f52887"> * </font></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px"><font color="#f52887"> By:&nbsp; </font><u><font color="#f52887"> /s/ David Hsu&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font></u></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px" align="center"><font color="#f52887"> February 9, 2017 </font></p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px"><font color="#f52887"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; David Hsu, Attorney-in-fact </font></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> &nbsp; </font></p>
<p style="MARGIN: 0px"><font style="MARGIN: 0px" color="#f52887"> &nbsp;
<p style="MARGIN: 0px">
<p style="MARGIN: 0px">
<table class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center">II-6</p></td></tr>
<tr></tr></table> </font></p></BODY></html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>2
<FILENAME>filename2.htm
<TEXT>
<html><head><title>solarmax_ex31.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><b>EXHIBIT 3.1</b></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>AMENDED AND RESTATED ARTICLES OF INCORPORATION</b></p>
<p style="MARGIN: 0px" align="center"><b>OF</b></p>
<p style="MARGIN: 0px" align="center"><b>SOLARMAX TECHNOLOGY, INC.</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center">Pursuant to NRS Chapter 78</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">1.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </font>The name of the corporation (the &ldquo;Corporation&rdquo;) is SolarMax Technology, Inc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">2.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </font>The registered agent for services of process is Corporate Creations Network Inc. The address of the registered agent is 8275 South Eastern Avenue, No. 200, Las Vegas, Nevada 89123.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">3.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>(a) The total number of shares of capital stock which the Corporation shall have authority to issue is five hundred fifteen million (515,000,000) shares, of which (i) fifteen million (15,000,000) shares are designated as preferred stock, with a par value of $0.001 per share (&ldquo;Preferred Stock&rdquo;) and (ii) five hundred million (500,000,000) shares are designated as common stock, with a par value of $0.001 per share (&ldquo;Common Stock&rdquo;).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">&nbsp; <font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>(b) The Preferred Stock of the Corporation may be issued by the Board of Directors of the Corporation in one or more series and each such series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Corporation may determine, from time to time, including but not limited to:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">(i) the designation of such class or series;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(ii) the dividend rate of such class or series, the conditions and dates upon which such dividends shall be payable, the preference or relation which such dividends shall bear to the dividends payable on any other class or classes or of any other series of capital stock, whether such dividends shall be cumulative or non-cumulative, and whether such dividends may be paid in shares of any class or series of capital stock or other securities of the Corporation;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(iii) whether the shares of such class or series shall be subject to redemption by the Corporation, and, if made subject to such redemption, the times, prices and other terms and conditions of such redemption;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(iv) the terms and amount of any sinking fund provided for the purchase or redemption of the shares of such class or series;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(v) whether or not the shares of such class or series shall be convertible into or exchangeable for shares of any other class or classes or series of capital stock or other securities of the Corporation, and, if provision be made for conversion or exchange, the times, prices, rates, adjustment and other terms and conditions of such conversion or exchange;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(vi) the extent, if any, to which the holders of the shares of such class or series shall be entitled to vote, as a class or otherwise, with respect to the election of the directors or otherwise, and the number of votes to which the holder of each share of such class or series shall be entitled;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(vii) the restrictions, if any, on the issue or reissue of any additional shares or any class or series of Preferred Stock; and</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 90px" align="justify">(viii) the rights of the holders of the shares of such class or series upon the dissolution of, or upon the distribution of assets of, the Corporation.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak1b5c4005-0866-4d4f-8f7d-404aa432e049" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center">&nbsp;</p></td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">&nbsp; <font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>(c) Holders of shares of Common Stock shall be entitled to cast one vote for each share held at all stockholders&rsquo; meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">&nbsp; <font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>(d) Subject to such rights as may be granted to the holders of any series of Preferred Stock, no holder of shares of stock of any class shall be entitled as a matter of right to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">4.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>The purpose of the Corporation shall be to engage in any lawful act or activity for which corporations may be organized in Nevada.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">5.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </font>Except as otherwise provided by law, a director or officer is not individually liable to the Corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or her capacity as a director or officer unless it is proven that (a) the director&rsquo;s or officer&rsquo;s act or failure to act constituted a breach of his or her fiduciary duties as a director or officer; and (b) the breach of those duties involved intentional misconduct, fraud or a knowing violation of law.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">6.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </font>The Corporation shall provide indemnification to its directors and officers to the maximum extent permitted by law. The Corporation shall pay advancements of expenses in advance of the final disposition of the action, suit, or proceedings upon receipt of an undertaking by or on behalf of the director or officer to repay the amount even if it is ultimately determined that he or she is not entitled to be indemnified by the corporation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">7.<font style='FONT: 7pt "Times New Roman"'>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp; </font>These Restated Articles of Incorporation were approved by the Board of Directors and the holders of a majority of the outstanding shares of common stock pursuant to NRS 78.390 and NRS 78.320, and this instrument correctly sets forth in full the articles of incorporation, as amended and restated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">IN WITNESS WHEREOF, the unsigned officer has signed these restated articles of incorporation this 15<sup>th </sup>day of November, 2016.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u>/s/ David Hsu&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </u></p>
<p style="MARGIN: 0px">David Hsu, Chief Executive Officer</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center">2</p></td></tr>
<tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p></body></html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>3
<FILENAME>filename3.htm
<TEXT>
<html><head><title>solarmax_ex32.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><b>EXHIBIT 3.2</b></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>AMENDED AND RESTATED BYLAWS OF</b></p>
<p style="MARGIN: 0px" align="center"><b>SOLARMAX TECHNOLOGY, INC.<font style="MSO-BIDI-FONT-WEIGHT: BOLD"></font></b></p>
<p style="MARGIN: 0px" align="center"><b>(a Nevada Corporation)</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>(adopted effective as of December 14, 2016)</b></p>
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<p style="MARGIN: 0px" align="justify">These Restated Bylaws of SolarMax Technology, Inc., a Nevada corporation (the &ldquo;<b>Corporation</b>&rdquo;) are adopted pursuant to Section 12.2 of the Corporation&rsquo;s existing Bylaws (the &ldquo;<b>Original Bylaws</b>&rdquo;), and are intended to amend, restate and replace, in their entirety, the Original Bylaws effective as of the date first written above.</p>
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<p style="MARGIN: 0px" align="center"><b>ARTICLE 1</b></p>
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<p style="MARGIN: 0px" align="center"><b>OFFICES</b></p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 1.1. <u>Principal Office</u>. The principal offices of the Corporation shall be in such location as the Board of Directors of the Corporation (the &ldquo;<b>Board of Directors</b>&rdquo;) may determine.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 1.2. <u>Other Offices</u>. The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.</p>
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<p style="MARGIN: 0px" align="center"><b>ARTICLE 2</b></p>
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<p style="MARGIN: 0px" align="center"><b>MEETINGS OF STOCKHOLDERS</b></p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.1. <u>Place of Meeting; Chairman</u>. All meetings of stockholders shall be held at such place, either within or without the State of Nevada, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. The Chairman of the Board of the Corporation (or the Executive Chairman of the Corporation, if such office is designated and filled in accordance with these Bylaws) (the &ldquo;<b>Chairman of the Board</b>&rdquo;) or any other person specifically designated by the Board of Directors shall act as the Chairman for any meeting of stockholders of the Corporation. The Chairman of the Board (or his or her designee) shall have full authority to control the process of any stockholder or Board of Directors meeting, including, without limitation, determining whether any proposals or nominations were properly brought before such meeting, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting, limitations on participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the Chairman of the Board (or his or her designee) shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, requiring ballots by written consent, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.2. <u>Annual Meetings</u>. The annual meeting of stockholders of the Corporation shall be held at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, subject to any postponement in the Board of Directors&rsquo; sole discretion, upon notice of such postponement given in any manner deeded reasonable by the Board of Directors.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.3. <u>Special Meetings</u>. Special meetings of the stockholders of the Corporation, for any purpose or purposes, unless otherwise prescribed by the Nevada Revised Statutes (&ldquo;<b>NRS</b>&rdquo;) or by the Amended and Restated Articles of Incorporation of the Corporation, as the same shall be amended (the &ldquo;<b>Articles of Incorporation</b>&rdquo;), may be called exclusively by: (i) the Chairman of the Board or the Chief Executive Officer, President or other executive officer of the Corporation, (ii) a majority of the members of the Board of Directors or (iii) the request in writing of stockholders of record, and only of record, owning not less than sixty-six and two-thirds percent (66 2/3%) of the entire capital stock of the Corporation issued and outstanding and entitled to vote (the &ldquo;<b>Requisite Percent</b>&rdquo;). Such request shall state the purpose or purposes of the proposed meeting. The officers or directors shall fix the date, time and any place, either within or without the State of Nevada, as the place for holding such meeting; <i>provided, however,</i> that the date of any such special meeting shall be not more than ninety (90) days after the date on which a special meeting request properly brought pursuant to Sections 2.3 and 2.5 are delivered to the Secretary of the Corporation.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.4. <u>Notice of Meeting</u>. Written notice of the annual and each special meeting of stockholders of the Corporation, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote thereat, not less than ten (10) nor more than sixty (60) days before the meeting and shall be signed by the Chairman of the Board, the Chief Executive Officer, the President or the Secretary of the Corporation (the &ldquo;<b>Secretary</b>&rdquo;) or such other officer as may be designated by the Board of Directors. The Board of Directors may postpone a special meeting in its sole discretion in any manner it deems reasonable. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder&rsquo;s notice as described below.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.5. <u>Business Conducted at Meetings</u>. </p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.5.1 At any meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before a meeting, business must be: (a) specified in the notice of meeting (or any supplement thereto provided within the notice period specified in Section 2.4) given by or at the direction of the Chairman of the Board, the President or the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder or stockholders of record, and only of record, holding the Requisite Percent in accordance with applicable law, these Bylaws or otherwise. In addition to any other applicable requirements set forth in these Bylaws, the U.S. federal securities laws or otherwise, for business to be properly brought before a meeting called by stockholders representing the Requisite Percent, such stockholder(s) must have given timely notice thereof in writing to the Secretary. Any special meeting of the Corporation proposed to be called by a stockholder or stockholders in such capacity shall not be required to be held: (i) with respect to any matter, within 12 months after any annual or special meeting of stockholders at which the same matter was included on the agenda, or if the same matter will be included on the agenda at an annual meeting to be held within 90 days after the receipt by the Corporation of such request (the election or removal of directors to be deemed the same matter with respect to all matters involving the election or removal of directors) or (ii) if the purpose of the special meeting is not a lawful purpose or if such request violates applicable law. A stockholder may revoke a request for a special meeting at any time by written revocation delivered to the Secretary, and if, following such revocation, there are un-revoked requests from stockholders holding in the aggregate less than the requisite number of shares entitling the stockholders to request the calling of a special meeting, the Board of Directors, in its discretion, may cancel the special meeting. If none of the stockholders who submitted the request for a special meeting appears or sends a qualified representative to present the nominations proposed to be presented or other business proposed to be conducted at the special meeting, the Corporation need not present such nominations or other business for a vote at such meeting.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.5.2 To be timely, a stockholder&rsquo;s notice of a proposal to be included at an annual meeting must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary of the date on which the Corporation first mailed its proxy materials for the previous year&rsquo;s annual meeting of stockholders (or the date on which the Corporation mails its proxy materials for the current year if during the prior year the Corporation did not hold an annual meeting or if the date of the annual meeting was changed more than thirty (30) days from the prior year) or such other date as may be set forth in a proxy statement with respect to the most recent annual or special meeting for which such information was provided. </p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.5.3 A record stockholders&rsquo; notice to the Secretary shall set forth in writing as to each matter the stockholder(s) propose to bring before the meeting: (a) a detailed description of the business desired to be brought before the meeting and the reasons for proposing such business, including the complete text of any resolutions, bylaws or Articles of Incorporation amendments proposed for consideration (b) the name and address, as they appear on the Corporation&rsquo;s books, of the stockholders proposing such business, (c) the class and number of shares of the Corporation which are owned directly or indirectly of record and directly or indirectly beneficially owned by the stockholders and each of its affiliates (within the meaning of Rule 144 promulgated under the Securities Act of 1933, as amended, or any successor rule thereto (&ldquo;<b>Rule 144</b>&rdquo;)), including any shares of the Corporation owned or controlled via derivatives, synthetic securities, hedged positions and other economic and voting mechanisms, (d) any material interest of the stockholders in such proposed business and any agreements or understandings to which such stockholders are a party which relate in any way, directly or indirectly, to the proposed business to be conducted, including a description of all arrangements or understandings between such stockholder and any other person or persons (including their names), (e) a representation as to whether or not such stockholder intends to solicit proxies; (f) a representation as to whether or not such stockholder intends to appear in person or by proxy at the applicable meeting, and (g) such other information regarding the stockholder in his, her or its capacity as a proponent of a stockholder proposal that would be required to be disclosed in a proxy statement or other filing with the United States Securities and Exchange Commission (&ldquo;<b>SEC</b>&rdquo;) required to be made in connection with the contested solicitation of proxies pursuant to the SEC&rsquo;s proxy rules.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.5.4 Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at a meeting except in accordance with the procedures set forth in this Section 2.5. The Chairman of the meeting shall, in his or her sole discretion, determine and declare to the meeting whether or not any business was properly brought before the meeting. Any such business not properly brought before the meeting shall not be transacted. Nothing in this Section 2.5 shall affect the right of a stockholder to request inclusion of a proposal in the Corporation&rsquo;s proxy statement to the extent that such right is provided by an applicable rule of the SEC. Notwithstanding the foregoing, the advance notice provisions of these Bylaws shall apply to all stockholder proposals regardless of whether such proposal is sought to be included in the Corporation&rsquo;s proxy statement or in a separate proxy statement.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.6. <u>Nomination of Directors.</u> Nomination of candidates for election as directors of the Corporation at any meeting of stockholders called for the election of directors, in whole or in part (an &ldquo;<b>Election Meeting</b>&rdquo;), must be made by the Board of Directors or by any stockholder entitled to vote at such Election Meeting, in accordance with the following procedures. </p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.6.1. Nominations made by the Board of Directors shall be made at a meeting of the Board of Directors or by written consent of the directors in lieu of a meeting prior to the date of the Election Meeting. At the request of the Corporation, each proposed individual nominated by the Board of Directors shall provide the Corporation with such information concerning himself or herself as is required, under the rules of the SEC and any applicable securities exchange, to be included in the Corporation&rsquo;s proxy statement soliciting proxies for his or her election as a director.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.6.2. The exclusive means by which a stockholder may nominate a director shall be: (i) in the case of the nomination of a director for election at an annual meeting, by delivery of a notice to the Secretary, not less than ninety (90) days nor more than one hundred twenty (120) days prior to the anniversary of the date on which the Corporation first mailed its proxy materials for the previous year&rsquo;s annual meeting of stockholders (or the date on which the Corporation mails its proxy materials for the current year if during the prior year the Corporation did not hold an annual meeting or if the date of the annual meeting was changed more than thirty (30) days from the prior year) or the date set forth in such prior year&rsquo;s statement for such purpose; or (ii) in the case of the nomination of a director for election at a special meeting (other than pursuant to a special meeting request in accordance with the requirements set forth in Sections 2.3 and 2.5), not less than ninety (90) days nor more than one hundred twenty (120) days prior to such special meeting or, if later, the tenth (10th) day following the day on which public disclosure (of the date of such special meeting was first made, setting forth: (a) the name, age, business address and the primary legal residence address of each nominee proposed in such notice, (b) the principal occupation or employment of such nominee, (c) the number of shares of capital stock of the Corporation which are owned directly or indirectly of record and directly or indirectly beneficially owned by the nominee and each of its affiliates (within the meaning of Rule 144), including any shares of the Corporation owned or controlled via derivatives, hedged positions and other economic and voting mechanisms, (d) any material agreements, understandings or relationships, including financial transactions and compensation, between the nominating stockholder and the proposed nominees, (e) such other information concerning each such nominee as would be required, under the rules of the SEC, in a proxy statement soliciting proxies in a contested election of such nominees, and (f) a representation that neither such nominee nor any of such nominee&rsquo;s affiliates is subject to a &ldquo;bad actor&rdquo; disqualification pursuant to paragraph (d) of Rule 506 of the SEC. Such notice shall include a signed consent of each such nominee to serve as a director of the Corporation, if elected. In addition, any stockholder nominee, to be validly nominated, shall submit to the Secretary the questionnaire required pursuant to Section 2.6.3 of these Bylaws. A stockholder intending to nominate one or more candidates for election as directors must comply with the advance notice bylaw provisions specifically applicable to the nomination of candidates for election as directors for such nomination to be properly brought before the meeting. For purposes of these Bylaws, &ldquo;public disclosure&rdquo; shall mean shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the SEC pursuant to Sections 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.6.3 To be eligible to be a director nominee nominated by a stockholder or stockholders for election or reelection as a director of the Corporation, such nominee must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.6.2 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire (the &ldquo;<b>Questionnaire</b>&rdquo;) with respect to the background, qualification and experience of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be in the form approved by the Corporation and provided by the Secretary or such Secretary&rsquo;s designee) and a written representation and agreement that such person: (a) will abide by the requirements of these Bylaws and the Articles of Incorporation as in effect at the time of their nomination and as validly amended, (b)&nbsp;is not and will not become a party to (1)&nbsp;any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a &ldquo;<b>Voting Commitment</b>&rdquo;) that has not been disclosed to the Corporation or (2)&nbsp;any Voting Commitment that could limit or interfere with such person&rsquo;s ability to comply, if elected as a director of the Corporation, with such person&rsquo;s fiduciary duties under applicable law, (c)&nbsp;is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (d)&nbsp;in such person&rsquo;s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation. If, prior to the Election Meeting, there is a change in any information set forth on the Questionnaire, then such director candidate shall promptly notify the Secretary by submitting a revised Questionnaire. </p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.6.4. In the event that a person is validly designated by the Board of Directors as a nominee in accordance with this Section 2.6 and shall thereafter become unable or willing to stand for election to the Board of Directors, the Board of Directors may designate a substitute nominee who meets all applicable standards under these Bylaws.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.6.5. If the Chairman of the Election Meeting determines that a nomination was not made in accordance with the foregoing procedures, such nomination shall be void.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.7. <u>Quorum; Adjournment</u>. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.7.1 The holders of one-third of the shares of capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy (provided the proxy has authority to vote on at least one matter at such meeting), shall constitute a quorum at any meeting of stockholders for the transaction of business, except when stockholders are required to vote by class, in which event a majority of the issued and outstanding shares of the appropriate class shall be present in person or by proxy (provided the proxy has authority to vote on at least one matter at such meeting) in order to constitute a quorum as to such class vote, and except as otherwise provided by the NRS or by the Articles of Incorporation. The stockholders present at a duly called or held meeting at which a quorum is present may continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to have less than a quorum if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.7.2 Notwithstanding any other provision of the Articles of Incorporation or these Bylaws, at any annual or special meeting of stockholders of the Corporation, whether or not a quorum is present, the Chairman of the Board or the person presiding as Chairman of the meeting shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, whether or not a quorum shall be present or represented. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting in accordance with Section 2.4 of these Bylaws. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.8. <u>Voting; Proxies</u>. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.8.1 Except as provided for below or by applicable law, rule or regulation, when a quorum is present at any meeting of the stockholders, any action by the stockholders on a matter except the election of directors shall be approved if approved by the majority of the votes cast. Each nominee for director shall be elected by the majority of the votes cast with respect to that nominee&rsquo;s election at any meeting for the election of directors at which a quorum is present, <i>provided, however,</i> that, in the case of a director nominee in a Contested Election, the Board of Directors, in its sole discretion, may determine that directors shall be elected by a plurality of the votes cast in any Contested Election, such determination to be made no later than five (5) days prior to the date of the Election Meeting as initially announced. For purposes of these Bylaws, a &ldquo;<b>Contested Election</b>&rdquo; means an election of directors with respect to which the Board of Directors determines that the number of nominees exceeds the number of directors to be elected and the Board of Directors has not rescinded such determination by the date that is five (5) days prior to the date of the Election Meeting as initially announced. In determining the number of votes cast in a Contested Election, abstentions and broker non-votes, if any, will not be treated as votes cast. The provisions of this paragraph will govern with respect to all votes of stockholders except as otherwise provided for in the Articles of Incorporation or by a specific statutory provision superseding the provisions of these Bylaws.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">Section 2.8.2 Every stockholder having the right to vote shall be entitled to vote in person, or by proxy: (a) appointed by an instrument in writing subscribed by such stockholder or by his or her duly authorized attorney or (b) authorized by the transmission of an electronic record by the stockholder to the person who will be the holder of the proxy or to a firm which solicits proxies or like agent who is authorized by the person who will be the holder of the proxy to receive the transmission subject to any procedures the Board of Directors may adopt from time to time to determine that the electronic record is authorized by the stockholder; <i>provided, however,</i> that no such proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest, or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution. If such instrument or record shall designate two (2) or more persons to act as proxies, unless such instrument shall provide the contrary, a majority of such persons present at any meeting at which their powers thereunder are to be exercised shall have and may exercise all the powers of voting or giving consents thereby conferred, or if only one (1) be present, then such powers may be exercised by that one (1). Unless required by the NRS or determined by the Chairman of the meeting to be advisable, the vote on any matter need not be by written ballot. No stockholder shall have cumulative voting rights.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.9. <u>Consent of Stockholders</u>. Whenever the vote of the stockholders at a meeting thereof is required or permitted to be taken for or in connection with any corporate action, the meeting and vote of stockholders may be dispensed with if stockholders, having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, consent in writing to such corporate action being taken; provided, that in no case shall the written consent be by the holders of stock having less than the minimum percentage of the vote required by the NRS. Any action by consent of the stockholders pursuant to this Section 2.9 must follow the notice and timing procedures of Section 2.5 applicable to any business to be conducted at a stockholder meeting. Further, upon the request of a stockholder to conduct a consent solicitation, the Board of Directors shall adopt a resolution fixing a record date within ten (10) days of the date on which a request therefor is received, provided that such record date shall not be more than ten (10) days after the date of the adoption of such resolution.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.10. <u>Voting of Stock of Certain Holders</u>. Shares standing in the name of another entity, domestic or foreign, may be voted by such officer, agent or proxy as the governing documents of such entity may prescribe, or in the absence of such provision, as the Board of Directors or governing body of such entity may determine. Shares standing in the name of a deceased person may be voted by the executor or administrator of such deceased person, either in person or by proxy. Shares standing in the name of a guardian, conservator or trustee may be voted by such fiduciary, either in person or by proxy, but no such fiduciary shall be entitled to vote shares held in such fiduciary capacity without a transfer of such shares into the name of such fiduciary. Shares outstanding in the name of a receiver may be voted by such receiver. A stockholder whose shares are pledged shall be entitled to vote such shares, unless in the transfer by the pledgor on the books of the Corporation, he or she has expressly empowered the pledgee to vote thereon, in which case only the pledgee, or his or her proxy, may represent the stock and vote thereon.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.11. <u>Treasury Stock</u>. The Corporation shall not vote, directly or indirectly, shares of its own stock owned by it; and such shares shall not be counted in determining the total number of outstanding shares.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 2.12. <u>Fixing Record Date</u>. The Board of Directors may fix in advance a date for any meeting of stockholders (which date shall not be more than sixty (60) nor less than ten (10) days preceding the date of any such meeting of stockholders), a date for payment of any dividend or distribution, a date for the allotment of rights, a date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining a consent of stockholders (which date shall not precede or be more than ten (10) days after the date the resolution setting such record date is adopted by the Board of Directors), in each case as a record date (the &ldquo;<b>Record Date</b>&rdquo;) for the determination of the stockholders entitled to notice of, and to vote at, any such meeting and any adjournment thereof, to receive payment of any such dividend or distribution, to receive any such allotment of rights, to exercise the rights in respect of any such change, conversion or exchange of capital stock, or to give such consent, as the case may be. In any such case such stockholders and only such stockholders as shall be stockholders of record on the Record Date shall be entitled to such notice of and to vote at any such meeting and any adjournment thereof, to receive payment of such dividend or distribution, to receive such allotment of rights, to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such Record Date.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 3</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>BOARD OF DIRECTORS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.1. <u>Powers</u>. The business and affairs of the Corporation shall be managed by the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders. Subject to compliance with the provisions of the NRS, the powers of the Board of Directors shall include the power to make a liquidating distribution of the assets, and wind up the affairs of, the Corporation. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.2. <u>Number and Qualifications</u>. The number of directors which shall constitute the whole Board of Directors shall be not less than one (1) and not more than nine (9). Within the limits above specified, the number of the directors of the Corporation shall be determined solely in the discretion of the Board of Directors from time to time. All directors shall be elected annually. Directors need not be residents of Nevada or stockholders of the Corporation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.3. <u>Vacancies, Additional Directors; Removal From Office; Resignation</u>. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 3.3.1 If any vacancy occurs in the Board of Directors caused by death, resignation, retirement, disqualification, removal from office or otherwise, or if any new directorship is created in accordance with Section 3.2 by an increase in the authorized number of directors, a majority of the directors then in office, though less than a quorum, or a sole remaining director, but not the stockholders of the Corporation, may choose a successor or fill the newly created directorship. Any director so chosen shall hold office for the unexpired term of his or her predecessor in his or her office and until his or her successor shall be elected and qualified, unless sooner displaced. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 3.3.2 No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 3.3.3 The stockholders of the Corporation may remove a member of the Board of Directors by the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the issued and outstanding stock entitled to vote. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 3.3.4 Any director may resign or voluntarily retire upon giving written notice to the Chairman of the Board or the Board of Directors. Such retirement or resignation shall be effective upon the giving of the notice, unless the notice specifies a later time for its effectiveness. If such retirement or resignation is effective at a future time, the Board of Directors may elect a successor to take office when the retirement or resignation becomes effective. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.4. <u>Regular Meetings</u>. A regular meeting of the Board of Directors shall be held each year, without notice other than this Bylaw provision, at the place of, and immediately prior to and/or following, the annual meeting of stockholders; and other regular meetings of the Board of Directors shall be held during each year, at such time and place as the Board of Directors may from time to time provide by resolution, either within or without the State of Nevada, without other notice than such resolution. <u>The Board of Directors </u>shall keep minutes of its regular meetings.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.5. <u>Special Meetings</u>. Special meetings of the Board of Directors may be called by the Chairman of the Board or by the President and shall be called by the Secretary on the written request of any two (2) directors (should there be such number then in office). The Chairman of the Board or President so calling, or the directors so requesting, any such meeting shall fix the time and any place, either within or without the State of Nevada, as the place for holding such meeting. <u>The Board of Directors </u>shall keep minutes of its special meetings.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.6. <u>Notice of Special Meeting</u>. Written notice (including via e-mail) of special meetings of the Board of Directors shall be given to each director at least twenty-four (24) hours prior to the time of a special meeting. Any director may waive notice of any meeting. The attendance of a director at any meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting solely for the purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting, except that notice shall be given with respect to any matter when notice is required by the NRS.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.7. <u>Quorum</u>. A majority of the Board of Directors then serving shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, and the act of a majority of the directors present at any meeting at which there is quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by the NRS, by the Articles of Incorporation or by these Bylaws. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting, without notice other than announcement at the meeting, until a quorum shall be present. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved of by at least a majority of the required quorum for that meeting.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.8. <u>Action Without Meeting</u>. Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors, or of any committee thereof as provided in Article 4 of these Bylaws, may be taken without a meeting, if a written consent thereto is signed by all of the members of the Board of Directors or of such committee, as the case may be. Evidence of any consent to action under this Section 3.9 may be provided in writing, including electronically via email or facsimile. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.9. <u>Meeting by Telephone</u>. Any action required or permitted to be taken by the Board of Directors or any committee thereof may be taken by means of a meeting by telephone conference or similar communications method so long as all persons participating in the meeting can hear each other. Any person participating in such meeting shall be deemed to be present in person at such meeting.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.10. <u>Compensation</u>. Directors, as such, may receive reasonable compensation for their services, which shall be set by the Board of Directors, and expenses of attendance at each regular or special meeting of the Board of Directors; <i>provided, however,</i> that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving additional compensation therefor. Members of special or standing committees may be allowed like compensation for their services on committees.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.11. <u>Rights of Inspection</u>. Every director shall have the absolute right at any reasonable time to inspect and copy all books, records and documents of every kind and to inspect the physical properties of the Corporation and also of its subsidiary corporations, domestic or foreign. Such inspection by a director may be made in person or by agent or attorney and includes the right to copy and obtain extracts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 3.12 <u>Interested Directors.</u> No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if: (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or their committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the shareholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 4</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>COMMITTEES OF DIRECTORS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 4.1. <u>Generally</u>. The Board of Directors may, by resolution passed by a majority of the whole Board of Directors, designate one or more additional special or standing committees, each such additional committee to consist of one or more of the directors of the Corporation. Each such committee shall have and may exercise such of the powers of the Board of Directors in the management of the business and affairs of the Corporation as may be provided in such resolution, except as delegated by these Bylaws or by the Board of Directors to another standing or special committee or as may be prohibited by law.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 4.2. <u>Committee Operations</u>. A majority of a committee shall constitute a quorum for the transaction of any committee business. Such committee or committees shall have such name or names and such limitations of authority as provided in these Bylaws or as may be determined from time to time by resolution adopted by the Board of Directors. The Corporation shall pay all expenses of committee operations. The Board of Directors may designate one or more appropriate directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of such committee. In the absence or disqualification of any members of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not he, she or they constitute a quorum, may unanimously appoint another appropriate member of the Board of Directors to act at the meeting in the place of any absent or disqualified member.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 4.3. <u>Minutes</u>. Each committee of directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. The Corporation&rsquo;s Secretary, or any other person designated by the applicable committee shall (a)&nbsp;serve as the Secretary of the special or standing committees of the Board of Directors of the Corporation, (b)&nbsp;keep regular minutes of standing or special committee proceedings, (c)&nbsp;make available to the Board of Directors, as required, copies of all resolutions adopted or minutes or reports of other actions recommended or taken by any such standing or special committee and (d)&nbsp;otherwise as requested keep the members of the Board of Directors apprised of the actions taken by such standing or special committees.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 5</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>NOTICE</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 5.1. <u>Methods of Giving Notice</u>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 5.1.1. <u>Notice to Directors or Committee Members</u>. Whenever under the provisions of the NRS, the Articles of Incorporation or these Bylaws, notice is required to be given to any director or member of any committee of the Board of Directors, personal notice is not required but such notice may be: (a) given in writing and mailed to such director or committee member, (b) sent by electronic transmission (including via e-mail) to such director or committee member, or (c) given orally or by telephone; <i>provided, however,</i> that any notice from a stockholder to any director or member of any committee of the Board of Directors must be given in writing and mailed to such director or member and shall be deemed to be given upon receipt by such director or member. If mailed, notice to a director or member of a committee of the Board of Directors shall be deemed to be given when deposited in the United States mail first class, or by overnight courier, in a sealed envelope, with postage thereon prepaid, addressed, to such person at his or her business address. If sent by electronic transmission, notice to a director or member of a committee of the Board of Directors shall be deemed to be given if by (i) facsimile transmission, when receipt of the fax is confirmed electronically, (ii) electronic mail, when delivered to an electronic mail address of the director or member, (iii) a posting on an electronic network together with a separate notice to the director or member of the specific posting, upon the later of (1) such posting and (2) the giving of the separate notice (which notice may be given in any of the manners provided above), or (iv) any other form of electronic transmission, when delivered to the director or member.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 5.1.2. <u>Notices to Stockholders</u>. Whenever under the provisions of the NRS, the Articles of Incorporation or these Bylaws, notice is required to be given to any stockholder, personal notice is not required but such notice may be given: (a) in writing and mailed to such stockholder, (b) by a form of electronic transmission consented to by the stockholder to whom the notice is given or (c) as otherwise permitted by the SEC. If mailed, notice to a stockholder shall be deemed to be given when deposited in the United States mail in a sealed envelope, with postage thereon prepaid, addressed to the stockholder at the stockholder&rsquo;s address as it appears on the records of the Corporation. If sent by electronic transmission, notice to a stockholder shall be deemed to be given if by (i) facsimile transmission, when directed to a number at which the stockholder has consented to receive notice, (ii) electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice, (iii) a posting on an electronic network together with a separate notice to the stockholder of the specific posting, upon the later of (1) such posting and (2) the giving of the separate notice (which notice may be given in any of the manners provided above), or (iv) any other form of electronic transmission, when directed to the stockholder.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 5.2. <u>Written Waiver</u>. Whenever any notice is required to be given by the NRS, the Articles of Incorporation or these Bylaws, a waiver thereof in a signed writing or sent by the transmission of an electronic record attributed to the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 5.3. <u>Consent</u>. Whenever all parties entitled to vote at any meeting, whether of directors or stockholders, consent, either by a writing on the records of the meeting or filed with the Secretary, or by presence at such meeting and oral consent entered in the minutes of such meeting, or by taking part in the deliberations at such meeting without objection, the actions taken at such meeting shall be as valid as if had at a meeting regularly called and noticed. At such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for lack of notice is made at the time, and if any meeting be irregular for lack of notice or such consent, provided a quorum was present at such meeting, the proceedings of such meeting may be ratified and approved and rendered valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote thereat. Such consent or approval, if given by stockholders, may be by proxy or power of attorney, but all such proxies and powers of attorney must be in writing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 6</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>OFFICERS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.1. <u>Officers</u>. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 6.1.1 The officers of the Corporation shall include the Chairman of the Board (or Executive Chairman, if the Board of Directors designates such office), the President, the Secretary and the Treasurer, each as approved and appointed by the Board of Directors. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 6.1.2 The officers of the Corporation may further include a Chief Executive Officer and a Chief Financial Officer, each as approved and appointed by the Board of Directors, and may further include, without limitation, such other executive or subordinate officers and agents, including, without limitation, one or more Vice Presidents (any one or more of which may be designated Senior Executive Vice President, Executive Vice President, Senior Vice President or such other title as may be determined by the Board of Directors), Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers, in each case as the Board of Directors deems necessary and approve and appoint. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 6.1.3 The Board of Directors may in its discretion delegate to the President the power and authority to appoint subordinate officers of the Corporation and to prescribe their respective duties and powers, but in any instance the Chairman of the Board, the President, the Secretary, the Treasurer and, if designated, the Chief Executive Officer, Chief Financial Officer or any other officer responsible for a principal business unit, division or function of the Corporation (such as sales, administration or finance), or any other officer who performs a policy making function (collectively, the &ldquo;<b>Principal Officers</b>&rdquo;), shall be subject to the approval of and appointment by the Board of Directors. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 1in" align="justify">SECTION 6.1.4 All officers of the Corporation shall hold their offices for such terms and shall exercise such powers and perform such duties as prescribed by these Bylaws, the Board of Directors or President, as applicable. Any two or more offices may be held by the same person. The Chairman of the Board shall be elected from among the directors. With the foregoing exception, none of the other officers need be a director, and none of the officers need be a stockholder of the Corporation. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.2. <u>Election and Term of Office</u>. The Principal Officers shall each be elected only by, and shall serve only at the pleasure of, the Board of Directors. All other officers of the Corporation may be appointed as the Board of Directors or the President deem necessary and elect or appoint. The officers of the Corporation shall be elected or ratified annually by the Board of Directors at its first regular meeting held concurrently with or after the annual meeting of stockholders or as soon thereafter as conveniently possible (or, in the case of those officers elected or appointed other than by the Board of Directors, ratified at the Board of Directors&rsquo; first regular meeting held following their election or appointment or as soon thereafter as conveniently possible). Subject to the terms and conditions of any applicable contract between an officer and the Corporation, each officer shall hold office until his or her successor shall have been chosen and shall have qualified or until his or her death or the effective date of his or her resignation or removal, or until he or she shall cease to be a director in the case of the Chairman of the Board.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.3. <u>Removal and Resignation</u>. Any officer or agent may be removed, either with or without cause, by the affirmative vote of a majority of the Board of Directors and, other than the Principal Officers, may also be removed, either with or without cause, by action of the President whenever, in his, her judgment, the best interests of the Corporation shall be served thereby, but such right of removal and any purported removal shall be without prejudice to the contractual rights, if any, of the person so removed. Any Principal Officer or other officer or agent may resign at any time by giving written notice to the Corporation. Any such resignation shall take effect at the date of the receipt of such notice or at any later time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.4. <u>Vacancies</u>. Any vacancy occurring in any Principal Officer office by death, resignation, removal or otherwise, shall be filled by the Board of Directors for the unexpired portion of the term. Any vacancy in any other office may be filled as the Board of Directors or President deem necessary.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.5. <u>Compensation</u>. The compensation of the Principal Officers shall be determined by the Board of Directors or a designated committee thereof. Compensation of all other officers and employees of the Corporation shall be determined by the President in consultation with the Board of Directors or a designated committee thereof and in accordance with any charter of any such committee as has been approved by the Board of Directors or any policies as have been approved by the Board of Directors. No officer who is also a director shall be prevented from receiving such compensation by reason of his or her also being a director.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.6. <u>Chairman of the Board</u>. The Chairman of the Board (who may also be designated as Executive Chairman), shall preside at all meetings of the Board of Directors and of the stockholders of the Corporation. In the Chairman of the Board&rsquo;s absence, such duties shall be attended to by any vice chairman of the Board of Directors, or if there is no vice chairman, or such vice chairman is absent, then by the President. The Chairman of the Board shall act as liaison between the Board of Directors and the executive officers of the Corporation and shall be responsible for general oversight of such executive officers. The Chairman of the Board may also hold the position of Chief Executive Officer or President, if so approved or appointed by the Board of Directors. The Chairman of the Board shall formulate and submit to the Board of Directors matters of general policy for the Corporation and shall perform such other duties as usually appertain to the office or as may be prescribed by the Board of Directors. He or she may sign with the President or any other officer of the Corporation thereunto authorized by the Board of Directors certificates for shares of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors, and any deeds or bonds, which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated or reserved by these Bylaws or by the Board of Directors to some other officer or agent of the Corporation, or shall be required by law to be otherwise executed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;
<table id="pagebreak4347d249-f20d-4331-8c35-55c8ba1e5f38" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">12</td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.7. <u>Chief Executive Officer</u>. The Chief Executive Officer shall, subject to the oversight by and control of the Board of Directors, have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer shall keep the Board of Directors fully informed and shall consult them concerning the business of the Corporation. Subject to the supervisory powers of the Board of Directors, the Chief Executive Officer may sign with any other officer of the Corporation thereunto authorized by the Board of Directors, certificates for shares of capital stock of the Corporation, the issuance of which shall have been authorized by resolution of the Board of Directors, and any deeds, bonds, mortgages, contracts, checks, notes, drafts or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof has been expressly delegated by these Bylaws or by the Board of Directors to some other officer or agent of the Corporation, or shall be required by law to be otherwise executed. In general, the Chairman of the Board shall perform all other duties normally incident to the office of the Chairman of the Board, except any duties expressly delegated to other persons by these Bylaws, the Board of Directors and such other duties as may be prescribed by the&nbsp;Board of Directors from time to time.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.8. <u>President</u>. The President shall, in general, perform such duties as usually pertain to the position of president and such duties as may be prescribed by the Board of Directors. The President may also, but shall not be required to, hold the position of Chief Executive Officer of the Corporation, if so approved or appointed by the Board of Directors. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.9. <u>Chief Financial Officer</u>. The Chief Financial Officer, if any, shall, in general, perform such duties as usually pertain to the position of chief financial officer and such duties as may be prescribed by the Board of Directors. The Chief Financial Officer (or the Treasurer, if the office of Chief Financial Officer is unoccupied) shall prepare annually (by the thirtieth (30th) day following the end of each fiscal year) a customary and appropriate financial and operational budget of income, expense and cash flows of the Company for the upcoming fiscal year, which budget shall be reviewed and approved by the Board of Directors. Such budget shall be updated quarterly (including a reconciliation of the Company&rsquo;s actual performance versus the approved budget) and presented to the Board of Directors for review and revision as determined by the Board of Directors. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.10. <u>Secretary</u>. The Secretary shall: (a)&nbsp;keep the minutes of the meetings of the stockholders, the Board of Directors and committees of directors; (b)&nbsp;see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; (c)&nbsp;be custodian of the corporate records and of the seal of the Corporation, and see that the seal of the Corporation or a facsimile thereof is affixed to all certificates for shares prior to the issuance thereof and to all documents, the execution of which on behalf of the Corporation under its seal is duly authorized in accordance with the provisions of these Bylaws; (d)&nbsp;keep or cause to be kept a register of the post office address of each stockholder which shall be furnished by such stockholder; (e)&nbsp;have general charge of other stock transfer books of the Corporation; and (f)&nbsp;in general, perform all duties normally incident to the office of the Secretary and such other duties as from time to time may be assigned to him or her by the Chairman of the Board, the President or the Board of Directors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.11. <u>Treasurer</u>. The Treasurer shall: (a)&nbsp;have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for monies due and payable to the Corporation from any source whatsoever and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositories as shall be selected in accordance with the provisions of Section 7.3 of these Bylaws; and (b)&nbsp;in general, perform all the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him or her by the Board of Directors or the President. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 6.12. <u>Interim Officer Status</u>. Any office of the Corporation may be designated by the Board of Directors as interim, and such interim status shall be on such terms and for such duration as may be designated by the Board of Directors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;
<table id="pagebreak22579c00-9854-4f73-9fc1-d05213fafbfe" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">13</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 7</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>EXECUTION OF CORPORATE INSTRUMENTS AND <br>VOTING OF SECURITIES OWNED BY THE CORPORATION</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 7.1. <u>Contracts</u>. Subject to the provisions of Section 6.1, the Board of Directors may authorize any officer, officers, agent or agents to enter into any contract or execute and deliver an instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 7.2. <u>Checks, etc</u>. All checks, demands, drafts or other orders for the payment of money, and notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers or such agent or agents of the Corporation, and in such manner, as shall be determined by the Board of Directors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 7.3. <u>Deposits</u>. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the&nbsp;President, the Treasurer or the Chief Financial Officer may be empowered by the Board of Directors to select or as the Board of Directors may select.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 7.4. <u>Voting of Securities Owned by Corporation</u>. All stock and other securities of any other corporation owned or held by the Corporation for itself, or for other parties in any capacity, and all proxies with respect thereto shall be executed by the person authorized to do so by resolution of the Board of Directors or, in the absence of such authorization, by any Principal Officer.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 8</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SHARES OF STOCK</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 8.1. <u>Issuance</u>. Each stockholder of the Corporation shall be entitled to a certificate or certificates showing the number of shares of stock registered in his or her name on the books of the Corporation. The certificates shall be in such form as may be determined by the Board of Directors, shall be issued in numerical order and shall be entered in the books of the Corporation as they are issued. They shall exhibit the holder&rsquo;s name and the number of shares and shall be signed by the Chairman of the Board and the President or such other officers as may from time to time be authorized by resolution of the Board of Directors. Any or all the signatures on the certificate may be a facsimile. In case any officer who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to be such officer before such certificate is issued, such certificate may nevertheless be issued by the Corporation with the same effect as if such officer had not ceased to be such officer at the date of its issue. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designation, preferences and relative participating, option or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such class of stock; provided that except as otherwise provided by the NRS, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate which the Corporation shall issue to represent such class or series of stock, a statement that the Corporation will furnish to each stockholder who so requests the designations, preferences and relative participating, option or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and rights. All certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in the case of a lost, stolen, destroyed or mutilated certificate a new certificate (or uncertificated shares in lieu of a new certificate) may be issued therefor upon such terms and with such indemnity, if any, to the Corporation as the Board of Directors may prescribe. In addition to the above, all certificates (or uncertificated shares in lieu of a new certificate) evidencing shares of the Corporation&rsquo;s stock or other securities issued by the Corporation shall contain such legend or legends as may from time to time be required by the NRS.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakd70677cf-4d6f-46b9-a43e-6db52e0c0ea8" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 8.2. <u>Lost Certificates</u>. The Board of Directors may direct that a new certificate or certificates (or uncertificated shares in lieu of a new certificate) be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates (or uncertificated shares in lieu of a new certificate), the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost, stolen or destroyed, or both.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 8.3. <u>Transfers</u>. In the case of shares of stock represented by a certificate, upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Transfers of shares shall be made only on the books of the Corporation by the registered holder thereof, or by his or her attorney thereunto authorized by power of attorney and filed with the Secretary and the Corporation&rsquo;s transfer agent, if any.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 8.4. <u>Registered Stockholders</u>. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Nevada.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 8.5. <u>Uncertificated Shares</u>. The Board of Directors may approve the issuance of uncertificated shares of some or all of the shares of any or all of its classes or series of capital stock.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 9</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>DIVIDENDS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 9.1. <u>Declaration</u>. Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the Articles of Incorporation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 9.2. <u>Reserve</u>. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="center">
<table id="pagebreak9ddf6108-5e32-4506-8ce4-82f3da788096" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">15</td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE&nbsp;10</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>LIMITATION ON LIABIILTY AND INDEMNIFICATION</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.1 No director or officer shall be personally liable to the Corporation or its shareholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law: (i) for acts or omissions not in good faith or which involve intentional misconduct, fraud or a knowing violation of law, or (ii) for any transaction from which the director derived an improper personal benefit. If the NRS is hereafter is amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by applicable law. No amendment to or repeal of this Section shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.2 The Corporation shall, to the maximum extent permitted under the applicable law and except as set forth below, indemnify, old harmless and, upon request, advance expenses to each person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or she is or was, or has agreed to become, a director or officer of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation, as a director, officer or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan (any such person being referred to hereafter as an &ldquo;<b>Indemnitee</b>&rdquo;), or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. Notwithstanding anything to the contrary in this Section, (a) the Corporation shall not indemnify an Indemnitee seeking indemnification in connection with any action, suit, proceeding, claim or counterclaim, or part thereof initiated by the Indemnitee unless the initiation thereof was approved by the Board of Directors, and (b) the Corporation shall not indemnify any person for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, final beyond right of review, all appeals having been exhausted, to be liable to the Corporation or for amounts paid in settlement to the Corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines, upon application, that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;
<table id="pagebreakfb57e558-ab75-42d8-8d64-feb4b9e4ebf0" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">16</td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.3 <u>Advance of Expenses.</u> Notwithstanding any other provisions of the Articles of Incorporation, these Bylaws, or any agreement, vote of stockholder or disinterested directors, or arrangement to the contrary, the Corporation shall advance payment of expenses incurred by an Indemnitee in advance of the final disposition of any matter only upon receipt of an undertaking by or on behalf of the Indemnitee to repay all amounts so advanced in the event that it shall ultimately be determined that the Indemnitee is not entitled to be indemnified by the Corporation as authorized in this Section. Such undertaking may be accepted without reference to the financial ability of the Indemnitee to make such repayment.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.4 <u>Subsequent Amendment.</u> No amendment, termination or repeal of this Article 10 or of the relevant provisions of the Chapter 78 of the NRS or any other applicable laws shall affect or diminish in any way the rights of any Indemnitee to indemnification under the provisions hereof with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.5 <u>Other Rights</u>. The Corporation may, to the extent authorized from time to time by its Board of Directors, grant indemnification rights to other employees or agents of the Corporation or other persons serving the Corporation and such rights may be equivalent to, or greater or less than, those set forth in this Section.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.6 <u>Reliance.</u> Persons who after the date of the adoption of this provision become or remain directors or officers of the Corporation or who, while a director or officer of the Corporation, become or remain a director, officer, employee or agent of a subsidiary, shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Section in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Section shall apply to claims made against an Indemnitee arising out of acts or omissions which occurred or occur both prior and subsequent to the adoption hereof.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.7 <u>Merger or Consolidation.</u> If the Corporation is merged into or consolidated with another corporation and the Corporation is not the surviving corporation, the surviving corporation shall assume the obligations of the Corporation under this Section with respect to any action, suit, proceeding or investigation arising out of or relating to any actions, transactions or facts occurring prior to the date of such merger or consolidation,</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.8 <u>Insurance.</u> The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was, or has agreed to become, a director, officer, employee or agent of the Corporation, or is or was serving, or has agreed to serve, at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or other enterprise, including any employee benefit plan, against all expenses (including attorney's fees) judgments, fines or amounts paid in settlement incurred by such person in any such capacity or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such expenses under the Chapter 78 of the NRS.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.9 <u>Savings Clause.</u> If this Article 10 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Indemnitee as to any expenses, including attorneys' fees, judgments, fines and amounts paid in settlement in connection with any action, suit, proceeding or investigation, whether civil, criminal or administrative, including an action by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article 10 that shall not have been invalidated and to the fullest extent permitted by applicable law.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakb8d7bf19-cad1-47b4-a712-e1b228ce8660" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 10.10 <u>Contested Director Indemnification</u>. Notwithstanding anything to the contrary contained in these Bylaws, a director who was elected in any Contested Election who is not a continuing director shall not be entitled to any indemnification or advancement of expenses unless and until a majority of the continuing directors vote that the indemnification provisions set forth in this Article 10 shall apply to such newly elected director.</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 11</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>MISCELLANEOUS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 11.1. <u>Books</u>. The books of the Corporation may be kept within or without the State of Nevada (subject to any provisions contained in the NRS) at such place or places as may be designated from time to time by the Board of Directors.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 11.2. <u>Fiscal Year</u>. The fiscal year of the Corporation shall be such fiscal year as may be designated by the Board of Directors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 11.3 <u>Forum Selection.</u> Unless the Corporation consents in writing to the selection of an alternative forum, a state or federal court located in the City and County of Riverside, California shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation&rsquo;s stockholders, (iii) any actions asserting a claim arising pursuant to any provision of the NRS, the Articles of Incorporation or these Bylaws, in each case as amended, or (iv) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such court having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 11.3. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>ARTICLE 12</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>AMENDMENTS</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 12.1 <u>Amendment By Stockholders.</u> The stockholders of the Corporation may alter, amend, repeal or the remove these Bylaws or any portion thereof only by the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the stockholders entitled to vote at a meeting of the stockholders, duly called; provided, however, that no such change to any Bylaw shall alter, modify, waive, abrogate or diminish the Corporation&rsquo;s obligation to provide the indemnity called for by Article 10 of these Bylaws, the Articles of Incorporation or applicable law. </p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 0.5in" align="justify">SECTION 12.2 <u>Amendment by the Board of Directors</u>. Notwithstanding Section 12.1, the Board of Directors may, by majority vote of those present at any meeting at which a quorum is present, alter, amend or repeal these Bylaws or any portion thereof, or enact such other Bylaws as in their judgment may be advisable for the regulation of the conduct of the affairs of the Corporation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"># # #</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>filename4.htm
<TEXT>
<html><head><title>solarmax_ex107.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><strong>EXHIBIT 10.7</strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>SOLARMAX TECHNOLOGY, INC.</b><b></b></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>2016 LONG-TERM INCENTIVE PLAN</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>Restricted Stock Agreement</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">This Restricted Stock Award Agreement evidences a grant of Restricted Stock pursuant to the provisions of the 2016 Long-Term Incentive Plan (the &ldquo;Plan&rdquo;) of SolarMax Technology, Inc., a Nevada corporation (the &ldquo;Company&rdquo;) to the individual whose name appears below (the &ldquo;Participant&rdquo;), pursuant to the provisions of the Plan and on the following terms and conditions (capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Plan):</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">1. <u>Name of Participant</u>: </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">2. <font style='FONT: 7pt "Times New Roman"'></font><u>Number of Shares of Restricted Stock (the &ldquo;Shares&rdquo;)</u>: </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">3. <u>Date of Grant</u>: October 7, 2016</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">4. <u>Issuance of the Shares</u>: Until a Forfeiture Termination Event occurs, the Shares shall be reflected as book entry, rather than physical certificates; and the Participant shall have the rights of ownership with respect to the Shares as and to the extent set forth in Section 5. The Company&rsquo;s stock record books shall include a notation that the Shares are subject to this Agreement. Upon the occurrence of a Forfeiture Termination Event, the Company shall remove the restriction notation on its stock record books and, if requested by the Participant, shall issue a certificate for the Shares to the Participant in the name of the Participant. If a Forfeiture Event shall occur, the Recipient shall transfer the Shares to the Company for cancelation. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">5. <u>Risk of Forfeiture</u>: </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">(a) The Participant shall have all rights of ownership with respect to the Shares, including the right to vote the shares and to receive dividends and distributions with respect to the Shares until and unless a Forfeiture Event shall occur; provided, however, that prior to a Forfeiture Termination Event, (i) the Participant shall have no rights to sell, encumber or otherwise transfer the Shares, and (ii) any shares of any class or series of capital stock of the Company which are issued to the Participant as a holder of the Shares as a result of a stock dividend, stock split, stock distribution, reverse split, recapitalization, or similar event, shall be subject to the same forfeiture provisions as the Shares.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">(b) A Forfeiture Termination Event shall mean such date as is six months following a Public Stock Event, which shall be the vesting date. A Public Stock Event shall mean the first to occur of (i) the effective date of a registration statement covering an underwritten public offering of the Company&rsquo;s common stock on a firm commitment basis; (ii) the closing date with respect to a public offering of the Company&rsquo;s common stock other than pursuant to a firm commitment underwritten offering; (iii) the date on which the Company&rsquo;s common stock is first trading on a United States or Canadian stock exchange or stock market or in a United States or Canadian over-the-counter market; (iv) the date on which the common equity of a Successor Corporation is publicly traded on a United States or Canadian stock exchange or stock market or in a United States or Canadian over-the-counter market; (v) a Change in Control, as defined in the Plan, or (vi) such other transaction or event which the Company&rsquo;s board of directors determines, in its sole discretion, is an Public Stock Event.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">(c) A Successor Corporation shall mean the successor of the Company by merger, reverse acquisition, sale of assets or other transaction provided that a majority of the shares of the resulting corporation is owned by those persons who were the stockholders of the Company immediately prior to the transaction.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 60px" align="justify">(d) A Forfeiture Event shall occur on December 31, 2017 if, and only if, a Public Stock Event shall not have occurred by such date; provided, however, that the board of directors shall have the right, in its sole discretion, to defer the Forfeiture Event. If a Forfeiture Event shall occur, there shall be no vesting and the Company shall cause the Shares to be transferred to the Company for cancellation, and the Participant consents to such cancellation. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">6. <u>Stock Power</u>: The Participant shall execute a stock power transferring the Shares to the Company and shall have his or her signature medallion guaranteed and the Company shall hold the stock power subject to the terms of this Agreement. The stock power shall only be used to transfer the Shares to the Company for cancellation if a Forfeiture Event shall occur. Following the occurrence of a Forfeiture Termination Event, the Company shall return the stock power to the Participant.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">7. <u>Withholding Tax</u>: If and at the time required by law, the Participant shall pay or make arrangements for payment of any withholding tax required to be paid or withheld with respect to the Shares.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">8. <u>Section 83(b) Election</u>: By signing this Agreement, the Participant acknowledges that he or she has been advised by his or her tax advisors with respect to the filing of an election pursuant to Section 83(b) of the Internal Revenue Code and the tax consequences of such election. It shall be in the Participant&rsquo;s sole discretion as to whether to make such an election.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">9. <u>Governing Law</u>: This Agreement shall be governed by the laws of the State of Nevada applicable to agreements executed and to be performed wholly within such state without regard to principles of conflict of laws.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">The Participant hereby acknowledges receipt of a copy of the Plan as presently in effect. The text and all of the terms and provisions of the Plan are incorporated herein by reference, and the grant of the Shares is subject to these terms and provisions in all respects. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">SOLARMAX TECHNOLOGY, INC. </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">By: ________________________________<u></u><br>David Hsu, Chief Executive Officer </p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">Agreed to and Accepted as of October 7, 2016:</p><u>
<p style="MARGIN: 0px"><br></u>[Name of Participant]
<p>
<p style="MARGIN: 0px">&nbsp;</p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>5
<FILENAME>filename5.htm
<TEXT>
<html><head><title>wordproof.doc</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><strong>EXHIBIT 10.18</strong></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b>AMENDMENT NO. 2 TO<br>SOLAR MODULE SUPPLY AGREEMENT</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">THIS AMENDMENT NO. 2 TO SOLAR MODULE SUPPLY AGREEMENT, dated as of February 6, 2017 (this &ldquo;<b>Amendment</b>&rdquo;), by and between SunSpark Technology Inc., a California corporation (&ldquo;<b>SunSpark</b>&rdquo;), and SolarMax Technology, Inc., a Nevada corporation (&ldquo;<b>SolarMax</b>&rdquo;). SunSpark and SolarMax together shall be referred to as the &ldquo;<b>Parties</b>&rdquo; and individually as a &ldquo;<b>Party</b>&rdquo;.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">WHEREAS, SunSpark and SolarMax are parties to that certain Solar Module Supply Agreement dated as of June 1, 2016 as amended by Amendment No. 1 to Solar Module Supply Agreement dated June 17, 2016 (as amended, the &ldquo;<b>Agreement</b>&rdquo;);</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">WHEREAS, the Parties desire to amend the Agreement, on and subject to the terms of this Amendment;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein and other good and valuable consideration, the Agreement is amended in the following manner:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="4%">1.</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font><u>Terms of the Amendment</u>.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td valign="top" width="4%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="top" width="4%">(a)</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font>The definition of &ldquo;Modules&rdquo; in Article I of the Agreement is hereby amended and restated in its entirety to read as follows:</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 135px">&ldquo;<b>Modules</b>&rdquo; shall mean the photovoltaic modules described in <u>Attachment A</u> attached hereto as updated from time to time by the Parties.&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td width="4%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="4%">
<p style="MARGIN: 0px">(b)</p></td>
<td>
<p style="MARGIN: 0px">Section 2.02 of the Agreement is hereby amended and restated in its entirety to read as follows:</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 135px">Section 2.02 <u>Quantity and Price</u>. During the Term, SolarMax, on behalf of itself and its affiliates, agrees to purchase from SunSpark and its affiliates, and SunSpark, on behalf of itself and its affiliates, agrees to supply SolarMax and its affiliates, a 150-megawatt quantity of Modules, at a price per watt to be negotiated from time to time between SolarMax and SunSpark not to exceed 110% of the three month rolling average market price per watt; <i>provided</i>, in any given one-year period during the Term, SolarMax and its affiliates shall purchase no less than a 30-megawatt quantity of Modules.&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td width="4%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="4%">
<p style="MARGIN: 0px">(c)<font style='FONT: 7pt "Times New Roman"'>&nbsp;</font></p></td>
<td>
<p style="MARGIN: 0px">The last sentence of Section 2.04 of the Agreement is hereby deleted in its entirety.</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">(d)</p></td>
<td>
<p style="MARGIN: 0px">Section 2.10(c) of the Agreement is hereby amended and restated in its entirety to read as follows:</p></td></tr></table>&nbsp;
<table id="pagebreak15baa172-da85-487d-b47e-0fe3787c9d2c" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">1</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 135px">(c) <u>Certifications</u>. All Modules shall comply with the applicable local certification standards or with the certification standards set forth in UL1703, CEC, FSEC.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top" width="4%">2.</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font><u>Counterparts</u>. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Amendment by facsimile or electronic mail shall be as effective as delivery of a manually executed counterpart of this Amendment.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top">3.</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font><u>Continuing Effect of the Agreement</u>. This Amendment shall not constitute an amendment of any other provision of the Agreement not expressly referred to herein. Except as expressly amended, the Agreement is and shall remain in full force and effect, and this Amendment shall be effective and binding upon SunSpark and SolarMax upon execution and delivery by SunSpark and SolarMax.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top">4.</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font><u>Headings</u>. The headings contained in this Amendment are for reference purposes only and shall not affect in any way the meaning or interpretation of this Amendment.</td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<tr>
<td valign="top">5.</td>
<td valign="top"><font style='FONT: 7pt "Times New Roman"'></font><u>Governing Law; Language</u>. The provisions of the Agreement relating to governing law set forth in the Agreement shall apply to this Amendment. This Amendment has been initially written in the English language; in the event of any conflict between the original English version and any translations into other languages, this original English version shall control.</td></tr></tr></tr></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center">[<i>Signature Page Follows</i>]</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreakc43bf1ad-2f37-4ee3-8c32-a1e24cae3914" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">2</td></tr>
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<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">IN WITNESS WHEREOF, each of the parties hereto has executed this Amendment as of the date first written above. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td>&nbsp;</td>
<td colspan="2">SUNSPARK:
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b>SUNSPARK TECHNOLOGY INC.</b></p></td>
<td></td></tr>
<tr>
<td width="50%">&nbsp;</td>
<td width="5%">&nbsp;</td>
<td width="35%">&nbsp; </td>
<td width="10%">&nbsp;</td></tr>
<tr>
<td></td>
<td>By:</td>
<td style="BORDER-BOTTOM: black 1px solid"><em>/s/ Jie Zhang </em></td>
<td></td></tr>
<tr>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">Name: </p></td>
<td>Jie Zhang</td>
<td>&nbsp;</td></tr>
<tr>
<td>&nbsp;</td>
<td>Title:</td>
<td>Authorized Signatory</td>
<td>&nbsp;</td></tr>
<tr>
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>&nbsp; </td>
<td>&nbsp;</td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">&nbsp; </p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr height="15">
<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td colspan="2">
<p style="MARGIN: 0px">SOLARMAX:</p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px"><b>SOLARMAX TECHNOLOGY, INC.</b></p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp; </p></td>
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<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
<td>
<p style="MARGIN: 0px">By: </p></td>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px"><em>/s/ David Hsu&nbsp;</em></p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td>
<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">Name:</p></td>
<td>
<p style="MARGIN: 0px">David Hsu</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">Title: </p></td>
<td>
<p style="MARGIN: 0px">Chief Executive Officer</p></td>
<td>
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center">[SIGNATURE PAGE TO AMENDMENT NO. 2 TO SOLAR MODULE SUPPLY AGREEMENT]</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cols="1" cellpadding="0" width="100%" align="center" border="0">

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<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center">3</p></td></tr></table></p>
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</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>filename6.htm
<TEXT>
<html><head><title>solarmax_ex1019.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><strong>EXHIBIT 10.19</strong>&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">Contract No.: SMX-06-Contract-1603-010</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font size="5">Project Contracting Contract for</font></b>&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font size="5">50MW Photovoltaic Power</font></b><b><font size="5"></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font size="5">Generation Project of Louxia Town, Pu'an </font></b></p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font size="5">County, Guizhou Province</font></b><b><font size="5"></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font size="5">Business Part</font></b><b><font size="5"></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center">September 26, 2016</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px">
<table id="pagebreak9b76e36a-c179-4340-9fe7-fd52f6184c2b" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">1</td></tr>
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<td><em></em></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in"><a name="TOC">Contents</a></p>
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<p style="MARGIN: 0px">Part I Contract&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td valign="top">
<p style="MARGIN: 0px">Project overview</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Main technical sources</td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td id="ffcell" valign="bottom" width="9%" align="right">7</td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Main dates</td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td id="ffcell" valign="bottom" width="9%" align="right">7</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Project quality standard</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Contract price and payment currency</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">7</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Meaning of contract</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Contract effectiveness</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">8</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Part II&nbsp;&nbsp; General Provisions</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">General stipulations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.1&nbsp; Definitions and interpretations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">10</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.2 Contract documents</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">12</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.3&nbsp; Language and words</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">13</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.4&nbsp; Governing laws</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">13</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.5&nbsp; Standards and codes</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">13</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.6&nbsp; Compliance with laws</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">13</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">1.7 Confidentiality matters</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Article 2&nbsp; Contract letting party</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">2.1&nbsp; The contract letting party's obligations and rights</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">2.2&nbsp; Representative of the contract letting party</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">14</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">2.3 Supervisor</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">2.4 Safety guarantee and security guard responsibility</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<td valign="top">Article 3&nbsp; Contractor</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.1&nbsp; The contract letting party's obligations and rights</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.2&nbsp; Project manger</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">15</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.3 Project quality assurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.4 Safety assurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.5 Occupational health and environmental protection assurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;
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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">2</td></tr>
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<td>
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<td><em></em></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td valign="top">3.6 Progress guarantee</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.7 Spot security guard</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">16</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">3.8 Subcontracting</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 4&nbsp; Progress plan, delay and suspension</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.1 Project progress plan</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.2 Design progress plan</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">17</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.3 Purchase progress plan</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">18</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.4 Construction progress plan</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">18</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.5 Delay compensation</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">4.6 Suspension</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">19</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 5&nbsp; Technologies and design</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">20</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">5.1 Production processing technologies and construction art models</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">20</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">5.2 Design</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">21</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">5.3 Design stage verification</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">21</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">5.4 Training of operators and maintenance persons</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">5.5 Intellectual properties</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 6&nbsp; Project materials</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.1&nbsp; Provision of project materials</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">22</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.2. Inspection</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">23</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.3 Imported project materials and customs declaration &amp; customs clearance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.4 Transportation and transportation of the materials beyond limits</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.5 Reorder and consequences</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">6.6 Custody and surplus of project materials</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">24</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 7&nbsp; Construction</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">25</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.1 The contract letting party's obligations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">25</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.2 The contractor's obligations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">25</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.3 Construction technologies and methods</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">26</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.4&nbsp; Human power, machine and tool resources</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">27</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreaka74d6e15-768f-4347-8877-55c48887f694" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">3</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><em></em></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top">7.5 Quality and inspection</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">27</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.6&nbsp; Concealed project and midway inspection &amp; acceptance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">28</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.7&nbsp; Dispute on the construction quality result</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">29</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">7.8&nbsp; Health, safety and environment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">29</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 8&nbsp; Completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.1 Obligations of completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">32</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.2&nbsp; Examination and inspection &amp; acceptance of completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">33</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.3&nbsp; Completion test safety and examination</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">33</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.4&nbsp; Delayed completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.5&nbsp; Retest and inspection &amp; acceptance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">34</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.6&nbsp; Failure to pass completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">8.7&nbsp; Dispute on completion test result</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">35</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 9&nbsp; Project receipt</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">9.1 Acceptance of project</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">9.2&nbsp; Receipt certificate</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">9.3&nbsp; Project receipt responsibilities</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">9.4&nbsp; Failure to receive the project</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">36</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 10&nbsp; Post-completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">37</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.1 Rights and obligations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">37</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.2&nbsp; Post-completion test procedures</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.3 Post-completion test and trial operation assessment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">38</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.4&nbsp; Delay in post-completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">39</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.5&nbsp; Conducting post-completion test again</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">39</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.6&nbsp; Failure to pass assessment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">39</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.7&nbsp; Post-completion test and assessment inspection &amp; acceptance certificate</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">10.8&nbsp; Loss of production value and use value</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 11&nbsp; Quality assurance responsibility</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">11.1&nbsp; Quality assurance responsibility agreement</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak25e347d1-8dac-41b0-9f22-8d57bbf42e5d" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">4</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><em></em></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="WIDTH: 100%; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td valign="top">11.2 Quality assurance deposit</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">40</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 12&nbsp; Project completion inspection &amp; acceptance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">12.1&nbsp; Completion inspection &amp; acceptance report and complete completion materials</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">12.2&nbsp; Completion inspection &amp; acceptance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 13&nbsp; Alteration and contract price adjustment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.1&nbsp; Alteration rights</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">41</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.2&nbsp; Alteration scope</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">42</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.3&nbsp; Alteration procedures</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">43</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.4&nbsp; Emergent alteration procedures</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">43</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.5&nbsp; Determination upon alteration price</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.6&nbsp; Interest sharing of suggested alteration</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.7&nbsp; Adjustment to the contract price</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">13.8&nbsp; Dispute in the contract price</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">44</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 14&nbsp; Total contract price and payment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.1&nbsp; Total contract price and payment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.2 Guarantee</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.3&nbsp; Prepayment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.4&nbsp; Project progress accounts</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.5&nbsp; Provisional deduction and payment of quality assurance amount</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">45</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.6&nbsp; Applying for payment according to the payment schedule</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">46</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.7&nbsp; Payment condition and schedule</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">46</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.8&nbsp; Delay in payment time</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">47</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.9&nbsp; Tax and tariff</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">47</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.10&nbsp; Payment of claim accounts</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">47</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">14.11&nbsp; Completion settlement</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">48</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 15&nbsp; Insurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">49</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">15.1&nbsp; The insurance purchased by the contractor</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">49</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">15.2&nbsp; All-risk insurance and third-party liability insurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreakc83932f3-aa6c-407d-bee4-31e87dd9f439" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">5</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><em></em></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr>
<td valign="top">15.3&nbsp; Miscellaneous provisions on insurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 16&nbsp;&nbsp; Breach, claim and arbitration</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">16.1&nbsp; Breach liabilities</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">16.2 Pursuit of Claims</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">50</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">16.3&nbsp; Dispute and adjudication</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">51</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 17&nbsp; Force majeure</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">17.1&nbsp; Obligations upon occurrence of force majeure.</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">17.2&nbsp; Consequences of force majeure.</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 18&nbsp; N/A</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 19&nbsp; Contract effectiveness and termination</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">52</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 20&nbsp; Supplementary provisions</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">53</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Part III&nbsp; Special provisions</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 1&nbsp; General stipulations</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">53</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 2 Contract letting party</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">53</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 3 Contractor</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">54</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 4 Progress plan, delay and suspension</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">54</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 5 Technologies and design</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">54</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 6&nbsp; Project materials</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">55</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 7&nbsp; Construction</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">55</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 8&nbsp; Completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">57</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 9&nbsp; Project receipt</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">57</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 10&nbsp; Post-completion test</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">57</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 11 Quality assurance responsibility</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">58</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 12&nbsp; Project completion inspection &amp; acceptance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">58</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 13&nbsp; Alteration and contract price adjustment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">58</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 14&nbsp; Total contract price and payment</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">58</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 15&nbsp; Insurance</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">60</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td valign="top">Article 16&nbsp; Contract effectiveness and termination</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td id="ffcell" valign="bottom" width="9%" align="right">60</td>
<td valign="bottom" width="1%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr></table><br>
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<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">6</td></tr>
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<td><em></em></td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in"><a name="P1">Part I Contract</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contract letting party (Party A): Pu'an Zhonghong New Energies Co.,Ltd</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contractor (Party B): Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In accordance with the Contract Law of the People's Republic of China, Construction Law of the People's Republic of China as well as related laws and administrative regulations, based upon the principles of equality, willingness, fairness and integrity, the contract parties enter into this contract through negotiation with respect to the matter relating to the contracting of 50MW photovoltaic power generation project of Moshega Village, Louxia Town, Pu'an County, Guizhou.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="I.Project overview">I. Project overview</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Project Name: 70MW photovoltaic power generation project of Louxia Town, Pu'an County, Guizhou</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Project location: Moshega Village, Louxia Town, Pu'an County, Guizhou</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contracting scope of project: all work necessary for constructing a complete photovoltaic power generation system by the contractor from the project development of this project to the start of commercial running of the photovoltaic power generation system and passing of inspection and acceptance conducted by relevant national, provincial and municipal authorities until expiry of the quality assurance period. The contents of this project include but be not limited to the project development, survey and design (including but not limited to preliminary design, construction drawing design, completion drawing design and access system design), civil engineering projects (including but not limited to foundation treatment, booster station and conveying lines), equipment and material supply, commodity and spare part preparation, transportation, custody, insurance, installation project, technical service, production preparation, employee training, debugging, test, inspection &amp; acceptance and synchronization, completion inspection &amp; acceptance, handling of all kinds of formalities and documents as well as obtaining of certification documents from relevant governmental authorities, after-sale service and project information system, standardized management, post appraisal and cooperation within complete scope of EPC project of 50MW photovoltaic power generation project of Moshega Village, Louxia Town, Pu'an County, Guizhou (including outgoing line project, station transformation lines, installation test and equipment on both sides). The total contracting price includes the material and equipment purchase (including photovoltaic components) of the whole project and all expenses occurring (except for supervision) during the project construction period and relating to this project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Such general contracting agreement does not include all one-off expenses including but not limited to project land lease, indemnification, site-clearing fee, young crop compensation and fee adjustment fee, Party B shall be responsible for handling the above related matters, however, Party A shall bear the expenses.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="II. Main technical sources">II. Main technical sources</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="III. Main dates">III. Main dates</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contract period (absolute date or relative date): not later than expiry of the quality assurance period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Construction period (absolute date or relative date): November 10, 2016</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Date of synchronization: synchronization and power generation shall be accomplished before June 30, 2017</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="IV. Project quality standard">IV. Project quality standard</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Project quality standards: refer to Photovoltaic Power Station Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II for details) and relevant technical standards promulgated by the State and the industry.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="V. Contract composition, price and payment currency">V. Contract composition, price and payment currency</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract shall have the contents including but not limited to project development, equipment purchase, design and construction installation.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The total contract price is RMB 322,500,000.00 yuan (in words: RMB THREE HUNDRED AND TWENTY TWO MILLION AND FIVE HUNDRED THOUSAND YUAN ONLY, tax inclusive), the specific amount of each item shall be subject to final settlement of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The total volume of this project is 50MWp, wherein, the unit contracting price for settlement of the project shall be RMB 6.45 yuan/W. If the owner asks to conduct any increased work on the project, the unit project settlement price for the increased part shall be RMB 6.45 yuan/W.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Except for the amount that shall be increased or decreased in the project implementation process as set forth herein, the contract price shall not be adjusted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="VI. Undertakings of the contractor">VI. Undertakings of the contractor</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The equipment selection of this project shall be recognized by the contract letting party or the design supervisor designated by the contract letting party (the specific details shall be subject to the technical terms).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor undertakes to, according to contract provisions, timely pay any and all sub-contractor equipment accounts and project accounts and guarantee that any and all sub-contractor shall not affect the construction of this project and subsequent operation work, should the contractor's failure to timely pay project and equipment accounts cause the construction of this project and subsequent operation to be affected, the contractor shall be entitled to pay reasonable accounts to any and all sub-contracting units of the contractor, the accounts paid shall be directly deducted from the project funds of contractor, any and all other losses caused shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor guarantees to the contract letting party that, it will conduct project development, design, purchase, construction and debugging until overall synchronization of this project in strict accordance with contract provisions in order to make this project be operated according to the provisions hereof and shall be responsible for renovating any and all faults and defects caused by any reason attributable to the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor undertakes that, consent and written confirmation of the contract letting party shall be obtained for supplier selection and type selection of main equipment purchase (including but not limited to component, inverter, support, cable and box transformer).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for handling land formalities for the project. The contractor undertakes that, the land shall satisfy the 50MW volume requirement of the power station and the land is free from any ownership dispute (the leased land circulation formalities shall conform to Party A's requirement), the land shall satisfy 25-year service life of the project and the land rental (including but not limited to indemnification, site-clearing fee, young crop compensation and fee adjustment fee) shall be settled according to the actual expenses.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Before this project is handed over to the contract letting party, the contractor undertakes to finish handling all certificates and approval files necessary for such project and guarantees that all formalities and documents are complete, legal and effective.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for developing the whole project and handling formalities as well as conducting all work for the construction and synchronization of the whole power station, and the contract letting party fully trusts the contractor's professional capacity.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="VII. The meanings of related words hereof shall be the same with the definitions and interpretations granted by the general contract provisions.">VII. The meanings of related words hereof shall be the same with the definitions and interpretations granted by the general contract provisions.</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="VIII. Contract effectiveness">VIII. Contract effectiveness</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">This contract shall come into effectiveness after being signed and affixed with official unit seals (or the special seal of contract) by the parties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Date of contract conclusion: September 26, 2016</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Place of contract conclusion: Jiangning District, Nanjing</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(This page contains no main text)</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(Signing page):</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">Contract letting party: Pu'an Zhonghong New Energies Co., Ltd.</p></td>
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<p style="MARGIN: 0px">Contractor: Solarmax Technology (Jiangsu) Co., Ltd.</p></td></tr>
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<p style="MARGIN: 0px">Legal representative:</p></td>
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<p style="MARGIN: 0px">Legal representative:</p></td></tr>
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<p style="MARGIN: 0px">Post Code:</p></td>
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<p style="MARGIN: 0px">Post Code:</p></td></tr>
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<p style="MARGIN: 0px">Tel.:</p></td>
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<p style="MARGIN: 0px">Tel.:</p></td></tr>
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<p style="MARGIN: 0px">Fax:</p></td>
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<p style="MARGIN: 0px">Fax:</p></td></tr>
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<p style="MARGIN: 0px">Email:</p></td>
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<p style="MARGIN: 0px">Email:</p></td></tr>
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<p style="MARGIN: 0px">Bank:</p></td>
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<p style="MARGIN: 0px">Bank:</p></td></tr>
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<p style="MARGIN: 0px">Account No.:</p></td>
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<p style="MARGIN: 0px">Account No.:</p></td></tr></table></p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="P2">Part II General Provisions</a></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 1 General stipulations">Article 1 General stipulations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.1 Definitions and interpretations">1.1 Definitions and interpretations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.1 General provisions refer to ordinary provisions observed by the contract parties in the process of performing the project contracting contract according to the provisions of laws and administrative regulations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.2 Special provisions refer to the provisions for supplementation, modification and perfection to the general provisions according to the actual situation of the contracting project that are jointly observed with consent.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.3 Project contracting, means that, upon entrustment of the client, the contractor conducts project contracting of the whole process or the design and other stages including but not limited to the design, purchase, construction (including completion test) and trial operation of the engineering construction project according to contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.4 Contract letting party refers to the party called contract letting party as agreed upon in the contract, including its legal successor and licensed assignee.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.5 Contractor refers to the party accepted by the contract letting party and having the qualification of project contracting subject as agreed upon in the contract, including its legal successor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.6 Subcontractor refers to any legal person or other organization with relevant qualification who accepts the subcontracting of part of the project or services by the contractor according to contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.7 Representative of the contract letting party refers to the representative designated by the contract letting party for performing this contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.8 Supervisor refers to the project supervising unit with relevant qualification entrusted by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.9 Project director refers to the general supervising engineer authorized by the supervisor and responsible for performing the supervision contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.10 Project manager refers to the representative appointed by the contractor to be responsible for performing this contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.11 Permanent project refers to the project subject to design, construction, completion test, post-completion test, completion inspection &amp; acceptance and trial operation assessment and delivery to the contract letting party for production, operation or use by the contractor according to contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.12 Project development: the contractor shall be responsible for obtaining all formalities and documents necessary for 50MW photovoltaic power generation project of Moshega Village, Louxia Town, Pu'an County before overall synchronization and guarantee that all formalities for this project are complete, legal and effective. See Appendix VI List of Formalities for details (According to the governmental regulations, if there is any formality that does not have to be handled or it is necessary to additionally handle any other document, the governmental regulations shall apply).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Including but not limited to:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Obtaining project and making archival filing, being responsible for handling all formalities of the archival filing period including but not limited to preliminary verification of land use, land surveying and mapping, geological prospecting, environmental assessment, energy assessment, safety assessment, stability assessment, water protection, preliminary verification comments of land and resources bureau, land circulation &amp; land use formalities, geological disaster assessment, overlaid and covered mineral report, planning and address selecting opinion as well as red-line drawing;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for handling power grid access, construction license, land use planning and license, construction project planning and license, fire protection inspection &amp; acceptance, environmental protection inspection &amp; acceptance and land use right certificate etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall guarantee that the land conforms to the requirements of power station construction, including but not limited to: the land property conform to relevant requirements, the land area conforms to the requirements of power station, a series of expenses including but not limited to design, supervision, construction, compensation and economic input incurred by water and land preservation and environmental protection inspection and acceptance are all included in this contract.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.13 Provisional project refers to any provisional building and structure that shall be constructed on the spot as well as any project not constituting permanent project entity for implementing, accomplishing permanent project and repairing any quality defect.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.14 Spot or field refers to any site used by the contractor for work on the spot, residence, storage of equipment, materials and parts, construction machines, tools and facilities as well as implementation of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.15 Project basic materials refer to the approval or ratification files by relevant authority on the project that shall be provided and handled by the contractor upon entrustment of the contract letting party, reports (factory selection report, resource report and reconnaissance report), materials (weather, hydrology and geology), agreements (water, electricity, gas and transportation) and relevant data etc. as well as basic materials necessary for design.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.16 Spot obstacle materials, refer to the coordinate locations and data of existing aboveground and underground buildings, structures, historic buildings and ancient trees etc. that shall be protected as well as the materials of other situations necessary for the contractor to accomplish design and conduct spot construction.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.17 Design stage refers to the stage of planning design, overall design, preliminary design, technical design and construction drawing design.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.18 Project materials refer to the materials necessary for the equipment, materials and components constituting the permanent project entity as set forth in the design documents as well as the materials for post-completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.19 Construction refers to the process that the contractor converts the design documents into the project, including the operation of civil engineering, installation and completion test etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.20 Completion test, refers to the test that shall be conducted by the contractor upon accomplishment of civil engineering and installation of the project and before the project is received by the client.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.21 Construction completion means that the civil engineering and installation of the project have been accomplished according to the contract provisions and design requirements and the project has passed completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.22 Project receipt, refers to the process that, after the project passes completion test, in order to make the operators and users of the contract letting parties to assume their posts to make preparation for post-completion test and trial operation, the contractor and the contract letting party handle project handover and take over and the contract letting party issues receipt certificate.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.23 Post-completion test refers to, after the project is received by the contract letting party, the test organized by the contract letting party on its own according to the contract provisions or the function test on the project under the organization and leading or the contract letting party and guidance by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.24 Trial operation assessment refers to all tests including the contract objective assessment inspection &amp; acceptance conducted by the contract letting party on its own or under the organization and leading of the contract letting party and under the guidance of the contractor according to the contract provisions and upon completion test after the project is accomplished.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.25 Assessment inspection &amp; acceptance certificate refers to the inspection &amp; acceptance certificate issued by the contract letting party upon accomplishment and inspection &amp; acceptance of all trial operation assessment tests.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.26 Synchronization inspection &amp; acceptance: means that, upon overall synchronization of this project, in order to obtain the synchronization inspection &amp; acceptance certificate issued by the contract letting party for this project, the contractor shall, according to the procedures and standards as set forth in the technical part of national industrial standards, conduct 240-hour continuous trial operation without any fault on this project, hand over all project materials, pass verification to be qualified and obtain the certification documents issued by the power grid and relevant governmental authority on synchronization permission and electricity power approval file of the material price authority.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.27 Project completion inspection &amp; acceptance refers to the project settlement and inspection &amp; acceptance organized by the contract letting party after the contractor receives assessment inspection &amp; acceptance certificate, accomplishes round-off project and defect renovation and submits completion inspection &amp; acceptance report, completion materials and completion settlement materials submitted according to the contract provisions. The project quality assurance period shall be calculated from the date of accomplishment of the project completion inspection &amp; acceptance.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.28 Project progress plan refers to the time schedule and arrangement of all project implementation stages (including design, purchase, construction, completion test, project receipt, post-completion test and all trial operation stages) as set forth herein or several implementation stages as set forth herein from the date of effectiveness of the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.29 Date of construction start refers to the absolute date or relative date on which the contractor starts spot construction as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.30 Date of completion refers to the absolute date or relative date on which the contractor finishes project construction (including completion test) as set forth in the contract, including any postponed date as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.31 Alteration refers to any alteration made to the project as notified or approved in writing by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.32 Contract price refers to the price for the work conducted by the contractor including but not limited to design, purchase, construction, completion test, post-completion test, completion inspection &amp; acceptance and service as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.33 Adjustment to the contract price refers to relevant adjustment made to the contract price according to any increase or decrease in the expenses that shall be effected according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.34 Total contract price refers to the contract price upon adjustment according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.35 Prepayment refers to the accounts that shall be prepaid to the contractor by the contract letting party according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.36 Project progress accounts refer to the progress accounts for design, purchase and construction as well as the service fees etc. for post-completion test paid by the contract letting party to the contractor by installments according to the payment contents and payment conditions as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.37 Project quality assurance responsibility agreement refers to the quality assurance responsibility agreement entered into by and between the contract letting party and the contractor according to the laws and regulations on quality assurance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.38 Written form refers to the form that may tangibly reflect the contents stated, including contract, letter and data message. Data message includes: telex, fax, EDI (electronic data interchange) and email.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.39 Breach liabilities refer to the liabilities that shall be borne by the contract party who fails to perform contract obligations or whose performance of contract obligations does not conform to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.40 Force majeure refers to the objective situations that can not be foreseen, avoided or overcome.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.41 According to the features of the project as set forth herein, other definitions that shall be supplemented as agreed upon.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1.42 The headlines of the articles shall not be deemed as basis for contract interpretation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.2 Contract documents">1.2 Contract documents</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2.1 Composition of contract documents. The contract documents interpret and explain to and for each other. Unless otherwise set forth in the special provisions, the documents constituting this contract and the priority sequence of interpretation are as follows:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) This contract</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Special provisions of this contract</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) General provisions of this contract</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Standards, codes and relevant technical documents</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Design documents, materials and drawings</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) Other documents constituting part hereof.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Written documents including but not limited to notice, minute, memorandum, supplementary document, directive, fax, email, alteration and discussion formed in the process of contract performance by both parties constituting integral part hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2.2 In case of unclearness or inconsistency in the contents of the provisions hereof and failure in explanation for clearness according to the interpretation sequence as set forth in the contract, under the circumstance of not affecting normal implementation of the project, the parties may either negotiate for settlement or adopt the interpretations of the supervisor. In case of no agreement reached upon negotiation by the parties or refusal to accept the interpretations of the supervisor, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2.3 The headlines of the articles hereof are only for the convenience of reading, shall not be deemed as basis for interpretations on the contract articles.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2.4 The "date", "month" and "year" used herein refer to the calendar date, month and year. The starting date of any period used herein refers to the date immediately following the date of occurrence of any relevant event. If the starting of any time is based upon the expiry of certain period, such starting date shall be the date immediately following the date of expiry of such period. The date of expiry of any period shall be the date on which such period expires. "Working day" refers to any calendar day other than legal holidays in China.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.3 Language and words">1.3 Language and words</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract is written, interpreted and explained in Simplified Chinese words. If the contract parties agree upon the use of two and more kinds of languages in the special provisions, Chinese shall be the dominating language for interpretation and explanation of this contract in priority.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In minority areas, the parties may agree upon the use of any minority language for writing, interpreting and explaining this contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.4 Governing laws">1.4 Governing laws</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">This contract is governed by laws of the People's Republic of China. The names of specific governing laws that shall be indicated expressly are stated in special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.5 Standards and codes">1.5 Standards and codes</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5.1 The names (or numbers) of the national standards and codes, industrial standards and codes, standards and codes of the place in which the project is located as well as enterprise standards and codes applicable to this project are stated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5.2 If the contract letting party uses foreign standards and codes, it shall be responsible for providing the version of the original language and Chinese translation text as well as stipulating in special provisions the names and counterparts of the standards and codes that shall be provided and the dates on which the standards and codes shall be provided.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5.3 Without relevant written standards and codes, the contract letting party shall specify technical requirements in special provisions within the time as set forth, the contractor shall propose implementation methods within the time as set forth and according to the technical requirements, such implementation methods shall only be effected upon recognition of the contract letting party. If the contractor needs to conduct research and development test on the implementation methods or provide the construction employees with special training, agreement shall be otherwise entered into as appendix hereto and the expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5.4 Design, purchase, processing and construction shall be conducted in accordance with the standards and codes as set forth in the provisions hereof, neither party shall alter the stipulations of national mandatory standards and codes.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5.5 The contract letting party shall be entitled to, in accordance with the contract as well as the standards and codes as set forth in applicable laws, raise suggestion, modification and alteration (without any additional fee) to the safety, quality, environmental protection and occupational health.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.6 Compliance with laws">1.6 Compliance with laws</a></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.6.1 During the period of contract performance, in accordance with the provisions of national laws and administrative regulations, the contractor shall handle and obtain the formalities including but not limited to project initiation, urban planning, regional planning approval file, land use license, project start approval or construction license, project quality supervision as well as any other permission, license, certificate and approval file, the contractor shall also be responsible for coordinating the relationship with any relevant authority and unit.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.6.2 During the period of contract performance, the contractor shall, in accordance with applicable laws, administrative regulations or industrial regulations, conduct design, purchase, processing, construction, completion test, post-completion test and completion inspection &amp; acceptance etc. and assume quality assurance responsibility. The contractor shall handle all kinds of permissions, licenses, approval files and formalities etc. necessary for contract performance that shall be handled by the contractor and guarantee that the contract letting party shall be protected from any loss caused thereby. In case of causing any loss against the contract letting party, the contractor shall make compensation according to the reasonable fees actually added of the contract letting party. In case of delay in the date of synchronization, any liability therefore caused shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.6.3 The contractor shall pay salaries and wages to the employees on time, purchase the personal insurance and pay relevant taxes and charges.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.6.4 In order to strengthen the supervision on engineering construction work, standardize the probity and discipline in contract conclusion and implementation according to law as well as prevent the occurrence of all kinds of illegitimate behaviors, according to relevant national and regulations in Nanjing, in line with the work practice, anti-bribery and anti-corruption declaration shall be entered into, see Appendix IV.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="1.7 Confidentiality matters">1.7 Confidentiality matters</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Either party shall be obliged to keep the trade secrets and technical secrets of the other party known in the process of contract conclusion and performance confidential, without consent, shall not disclose or use for any purpose beyond what is set forth herein. If either party discloses or uses any such trade secret or technical secret beyond this contract, which causes any loss against the other party, it shall assume damage compensation liability. If either party needs any information necessary for contract performance, the other party shall offer. If the parties deem as necessary, they may enter into confidentiality agreement as appendix hereto.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 2 Contract letting party">Article 2 Contract letting party</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="2.1 The contract letting party's obligations and rights">2.1 The contract letting party's obligations and rights</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1.1 Shall perform the contract price adjustment, payment and completion settlement obligations as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1.2 Shall be entitled to raise suggestions on the implementation work including but not limited to the design, purchase and construction of the contractor according to the contract provisions and mandatory stipulations of national laws on safety, quality, standard, environmental protection and occupational health etc., modification and alteration may only be made after such suggestions are acknowledged by both parties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1.3 Shall be entitled to, according to the contract provisions, raise compensation requirement for any loss and damage caused by any reason attributable to the contractor against the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1.4 When the contract letting party deems as necessary, it shall be entitled to give notice on suspension in writing. If any reason attributable to the contract letting party causes any increase in the fees, such increase in the fees shall be borne by the contract letting party. In case of delay in any key route of the project caused thereby, the date of synchronization shall be extended accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1.5 Perform other rights and obligations as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="2.2 Representative of the contract letting party">2.2 Representative of the contract letting party</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.2.1 The representative designated by the contract letting party shall exercise the rights entrusted by the contract letting party and perform the obligations of the contract letting party. The representative of the contract letting party shall perform his/her duty according to this contract and within the scope of authorization. Any notice given by the representative of the contract letting party be given to the contractor according to the contract provisions and submitted to the project manager after being signed by himself/herself in writing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.2.2 The name, title and duty of the representative of the contract letting party shall be set forth in the special provisions. If the contract letting party decides to replace its representative, it shall notify the contractor in writing of the name, title, function of power and date of appointment of the new representative 15 days before the new representative takes up the post.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="2.3 Supervisor">2.3 Supervisor</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.3.1 If the contract letting party conducts supervision on the project, the name of the supervisor, project director, supervision scope, contents, function of power and authority shall be specified in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The supervisor shall conduct supervision on the contractor on behalf of the contract letting party according to the scope, contents, function of power and authority of supervision entrusted by the contract letting party. Any notice given by the supervisor to the contractor shall be signed by the project director in writing and subsequently submitted to the project manager.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.3.2 In case of overlapping or unclear function of power of the project director and the representative of the contract letting party, the contract letting party shall coordinate, make clear and notify the contractor in writing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.3.3 Unless otherwise expressly set forth in the special provisions or with consent of the contract letting party, the project director shall not be entitled to alter any right and obligation of the contract parties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.3.4 If the contract letting party intends to replace the project director, it shall notify the contractor of the name, title, function of power, authority and date of appointment of the substitute in writing 15 days in advance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="2.4 Safety guarantee and security guard responsibility">2.4 Safety guarantee and security guard responsibility</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The safety and security guard agreement shall be otherwise entered into.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 3 Contractor">Article 3 Contractor</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.1 The contractor's obligations and rights">3.1 The contractor's obligations and rights</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.1 Shall be responsible for handling relevant formalities including but not limited to project verification and approval, ratification or archival filing, obtaining the use right of the project land, as well as accomplishing demolition and compensation work to make the project have the work start conditions as set forth in laws. The contractor shall be obliged to accomplish design, purchase, construction, completion test, and post-completion test according to this contract as well as the standards, codes, project functions, scale, assessment object and date of synchronization as set forth in the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.2 The contractor shall be obliged to, according to the contract provisions, at its own expenses, renovate any defect in any design, document, equipment, material, part, construction, completion test, and post-completion test caused by any reason attributable to the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.3 The contractor shall be obliged to submit related statements according to the contract provisions and the requirements of the contract letting party. The types, contents and dates of submission of the statements shall be stated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.4 In case of notice on suspension on account of any reason attributable to the contract letting party, the contractor shall be entitled to propose to increase the fees or postpone the date of completion according to the provisions of Article 2.1.5 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.5 With respect to any loss, damage or delay in any key route of the project caused by any reason attributable to the contract letting party, the contractor shall be entitled to require compensation or postpone the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.2 Project manger">3.2 Project manger</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2.1 The project manager shall have relevant occupational qualification, is authorized to be responsible for performing this contract on behalf of the contractor. The name, duty and authority of the project manager shall be stated in the special provisions. The project manager shall not simultaneously assume the post of project manager for any other project. With prior consent of the contract letting party, the project manager may leave the project site and designate an experienced person to provisionally perform his/her duty on behalf of him/her. If the contractor violates the above provisions, it shall assume breach liabilities according to the stipulations of such special provisions.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2.2 The project manager shall organize project implementation according to the project progress plan as set forth in the contract and any directive delivered by the representative of the contract letting party or the project director in accordance herewith. In case of emergency and failure to contact with the representative of the contract letting party or the project director, the project manager shall be entitled to take necessary measures to safeguard the human body, project and property safety, however, he/she shall submit written report to the representative of the contract letting party or the project director within 48 hours upon the emergency.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2.3 If the contractor needs to replace the project manager, it shall notify the contract letting party in writing 15 days in advance and obtain consent of the contract letting party. The succeeding project manager shall continue to perform the duty and authority as set forth in Article 3.2.1. If, without consent of the contract letting party, the contractor arbitrarily replaces the project manager, it shall assume breach liabilities according to the stipulations of Article 3.2.1 Special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2.4 The contract letting party shall be entitled to replace any project manager it deems as incompetent by written notice, the contractor shall submit written improvement report to the contract letting party within 15 days upon the receipt of notice on replacement. Hereinafter, if the contract letting party still notifies of replacement in writing, the contractor shall effect replacement within 15 days after receipt of the second notice on replacement and notify the contract letting party of the name and resume of the newly appointed project manager in writing. The new project manager shall continue to perform the authority as set forth in Article 3.2.1.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.3 Project quality assurance">3.3 Project quality assurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.3.1 Quality assurance system. The contractor's quality assurance system authentication certificate shall be kept continuously effective in the contract implementation process, and the quality assurance system hereunder shall be established.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.3.2 Quality assurance of the implementation process. The contractor shall ensure about the quality of design, purchase, processing &amp; manufacture, construction, completion test, post-completion test, and assessment and acceptance according to the quality standards and codes as set forth in the contract. The contractor shall also guarantee to keep the project in good repair in accordance with national regulations on quality assurance responsibilities. The project quality assurance period shall be calculated from the date of accomplishment of the project completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.4 Safety assurance">3.4 Safety assurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.4.1 Project safety performance. The contractor shall conduct design, purchase, and construction, completion test in order to guarantee about the project safety performance according to the contract provisions and in compliance with construction project design management rules, construction project quality management rules as well as relevant laws and regulations on safe production.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.4.2 Safe construction on the spot and environmental safety. The contractor shall comply with the provisions of health, safety and environment as set forth in Article 7.8 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.5 Occupational health and environmental protection assurance">3.5 Occupational health and environmental protection assurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.5.1 Project design. The contractor shall conduct environmental protection design and occupational health protection design of the project in order to guarantee that the project conforms to the laws and regulations on environmental protection and occupational health according to the contract provisions and in compliance with construction project design management rules, construction project quality management rules as well as relevant laws and regulations.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.5.2 Occupational health and environmental protection on the spot. The contractor shall comply with the provisions of health, safety and environment as set forth in Article 7.8 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.6 Progress guarantee">3.6 Progress guarantee</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall, in accordance with the project progress plan as set forth in Article 4.1 hereof, reasonably organize all kinds of resources necessary for design, purchase, construction, completion test, and post-completion test in an orderly way and take effective implementation methods and organization methods to guarantee about the realization of the project progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.7 Spot security guard">3.7 Spot security guard</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall assume the spot security guard responsibility (including pre-manufacture processing field, office and living zones) after it enters the spot, starts the construction and before the contract letting party accepts the project. The contractor shall also be responsible for formulating relevant security guard system, responsibility system and report system and submitting to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="3.8 Subcontracting">3.8 Subcontracting</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.1 Subcontracting provisions. The contractor shall only conduct subcontracting bidding for the subcontracting matters (including but not limited to design, purchase, construction and completion test) specified in the special provisions and in the shortlist of its subcontractors.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to the subcontracting matters and the shortlist of the subcontractors not specified in the special provisions, the contract letting party shall decide upon approving or raising opinions within 15 days after receiving the subcontracting matters and shortlist of the subcontractors. If the contract letting party neither approves nor raise opinions within 15 days, the contractor shall be not entitled to subcontract the matters to be subcontracted as proposed, from the 16th date after submitting the subcontracting matters and the shortlist of the subcontractors.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.2 Subcontractor qualification. Any subcontractor with enterprise qualification level as set forth in national laws may be chosen as a subcontractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.3 The contractor shall neither subcontract the whole project contracted with the method of dismemberment nor wholly subcontract the project contracted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.4 No subcontractor is allowed to subcontract the project contracted again regarding design, construction and procurement of goods (excluding packaged unit equipment and complete set of electrical instruments).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.5 With respect to the payment to any subcontractor, the contractor shall pay the subcontractor progress accounts on time in accordance with the provisions of the subcontracting contract. If the contractor is behind in payment of worker wages or accounts payable to any subcontractor, which will have adverse effect to the project under construction and the contract letting party, upon written notification by the contract letting party, the contractor still refuses to correct, the contract letting party shall be entitled to directly deduct such accounts payable from the contract and shall be punished as per once of the actual amount in arrears, otherwise, the contractor shall be deemed as breaching the contract and shall assume all losses caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.6 The contractor shall be liable to any subcontractor. If any breach behavior, inappropriate management, negligence or any other fault of any subcontractor causes any defect in the project quality, which leads to any loss against the contract letting party or leads to postponement of the date of completion, the contractor shall be liable to any subcontractor, the contractor and any subcontractor shall assume joint liabilities to the contract letting party with respect to the subcontracting project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.8.7 The contractor shall be responsible for comprehensive management of any subcontractor and shall pay the subcontracting party project accounts on time, in case of any subcontractor provoking caused by and reason attributable to the contractor, for each occurrence, the contractor shall compensate for any and all losses of the contract letting party, the contractor shall be entitled to impose penalty of RMB 50,000 yuan/time upon the contractor, such penalty shall be directly deducted from the project funds.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 4 Progress plan, delay and suspension">Article 4 Progress plan, delay and suspension</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.1 Project progress plan">4.1 Project progress plan</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.1.1 Project progress plan. With respect to the project progress plan formulated by the contractor, the construction period shall conform to the provisions as set forth herein. The scheme shall only be implemented after being approved by the contract letting party. The approval of the contract letting party shall not exempt the contractor from the contract liabilities of the contractor. The counterparts of the project progress plan submitted by the contractor and the time of submission shall be specified in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.1.2 Shall at its own expenses catch up with the project progress plan. If any reason attributable to the contractor causes the actual progress of the project to be obviously behind the project progress plan, the contractor shall be obliged and the contract letting party shall also be entitled to require the contractor to at its own expenses take measures to catch up with the project progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.2 Design progress plan">4.2 Design progress plan</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.2.1 Design progress plan. The contractor shall formulate progress plan according to the approved project progress plan and the schedule for verification meeting of any design verification stage and the design stage organized by the contract letting party as set forth in Article 5.3.1. The design progress plan shall only be implemented upon recognition by the contract letting party. The recognition of the contract letting party shall not exempt the contractor from the contract liabilities of the contractor.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.2.2 Date of design start. The first day upon contract conclusion shall be deemed as the date of design start.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.2.3 Delay in the date of design start. If any reason attributable to the contractor causes delay in the date of design start, according to the provisions of Article 4.1.2, it shall at its own expenses catch up with the design progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.2.4 Delay in the date of verification in any design stage</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Due to any reason attributable to the contractor, in case of failure to submit the design documents of any relevant stage according to the schedule of any design verification stage and verification meeting as set forth in Article 5.3.1 or incompliance of relevant design documents submitted with the design depth of any relevant verification stage, which causes delay in any design verification meeting, in accordance with the provisions as set forth in Article 4.1.2 hereof, the contractor shall at its own expenses take measures and catch up with progress. In case of delay in the date of completion caused thereby, any and all economic losses of the verification meeting preparation caused against the contract letting party shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.3 Purchase progress plan">4.3 Purchase progress plan</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.3.1 Purchase progress plan. The contractor's purchase progress plan conforms to the schedule of the project progress plan and connects with the progress plan of design, construction, completion test, and post-completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.3.2 Date of purchase start. As set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.3.3 Delay in the purchase progress. If any reason attributable to the contractor leads to purchase delay, which causes work stop, any loss on slow work of the labor and delay in the date of completion, the contractor shall be liable. If any reason attributable to the contract letting party leads to purchase delay, which causes work stop and any loss on slow work of the labor against the contract letting party and delay in any key route, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.4 Construction progress plan">4.4 Construction progress plan</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.4.1 Construction progress plan. The contractor shall submit an overall construction organizing design including the construction progress plan 15 days before start of spot construction. The construction progress plan conforms to the schedule of the project progress plan and connects with the progress plan of design, purchase and completion inspection &amp; acceptance. If the contract letting party requires the contractor to submit sub-divisional construction progress plan of key sub-divisions, it shall stipulate in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.4.2 Delay in the date of construction start. According to the following provisions, the postponement of the date of completion shall be determined:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) If any reason attributable to the contract letting party causes the failure of the contractor to start construction on time, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) If any reason attributable to the contractor causes the failure to start construction on time, it shall specify legitimate reasons and at its own expenses take measures to start construction as soon as possible but not to postpone the date of synchronization.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) If force majeure causes to postpone the date of construction start, the date of synchronization shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.4.3 Date of completion</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1. If the contracting scope includes completion test, the planned date of completion and actual date of completion shall be determined with the following methods:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The date of project completion as set forth in the special provisions of Article 9.1 Project receipt shall be the planned date of project completion; for the project, the planned date of completion for the last project shall be the planned date of project completion;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The date of 14 days after the project passes completion test, overall project inspection &amp; acceptance and starts formal power generation (definition of formal power generation: the license document has been obtained from the government or the electric power authority) shall be the actual date of project completion.</p>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify">2. If the contracting scope excludes completion test, the planned date of completion and actual date of completion shall be determined with the following methods:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The date of project completion as set forth in the special provisions of Article 9.1 Project receipt shall be the planned date of project completion; for the project, the planned date of completion for the last project shall be the planned date of project completion;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The date on which the contractor accomplishes all construction work of the project as set forth in the construction drawings and conforms to the quality standards as set forth shall be the actual date of project completion;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The date on which the contractor accomplishes all construction work of the last project as set forth in the construction drawings and conforms to the quality standards as set forth shall be the actual date of project completion;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3. Any construction location reserved by the contractor for completion test or post-completion test or any construction location required by the contractor shall neither affect the fragmentary round-off project and defect renovation used by the substantial operation of the contract letting party nor affect the determination upon the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.5 Delay compensation">4.5 Delay compensation</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If any reason attributable to the contractor causes delay in the date of project completion, the contractor shall assume delay compensation. The daily delay compensation amount and the maximum accumulated compensation amount shall be stipulated in the special provisions. The contract letting party shall be entitled to deduct the compensation amount from the project progress accounts, or completion settlement accounts or the performance bond submitted as stipulated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="4.6 Suspension">4.6 Suspension</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.1 Suspension caused by any reason attributable to the contract letting party. The contract letting party may notify the contractor of suspending any work in the project implementation in writing. The notice shall specify the date of suspension and anticipated period of suspension.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Any increase in the fees suffered by the contractor due to the implementation of such suspension or reasonable expenses increased by return to work shall be borne by the contract letting party. In case of delay in any key route of the project caused thereby, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.2 Suspension caused by force majeure. The work of the parties shall be arranged according to the provisions on obligations upon occurrence of force majeure as set forth in Article 17.1 and the provisions on consequences of force majeure as set forth in Article 17.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.3 The contractor's work upon suspension. Under the circumstance of suspension as set forth in Article 4.6.1 Suspension caused by any reason attributable to the contract letting party and Article 4.6.2 Suspension caused by force majeure hereof, the contractor shall immediately stop the implementation work on the spot. During the period of suspension, according to the contract provisions, the contractor shall be responsible for attending, protecting and supervising the employees, project, materials and the contractor's documents etc. During the period of suspension, according to the contract provisions, the contractor shall be responsible for attending, protecting and supervising the employees, project, materials and the contractor's documents etc. If the failure of the contractor to perform attending, protecting and supervising responsibilities causes any damage and metamorphism etc., which leads to any increase in the expenses of the contract letting party or delay in the date of completion, the contractor shall be liable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.4 The contractor's requirement on return to work. According to the suspension advised by the contract letting party as set forth in Article 4.6.1, the contractor shall be entitled to notify of and require return to work 45 days upon the suspension. In case of failure in return to work, the contractor shall be entitled to adjust and decrease part of the project affected by suspension according to the provisions on adjustment to and decrease of part of the project as set forth in Article 13.2.5 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Should the suspension of the contract letting party last for more than 45 days and affect the whole project, or last for more than 180 days, or the suspension caused by force majeure causes the failure in contract performance, the contractor shall be entitled to give notice on contract cancellation according to the provisions on contract cancellation by the contractor as set forth in Article 18.2 hereof.</p>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.5 The contract letting party's return to work. After the contract letting party gives notice on return to work, the contract letting party shall be entitled to organize for the contractor to examine the project, equipment, materials and parts affected by suspension, the contractor shall notify the contract letting party of the examination result and the contents that needs recovery and renovation as well as the estimation, upon acknowledgement by the contract letting party, the recovery and renovation expenses incurred thereby shall be borne by the contract letting party. In case of delay in any key route of the project caused by recovery and renovation, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.6 Suspension caused by any reason attributable to the contractor. If any reason attributable to the contractor causes suspension of part of the project or the project, which leads to any loss, damage and delay in the date of completion, the contractor shall be liable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.6.7 Payment upon project suspension. In case of suspension caused by the contract letting party, in addition to the payment for the project that has been accomplished according to the contract provisions, the contract letting party shall compensate for any economic loss caused against the contractor by work stop, slow work of the labor, profiteering by buying cheap and selling dear, relocation of mechanical equipment, overstock of materials and components etc.:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) With respect to the equipment, materials and components purchased by the contractor and constituting the project entity but of which the payment can not be effected according to the purchase progress accounts, the contractor shall independently list such accounts into the statements of Article 14.6 Applying for payment according to the monthly project progress or Article 14.7 Applying for payment according to the payment schedule, the contract letting party shall arrange payment according to the date of payment as set forth in Article 14.8 hereof;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) With respect to the permanent project equipment, materials and components purchased and delivered to the spot by the contractor that have not been subject to inspection &amp; acceptance and payment, both parties shall conduct inspection &amp; acceptance and handover &amp; takeover. The contractor shall at its own expenses renovate any defective equipment, material and component. Upon accomplishment of renovation and inspection &amp; acceptance by the contract letting party, according to the provisions as set forth in Article 14.4.1 hereof, the purchase progress accounts wherein shall be paid.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contract letting party shall assume relevant accounts for the equipment, materials and components purchased by the contractor but having not been delivered to the spot for permanent project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) If the contract letting party requires the contractor to return any equipment, materials or component that has been ordered for the permanent project, the contract letting party shall assume relevant expenses including but not limited to the indemnification and compensation required by any supplier or manufacturer.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 5 Technologies and design">Article 5 Technologies and design</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="5.1 Production processing technologies and construction art models">5.1 Production processing technologies and construction art models</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.1.1 Processing technologies or construction art models provided by the contractor</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">When the contractor is responsible for providing production processing technologies (including patent technologies, proprietary technologies and process package) and construction art models (including construction design), the contractor shall be liable for the processing technology data, processing conditions, software, analysis manual, operation instructions, equipment manufacture instructions and other materials, other requirements or construction art models that have been provided and the structural design.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for the trial operation assessment guaranteed value and explanations on the guarantee of use functions as set forth in such special provisions. The trial operation assessment guaranteed value and explanations on the guarantee of use functions shall be the appraisal basis for the trial operation assessment as set forth in Article 10.3.3. According to the project features, the trial operation assessment guaranteed value and explanations on the guarantee of use functions for the project shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.1.2 Processing technologies or construction art models provided by the contract letting party</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">When the contract letting party is responsible for providing production processing technologies (including patent technologies, proprietary technologies and process package) and construction art models (including construction design), the contract letting party shall be liable for the processing technology data, processing conditions, software, analysis manual, operation instructions, equipment manufacture instructions as well as other documents and materials of the contractor, the requirements of the contract letting party or the requirements of the construction art models.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract letting party shall be obliged to guide, verify and acknowledge the production processing design and construction design documents conducted according to the above materials provided by the contract letting party. All guaranteed values of project trial operation assessment or the responsibilities that shall be respectively assumed in the instructions on guarantee of use functions as set forth in the special provisions shall be appraisal basis for the trial operation assessment and assessment responsibilities as set forth in Article 10.3.3.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="5.2 Design">5.2 Design</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.1 Compliance with standards and codes</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The standards and codes as set forth in Article 1.5 shall be applicable to the project receipt or whole project receipt by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) In the process of contract performance, if any new standard or code is promulgated by the State, the contractor shall be obliged to submit proposal on any relevant new standard or new code to the contract letting party. Any mandatory standard or code therein shall be observed and deemed as alteration for disposal; the contract letting party may decide to adopt or not to adopt any optional and recommended standard or code, if it decides to adopt, it shall be deemed as alteration for disposal.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The design drawings accomplished according to applicable laws as well as the standards and codes as set forth herein, the technical data and technical conditions in the design documents shall be the basis for the equipment, materials, component purchase quality, construction quality and completion test quality of the permanent project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.2 Operation and maintenance manual. The contractor shall guide post-completion test, trial operation assessment test as well as formulate operation and maintenance manual, the licenser shall provide operation guidance and analysis manual and be liable for the authenticity, accuracy, completeness and timeliness of the materials, unless otherwise set forth in the special provisions. The contract letting party shall submit operation guidance and analysis manual and the contractor shall submit operation and maintenance manual, the counterparts and the period of submission thereof shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.3 Counterparts and time of submission of design documents. The counterparts and dates of submission of the design documents, materials and drawings of any relevant design stage to be submitted shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.4 Renovation of any design defect at its own expenses and catch up with the progress at its own expenses. In case of any omission, error, defect and deficiency in the design documents caused by any reason attributable to the contractor, the contractor shall renovate at its own expenses. In case of delay in the design progress, the contractor shall at its own expenses take measures to catch up with the progress.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="5.3 Design stage verification">5.3 Design stage verification</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.1 Design verification stage and date of verification meeting. The design stage of this project and the schedule for the verification meeting of the design stage shall be stipulated in the special provisions. The expenses incurred by the verification meeting and participation of the contract letting party's superior unit and relevant governmental authority in the verification meeting shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.2 According to the provisions as set forth in Article 5.3.1 hereof, the contractor shall submit design documents of any relevant design verification stage to the contract letting party and conform to the in-depth stipulations of administrative regulations on the design documents, drawings and materials of any relevant design stage. The contractor shall be obliged to at its own expenses attend the design verification meeting organized by the contract letting party, introduce, answer and interpret to any and all verifiers and at its own expenses and in the verification process, provide supplementary materials that shall be provided.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.3 The contract letting party shall be obliged to provide the contractor with the approval files and minutes of the design verification meeting according to Article 5.3.2 hereof. The contractor shall be obliged to make modification, supplementation and perfection to relevant design in accordance with the approval files and minutes of any relevant verification stage, the contract provisions and the stipulations of relevant design regulations.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.4 If any reason attributable to the contractor causes the failure to submit complete design documents, drawings and materials of any relevant design verification stage to the contract letting party according to the time as set forth in Article 5.2.5 hereof, which leads to the failure to convene the meeting of any relevant design verification stage or failure to convene the meeting of any relevant design verification stage as scheduled, the contractor shall be liable for the delay in the date of completion, any loss on slow work of the labor or any increase in the expenses for the contract letting party to organize the meeting.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.5 The contract letting party shall be entitled to, before any and all design verification stages as set forth in Article 5.3.1, raise suggestion, verification and acknowledgment on the design documents, drawings and materials of any relevant design stage, any suggestion, verification and acknowledgment by the contract letting party shall not relieve the contractor of or exempt the contractor from any contract liability and contract obligation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.3.6 The contractor's design scheme may only be implemented upon recognition by the design supervisor and the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="5.4 Training of operators and maintenance persons">5.4 Training of operators and maintenance persons</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for formulating training plan and methods as well as formulating training manual and materials for the contract letting party's operators and maintenance persons.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="5.5 Intellectual properties">5.5 Intellectual properties</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If this contract involves intellectual properties including but not limited to technical patent, construct art model, know-how and copyright of either party or both parties (including any related licenser and independent architect of either party or both parties), relevant agreement on intellectual properties and confidentiality shall be entered into as appendix hereto.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 6 Project materials">Article 6 Project materials</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.1 Provision of project materials">6.1 Provision of project materials</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.1 The equipment, materials and components provided by the contract letting party for the permanent project</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) In case of any defect in the equipment, materials and components purchased by the contract letting party or subject to purchase designated by the contract letting party or delay in delivery thereof to the spot, which causes slow work of the labor, work stop, increase in expenses or delay in any key route against the contractor, the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof shall apply.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) If the contract letting party invites the contractor to participate in foreign purchase, the expenses incurred thereby shall be borne by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.2 The equipment, materials and components provided by the contractor for the permanent project</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) According to the technical parameters, technical conditions, function requirements and use requirements as set forth in the design documents, the contractor shall be responsible for the purchase of the equipment, materials and components for the permanent project and delivery thereof to the spot and liable for the quality examination results and performance results. The types, estimated quantity or specification list of the equipment, materials and components provided by the contractor for the permanent project shall be specified in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor shall at its own expenses renovate any quality defect caused by incompliance of the equipment, materials and components (including but not limited to building components) provided by the contractor with national mandatory standards, in case of therefore causing delay in the progress, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The types or list of productive materials provided by the contractor for post-completion test shall be specified in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.3 Selection of suppliers by the contractor. Based upon the list of suppliers submitted by the contractor and approved by the contract letting party according to the provisions as set forth in Article 3.8.1 hereof, the suppliers or manufacturers of relevant materials shall be chosen by bidding.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall not designate any supplier or processing manufacturer in the design documents or oral implications, except under any special circumstance or if there is only one factory.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.4 Ownership of the project materials. The ownership of the equipment, materials and components provided for the permanent project according to the provisions as set forth in Article 6.1.1 and Article 6.1.2 hereof shall be transferred to the contract letting party after being delivered to the destination on the spot. The contract letting party shall perform the payment obligation as set forth in the contract. Before the contract letting party receives the project, the contractor shall be obliged to keep, preserve and maintain the project equipment, materials and components that shall not be transported out of the spot without approval by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.2. Inspection">6.2. Inspection</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.1 Factory test and report</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor shall comply with relevant laws and regulations, be responsible for the equipment, materials, components and spare parts for the permanent project as set forth in Article 6.1.2 hereof as well as the mandatory examination, test, supervision and experiment on the materials subject to post-completion test and submitting relevant reports to the contract letting party. The contents, periods and counterparts of each report shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) If the contractor invites the contract letting party to participate in examination, before conducting examination, test, supervision and experiment of any relevant processing manufacture stage, the contractor shall notify the contract letting party of the contents, address and time in writing. Within 5 days upon receipt of the invitation, the contract letting party shall notify the contractor whether it will participate in examination or not in writing. If the contract letting party intends to participate in examination, it shall notify the contractor within 5 days upon receipt of written notice or report sent by the contractor as stipulated in item (1) of this Article.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall assume the salaries, subsidies, traveling expenses and accommodation fees etc. of its examination participants during the period of participating in examination, be responsible for handling the license for access to any relevant factory and offer convenience.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) If the contract letting party entrusts any qualified and experience third party to at its own expenses participate in examination on behalf of the contract letting party, within 5 days upon receiving the letter of invitation or report from the contractor, it shall notify the contractor in writing and specify the designation, name as well as function of power granted of any entrusted unit and entrusted person.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The participation in examination by the contract letting party and its entrusted person shall not exempt the contractor from the quality liabilities for the project equipment, materials and components purchased by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.2 Covering and packaging consequences. The contract letting party has notified the contractor of participating in examination in writing within the date as set forth in Article 6.2.1 and arrives at the designated place prior to the date as stipulated or on time, however, the processed and manufactured equipment, materials and components (including the materials subject to post-completion test) have been covered, packaged or delivered to place of departure, the contract letting party shall be entitled to order the contractor to transport back to the original place, remove the coverage and package as well as conduct examination or test or inspection or experiment or recovery again, the contractor shall assume the expenses incurred thereby. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.3 Failure to participate in examination on time. If the contract letting party fails to participate in examination according to the provisions as set forth in Article 6.2.1, the contractor may on its own organize examination, test, inspection and experiment, the quality inspection result shall be deemed as authentic. If the contract letting party orders to conduct examination, test, inspection and experiment again hereinafter or add any experiment detail or alter the experiment place, it shall be entitled to notify the contractor of the alteration order. Upon conformity by quality inspection, the expenses incurred thereby shall be borne by the contract letting party, in case of causing delay in any key route of the project, the date of completion shall be postponed accordingly; upon inconformity by quality inspection, the expenses incurred thereby shall be borne by the contractor and the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.4 Spot count and examination</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall notify the contract letting party 5 days before the equipment, materials and components provided by the contractor for the permanent project according to the provisions as set forth in Article 6.1.2 hereof are delivered to the spot. The contractor (including contractor or any supplier or subcontractor providing the contractor with equipment, materials and components) and the contract letting party (including the contract letting party or its representative or its supervisor) shall count the carton quantity according to the delivery document for each batch of goods and conduct examination on the appearance as well as count the in-carton quantity, certificates of compliance for appearance, drawings and document materials according to the packing list and conduct examination on the appearance. Upon examination and count, both parties shall sign the handover and takeover list.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In case of carton shortage detected in spot examination and count, for the shortage of the in-carton quantity, drawings and materials or any defect in the appearance, the contractor shall be responsible for supplementation and renovation at its own expenses, before defect renovation, no use in the project shall be allowed. The contractor shall be liable for any increase in the fees and delay in the date of completion caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.5 Participation in examination by the quality supervision, fire protection and environmental protection authorities. The contract letting party and the contractor shall, from time to time, accept the on-site inspection on the manufacture factory, installation and experiment process conducted by professional inspectors from the quality supervision authority, fire protection authority, environmental protection authority and the industry etc., the expenses shall be borne by the contractor. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to the opinions on modification and replacement proposed in examination, the liable party as set forth in Article 6.1.1 or Article 6.1.2 shall assume relevant expenses. In case of delay in any key route of the project caused thereby, if the liable party is the contractor, the date of completion shall not be postponed; if the liable party is the contract letting party, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.3 Imported project materials and customs declaration &amp; customs clearance">6.3 Imported project materials and customs declaration &amp; customs clearance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.3.1 The party responsible for imported purchase of the equipment, materials and components for the permanent project as well as the bidding and inquiry methods shall be stipulated in the special provisions. The party responsible for purchase shall be responsible for customs declaration &amp; customs clearance, and the other party shall be obliged to offer assistance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.3.2 If the delay in customs declaration &amp; customs clearance of imported project equipment, materials and components causes delay in any key route of the project, if it is the contractor who is responsible for imported purchase, the date of completion shall not be postponed and any increase in the expenses shall be borne by the contractor; if it is the contract letting party is responsible for imported purchase, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.4 Transportation and transportation of the materials beyond limits">6.4 Transportation and transportation of the materials beyond limits</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be responsible for the transportation of project materials beyond limits (beyond the weight, length, width and weight limits), all expenses for transportation of the materials beyond limits and special measures etc. are included in the bid-winning contract price. Any increase in the expenses due to the transportation of the materials beyond limits shall be borne by the contractor. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.5 Reorder and consequences">6.5 Reorder and consequences</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the provisions as set forth in Article 6.1.2 and Article 6.1.3 hereof, in case of any defect in the equipment, materials and components provided by the contractor for the permanent project and in case of inconformity upon renovation by the contractor, the contractor shall be responsible for reorder and delivery to the spot. The contractor shall be liable for any increase in the fees and delay in the date of completion caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="6.6 Custody and surplus of project materials">6.6 Custody and surplus of project materials</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.6.1 Custody of project materials If the project materials provided by the contract letting party according to Article 6.1.1 hereof and those provided by the contractor according to Article 6.1.2 are subject to custody by the contractor upon entrustment, the types and estimated quantity of the project materials shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall keep, preserve and maintain according to relevant provisions of the instructions in order to prevent deformation, deterioration, pollution and human body injury. The time within which the contractor shall submit custody and maintenance scheme is stipulated in the special provisions, such scheme includes: classification and custody of project materials, maintenance, security guard and obtaining system as well as warehouse, special custody warehouse, pile, road, lighting, fire protection, facility and appliance planning etc. All expenses necessary for custody shall be included in the bid-winning contract price.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.6.2 Handover of surplus project materials. With respect to the materials kept by the contractor for the permanent project, upon accomplishment of completion test, the surplus project materials shall be handed over to the contract letting party free of charge (unless otherwise set forth in special provisions).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 7 Construction">Article 7 Construction</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.1 The contract letting party's obligations">7.1 The contract letting party's obligations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.1 Verify overall construction organization and design. The contract letting party shall be entitled to conduct verification on the overall construction organization and design submitted by the contractor according to the provisions as set forth in Article 7.2.2 hereof as well as raise suggestions, requirements and supplementary requirements within 20 days upon receipt. The contract letting party's suggestions and requirements will not relieve the contractor of or exempt the contractor from any contract liability. If the contract letting party fails to raise any suggestion and requirement, the contractor shall be entitled to conduct implementation according to the overall construction organization and design submitted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.2 Entry conditions and entry date. The contract letting party shall agree with the contractor upon entry conditions and determine upon the entry date according to the approved preliminary design and provisional land occupation materials submitted by the contractor according to the provisions as set forth in Article 7.2.3. The contract letting party shall guarantee that the contractor can enter the spot and start preparation work on time. The entry conditions and entry date shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In case of delay in the contractor's entry date caused by any reason attributable to the contract letting party, the date of completion shall be postponed accordingly. The contract letting party shall assume relevant expenses for slow work of the labor incurred thereby against the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.3 Urge the contractor to handle approval formalities for construction start etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.4 The contract letting party shall make acknowledgement within 20 days upon receipt of "health, safety and environment" management plan submitted by the contractor according to the provisions as set forth in Article 7.8 hereof. The contract letting party shall be entitled to inspect its implementation status and raise correction suggestions on any problem detected in the inspection, the contractor shall correct according to the contract letting party's reasonable suggestions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.5 The contract letting party shall perform other obligations that shall be performed by the contract letting party as set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.2 The contractor's obligations">7.2 The contractor's obligations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.1 Coordinate review and despooling. The contractor shall be obliged to review the benchmark coordinate materials (including benchmark control point, benchmark control elevation and benchmark coordinate control line). The contractor shall be liable for the despooling of the project and construction part and liable for the despooling accuracy.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.2 Construction organization and design. Within 15 days before construction start or within other time as stipulated, the contractor shall submit overall construction organization and design to the contract letting party. Along with the construction progress, the contractor shall submit the construction organization and design of main divisions and main items submitted by the contract letting party. The contractor shall at its own expenses make modification and perfection according to the reasonable suggestions and requirement proposed by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The counterparts and time of submission of the overall construction organization and design as well as the name, counterparts and dates of submission of main divisions and main items of the construction organization and design that shall be submitted are stipulated in special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.3 Submitting provisional land occupation materials. The contractor shall, within the time as set forth in the special provisions, submit:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) According to the provisions on custody of project materials as set forth in Article 6.6.1 hereof, shall submit the explanations on the coordinate locations, areas, land use time and use purposes of the land used for warehouse, pile and road and shall independently list the explanations on the coordinate locations, areas, land use time and use purposes of the land that shall be rented by the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Shall submit the explanations on the coordinate locations, areas, land use time and use purposes of the land used for construction and shall independently list the explanations on the coordinate locations, areas, land use time and use purposes of the land that shall be rented by the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Shall indicate the coordinate location of the entrance to the road of the construction site, and specify the direction, length, width, level, bridge and culvert bearing, turning circle radius of the road that the contract letting party is required to pave for connecting to urban and rural public roads as well as the requirements on the time of paving.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor fails to submit the above materials on time, which causes delay in the entry date as set forth in the provisions of Article 7.1.3 hereof, any increase in the expenses or delay in the date of completion caused thereby shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.4 The contractor shall be responsible for solving the problems of provisional water and electricity use etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.5 The contractor shall handle construction start approval or construction license, project quality supervision formalities and any other license, certificate and approval file etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.6 Any approval that shall be handled in the construction process upon notification. In the construction process, if the contractor provisionally adds off-site provisional land, provisional requires to cut off water supply, cut off power supply, cut off road communication and conduct blasting operation, or may damage public facilities relating to road, pipeline, power, post &amp; telecommunications and communication, the contractor shall be responsible for handling relevant formalities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.7 Provide construction obstacle materials. The contractor shall, according to the provisions hereof, provide the coordinate locations of relevant underground buildings, structures and other facilities within the project scope.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.8 Newly discovered construction obstacle. With respect to any building, structure, historical and cultural relic, ancient tree and famous tree newly discovered in the construction process neighboring and close to the site as well as underground pipeline, wire, structure, cultural relic, fossil and tomb etc., the contractor shall immediately take protection measures and timely notify the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.9 The contractor shall be obliged to guarantee that the human power, machines and tools, equipment, facilities, measure materials, circulation materials and other construction resources can satisfy the demands of project implementation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.10 The contractor shall be obliged to, before construction, explain the intention of the design document and interpret the design documents to the construction subcontractor and supervisor and timely solve any relevant problem occurring in the construction process.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.11 Project protection and maintenance. From the date of construction start to the date on which the project is received by the contract letting party, the contractor shall be responsible for the protection, maintenance and security guard of the project and shall guarantee that the project will not be subject to any loss or damage due to the contractor's construction.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.12 Site clearing. The contractor shall be responsible for site clearing and classified piling in the construction process and upon accomplishment of the project, and shall deliver the residue, waste and garbage etc. to any place designated by the contract letting party or any local relevant authority. Any machine and tool, equipment, facility and provisional project etc. that will not be used by the contractor again shall be evacuated from the site or delivered to any field designated by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.13 The contractor shall be obliged to perform other related obligations that shall be performed by the contractor as set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.3 Construction technologies and methods">7.3 Construction technologies and methods</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor's construction technologies and methods are in compliance with relevant operation procedures, safety procedures and quality standards.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract letting party shall make acknowledgement on key construction technologies and methods, and within 5 days after receiving any such method submitted by the contractor, shall make acknowledgement or raise suggestions, any such acknowledgement and suggestion of the contract letting party will not relieve the contractor of or exempt the contractor from any contract liability.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.4 Human power, machine and tool resources">7.4 Human power, machine and tool resources</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.4.1 The contractor shall submit schedule of human resource plan for construction to the contract letting party according to the format, contents, counterparts and time of submission as set forth in the special provisions. The human resource plan for construction shall satisfy the demands of the construction progress plan. The contractor shall also provide the contract letting party with the information about the human resources subject to actual entry according to the format, contents, counterparts and time of submission as set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor fails to input sufficient work and human resources according to the schedule of human resource plan for construction, which causes the actual construction progress to be obviously behind the construction progress plan, the contract letting party shall be entitled to notify the contractor of adjusting and designating any relevant person to enter the site according to the work type and number of persons listed in the schedule of plan within reasonable time. Otherwise, the contract letting party shall be entitled to order the contractor to separately subcontract some parts and some items of the project, the expenses incurred thereby and the time of delay shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.4.2 The contractor shall submit schedule of main machine and tool resource plan for construction to the contract letting party according to the format, contents, counterparts and time of submission as set forth in the special provisions. The machine and tool resource plan for construction shall satisfy the demands of the construction progress plan. The contractor shall also provide the contract letting party with the information about main machines and tools subject to actual entry according to the format, contents, counterparts and time of submission as set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor fails to input sufficient machines and tools according to the schedule of machine and tool plan for construction, which causes the actual construction progress to be obviously behind the construction progress plan, the contract letting party shall be entitled to notify the contractor of adjusting and designating any relevant machine and tool to enter the site according to the number of machines and tools listed in the schedule of plan within reasonable time. Otherwise, the contract letting party shall be entitled to order the contractor to otherwise lease machines and tools, the expenses incurred thereby and the time of delay shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.5 Quality and inspection">7.5 Quality and inspection</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.1 Quality and inspection</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor and its subcontractors shall, from time to time, accept safety quality supervision and inspection conducted by the contract letting party, project director, administrative authority, quality administration authority, safety administration authority and industrial safety inspectors or any third-party quality inspection unit designated by the contract letting party. The contractor shall provide such supervision and inspection with convenience and assume relevant expenses.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) When the contract letting party entrusts any third party to conducts examination, inspection, test and experiment on the construction quality, it shall notify the contractor in writing. The third-party inspection and acceptance result shall be the contract letting party's inspection and acceptance result.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall comply with relevant regulations on construction quality administration and shall be responsible for providing the operators with training, assessment, drawing disclosure, technical disclosure, operation procedure disclosure, safety procedure disclosure and quality standard disclosure to eliminate accident and hidden danger.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor shall conduct examination, inspection, test and experiment on the equipment, materials and components (including building parts and accessories) of the permanent project according to the provisions of the design documents and construction standards as well as the contract provisions, but shall not use disqualified equipment, materials and components. The contractor shall also be obliged to at its own expenses renovate and replace disqualified equipment, materials and components, the delay in the date of completion caused thereby shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The contractor's construction shall conform to the quality standards as set forth in the contract. The assessment of quality standards shall be based upon the assessment standards for quality inspection as set forth in the contract. With respect to the construction part not in compliance with the quality standards, the contractor shall be obliged to at its own expenses renovate, rework or replace or reset, the delay in the date of completion caused thereby shall be borne by the contractor.</p>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.2 Quality inspection parts and inspection participants. The quality inspection parts are: the part subject to inspection by the contract letting party, supervisor and the contractor; the part subject to inspection by the supervisor and the contractor; the part subject to inspection by either any third party or the contractor. The parts subject to inspection on the construction quality, inspection standards as well as inspection &amp; acceptance table format are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the above provisions, any part inspected as qualified by the contractor shall be reported to the contract letting party or the supervisor for archival filing. The contract letting party and the project director shall be entitled to, from time to time, conduct spot inspection or overall inspection on the parts subject to archival filing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.3 Notify inspection participants of participation in inspection. If the contractor on its own examines, inspects, tests and experiments the conformity, it shall notify relevant inspection participating units of participating in inspection according to the quality inspection parts and inspection participants as set forth in the special provisions of Article 7.5.2 hereof. If any inspection participant fails to participate on time, the contractor shall submit the self-inspection result of conformity to the contract letting party or the supervisor for signing within 24 hours thereafter, in case of failure to be signed after 24 hours, the quality inspection result shall be deemed as having been recognized by the contract letting party. Within 3 days thereafter, the contractor shall send notice on the fact that the contract letting party or the supervisor has been deemed to have acknowledged such quality inspection result.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.4 Quality inspection rights. The contract letting party or the supervisor or any third party authorized thereby shall, under the circumstance of not hindering normal operation of the contractor, have to rights to conduct quality supervision, examination, inspection, test and experiment on any construction zone. The contractor shall provide such quality inspection activity with convenience. If the examination, inspection, test and experiment result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In case of detecting any quality defect caused by any reason attributable to the contractor upon quality inspection, shall be entitled to place directives on renovation, suspension, demolition, rework, reconstruction and replacement etc. Any increase in the expenses caused thereby shall be borne by the contractor, in case of delay in the date of completion, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.5 Conduct quality inspection again. According to the provisions as set forth in Article 7.5.3 hereof, with respect to the project parts certified to be qualified upon quality inspection, the contract letting party shall be entitled to conduct quality inspection again under the condition of not affecting normal project construction. If the examination, inspection, test and experiment result indicates inconformity, the expenses incurred thereby shall be borne by the contractor, in case of delay in any key route of the project, the date of completion shall not be postponed; if the examination, inspection, test and experiment result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.6 Other additional expenses incurred by any reason not attributable to the contract letting party shall be completely borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.6 Concealed project and midway inspection &amp; acceptance">7.6 Concealed project and midway inspection &amp; acceptance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.1 Concealed project and midway inspection &amp; acceptance. The classification, parts, quality inspection contents, quality inspection standards, quality inspection tables and inspection participants of the concealed project that shall be subject to quality inspection and the parts of midway inspection &amp; acceptance are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.2 Notice on inspection &amp; acceptance and inspection &amp; acceptance With respect to the concealed project or midway inspection &amp; acceptance parts certified to be qualified upon self inspection, the contractor shall notify the contract letting party and the supervisor of inspection &amp; acceptance in writing 48 hours before the concealed project or midway inspection &amp; acceptance. The notice shall specify the contents of concealment and midway inspection &amp; acceptance, acceptance time and place. If the inspection &amp; acceptance result indicates conformity, both parties shall sign on the inspection &amp; acceptance records in order to cover, conduct subsequent operation, formulate and submit concealed project completion materials.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party and the supervisor do not sign on the inspection &amp; acceptance records within 24 hours after the inspection &amp; acceptance result indicates conformity, the contract letting party and the supervisor shall be deemed as having recognized the inspection &amp; acceptance records, the contractor can conceal or conduct subsequent operation. If the contract letting party and the supervisor's inspection &amp; acceptance result indicates inconformity, the contractor shall correct within the time as limited by the contract letting party and the supervisor and notify the contract letting party and the supervisor of inspection &amp; acceptance again.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.3 Failure to participate in inspection &amp; acceptance on time. If the contract letting party and the supervisor fail to participate in the inspection &amp; acceptance of the concealed project and the parts subject to midway inspection &amp; acceptance on time, within 24 hours upon receipt of notice on inspection &amp; acceptance, the contract letting party and the supervisor shall apply to the contractor for postponement, the inspection &amp; acceptance shall not be postponed for more than 48 hours. In case of failure to apply for postponement of inspection &amp; acceptance within the above time and failure to participate in inspection &amp; acceptance, the contractor shall on its own organize inspection &amp; acceptance, and the inspection &amp; acceptance records shall be deemed as having been recognized by the contract letting party and the supervisor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.4 Re-inspection. Within any time, the contract letting party and the supervisor shall be entitled to require re-inspection on the concealed project that has been inspected and accepted, the contractor shall remove coverage, conduct stripping or trepanning and shall recover or renovate upon inspection. If the inspection result indicates inconformity, the expenses incurred thereby shall be borne by the contractor, in case of delay in any key route of the project, the date of completion shall not be postponed; if the inspection result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.7 Dispute on the construction quality result">7.7 Dispute on the construction quality result</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.7.1 Any dispute on the construction quality result shall be firstly settled through negotiation. If no consensus is reached upon negotiation, any project quality test institution with relevant qualification shall be entrusted to conduct authentication with consent of the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the authentication result, if the liable party is the contractor, the contractor shall be liable for any increase in the expenses incurred against the contractor or delay in any key route of the project; if the liable party is the contract letting party, the contract letting party shall be liable for any increase in the expenses incurred against the contractor, in case of delay in any key route of the project duet to any dispute, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.7.2 According to the authentication result, if both contract parties are liable, according to the liabilities of either party, they shall negotiate for assuming respective expenses; in case of delay in any key route of the project caused thereby, they shall discuss about postponement of the date of completion. If both parties fail to reach consensus on the assuming of expenses and postponement of the date of completion, the procedures as set forth in Article 16.3 Dispute and adjudication shall apply to settlement.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="7.8 Health, safety and environment">7.8 Health, safety and environment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.8.1 Health, safety and environment management</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Both parties shall be obliged to observe all laws and regulations on health, safety and environment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Implementation plan for health, safety and environment management. Before construction start on the spot or within other time as stipulated, the contractor shall submit implementation plan for health, safety and environment management to the contract letting party. The management and implementation fees of such plan are included in the contract price. The contract letting party shall raise suggestions and make acknowledgement within 15 days upon receipt of such plan, the contractor shall at its own expenses correct according to the suggestions of the contract letting party. The counterparts and time of submission of such plan are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) In the process of carrying out the implementation plan for health, safety and environment by the contractor, if the contract letting party needs to take special measures beyond such plan, it shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The party involved ensures that all employees of the party and its subcontractors on the spot have been sufficiently trained and experienced and are competent for health, safety and environment management work.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The parties shall comply with all laws and regulations on spot health, safety and environment relating to implementation of this project and use of construction equipment and respectively handle related formalities as stipulated.</p>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) The contractor shall establish health security conditions, construct safe facilities and take environmental protection measures etc. for the part subject to spot construction start of the project. If any reason causes delay in the approval of construction license due to any reason attributable to the contractor, the contractor shall be liable for any increase in the expenses or delay in any key route of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(7) The parties shall have full-time engineers or management persons responsible for managing, supervising and guiding employee health, safety protection and environmental protection work. The contractor shall be liable to any subcontractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(8) The contractor shall from time to time accept the supervision and inspection conducted by the health, safety and environment inspectors of any relevant governmental administrative authority, industrial institution, contract letting party and project director and shall therefore provide convenience.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(9) According to the Regulations on Safety, Health and Environment Management Work of Power Construction and relevant provisions of the company, in case of any accident against safety and violation in the contents of Appendix V, the contract letting party shall be entitled to directly deduct penalty from the project funds.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.8.2 Occupational health management on the spot</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor shall comply with applicable laws and regulations on occupational health as well as the contract provisions (including the provisions on employment, health, safety and benefit etc.) and be responsible for the occupational health and protection of the persons in the spot implementation process.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor shall comply with applicable labor laws to protect legal rights and interests of its employees including but not limited to legal holiday right and shall provide the employees on the spot with labor protection articles, protective device, heatstroke prevention products, necessary spot boarding and lodging conditions as well as safe production facilities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall provide the constructors with occupational health knowledge training for relevant operation, disclosure of dangerous and hazardous factors, disclosure of safe operation procedures, shall take effective measures and shall provide protective device to prevent human body injury according to relevant provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor shall set warning marks and instructions in poisonous and harmful operation zones. Any injury caused by the contract letting party and its entrusted persons due to entry into such operation zones without permission of the contractor and not equipped with relevant protection appliance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The contractor shall conduct preventive examination on the poisonous and harmful posts and timely ratify and correct disqualified protection facilities, appliance and erection etc. in order to eliminate hidden danger that is harmful to health.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) The contractor shall take health and anti-epidemic measures to be equipment with medical workers and first-aid facilities, keep the food health of dining hall, maintain the environmental health of the residence and its surrounding areas and protect the health of constructors.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.8.3 Safety management on the spot</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The supervisor shall provide the employees on the spot with safety education and shall be liable for any accident against safety caused thereby. The supervisor shall not force the contractor to violate relevant safety regulations on safe construction, safe operation, completion test, and post-completion test. The supervisor shall assume relevant liabilities and the expenses incurred thereby for any human body injury and property loss caused by any reason attributable to the supervisor and its employees on the spot. In case of delay in any key route of the project, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall be liable for any human body injury, property loss and delay in any key route of the project caused by violation of relevant safety regulations on safe construction, safe operation, completion test, and post-completion test due to any reason attributable to the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The employees of the parties shall comply with attention to no entry, including no entry to the work field and no closeness to special zones of the work field. In case of failure to comply with such provisions, the party failing to comply with such provisions shall be liable for any injury, damage and loss caused thereby.</p>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall be responsible for the safe work on the spot according to the contract provisions, including the spot of any subcontractor. Any spot with relevant conditions shall be subject to closed management. According to the project features, shall formulate relevant technical safety measures in the construction organization and design documents and formulate special safe construction organization and design to the project part with strong specialty, including but not limited to the measures for maintaining safety, prevent danger and prevent fire.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor (including subcontractors, suppliers and transportation units of the contractor) shall take preventive measures to protect the roads, bridges and underground facilities etc. on the spot and on the way entering into and exiting from the spot, unless otherwise set forth in special provisions. The contractor shall be liable for any damage and delay in the date of completion caused by failure to take preventive measures as stipulated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The contractor shall provide its constructors with safe operation training, disclosure of safe operation procedures, take safety protection measures, set safe warning marks and instructions and conduct safety inspection to eliminate accident and hidden danger.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) When the contractor conducts operation in power equipment, electric transmission line, underground pipeline, sealed quakeproof workshop, high temperature and high pressure, inflammable and explosive zones and sections as well as in the neighborhood of vital communication lines close to street, the contractor shall take safety protection measures to any damage that may be caused against the construction site and neighboring buildings, structure and special operation environment. Before construction start, safety protection measures and schemes shall be submitted to the contract letting party or the supervisor and may only be implemented after being recognized.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(7) If the contractor intends to conduct blasting, radioactive, electric and toxic operation as well as conduct operation by using inflammable and explosive, toxic and corrosive articles (including transportation, storage and custody), the contractor shall, within 10 days before construction start, notify the contract letting party and the supervisor in writing, submit relevant safety protection measures and schemes which shall only be implemented after being recognized.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(8) Safety and protection inspection. Before start of operation, the contractor shall notify the representative of the contract letting party and the supervisor of conducting inspection on any influence that may be generated by the safety measures and schemes submitted and construction of safe facilities on the spot, safe passages, safe appliance and fire protection appliance and configuration on the safety of surrounding environment, and shall at its own expenses make ratification and correction according to the ratification and correction raised by the contract letting party and the supervisor. The supervisor's suggestions and requirements will not relieve the contractor of or exempt the contractor from any contract liability.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.8.4 Environmental protection and management on the spot</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor shall be responsible for protecting the buildings, structure, cultural relic buildings, ancient trees and famous trees as well as underground pipelines, wire, structures, cultural relics, fossils and tombs etc. on the spot and in the neighborhood in the spot construction process. The contractor shall be liable for any increase in the expenses including but not limited to damage, loss and compensation and delay in the date of completion due to the failure of the contractor to notify the contract letting party and failure to obtain further instructions from the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor shall take measures and be responsible for controlling and disposing of the pollution and damage caused by the dust, waste gas, waste water, solid waste and noise against the environment on the spot. The contractor shall be liable for any increase in the expenses including but not limited to injury, compensation and penalty and delay in the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall timely and periodically transport the residual and waste garbage on the construction site to any place designated by the contract letting party or relevant local administrative authority to prevent the pollution on the surrounding environment and influence on the operation. The contractor shall be liable for any increase in the expenses including but not limited to injury and compensation imposed by local administrative authority.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.8.5 Accident treatment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) If the contractor or any employee of any subcontractor is deceased or suffers injury in the spot operation process, the contractor or its subcontractor shall immediately take rescue measures, immediately report to the contract letting party and the rescue unit, the contract letting party shall be obliged to provide such rescue with necessary conditions. The contractor shall maintain the spot and take relevant measures to prevent the spreading of any accident.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) With respect to significant casualty, significant damages on properties and the environment as well as other accidents against safety, the contractor shall, according to relevant provisions, immediately report to relevant authority and immediately notify the representative of the contract letting party and the supervisor. Meanwhile, it shall be handled according to the requirements of relevant governmental authority.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) If the contract parties have any dispute on the liabilities for any accident, the final result identified by relevant governmental authority upon investigation shall apply.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) If the construction project causes human body and property damage within reasonable use period and equipment assurance period for the sake of the contractor, the contractor shall assume damage compensation liability.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) In case of any food poisoning, endemic disease and occupational health event among the employees for the sake of contractor, the contractor shall be liable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 8 Completion test">Article 8 Completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The project as set forth herein includes completion test, the provisions hereof shall be observed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.1 Obligations of completion test">8.1 Obligations of completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.1.1 The contractor's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Before start of the project completion test, the contractor shall accomplish the construction operation of relevant project; and before start of the completion test, shall accomplish examination, inspection, test and experiment that shall be conducted according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Before start of the completion test, the contractor shall submit relevant quality inspection materials and its completion materials to the contract letting party according to the provisions of concealed project and midway inspection and acceptance parts as set forth in Article 7.6 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) According to the provisions on post-completion test as set forth in Article 10 hereof, the contractor shall guide the contract letting party to conduct post-completion test, the contractor shall accomplish the training for operators and maintenance persons according to the provisions as set forth in Article 5.4 and submit the operation and maintenance manual as set forth in Article 5.2.2 before post-completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Completion test scheme. Within 20 days before the completion test conditions are satisfied, the contractor shall submit the completion test scheme to the contract letting party. The contract letting party shall raise suggestions and opinions within 10 days, the contractor shall at its own expenses amend the completion test scheme according to the suggestions and comments raised by the contract letting party. After the completion test scheme is acknowledged by the contract letting party as appendix hereto, it shall be implemented by the contractor. The counterparts and time of submission of completion test scheme are stipulated in the special provisions. The scheme shall include:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) The basis and principles based upon which the completion test scheme is formulated;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) Establishment and responsibility division of the organizational framework;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3) Test procedures and test conditions of completion test for the project;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4) Test procedures and test conditions of single, individual and joint test for the project;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5) Types, performance standards, test, inspection &amp; acceptance format of the equipment, materials and components subject to completion test;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6) The quality and quantity requirements on the water, electricity and power conditions etc.;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7) Safe procedures, safe measures and protection facilities;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8) Progress plan, measures and schemes, human resource as well as machine and tool plan and arrangement of completion test;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9) Others</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) The completion test of the contractor shall include the completion test of the equipment, materials and components newly entrusted by the contract letting party to the contractor according to Claus (3) of Article 8.1.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) The contractor shall accomplish completion test according to the test conditions and test procedures as well as the standards, codes and data as set forth in Clause (3), Article 5.2.3 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.1.2 The contract letting party's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In the inspection &amp; acceptance process, if it is necessary for the contract letting party to organize inspection &amp; acceptance group, the contract letting party shall cooperate with the contractor in accomplishing the organization of inspection &amp; acceptance and acknowledgment on the inspection &amp; acceptance result.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.1.3 Completion test leading organ. The completion test leading organ shall be responsible for leading, organizing and coordinating the completion test. The contractor shall provide relevant conditions as set forth in the human resource, machine and tool as well as completion test schemes and be responsible for accomplishing the test. The contract letting party shall be responsible for organizing the inspection &amp; acceptance of completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.2 Examination and inspection &amp; acceptance of completion test">8.2 Examination and inspection &amp; acceptance of completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.1 The examination and inspection &amp; acceptance shall be conducted according to the standards, codes and data as set forth in Clause (3), Article 5.2.3 hereof and Sub-clause 5) of Clause 4 Completion test scheme of Article 8.1.1.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.2 Before start of the completion test, after the contractor examines and verifies the test conditions provided by the parties according to the provisions as set forth in Article 8.1.1 hereof, both parties shall sign on relevant tables. In case of delay in the completion test progress plan of any key route, the date of completion shall be postponed accordingly; if any reason attributable to the contractor causes the failure to verify the completion test conditions on time, any increase in the expenses shall be borne by the contractor, in case of delay in the completion test, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.3 Within 36 hours before start of certain completion test, the contractor shall send notice to the contract letting party and the supervisor, the notice shall include the test items, contents, place and inspection &amp; acceptance time. Within 24 hours upon receipt of notice, the contractor or (and) the supervisor shall notify the contractor of participating in writing, if the test result indicates conformity, both parties shall sign on the test records and inspection &amp; acceptance table.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party and the supervisor do not sign on the inspection &amp; acceptance records and inspection &amp; acceptance table within 24 hours after the inspection &amp; acceptance result indicates conformity, the contract letting party and the supervisor shall be deemed as having recognized the inspection &amp; acceptance records, the contractor can conceal or conduct subsequent operation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the inspection &amp; acceptance result indicates inconformity, within the time as ordered by the contract letting party and the supervisor, the contractor shall make amendment and notify the contract letting party and the supervisor of conducting inspection &amp; acceptance again.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.4 If the contract letting party and the supervisor fail to participate in the test and inspection &amp; acceptance on time, they shall apply to the contractor in writing for postponement within 24 hours upon receipt of notice, the time shall not be postponed for more than 24 hours. In case of failure to apply for postponed test within the above time and failure to participate in test and inspection &amp; acceptance, the contractor may on its own organize test according to the test items as notified, the test result shall be deemed as recognized by the contract letting party and passing inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.5 No matter whether the contract letting party and the supervisor participate in completion test and inspection &amp; acceptance or not, the contract letting party shall be entitled to order to conduct test again. If the retest result indicates inconformity, any increase in the expenses incurred against the contractor shall be borne by the contractor, in case of delay in the completion test progress, the date of completion shall not be postponed; if the retest result indicates conformity, any increase in the expenses incurred against the contractor and delay in the date of completion shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.2.6 Provisions on date of inspection &amp; acceptance of completion test</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Date and time of inspection &amp; acceptance of certain completion test. The date and time of passing such completion test shall be deemed as the date and time of inspection &amp; acceptance of such completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Date and time of completion test of the project. The date and time of passing completion test of the last project shall be deemed as the date and time of completion test of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.3 Completion test safety and examination">8.3 Completion test safety and examination</a></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.3.1 According to the provisions on health, safety and environment as set forth in Article 7.8 hereof, in combination with electricity access, water access, pressure test, leakage test and turning features etc. of completion test, the contractor shall formulate safe operation schemes including but not limited to safe procedures, safe system, fire protection measures, accident report system and accident disposal scheme for completion test with respect to electric shock hazard, inflammable and explosive as well as running of mechanic equipment, and shall submit such schemes to the contract letting party for acknowledgment and raise suggestions, comments and requirements to the contract letting party, the contractor shall at its own expenses make amendment and put into implementation upon acknowledgment by the contract letting party. The acknowledgment of the contract letting party shall not relieve the contractor of or exempt the contractor from the contract liabilities of the contractor. The expenses for the contractor to provide the completion test with safe protection measures and protection articles have been included in the contract price.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.3.2 The contractor shall provide its employees with training on the safety of completion test and disclose the safe operation procedures, field environment, operation system and emergency disposal measures etc. of completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.3.3 The contract letting party and the supervisor shall be obliged to, according to the safe procedures, safe system and safe measures etc. in the safe schemes of completion test acknowledged, provide its management persons, operators and maintenance persons with education on the safety of completion test and at its own expenses provide the supervisors and inspectors with protection facilities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.3.4 The contract letting party and the supervisor shall be entitled to supervise and examine the work and implementation status listed in the safe schemes of completion test, and shall be entitled to propose safe ratification and correction as well as deliver regulation orders. The contractor shall be obliged to make ratification, correction and regulation according to the order and bear any increase in the expenses. In case of delay in the completion test progress plan of the project caused thereby, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.3.5 Shall, according to the decision of the completion test leading organ as set forth in Article 8.1.3 hereof, organize, coordinate and implement completion test to prevent the occurrence of human body injury and accident.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to any accident caused by any reason attributable to the contract letting party, the contract letting party shall assume its relevant liabilities, expenses and compensation. In case of delay in the completion test progress plan of the project caused thereby, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to any accident caused by any reason attributable to the contractor, the contractor shall assume its relevant liabilities, expenses and compensation. In case of delay in the completion test progress plan of the project caused thereby, shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.4 Delayed completion test">8.4 Delayed completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.4.1 If any reason attributable to the contractor causes certain project to be behind the completion test progress plan, the contractor shall at its own expenses take measures to catch up with the completion test progress plan according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.4.2 In case of delay in the completion test caused by any reason attributable to the contractor, which leads to delay in the date of completion of the project as set forth in the contract, according to the provisions on delay and damage compensation as set forth in Article 4.5, the contractor shall be liable for delay and damage compensation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.4.3 Completion test organized by the contract letting party. Without any legitimate reason, if the contractor fails to conduct certain completion test according to the completion test progress plan decided by the completion test leading organ, and within 10 days upon receipt of notice sent by the test leading organ, the contractor still fails to conduct certain completion test without any legitimate reason, the contract letting party shall be entitled to on its own organize such completion test, the test risks and expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.4.4 If the contract letting party fails to perform its obligations as set forth in Article 8.1.2 hereof, which causes delay in the completion test, in case of any increase in the expenses, the contract letting party shall bear reasonable expenses, in case of delay in the completion test progress plan, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.5 Retest and inspection &amp; acceptance">8.5 Retest and inspection &amp; acceptance</a></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.5.1 If the contractor fails to pass relevant completion test, it shall conduct such test again according to the provisions as set forth in Clause (6), Article 8.1.1 hereof and conduct test and inspection &amp; acceptance according to the provisions as set forth in Article 8.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.5.2 No matter whether the contract letting party and the supervisor participate in completion test and inspection &amp; acceptance or not, if the contractor fails to pass completion test, the contract letting party shall be entitled to notify the contractor of conducting such completion test again according to the provisions as set forth in Clause (6), Article 8.1.1 hereof and conducting test and inspection &amp; acceptance according to the provisions as set forth in Article 8.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.6 Failure to pass completion test">8.6 Failure to pass completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In case of failure to pass the completion test due to any reason attributable to the contractor, it is permitted that such completion test should be conducted again, however, it shall only be conducted for at least twice, in case of inconformity with the inspection &amp; acceptance conditions upon twice test, the date of completion shall not be postponed, relevant expenses and relevant matters shall be handled according to the following provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) In case of failure to pass such completion test, which does not have any substantial influence on the operation or use, the contractor shall at its own expenses renovate. In case of failure to renovate, the contract letting party shall be entitled to deduct relevant accounts of such part, and it shall be deemed as passing such completion test;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) In case of failure to pass such completion test, which has any substantial influence on the operation or use of such project, the contract letting party shall be entitled to deduct relevant accounts of such part, and it shall be deemed as passing such completion test;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) In case of failure to pass such completion test, which has any substantial influence on the operation or use, the contract letting party shall be entitled to order the contractor to replace relevant parts and conduct completion test. Any increase in the expenses incurred against the contract letting party shall be borne by the contractor. In case of delay in the date of completion caused thereby, the contractor shall be liable for delay and damage compensation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) In case of failure to pass the completion test, which causes any main part of the project to lose the production and use functions, the contract letting party shall be entitled to order the contractor to replace any relevant part, the contractor shall be liable for any increase in the expenses and delay in the date of completion caused thereby. In case of any increase in the expenses incurred against the contract letting party, the contract letting party shall be titled to claim to the contractor according to the provisions on claim as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) In case of failure to pass the completion test, which causes the whole project to lose the production and use functions, the contract letting party shall be entitled to order the contractor to redesign and reset any relevant part, the contractor shall be liable for any increase in the expenses and delay in the date of completion caused thereby. The contract letting party shall be titled to claim to the contractor according to the provisions on claim as set forth in Article 16.2.1 hereof. Or shall be entitled to cancel the contract according to the provisions as set forth in Article 18.4 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="8.7 Dispute on completion test result">8.7 Dispute on completion test result</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.7.1 Negotiation for settlement. Any dispute on the completion test result shall be firstly settled through negotiation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.7.2 Entrustment of authentication institution. Upon negotiation, should there still be any dispute on the completion test result, a test institution with relevant qualification shall be jointly entrusted to conduct authentication. Upon authentication,</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) If the liable party is the contractor, the necessary authentication fees and any increase in the reasonable expenses therefore incurred against the contract letting party shall be borne by the contractor, the date of completion shall not be postponed;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) If the liable party is the contract letting party, the necessary authentication fees and any increase in the reasonable expenses therefore incurred against the contractor shall be borne by the contract letting party, the date of completion shall be postponed accordingly;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) If both parties are liable, they shall negotiate for respectively bearing the expenses according to their liabilities and postponing the date of completion based upon the delay in the completion test plan. In case of any dispute between the parties on the expense bearing and postponement of the date of completion, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 9 Project receipt">Article 9 Project receipt</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="9.1 Project receipt">9.1 Project receipt</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.1.1 Receipt based upon the project. According to the specific situation and features of the engineering project, the project receipt shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Receipt based upon the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the provisions on post-completion test as set forth in Article 10 hereof, the contractor shall be responsible for guiding the contract letting party to conduct post-completion test and assume the assessment responsibility for trial operation. The schedule for the project is stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party is responsible for post-completion test of the project and the assessment responsibility for trial operation, the arrangement for the date of project receipt shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) With respect to the project without completion test or post-completion test, the contractor shall accomplish the round-off project and defect renovation, and in case of compliance with the inspection &amp; acceptance standards as set forth in the contract, the project receipt and completion inspection &amp; acceptance shall be handled according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.1.2 The materials that shall be submitted by the contractor upon project receipt. In addition to the materials that have been submitted according to the provisions as set forth in Clause (1) to (3) of Article 8.1.1 hereof, the types, contents, counterparts and time of submission of the inspection &amp; acceptance materials for accomplishment of completion test that shall be submitted are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="9.2 Receipt certificate">9.2 Receipt certificate</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.2.1 Within 10 days after the project satisfies the receipt conditions, the contractor shall submit application for receipt certificate to the contract letting party, and within 10 days upon receipt of the application, the contract letting party shall organize receipt and issue project receipt certificate.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The date of project receipt shall be subject to the date as set forth in Clause 2, Article 8.2.6 as the date of receipt.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.2.2 Round-off project and defect renovation: the round-off project and defect renovation having not substantial influence on the operation and use of the project shall not be deemed as the reason for the contract letting party's refusal to receive the project. The reasonable time determined upon negotiation by the contract letting party and the contractor for the contractor to accomplish such round-off project and defect renovation shall be deemed as appendix to the receipt certificate.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="9.3 Project receipt responsibilities">9.3 Project receipt responsibilities</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.3.1 Security guard responsibility: the contract letting party shall assume security guard responsibility upon overall project receipt, and the employees of the contractor shall all evacuate or basically evacuate from the site.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.3.2 Attention responsibility: from the date of overall project receipt, the contract letting party shall assume its attention responsibility. And shall be responsible for the preservation, maintenance and repair of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.3.3 Project insurance coverage responsibility: according to the contract provisions, during the construction period, if the party that shall purchase insurance is the contractor, the contractor shall keep the insurance coverage period of the project until the date on which the contract letting party receives the project as set forth in Article 9.2.1. The party that shall purchase insurance shall be contract letting party thereafter.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="9.4 Failure to receive the project">9.4 Failure to receive the project</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.4.1 Refusal to receive the project: within 15 days upon receipt of the application for overall project receipt certificate submitted by the contractor, if the contract letting party does not organize receipt, it shall be deemed that the application for project receipt certificate has been recognized by the contract letting party. From the 16th day, the contract letting party shall assume relevant liabilities according to the provisions as set forth in Article 9.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.4.2 Failure to receive the project according to the contract provisions: if the contractor fails to submit application for project receipt certificate or fails to pass the project receipt conditions, the contract letting party shall be entitled to refuse the project.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party fails to comply the provisions of this article, uses or forces to receive the project, it shall, according to the provisions on project receipt as set forth in Article 9.3, assume relevant liabilities and shall be liable for any loss, breakdown, damage and compensation caused by the operation and use of the project upon use or forced receipt.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 10 Post-completion test">Article 10 Post-completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The project as set forth herein includes post-completion test, the provisions hereof shall be observed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.1 Rights and obligations">10.1 Rights and obligations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.1.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contract letting party shall be entitled to verify and approve the post-completion test scheme submitted by the contractor according to the provisions as set forth in Clause (2), Article 10.1.2, the contract letting party's approval will not relieve the contractor of or exempt the contractor from the contract liabilities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contract letting party shall be obliged to establish post-completion test united coordinating and leading organ and arrange work division, organize and accomplish preparation work, post-completion test and trial operation assessment according to the post-completion test scheme that has been approved. The establishment scheme and the work division &amp; duties of the united coordinating and leading organ shall be deemed as part hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contract letting party shall be entitled to give the contractor notice on refusal or acceptance of any suggestion raised by the contract letting party to the contractor according to Clause (4), Article 10.1.2 hereof. In case of failure to accept such suggestion, the contractor shall be obliged to implement according to any original organization, arrangement, directive and notice.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Any organization, arrangement, directive and notice delivered by the contract letting party to the contractor at the post-completion test stage shall be delivered to the project manager of the contractor in writing, and the project manager shall sign thereupon with date, time and signature.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Under emergency, the contract letting party shall be entitled to issue emergent directive to the contractor orally and in writing, and the contract shall immediately implement. If the contractor fails to implement any directive of the contract letting party, the contractor shall be liable for any accident liability, human body injury and project damage caused thereby. Within 12 hour after giving oral directive, the contract letting party shall send supplementary directive in writing to the project manager.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) Other obligations and work of the contract letting party at the post-completion test stage are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.1.2 The contractor's responsibilities and obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Under unitary arrangement of the post-completion test united coordinating and leading organ established by the contract letting party, the contractor shall designate any person with relevant qualification and experience to guide the post-completion test. During the post-completion test period, the power station initiation manger and its guiding persons designated by the contractor shall only leave the site upon approval by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor shall formulate post-completion test scheme according to the contract provisions and the post-completion test features of this project. And shall submit post-completion test scheme to the contract letting party before start of post-completion test. Such scheme shall include: the operation test procedures, resource conditions, test conditions, operation procedures, safe procedures, accident disposal procedures and progress plan etc. of the project and its relevant parts. The scheme shall only be implemented after being verified and approved by the contract letting party. The counterparts and time of submission of post-completion test scheme are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) If the contractor fails to implement any arrangement, directive and notice of the contract letting party, the contractor shall be liable for any accident, human body injury and project damage caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor shall be obliged to raise suggestions and make explanations on any organization, arrangement, directive and notice of the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Under emergency, the contractor shall immediately implement the operation, work and assignment ordered by the contract letting party orally. The contractor shall make records for such directive and make implementation records. With respect to such directive, the contract letting party shall deliver the oral directive in writing again to the contractor within 12 hours.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party fails to deliver supplementary notice on such oral directive in writing within 12 hours, the contractor and its project manager shall be entitled to, within 24 hours upon receipt of the oral directive, submit such oral directive in writing to the contract letting party, the contract letting party shall sign for confirmation on the receipt with the date and time of receiving. If the contract letting party fails to sign for confirmation on the receipt within 24 hours, it shall be deemed as confirmed by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract letting party shall be liable for any accident liability, human body injury, project damage and increase in the expenses due to implementation of such oral directive.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) Liability for any defect of the operation and maintenance manual. With respect to the operation and maintenance manual formulated by the contractor, the contractor shall be liable for any accident liability, human body injury and project damage caused by any defect of the manual; if any defect existing in the operation guidance provided by the contract letting party (including any licenser of its) causes any defect of the contractor's operation manual, the contract letting party shall be liable for any accident liability, human body injury, project damage and increase in the expenses incurred against the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(7) Other obligations and work of the contractor at the post-completion test stage according to the contract provisions and industrial regulations are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.2 Post-completion test procedures">10.2 Post-completion test procedures</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.1 The contract letting party shall organize and arrange its management persons, operators, maintenance persons and all other preparation work according to the post-completion test scheme approved by the united coordinating and leading organ.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.2 The contractor shall, according to the post-completion test scheme that has been approved, provide all electric power, water, power, raw materials, auxiliary materials, consumable materials and other test conditions as well as provide other equipment, facilities, tools and appliances necessary for post-completion test that shall be provided by the contractor as set forth in the scheme and accomplish other preparation work that shall be finished by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.3 The contractor shall organize post-completion test according to the post-completion test scheme that has been approved as well as the post-completion test procedures and test conditions for any part of the project, among different projects and the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.4 The united coordinating and leading organ shall organize, fully examine and carry out the resource conditions, test conditions, safe facilities and conditions, fire protection facilities and conditions, emergency and accident disposal facilities, conditions and relevant measures necessary for post-completion test of the project and any part thereof, in order to guarantee about the completeness of recording instruments and special recording tables and the sufficiency of quantity thereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.5 Notice on date of post-completion test. The contract letting party shall, within 15 days upon the date of project receipt, notify the contractor of the date of post-completion test start. Unless otherwise set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.3 Post-completion test and trial operation assessment">10.3 Post-completion test and trial operation assessment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.1 Test shall be conducted according to the test procedures, test conditions and operation procedures of the post-completion test scheme that has been approved in order to achieve the production function and use function of the project as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.2 The contract letting party's operators and the contractor's instructors shall truthfully fill out data, conditions, status, time, name and other contents as stipulated in the test condition records, test records and tables of the same post in the process of post-completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.3 Trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) According to the provisions as set forth in Article 5.1.1 hereof, if the contractor provides production process and technologies or construction design, it shall guarantee to achieve the assessment guaranteed value or use function as set forth in the special provisions of Article 5.1.1 within the trial operation assessment period.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) According to the provisions as set forth in Article 5.1.2 hereof, if the contract letting party provides production process and technologies or construction design, the contractor shall guarantee to achieve the assessment guaranteed value or use function as set forth in the special provisions of Article 5.1.2 within the trial operation assessment period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) According to the regulations of relevant industries on the trial operation assessment period, the trial operation assessment period shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) After passing the trial operation assessment or use function, both parties shall jointly clear up the post-completion test and its trial operation test result and compile appraisal report. The report shall be made in duplicate with either party holding each respectively after being signed or sealed by both contract parties and shall be deemed as part hereof. The contract letting party shall issue assessment inspection &amp; acceptance certificate according to the provisions as set forth in Article 10.7 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.4 Ownership of product and service income. Any product income or service income during the period of post-completion test of the project and trial operation assessment shall belong to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.5 One of the trial operation assessment indexes is that, after the power station experiences trial operation of a period of time, only when the generating capacity of the power station reaches the agreement value, the trial operation may be subject to closure in a real sense.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.4 Delay in post-completion test">10.4 Delay in post-completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.4.1 In case of delay in the post-completion test caused by any reason attributable to the contractor, relevant measures shall be take to organize post-completion test as soon as possible. If the delay causes any increase in the expenses against the contract letting party, the contract letting party shall be entitled to claim from the contractor according to the provisions as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.4.2 According to the provisions on trial operation assessment as set forth in Article 10.3.3 hereof, during the trial operation assessment period, in case of assessment suspension or shutoff, and the accumulative days of suspension or shutoff exceeds the trial operation assessment period as set forth in the special provisions of Clause (3), Article 10.3.3, trial operation assessment shall be conducted again within 20 days upon suspension or shutoff, beyond such period, the project shall be deemed as having passed the trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.5 Conducting post-completion test again">10.5 Conducting post-completion test again</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.5.1 According to the provisions as set forth in Article 5.1.1 or Article 5.1.2 and their special provisions, if any reason attributable to the contractor causes the project or any part thereof to fail to pass the post-completion test, the contractor shall at its own expenses renovate its defect and conduct such test again according to the test procedures and test conditions as set forth in Article 10.2.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.5.2 According to the provisions on conducting test again as set forth in Article 10.5.1 hereof, if the contractor still fails to pass such test, the contractor shall at its own expenses continue to renovate the defect and conduct such test again according to the test procedures and test conditions as set forth in Article 10.2.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.5.3 If the post-completion test conducted again by the contractor causes any increase in the expenses against the contract letting party, the contract letting party shall be entitled to claim to the contractor according to the provisions as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.6 Failure to pass assessment">10.6 Failure to pass assessment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If any reason attributable to the contractor causes the failure of the project to pass the assessment, however, it still has production function and use function, it shall be handled according to the following provisions:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Compensation for failure to pass the trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) The production process and technologies or construction design provided by the contractor fail to pass trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the project trial operation guaranteed value or instructions on use function guarantee as set forth in the special provisions of Article 5.1.1 hereof, and in accordance with the amount of compensation or the amount calculated based upon the compensation computation formula for failure to pass trial operation assessment as set forth in the special provisions of this article, after relevant amount of compensation is paid to the contract letting party, the contractor shall be deemed as having passed the trial operation assessment.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) The production process and technologies or construction design provided by the contract letting party fail to pass trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to relevant liabilities that shall be assumed by the contractor in the project trial operation assessment as set forth in the special provisions of Article 5.1.2 hereof, and in accordance with the amount of compensation as set forth in the special provisions of this article for relevant liabilities or the amount calculated based upon the compensation computation formula, after relevant amount of compensation is paid to the contract letting party, the contractor shall be deemed as having passed the trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) With respect to the project failing to pass trial operation assessment, the contractor shall at its own expenses investigate, adjust and amend until the project is accepted by the contract letting party, both parties shall discuss about relevant investigation, amendment and test periods, and the contract letting party shall therefore provide convenience. Before passing such assessment, the contract letting party may provisionally not claim for compensation according to the provisions as set forth in Clause (1), Article 10.6 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) When the contract letting party accepts the provisions as set forth in Clause (2) of this article, however, within the period as agreed upon, if the contract letting party fails to provide the contractor with convenience, which causes the failure of the contractor to conduct investigation, adjustment and amendment within the period as agreed upon, it shall be deemed as having passed such trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.7 Post-completion test and assessment inspection &amp; acceptance certificate">10.7 Post-completion test and assessment inspection &amp; acceptance certificate</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.7.1 It is stipulated in the special provisions that post-completion test and assessment inspection &amp; acceptance certificate shall be issued based upon the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.7.2 According to the provisions as set forth in Article 10.3, Article 10.4, Article 10.5.1, Article 10.5.2 and Article 10.6 hereof, if the contract letting party passes or is deemed to pass post-completion test and trial operation assessment, it shall issues post-completion test and assessment inspection &amp; acceptance certificate according to Article 10.7.1. The date and time of passing trial operation assessment as specified in such certificate shall be the date and time of actually accomplishing assessment or being deemed to pass trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="10.8 Loss of production value and use value">10.8 Loss of production value and use value</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If any reason attributable to the contractor causes the project or single project to fail to pass the post-completion test and causes the whole project to lose production value or use value, the contract letting party shall be entitled to claim for failure of performance and deduct the performance bond that has been submitted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 11 Quality assurance responsibility">Article 11 Quality assurance responsibility</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="11.1 Quality assurance responsibility agreement">11.1 Quality assurance responsibility agreement</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.1.1 Quality assurance responsibility agreement. To enter into quality assurance responsibility agreement according to relevant laws and regulations is one of the conditions for completion inspection &amp; acceptance. According to the assurance contents, scope, period and responsibilities as set forth in laws and regulations, the quality assurance responsibility agreement shall be entered into as Appendix III hereto. The date on which the contract letting party receives all projects hereof is the date on which the contractor's assurance responsibility starts.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.1.2 If the contractor fails to submit quality assurance responsibility agreement and refuses to enter into quality assurance responsibility agreement with the contract letting party without any legitimate reason, the contract letting party may refuse to handle completion settlement with the contractor and refuse to assume the relevant interest of completion settlement accounts not paid, even if the interest for delayed payment is stipulated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor submits quality assurance responsibility agreement, proposes to enter into such quality assurance responsibility agreement with the contract letting party and agrees upon the interest for delayed payment in the contract, however, if any reason attributable to the contract letting party causes the failure to timely enter into quality assurance responsibility agreement, the contract letting party shall bear the interest for delayed payment of completion settlement from the 11th day of receiving such responsibility agreement.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="11.2 Quality assurance deposit">11.2 Quality assurance deposit</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.2.1 Quality assurance amount. The quality assurance amount is stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.2.2 Provisional deduction of quality assurance amount. The provisional deduction method of quality assurance amount is stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.2.3 Payment of quality assurance amount. The contractor shall pay the quality assurance amount subject to provisional deduction according to the provisions on payment of quality assurance amount as set forth in Article 14.5.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 12 Project completion inspection &amp; acceptance">Article 12 Project completion inspection &amp; acceptance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="12.1 Completion inspection &amp; acceptance report and complete completion materials">12.1 Completion inspection &amp; acceptance report and complete completion materials</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.1.1 The project conforms to relevant provisions on project receipt as set forth in Article 9.1, or the post-completion test and assessment inspection &amp; acceptance certification has been issued according to the provisions as set forth in Article 10.8, the round-off project and defect renovation as set forth in Article 9.2.2 have been accomplished, upon inspection &amp; acceptance conducted by the contract letting party or the supervisor, the contractor shall submit complete project completion materials according to examination and inspection &amp; acceptance of completion test as set forth in Clause (1), (2) and (3), Article 8.1.1 and Article 8.2 and based upon the materials including but not limited to the post-completion test and its trial operation assessment result as set forth in Clause (4), Article 10.3.3. The formats, contents and counterparts of the completion inspection &amp; acceptance report and complete completion materials are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.1.2 The contract letting party shall raise modification opinions or acknowledgment within 25 working days upon receipt of completion inspection &amp; acceptance report and complete completion materials, and the contractor shall at its own expenses be responsible for modification. In case of failure to raise modification opinions within 25 working days, it shall be deemed that the completion materials and completion inspection &amp; acceptance report have been acknowledged.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.1.3 The project subject to stage construction, stage production or stage use shall be handled according to the provisions as set forth in Article 12.1.1 and Article 12.1.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="12.2 Completion inspection &amp; acceptance">12.2 Completion inspection &amp; acceptance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.2.1 Organizing completion inspection &amp; acceptance. According to the provisions as set forth in Article 12.1.2 hereof, upon acknowledgment on completion inspection &amp; acceptance report and complete completion materials, the contract letting party shall preside over completion inspection &amp; acceptance, the specific completion inspection &amp; acceptance preparation work shall be carried out by the contractor within 20 days and the expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.2.2 Within 15 days upon inspection &amp; acceptance, the contract letting party shall raise further modification opinions on the completion inspection &amp; acceptance report or completion materials of the contractor and the contractor shall at its own expenses be responsible for modification.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.2.3 The completion inspection &amp; acceptance of the contract project subject to stage construction, stage production or stage use shall be handled according to the provisions as set forth in Article 12.1.3 and Article 12.1.1 hereof, and the completion inspection &amp; acceptance shall be organized by stages.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 13 Alteration and contract price adjustment">Article 13 Alteration and contract price adjustment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.1 Alteration rights">13.1 Alteration rights</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1.1 Alteration rights. The contract letting party shall have the rights to approve alteration. Within any time from effectiveness of the contract to the project completion inspection &amp; acceptance, the contract letting party shall be entitled to deliver alteration directive. The alteration directive shall be delivered in writing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1.2 Alteration. Both written alteration directive and oral alteration directive approved and sent by the contract letting party shall be deemed as alteration. Including: any alteration directive directly delivered by the contract letting party or any alteration directive approved by the contract letting party or delivered by the supervisor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If any reason attributable to the contractor causes any defect existing in design, purchase, construction, completion test, and post-completion test, the contractor shall at its own expenses make amendment, adjustment and perfection which shall not be deemed as alteration.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1.3 Alteration proposing rights. The contractor shall be entitled to submit written suggestions on alteration at any time, including: shortening work period, lowering the project, construction, maintenance and operation expenses of the contract letting party, improving the efficiency or value of completed project, bringing long-term interest and other interest to the contract letting party. Upon receipt of such suggestions, the contract letting party shall send: written notice on refusing to adopt, adopting and supplementing further materials.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.2 Alteration scope">13.2 Alteration scope</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.1 Design alteration scope</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Adjusting production process and procedures, but not enlarging or shrinking the production routes and scale approved by preliminary design or not enlarging or shrinking the production routes and scale as set forth herein;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Adjusting the planar layout, vertical layout and partial use function, but not enlarging the construction scale approved by preliminary design, not changing the use function approved by preliminary design; or not enlarging the construction scale as set forth herein, not changing the use function as set forth herein;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Adjusting the process and use function of the supporting project system;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Adjusting the benchmark control point, benchmark elevation and benchmark line in the region;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Adjusting the performance, specification and quantity of equipment, materials and components;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) No content;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(7) Other design matters beyond the contract provisions;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(8) Additional work necessary for the above alteration.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.2 Purchase alteration scope</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor has, according to the name list approved by the contract letting party, entered into purchase contract with any relevant supplier or has started processing &amp; manufacture, commodity supply and transportation etc., the contract letting party notifies the contractor of selecting another supplier in such name list;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contract letting party requires to change examination, inspection, test and experiment address or added additional experiment;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contract letting party requires to increase or decrease the purchase quantity of the spare parts, special tools and post-completion experiment materials.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.3 Construction alteration scope</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The design alteration as set forth in Article 13.2.1 hereof causes change in construction method and increase or decrease in the equipment, materials, parts and project quantity;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The additional experiment added according to the requirement of the contract letting party and change in the experiment address;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Beyond Clause (1) and Clause (2), Article 5.2.1 hereof, newly added construction obstacle;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) With respect to the project certified to be qualified upon completion test inspection &amp; acceptance or municipal inspection &amp; acceptance, the contract letting party shall notify of conducting completion test again;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Additional work necessary for the above alteration.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.4 The contract letting party's hurry work directive. Upon acceptance of the contract letting party's written instructions, when the contractor accelerates design, construction or the progress of any other part with any method deemed as necessary by the contract letting party, if the contractor needs to adjust the project progress plan for implementing the hurry work directive and make estimate for the added measures and resources, upon approval by the contract letting party, such adjustment shall be deemed as alteration. If the contract letting party fails to approve such alteration, the contractor shall be entitled to implement according to the progress plan of any relevant stage as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If any reason attributable to the contractor causes the actual progress to be obviously behind the project progress plan approved above, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2; in case of delay in the date of completion, the contractor shall assume compensation for delay according to the provisions as set forth in Article 4.5.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.5 Decrease adjustment to part of the project. According to the provisions on the contractor's requirement on return to work as set forth in Article 4.6.4 hereof, if the suspension of the contract letting party lasts for more than 45 days, the contract letting party still fails to return to work when the contractor requires return to work or fails to continue the construction due to the lasting of force majeure, as required by either party, decrease adjustment may be made to the part of the project affected by suspension with the method of alteration.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.2.6 Other alteration. Other alteration is stipulated in the special provisions according to specific features of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.3 Alteration procedures">13.3 Alteration procedures</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.3.1 Alteration notice. In order to avoid adverse influence of alteration on the project functions or use function etc., notice on the contract letting party's alteration in writing shall be sent to the contractor in advance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.3.2 Proposal and report of alteration notice. The contractor shall be obliged to submit written proposal and report to the contract letting party within 10 days upon receipt of the contract letting party's alteration notice, including:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Upon acceptance of such alteration in the contract letting party's alteration notice, the proposal and report shall include: the reason for supporting such alteration, the estimate on the resources and consumables including but not limited to the work contents, equipment, materials, human resource, machines and tools for implementing such alteration. In case of delay in the date of completion caused by such alteration, the reasons shall be specified in the report and the progress plan shall be submitted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor fails to submit the estimate on any increase in the expenses and in case of delay in the date of completion, it shall be deemed that such alteration does not involve adjustment to the contract price and delay in the date of completion, the contract letting party shall not assume any expense of such alteration or be liable for delay in the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) In case of refusal to accept such alteration in the contract letting party's alteration notice, the proposal and report shall include the reasons for not supporting such alteration, the reasons include:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) Such alteration does not conform to laws and regulations etc.;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) Or it is difficult for the contractor to obtain special equipment, materials and components necessary for alteration;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3) Or the alteration will reduce the project safety, stability and applicability;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4) Or the alteration will generate adverse influence on the realization of productive performance guaranteed value and use function guarantee.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.3.3 The contract letting party's verification and approval. Within 10 days upon receipt of written proposal and report submitted by the contractor according to the provisions as set forth in Article 13.3.2 hereof, the contract letting party shall verify such proposal and deliver written notice on approval, revocation, alteration and raising further requirements. With the time of waiting for the contract letting party's response, the contractor shall not stop or delay any work.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Upon receipt of the proposal and report submitted by the contractor according to the provisions as set forth in Clause (1), Article 13.3.2 hereof, the contract letting party shall deliver alteration directive in writing after verifying and approving the reasons, estimate and delay in the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party fails to make acknowledgment on the estimate or (and) delay in the date of completion proposed by the contractor on such alteration in the delivered alteration directive, from the 11th day after the contract letting party receives written approval and report, it shall be deemed that the alteration estimate and delay in the date of completion submitted by the contractor have been approved by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) After the reasons submitted according to the provisions as set forth in Clause (2), Article 13.3.2 hereof for contractor's refusal to accept such alteration are verified by the contract letting party, the contractor shall implement the written notice delivered on revocation, alteration and submitting further supplementary materials.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.3.4 If the contractor submits the alteration proposal according to the provisions as set forth in Article 13.1.3 hereof, the alteration procedures shall be subject to such provisions on alteration procedures.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.4 Emergent alteration procedures">13.4 Emergent alteration procedures</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.4.1 The contract letting party shall be entitled to deliver emergent alteration directive in writing or orally and order the contractor to immediately implement such alteration. The contractor shall immediately implement upon receipt of such directive.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.4.2 The contractor shall, within 10 days after the implementation of emergent alteration directive is finished, submit to the contract letting party the work contents of implementing such alteration as well as the expenses actually consumed by the resources including but not limited to equipment, materials, human resources, machine and tools and relevant obtaining expenses. In case of delay in any key route of the project caused by implementation of such alteration, it shall be proposed to postpone the date of completion, specify the reasons and submit the progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contractor fails to submit the expenses actually consumed and relevant obtaining expense or (and) written materials for postponing the date of completion within 10 days after such alteration is finished, it shall be deemed that such alteration does not involve adjustment to the contract price and delay in the date of completion, the contract letting party will not be liable for such alteration any more.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.4.3 Within 25 days upon receipt of the written materials submitted by the contractor according to the provisions as set forth in Article 13.4.2 hereof, the contract letting party shall notify the contractor of approved reasonable expenses in writing or reasonably postpone the date of completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Within 25 days upon receipt of such written report of the contractor, if the contract letting party fails to approve the expenses of the contractor or postpone the date of completion, from the 26th day of receiving such report, it shall be deemed that the expenses submitted and the delay in the date of completion have been approved by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.5 Determination upon alteration price">13.5 Determination upon alteration price</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to the determination upon each alteration price, the alteration price shall be determined based upon the unit price (including obtaining expenses) of the human resources, machines and tools as well as project quantity etc.; or the alteration price shall be determined based upon the price of similar altered project; or the alteration price shall be determined based upon the price as negotiated; or the alteration price shall be determined with any other method. As set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.6 Interest sharing of suggested alteration">13.6 Interest sharing of suggested alteration</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the contract letting party approves and adopts any alteration suggestion raised by the contractor according to the provisions as set forth in Article 13.1.3 hereof, which causes decrease in project investment, shortening of work period and achievement of long-term operating efficiency or other interest, the interest sharing methods shall be stipulated in the special provisions, then supplementary agreement on interest sharing shall be otherwise entered into as contract appendix.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.7 Adjustment to the contract price">13.7 Adjustment to the contract price</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Within 30 days under any of the following circumstances, the contractor shall notify the contract letting party or the supervisor in writing of the reasons for adjustment to the contract price and adjustment amount. The reasonable amount acknowledged by the contract letting party shall be adjustment amount of the contract price and the amount that shall be paid or deducted in the payment of the project accounts of that period. The adjustment to the contract price shall include the following situations:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Upon contract conclusion, due to any change in laws, administrative regulations and national policies and the industrial regulations that shall be observed, the contract price is affected;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The increase or decrease in the alteration expenses approved by the contract letting party according to the alteration procedures as set forth in Article 13.3 to Article 13.5 hereof;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Adjustment to any increase or decrease in other accounts as set forth herein. With respect to any increase or decrease in the accounts not set forth herein, the contract letting party will not be responsible for adjusting the contract price. Unless otherwise set forth in applicable laws;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Adjustment to the contract price shall not include the contract alteration.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="13.8 Dispute in adjustment to the contract price">13.8 Dispute in adjustment to the contract price</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Upon negotiation, in case of any dispute arising out of the failure to reach consensus on the expenses of project alteration, adjustment to the contract price or delay in the date of completion, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 14 Total contract price and payment">Article 14 Total contract price and payment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.1 Total contract price and payment">14.1 Total contract price and payment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.1.1 Total contract price. This contract is total-price contract, unless in accordance with the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof as well as the provisions on increase or decrease in other related amounts as set forth in the contract, the contract price shall not be adjusted.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.1.2 Payment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The currency type of the contract price shall be RMB, and the contract price shall be paid to the contractor within the territory of China.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contract letting party shall pay the contract price to the contractor based upon the type of payables and payment schedule as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.2 Guarantee (not applicable to this contract)">14.2 Guarantee (not applicable to this contract)</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.2.1 Performance bond. If the contractor shall submits performance bond to the contract letting party as set forth in the contract, the format, amount and time of submission of the performance bond shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.3 Prepayment">14.3 Prepayment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.1 Prepayment amount. The contract letting party agrees that certain proportion of the contract price shall be deemed as prepayment amount of which the specific amount shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.2 Payment of prepayment. Within 5 working days upon effectiveness of the contract and construction start of exterior lines, conclusion of main equipment contract and accomplishment of road fences (acknowledged by the contract letting party), the contract letting party shall pay the contractor the prepayment amount as set forth in the provisions of Article 14.3.1 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.3 Deduction of prepayment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Deduction of prepayment. The deduction method of prepayment, deduction proportion and deduction time schedule shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) After the contract letting party issues project receipt certificate or the contract is cancelled, if the prepayment has not been fully deducted,</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) The contract letting party shall be entitled to deduct from the accounts payable to the contractor or the accounts belonging to the contractor once or more times;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) If the accounts deducted by the contract letting party from the accounts payable to the contractor or the accounts belonging to the contractor are insufficient for deduction, in the event that the contract does not stipulate that the contractor shall submit performance bond for prepayment but stipulates performance bond, the contract letting party shall be entitled to deduct the part of prepayment that has not been deducted from the performance bond;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3) If the accounts deducted by the contract letting party from the accounts payable to the contractor or the accounts belonging to the contractor are insufficient for deduction, in the event that the contract stipulates performance bond, the prepayment amount that has not been deducted by the contract letting party shall be paid by the contractor to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.4 Project progress accounts">14.4 Project progress accounts</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.4.1 Project progress accounts. The project progress accounts shall include but be not limited to design progress accounts, purchase progress accounts, construction progress accounts, completion test progress accounts and post-completion test service fees, and project contracting management fees, the payment method, payment condition and payment time shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.4.2 According to specific situation of the project, other progress accounts payable shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.5 Provisional deduction and payment of quality assurance amount.">14.5 Provisional deduction and payment of quality assurance amount.</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.1 Provisional deduction of quality assurance amount. Shall be provisionally deducted according to the provisions on quality assurance amount as set forth in Article 11.2.1 hereof and those on provisional deduction of quality assurance amount as set forth in Article 11.2.2 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.2 Payment of quality assurance amount.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) While handling project completion inspection &amp; acceptance and completion settlement, half of the quality assurance amount subject to provisional deduction as set forth in Article 14.5.1 (unless otherwise set forth in special provisions). Hereinafter, if the contractor fails to renovate any newly detected defect or entrust the contracting party to renovate such defect according to the notice of the contract letting party, such expenses incurred against the contract letting party shall be deducted from the remaining quality assurance amount. Within 15 days upon one year from the date of receipt of the certificate issued, the contract letting party shall pay the balance of the quality assurance amount subject to provisional deduction to the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) While handling project completion inspection &amp; acceptance and completion settlement, if the contractor requires to provide performance bond for the remaining half of quality assurance amount and the contract letting party agrees to accept, upon receipt of such performance bond, the contract letting party shall pay the remaining half of such assurance amount. Hereinafter, if the contractor fails to at its own expenses renovate any newly detected defect or entrust the contract letting party to renovate such defect, the expenses incurred against the contract letting party shall be deducted from such performance bond. Within 15 working days upon one year from the date of receipt of the certificate issued, the performance bond shall be returned. The format, amount and time of submission of the performance bond for the quality assurance amount shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.6 Applying for payment according to the payment schedule">14.6 Applying for payment according to the payment schedule</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.6.1 Applying for payment according to the payment schedule. With respect to application for payment according to the payment schedule, based upon the contract price as set forth in the contract as well as the payment installments as set forth in the special provisions, the main image progress anticipated to be achieved in each installment or the main planned project quantity (including but not limited to design, purchase, construction, completion test and post-completion test) and the payment amount of each installment as well as in accordance with the format, contents, counterparts and time of submission as set forth in the special provisions, the contractor shall submit the application report for payment of current installment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The amount as set forth in the application report for the payment of each installment shall include:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The amount of current installment subject to planned application as set forth in the special provisions of this clause;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Any increase or decrease according to the provisions on adjustment to the contract price as set forth in Article 13.7;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The accounts paid or deducted according to the provisions on prepayment as set forth in Article 14.3 hereof;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The accounts subject to provisional deduction or payment according to the provisions on quality assurance amount as set forth in Article 14.5 hereof;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Any increase or decrease in the accounts according to the claim result as set forth in Article 16.2 hereof;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) Any increase or decrease in the accounts according to supplementary agreement to this contract otherwise entered into.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.6.2 When the contract letting party effects payment according to the payment schedule, if the contractor's actual work and actual progress is obviously behind what is stipulated in the payment schedule, the contract letting party shall be entitled to negotiate with the contractor for decreasing the payment amount of current installment and shall be entitled to jointly adjust the payment schedule with the contractor. The contractor's application for payment of all subsequent installments and the contract letting party's payment shall be based upon the adjusted payment schedule.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.6.3 If it is stipulated that application for payment shall be made according to the payment schedule as set forth in Article 14.6 hereof, the application according to the monthly project progress payment as set forth in Article 14.6 hereof shall not apply.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.7 Payment condition and schedule">14.7 Payment condition and schedule</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.7.1 Payment condition. If it is stipulated that the contractor shall submit performance bond, the submission of performance bond shall be the condition for the contract letting party to pay all accounts; in case of no performance bond stipulated, the contract letting party shall pay all accounts as agreed upon. 14.7.2 Payment of prepayment shall be subject to the provisions on payment of prepayment as set forth in Article 14.3.2 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.7.3 Project progress accounts</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Application and payment according to the monthly project progress. If it is stipulated to apply for payment and effect payment according to the monthly project progress as set forth in Article 14.5.1 hereof, the contract letting party shall, within 25 days after receiving the monthly payment application report submitted according to Article 14.5.1 hereof, conduct verification and effect payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Applying for payment according to the payment schedule. In case of applying for payment and effecting payment according to the payment schedule as set forth in Article 14.6.1 hereof, the contract letting party shall, within 25 days after receiving the application report for the payment of each installment submitted according to Article 14.6.1 hereof, conduct verification and effect payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.8 Delay in payment time">14.8 Delay in payment time</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.8.1 If any reason attributable to the contract letting party causes the failure to pay the contractor all accounts hereunder, from the 15th day thereafter, the interest for overdue payment shall be paid to the contractor as per the interest rate of similar loans during the same period published by the People's Bank of China as liquidated damages for overdue payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.8.2 If the contract letting party has been behind in payment for over 15 days, the contractor shall be entitled to send notice on payment requirement to the contract letting party, if the contract letting party still does not effect payment upon receipt of notice, the contractor may suspend part of the work, it shall be deemed as suspension caused by the contract letting party and subject to the provisions on suspension caused by any reason attributable to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">In case of negotiation for entering into overdue payment agreement, the contract letting party shall effect payment according to the installments, time, amount and interest as set forth in the overdue payment agreement; if both parties fail to reach overdue payment agreement, which causes the failure to implement the project, the contractor may stop part or whole of the project, the contract letting party shall assume breach liabilities, in case of delay in any key route of the project, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.8.3 If the contract letting party has been behind in payment for over 60 days, which affects the implementation of the whole project, the contract letting party shall pay the contractor interest for overdue payment as per twice of the interest rate of similar loans during the same period published by the People's Bank of China as liquidated damages for overdue payment, the interest for overdue payment shall be calculated from the date of overdue payment to the date of actual payment and deemed as liquidated damages for overdue payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.9 Tax and tariff">14.9 Tax and tariff</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.9.1 The contract letting party and the contractor shall respectively perform their tax (including import tariff) payment obligations according to national regulations on tax payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.9.2 If either party enjoys tax reduction and exemption on the import value added tax and tariff for the imported project equipment, materials, equipment parts etc. as set forth herein), the other party shall be obliged to handle the formalities for tax reduction and exemption as well as assist and cooperate.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.10 Payment of claim accounts">14.10 Payment of claim accounts</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.10.1 With respect to the claim accounts deserved by the contract letting party determined by negotiation, adjudicated by arbitration or judged by the court, the contract letting party may deduct such claim accounts from the payment paid to the contractor according to the monthly project progress accounts or payment schedule of current installment. If the project progress accounts of all installments paid to the contractor are insufficient for deduction of the contract letting party's claim accounts, and the contract stipulates that the contractor shall submit performance bond, then the insufficiency of the claim accounts may be deducted from the performance bond. If the performance bond is insufficient for deduction, or in case of no performance bond stipulated, the contractor shall otherwise pay such claim accounts.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.10.2 With respect to the claim accounts deserved by the contractor determined by negotiation, adjudicated by arbitration or judged by the court, the contractor may separately list such claim accounts in the monthly project progress accounts or payment schedule of current installment, and the contract letting party shall pay such claim accounts in the payment of current installment. If the contract letting party fails to pay such claim accounts, and it is stipulated in the contract that the contract letting party shall submit performance of bond for payment, the contractor shall be entitled to deduct from the performance of bond for payment submitted by the contract letting party. If both parties do not agree upon the performance of bond for payment, the contract letting party shall otherwise pay such claim accounts.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="14.11 Completion settlement">14.11 Completion settlement</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.1 Submitting completion settlement materials. According to the provisions as set forth in Article 12.1 hereof, within 12 days after the completion inspection &amp; acceptance report and complete completion materials submitted by the contractor are recognized by the contract letting party, the contractor shall deliver the completion inspection &amp; acceptance report and complete completion materials to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.2 Final completion settlement materials. Within 15 days upon receipt of the completion inspection &amp; acceptance report and complete completion materials submitted by the contractor, the contract letting party shall make verification and raise modification opinions, upon consensus through negotiation, the contractor shall at its own expenses make amendment and submit the final completion inspection &amp; acceptance report and final completion materials. The contractor shall be liable for delay in the completion settlement and delay in subsequent payment caused by incompleteness of the settlement materials provided by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.3 Paying up completion settlement accounts. Within 15 days after the contractor submits final completion settlement materials according to the provisions as set forth in Article 14.11.2 hereof, the contract letting party shall pay up the completion settlement accounts. Upon settlement, the contract letting party will return the performance bond submitted by the contractor according to the provisions as set forth in Article 14.2.1 hereof to the contractor; the contractor shall return the performance of bond submitted by the contract letting party according to the provisions as set forth in Article 14.2.2 hereof to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.4 Failure to make response to the completion settlement report. Within 15 days upon receipt of completion settlement report and complete completion settlement materials submitted according to the provisions as set forth in Article 14.11.1 hereof, if the contract letting party fails to raise modification opinions and fails to make response, it shall be deemed that the contract letting party has recognized such completion settlement materials as final completion settlement materials. The contract letting party shall pay up the completion settlement accounts according to the provisions as set forth in Article 14.11.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.5 The contract letting party's failure to pay the completion settlement accounts</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) If the contract letting party fails to pay up the remaining completion settlement accounts payable to the contractor according to the provisions as set forth in Article 14.11.3 hereof, the contractor shall be entitled to deduct such remaining accounts from the performance of bond for payment submitted by the contract letting party according to the provisions as set forth in Article 14.2.2 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If it is not stipulated in the contract that the contract letting party shall submit the performance of bond for payment according to the provisions as set forth in Article 14.2.2 hereof, from the 31st day after the contractor submits final settlement materials, the contract letting party shall pay the remaining completion settlement accounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) According to the provisions as set forth in Article 14.11.4 hereof, if the contract letting party fails to raise modification opinions and response on the completion settlement materials within 30 days as stipulated, and fails to pay the contractor the remaining completion settlement accounts, from the 31st day of submitting such report by the contractor, the contract letting party shall pay the remaining completion settlement accounts owing to the contractor and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Within 15 days after the contractor submits final completion settlement materials, if the contract letting party still fails to effect payment, the contract may seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.6 Failure to submit completion settlement report and complete settlement materials on time. Within 15 days after the project completion inspection &amp; acceptance report is recognized by the contract letting party, the contractor fails to submit completion settlement report and complete settlement materials to the contract letting party, which causes the failure to conduct project completion settlement normally or failure to conduct project completion settlement on time, if the contract letting party requires the contractor to pay for the project, the contractor shall effect payment; if the contract letting party does not require payment for the project, the contractor shall assume custody, preservation and maintenance expenses and be responsible for custody, preservation and maintenance, excluding any part of the project that has been used and received by the contract letting party according to the provisions on project receipt as set forth in Article 9 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.7 The contractor's failure to pay the completion settlement accounts</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) If the contractor fails to pay up the remaining completion settlement accounts payable to the contract letting party according to the provisions as set forth in Article 14.11.3 hereof, the contract letting party shall be entitled to deduct such remaining accounts from the performance of bond submitted by the contractor according to the provisions as set forth in Article 14.2.1 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the amount of the performance bond is insufficient for deduction, from the 31st day from the submission of final completion settlement materials, the contractor shall pay the remaining completion settlement accounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China. If the contractor still fails to effect payment within 60 days upon submission of the final completion settlement materials, the contract letting party shall be entitled to seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) In case of no performance bond stipulated in the contract, from the 31st day from the submission of final completion settlement materials, the contractor shall pay the contract letting party the remaining amounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China. If the contractor still fails to effect payment within 60 days upon submission of the final completion settlement materials, the contract letting party shall be entitled to seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.11.8 Dispute on completion settlement. Within 30 days upon receipt of the completion settlement report and complete settlement materials submitted by the contractor, if the contract letting party has any objection to the project completion settlement price, they shall jointly entrust a project construction cost consultation unit to conduct verification on the completion settlement, and the completion settlement accounts shall be paid up according to the verification result. In case of any dispute on the verification result, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 15 Insurance">Article 15 Insurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="15.1 The insurance purchased by the contractor">15.1 The insurance purchased by the contractor</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1.1 According to the insurance coverage categories as set in applicable laws, administrative regulations and rules as well as special provisions, the types of insurance that shall be purchased by the contractor are stipulated, and the insurance premium is included in the contract price. The types, scope, amount, period and effective lasting time of the insurance etc. that shall be purchased by the contractor are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contractor shall be responsible for purchasing the insurance as set forth in applicable laws, administrative regulations and rules as well as special provisions on schedule and according to the needs of the project implementation stage;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) In the contract performance process, with respect to the mandatory insurance that shall be purchased by the contractor according to newly promulgated applicable laws, regulations and rules, the contract price shall be adjusted according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1.2 If any insurance policy provides the joint insured with insurance, the insurance compensation shall respectively apply to each joint insured. The contractor shall, on behalf of its insured, guarantee that its insured will comply with the conditions and its compensation amount as set forth in the insurance policy.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1.3 The claim accounts received by the contractor from the insurer shall be used for renovating any loss, damage and injury as set forth in the insurance policy and used for acquisition, reconstruction and compensation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1.4 With respect to the insurance items and within the insurance period, the contractor shall provide the contract letting party with duplicate of insurance policy, copy of premium payment voucher and certification on effectiveness of the insurance policy.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="15.2 All-risk insurance and third-party liability insurance">15.2 All-risk insurance and third-party liability insurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">With respect to all-risk insurance of the construction project, all-risk insurance of the installation project and third-party liability insurance, no matter the party that shall purchase insurance is which party, it shall at the same list the other party hereunder as the insured under the insurance contract while purchasing insurance. The specific insurance applicant shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="15.3 Miscellaneous provisions on insurance">15.3 Miscellaneous provisions on insurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.3.1 The contractor shall purchase transportation insurance for the equipment, materials and components purchased and transported by the contractor. Such insurance premium has been included in the contract price. Unless otherwise set forth in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.3.2 Upon occurrence of any accidental event under the insurance matters, the present parties shall be obliged to make efforts to take necessary measure to prevent the expansion of any loss and damage.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.3.3 Any insurance beyond this contract shall be purchased as needed, and the insurance premium shall be borne respectively.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 16 Breach, claim and arbitration">Article 16 Breach, claim and arbitration</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="16.1 Breach liabilities">16.1 Breach liabilities</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.1.1 The contract letting party's breach liabilities. Under any of the following circumstances:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contract letting party fails to perform the provisions as set forth in Article 5.1.1 and Clause (1) and (2), Article 5.1.2 hereof and fails to provide authentic, accurate and complete process technologies and construction models, project basic materials and spot obstacle materials on time;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contract letting party fails to adjust the contract price according to the provisions as set forth in Article 13 hereof and fails to pay relevant accounts as per the account type, amount and time as set forth by the prepayment, project progress accounts and completion settlement;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contract letting party fails to perform any other responsibility and obligation as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract letting party shall take remedy measures and compensate for any loss caused by the above breach behavior against the contractor. In case of delay in any key route of the project, the date of completion shall be postponed accordingly. The contract letting party's assuming of the breach liabilities will not relieve the contract letting party of or exempt the contract letting party from other responsibilities and obligations that shall be assumed by the contract letting party continually as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.1.2 The contractor's breach liabilities. Under any of the following circumstances:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor fails to perform the provisions on inspection of the equipment, materials and components provided for the permanent project as set forth in Article 6.2 and the provisions on construction quality and inspection as set forth in Article 7.5 and fails to renovate any defect;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The contractor still fails to pass completion test after having being tested for three times, still fails to pass post-completion test after having being tested for three times, any main part or the whole of the project to lose use value, production value and use interest;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor fails to perform any other responsibility and obligation as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Without consent of the contract letting party, or without necessary permission, or not allowed by applicable laws, the contractor transfers the project to any other person.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall take remedy measures and compensate for any loss caused by the above breach behavior against the contract letting party. The contractor's assuming of the breach liabilities will not relieve the contractor of or exempt the contractor from other responsibilities and obligations that shall be assumed by the contractor continually as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="16.2 Pursuit of Claims">16.2 Pursuit of Claims</a></p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.2.1 The contract letting party's claim. If the contract letting party deems that, the contractor fails to perform any duty, responsibility and obligation as set forth herein, and according to any relevant situation and matter of the documents and materials as set forth herein and relating hereto, the contract letting party deems to be entitled to the compensation for any loss, damage and injury that shall be borne by the contractor, the contractor fails to perform its compensation liability according to the provisions as set forth herein, the contract letting party shall be entitled to file claim against the contractor. The claim shall conform to laws and the contract provisions and be handled in compliance with the following procedures:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Within 30 days upon occurrence of any claim event, the contract letting party submits notice on claim to the contractor. In case of failure to send notice on claim within 30 days upon occurrence of any claim event, the contractor will not assume any liability any more, unless otherwise set forth by laws;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Within 30 days after sending notice on claim, the contract letting party provides the contractor in writing with relevant materials including but not limited to legitimate reasons, article basis, effective provable evidence and claim estimate for specifying the claim event;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Within 30 days upon receipt of the claim materials submitted by the contract letting party, the contractor negotiates with the contract letting party for settlement or makes response, or requires the contract letting party to further provide claim reasons and evidence;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Within 30 days upon receipt of the claim materials submitted by the contract letting party, if the contractor does not negotiate with the contract letting party, does not make response or does not raise further requirements to the contract letting party, it shall be deemed that such claim has been recognized by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) If the claim event raised by the contract letting party continually has influence, the contract letting party shall send the lasting influence of the claim event to the contractor on a weekly basis, within 30 days upon stop of the lasting influence of the claim event, the contract letting party shall submit final claim report and final claim estimate to the contractor. The claim procedures shall be the same with those as set forth in Clause (1) to (4) of this article.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.2.2 The contractor's claim. The contractor deems that, if the contract letting party fails to perform any duty, responsibility and obligation as set forth herein, and according to the provisions of article hereof, any relevant situation and matter of the documents and materials relating hereto, it deems that it shall be entitled to the compensation for any loss, damage and injury that shall be borne by the contract letting party and delay in the date of completion, the contract letting party fails to perform its compensation liability as set forth herein, the contractor shall be entitled to file claim against the contract letting party. The claim shall conform to laws and the contract provisions and be handled in compliance with the following procedures:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Within 30 days upon occurrence of any claim event, sending notice on claim to the contract letting party. In case of failure to send notice on claim within 30 days upon occurrence of any claim event, the contract letting party will not assume any liability any more, unless otherwise set forth by laws;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Within 30 days after sending notice on claim, the contractor provides the contractor in writing with relevant materials including but not limited to legitimate reasons, article basis, effective provable evidence and claim estimate for specifying the claim event;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) Within 30 days upon receipt of the claim materials submitted by the contractor, the contract letting party negotiates with the contractor for settlement or makes response, or requires the contractor to further provide claim reasons and evidence;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) Within 30 days upon receipt of the report and supplementary materials according to Clause (3) of this article, if the contract letting party does not negotiate with the contractor, does not make response or does not raise further requirements to the contractor, it shall be deemed that such claim has been recognized by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) If the claim event raised by the contractor continually has influence, the contractor shall send the lasting influence of the claim event to the contract letting party on a weekly basis, within 30 days upon stop of the lasting influence of the claim event, the contractor shall submit final claim report and final claim estimate to the contract letting party. The claim procedures shall be the same with those as set forth in Clause (1) to (4) of this article.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="16.3 Dispute and adjudication">16.3 Dispute and adjudication</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.3.1 Dispute settlement procedures: in case of any dispute, the parties shall firstly negotiate for reconciliation; upon negotiation, in case of failure in reconciliation or the parties indicates unwillingness to negotiate for reconciliation, arbitration or lawsuit shall be adopted for settling the claim dispute. The name and address of the arbitration institution as agreed upon shall be stipulated in the special provisions.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.3.2 No dispute shall affect the contract performance. Upon occurrence of any dispute, the performance of the responsibilities and obligations as set forth herein shall be continued to keep the continuing implementation of the project. Except under any of the following circumstances, neither party shall stop the implementation of the project or part of the project:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Breach by either party causes the exact failure to perform the contract, the implementation is stopped upon agreement by the contract parties;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) The arbitration institution or the court orders to stop the implementation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">16.3.3 Protection of the project of which the implementation is stopped. According to the provisions as set forth in Article 16.3.2 hereof, with respect to the project or part of project of which the implementation is stopped, the parties shall, according to the duties, responsibilities and obligations as set forth herein, protect all documents, materials and drawings relating to the project as set forth herein as well as the project that has been accomplished and the equipment, materials and components for the permanent project that have not been used.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 17 Force majeure">Article 17 Force majeure</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="17.1 Obligations upon occurrence of force majeure.">17.1 Obligations upon occurrence of force majeure.</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">17.1.1 Notice obligation. The party sensing or detecting any force majeure event shall be obliged to immediately notify the other party. According to the provisions as set forth herein, upon occurrence of any force majeure event, the party responsible for custody on the project spot shall promptly take measures as possible as it can to reduce the loss to its ability; and the other party shall spare no effort to assist and take measures. The construction or work of which the implementation shall be suspended shall be immediately stopped.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">17.1.2 Notification obligation. Within 48 hours upon the end of any force majeure event, if the party responsible for custody on the project spot is the contractor, the contractor shall notify the contract letting party of the victim and loss information. If any force majeure event occurs and lasts, the contractor shall report the victim information to the contract letting party and the project director on a weekly basis. Unless the reporting period is otherwise stipulated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="17.2 Consequences of force majeure.">17.2 Consequences of force majeure.</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The expenses incurred by any loss, damage and injury due to any force majeure event and the delay in the date of completion shall be subject to the following provisions:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The contract letting party shall be liable for any loss and damage on the permanent project and its equipment, materials and components etc. ;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Any injury suffered by any employee shall be respectively subject to the corresponding employment contract relationship;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(3) The contractor shall be liable for any loss and damage on the machines and tools, equipment, properties and provisional project of the contractor;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(4) The contractor shall be liable for the shutdown loss suffered by the contractor due to any force majeure event;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(5) Upon occurrence of any force majeure event, with respect to any lasting loss and damage caused by either party's delay in the performance of the protection obligation as set forth in the contract, the party subject to delay in the performance of any obligation shall assume any relevant liability and loss;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(6) If the contract letting party notifies of recovery in construction, within 20 days upon receipt of the notice or within the time as agreed upon by both parties as the case may be, the contractor shall submit clearing and renovating scheme and its estimate as well as the materials and report as arranged by the progress plan, upon acknowledgment by the contract letting party, the necessary clearing and renovating expenses shall be borne by the contract letting party. The date of completion upon recovery in construction shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 18 N/A">Article 18 N/A</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 19 Contract effectiveness and termination">Article 19 Contract effectiveness and termination</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">19.1. Effectiveness: The contract shall come into effectiveness after satisfying the contract effectiveness conditions as set forth in the contract. The counterparts of the original and copy of the contract shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article 19.2 Unless otherwise set forth in the provisions on quality assurance responsibility agreement as set forth in Article 11.1 hereof, if the contract parties have performed all obligations as set forth herein and paid up the completion settlement accounts, this contract shall be immediately subject to termination.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">19.3 Upon termination of the contract, the contract parties shall observe the principles of integrity and credit to perform the obligations of notice, assistance and confidentiality etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 20 Supplementary provisions">Article 20 Supplementary provisions</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to relevant laws, administrative regulations and industrial regulations, in line with the project implementation status, upon consensus through negotiation, specific stipulations, supplementations or modifications may be made to such general provisions in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Part III Special provisions">Part III Special provisions</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 1 General stipulations">Article 1 General stipulations</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1 Definitions and interpretations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the features of the project as set forth herein, other definitions that shall be supplemented as agreed upon: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2 Language and words</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">This contract shall be written, interpreted and explained in Chinese.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.3 Governing laws</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The laws and administrative regulations that shall be expressly indicated by the contract parties: according to the laws, regulations as well as the department regulation as stipulated and the local regulations of the place in which the project is located.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.4 Standards and codes</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.4.1 The standards and codes (names) applicable to this contract: Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.4.2 Names, counterparts and time of foreign standards and codes provided by the contract letting party: provisionally N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.4.3 The stipulations not set forth in written codes and standards: provisionally N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contract letting party's technical requirements: Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries. The time for the contractor to submit construction organization and design scheme: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Training agreement: to be supplemented upon negotiation by the parties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.5 Confidentiality matters</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1. The commercial confidentiality agreement entered into: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2. The technical confidentiality agreement entered into: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 2 Contract letting party">Article 2 Contract letting party</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1 Representative of the contract letting party</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Name of representative of the contract letting party: ;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Title of representative of the contract letting party: project manager;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Duty of representative of the contract letting party: supervising project construction including but not limited to project safety, quality, progress, operation and management according to relevant laws, regulations and rules.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 3 Contractor">Article 3 Contractor</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1 General obligations and rights of the contractor</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1.1 As agreed upon by the contract parties, the types, names, requirements, reporting periods, time of submission and counterparts of the statements that shall be submitted by the contractor: to be otherwise determined.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2 Project manger</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2.1 Name of project manager:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Duty of project manager: being fully responsible for the project construction of such project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Authority of project manager: being only limited to such project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Provisions on breach, for example, arbitrary replacement of project manager or the project manager being any other project manager: such project manager shall not assume the post of project manager for any other project, for the replacement of project manager, it is necessary to obtain consent from the contract letting party in advance. The contractor shall have 2 persons specially responsible for handling exterior formalities, the human resource and commission charges shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.3 Subcontracting</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.3.1 Subcontracting provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Shortlist of subcontracting matters and subcontractors as agreed upon: to be supplemented upon negotiation by the parties;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 4 Progress plan, delay and suspension">Article 4 Progress plan, delay and suspension</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.1 Project progress plan</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.1.1 The counterparts and time of submission of the project progress plan that shall be submitted by the contractor: 7 counterparts in writing, 1 in electric form, within 10 days upon contract conclusion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.1.2 Upon project construction start, the contractor shall send the prepared weekly project report and monthly project report to the contract letting party between 16:00 of each Friday and before the 25th day of each month. The contents to be compiled shall include: construction safety, quality and progress status of the week and the month, as well as the construction plan of the following week and the following month as well as all construction safety and technical measures etc.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.3 Material purchase and progress plan</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.3.1 Provisions on project material purchase and date of start: 1) specification, model No. and quantity of the materials purchased and the list of equipment provided by the design institution; 2) the date shall be determined according to the project progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.4 Construction progress plan</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4.4.1 Construction progress plan (expressed in table or words)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Submitting key construction plan (name): see the construction organization and design scheme approved by the client.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Submitting the divisional project construction plan of any key part (name): see the construction organization and design scheme approved by the owner.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 5 Technologies and design">Article 5 Technologies and design</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.1 Production processing technologies and construction art models</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.1.1 The explanations provided by the contractor on the production processing technologies or construction art models and project trial operation assessment guaranteed value and use function are as follows: Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries. Or the explanations on project trial operation assessment guaranteed value and use function are as follows: Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.1.2 The explanations provided by the contract letting party on the production processing technologies or construction art models and project trial operation assessment guaranteed value and use function are as follows: see Typical Design of Photovoltaic Power Generation Project (see Appendix I) for main technical indexes, Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Or the explanations on project trial operation assessment guaranteed value and use function are respectively as follows: Typical Design of Photovoltaic Power Generation Project (see Appendix I), Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2 Design</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Providing project basic materials. The types, contents, counterparts and time of submission of the project basic materials that shall be provided by the contract letting party: the contract letting party entrusts Solarmax Technology (Jiangsu) Co., Ltd. to be responsible for neatening and providing basic materials for free.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Providing spot obstacle materials. The types, contents, counterparts and time of submission of the spot obstacle materials that shall be provided by the contract letting party: the contract letting party entrusts Solarmax Technology (Jiangsu) Co., Ltd.to be responsible for surveying, neatening and providing obstacle materials for free.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.2 The contractor's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) As agreed upon by the contract parties, with respect to the following parts of the project basic materials and spot obstacle materials provided by the contractor upon entrustment of the contract letting party, further requirements may be raised according to the following time and period as set forth herein.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5.2.3 Operation and maintenance manual. Counterparts that shall be submitted and final submission period: 7 counterparts, 1 in electronic form, 1 month before project completion.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 6 Project materials">Article 6 Project materials</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1 Provision of project materials</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.1 The types, estimated quantity and specification list of the equipment, materials and components that shall be provided by the contract letting party for the permanent project: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.1.2 The types, spare part quantity and specification list of the equipment, materials and components that shall be provided by the contractor for the permanent project: based upon the list of equipment provided by the design institution.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2 Custody and surplus of project materials</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6.2.1 Custody of project materials</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The types and estimated quantity of the project materials subject to custody by the contractor upon entrustment: photovoltaic components 70MW.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The time for the contractor to submit construction custody and maintenance scheme: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The warehouse, pile, facility and equipment provided by the contract letting party: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 7 Construction">Article 7 Construction</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.1 Providing benchmark coordinate materials</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contents and time of submission of benchmark coordinate materials: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.2 Entry conditions and entry date. The contractor's entry conditions: the contractor shall be responsible.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor's entry date: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.3 With respect to the provisional water and electricity provision and section pavement, the contract letting party shall provide provisional water and electricity etc. and unit price of obtaining fees: the contractor shall be responsible.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.1.4 Other obligations to be performed by the contract letting party: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2 The contractor's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.1 Construction organization and design.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The counterparts and time of submission of overall project construction organization and design: 7 counterparts in writing, 1 in electric form, within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The names, counterparts and time of submission of divisional project construction organization &amp; design of main parts that shall be submitted: civil engineering project, component and pile foundation, frame project, access system project, equipment installation, debugging project, supervision and control system, roof solidification and improvement (if any).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.2 Submitting provisional land occupation materials.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The time of submitting provisional land occupation materials: shall be provided at the project design stage simultaneously.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.3 Providing provisional water and electricity use materials</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The quality, normal use quantity, peak quantity and use time of water and electricity etc. needed by the contractor: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The type and quantity of provisional water and electricity use etc. for the contract letting party to satisfy construction demands: the contractor shall be responsible.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Time of submission for section and location materials of water and electricity etc.: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.2.4 Other obligations to be performed by the contractor: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.3 Human power, machine and tool resources</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.3.1 The format, contents, counterparts and time of submission of schedule of human resource plan for construction: see the construction organization and design scheme. The format, counterparts and reporting period of the statement for actual entry of human resources: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.3.2 The format, contents, counterparts and time of submission of schedule of main machine and tool plan: see the construction organization and design scheme. The format, counterparts and reporting period of the statement for actual entry of main machines and tools: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.4 Quality and inspection</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.4.1 Quality inspection parts and inspection participants.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The parts subject to quality inspection by three parties, standards and table: refer to Photovoltaic Power Station Construction Quality Examination and Inspection &amp; Acceptance Procedures (see Appendix II for details) and relevant technical standards promulgated by the State and the industry.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5 Concealed project and midway inspection &amp; acceptance</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.5.1 Concealed project and midway inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The classification, parts, quality inspection contents, standards and tables of the concealed project and midway inspection &amp; acceptance parts as well as the provisions of the inspection participants: the supervising unit shall issue specific detailed rules for inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6 Health, safety and environment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.1 Health, safety and environment management</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The counterparts and time of submission of health, safety and environment management plan: 7 counterparts, 10 days before project start.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7.6.2 Before project start, both parties enter into Project Safety Agreement, see Appendix V.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 8 Completion test. The project as set forth herein includes completion test.">Article 8 Completion test. The project as set forth herein includes completion test.</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.1 Obligations of completion test</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">8.1.1 The contractor's general obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Completion test scheme.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The counterparts and time of submission of completion test scheme: 7 counterparts, 10 days before project start.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 9 Project receipt">Article 9 Project receipt</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.1 Project receipt</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.1.1 (1) Receipt based upon the project</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Date of receipt based upon the project: 240 hours upon project trial operation, after accomplishment of defect ratification and correction, Party A shall organize project receipt with seven working days, in case of failure to receive within seven working days, it shall be deemed that the project is inspected &amp; accepted to be qualified.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">9.1.2 The materials that shall be submitted for project receipt</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The types, contents, counterparts and time of submission of completion test materials: 7 counterparts, 4 discs, within 1 month upon project completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 10 Post-completion test">Article 10 Post-completion test</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.1 Responsibilities and obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.1.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Other obligations and work: N/A</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.1.2 The contractor's obligations</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) The counterparts and time of submission of post-completion test scheme submitted to the contract letting party: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(2) Other obligations and work: N/A</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2 Post-completion test procedures</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.1 Shall be implemented according to the test scheme acknowledged by both parties.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.2.2 Notice on date of post-completion test</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Date of start of project post-completion test: signed for confirmation by the supervisor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3 Post-completion test and trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.3.1 Trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(1) Trial operation assessment period: 240 hours.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.4 Failure to pass assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.4.1 Compensation for failure to pass trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) Compensation for the failure of the production process and technologies or construction design provided by the contractor to pass trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;
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<td><i></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Project compensation amount: both parties shall make ratification and correction within the time as agreed upon, if the contractor fails to make ratification and correction and fails to pass assessment within the time as agreed upon, upon identification and confirmation by any third-party institution, the contractor shall compensate for any loss caused against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment. The contractor shall compensate for any loss caused by any liability attributable to the contractor against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) Compensation for the failure of the production process and technologies or construction design provided by the contract letting party to pass trial operation assessment</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The contractor shall compensate for any loss caused by any liability attributable to the contractor against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.5 Assessment inspection &amp; acceptance certificate</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">10.5.1 According to this contract, the post-completion test and assessment inspection &amp; acceptance certificate shall be issued.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 11 Quality assurance responsibility">Article 11 Quality assurance responsibility</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.1 Quality assurance deposit</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.1.1 Quality assurance deposit</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The quality assurance deposit shall be 5% of the total contract price.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The provisional deduction method of the quality assurance deposit: see Appendix III for details, the quality assurance deposit shall be kept for one year (from the date of completion inspection &amp; acceptance and issuance of compliance certificate).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Quality assurance period: the overall quality assurance period of the system shall be one year (from the date of completion inspection &amp; acceptance of the project), the quality assurance period of the main equipment including but not limited to the inverter and transformer shall not be less than 5 years, see the technical agreement for details.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">11.2 See Appendix III for signing of Project Quality Assurance Agreement.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 12 Project completion inspection &amp; acceptance">Article 12 Project completion inspection &amp; acceptance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.1 Completion materials and completion inspection &amp; acceptance report</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">12.1.1 Completion materials and completion inspection &amp; acceptance report</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The format, number of counterparts and time of submission of the completion inspection &amp; acceptance report: word format, 7 counterparts, one disc, within 2 months upon completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The format, number of counterparts and time of submission of complete completion inspection &amp; acceptance report: word format, 7 counterparts, one disc, within 2 months upon completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 13 Alteration and contract price adjustment">Article 13 Alteration and contract price adjustment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1 Alteration scope</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1.1 Other alteration</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">According to the features of this project, other alteration scope as agreed upon: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">13.1.2 Determination of price alteration:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Agreement upon the calculation method for each price alteration: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 14 Total contract price and payment">Article 14 Total contract price and payment</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.1 The total contract price shall be RMB 322,500,000 yuan (in words: RMB THREE HUNDRED AND TWENTY TWO MILLION AND FIVE HUNDRED THOUSAND YUAN ONLY).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.2 Payment method of component accounts: the payment method shall be otherwise agreed upon.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3 All accounts other than the component accounts: the unit price shall not be lower than RMB 3.30 yuan/W, RMB 16,500,000 yuan (in words: RMB SIXTEEN MILLION AND FIVE HUNDRED THOUSAND YUAN ONLY) (hereinafter referred to as: project accounts) shall be paid with the following method:</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.1 This contract shall come into effectiveness and satisfy the following conditions:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">A. The contractor enters and starts the construction of exterior lines, the main equipment contract is entered into, the roads and fences have been finished and confirmed by the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">B. The project archival filing is obtained;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">C. The provincial access approval and response file is obtained;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">D. Equal-amount financial receipt;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">E. All formalities and documents as set forth in the appendix (Table I) have been accomplished;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">F. The 5MW of the pile foundation under this project has been finished (field flatting and line paving have been completely finished) and confirmed by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Within 5 working days of satisfying the above conditions and receiving equal-amount financial receipt from the contractor, the contract letting party shall pay 15% of the project accounts to the contractor [the payment method shall be telegraphic transfer (T/T)];</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.2 For this project, the installation of the 20MW of the pile foundation has been finished, 20MW of the frame has been finished, within 5 working days upon confirmation by the contract letting party and receipt of equal-amount financial receipt from the contractor, the contract letting party shall pay 25% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.3 This project has been finished for no less than 20MW, within 5 working days upon confirmation by the contract letting party and after the contractor submits legal and effective invoice with 50% of the project accounts, the contract letting party shall pay 25% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill].</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.4 For this project, upon accomplishment of installation of components, within 5 working days upon confirmation by the contract letting party and submission of equal-amount financial receipt to the contract letting party, the contract letting party shall pay 20% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.5 For this project, upon accomplishment of overall synchronization and upon inspection and acceptance on synchronization, within 5 working days upon confirmation by the contract letting party and submission of equal-amount financial receipt to the contract letting party, the contract letting party shall pay 5% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.6 For this project, scheduling agreement, electricity purchase and sale agreement, within 5 working days upon accomplishment of project completion inspection &amp; acceptance and settlement and after the contractor finishes all formalities as set forth in the appendices (Table I, Table II and Table III) and receives 100% invoice issued by the contractor in compliance with the requirements of the contract letting party, the contract letting party shall pay the contract 5% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill] on time after deducting quality assurance deposit based upon the settlement;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.3.7 The quality assurance deposit shall be 5% of the project accounts, the quality assurance period shall be one year. 12 months upon accomplishment of completion inspection and acceptance on this project by issuance of Trial Operation of the Project and Handover of Authentication on Production Inspection and Acceptance, after the contract letting party confirms to be qualified without any problem and the contractor finishes all formalities as set forth in the appendices (Table I, Table II and Table III), the contract letting party shall pay the contractor quality assurance deposit.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.4 Provisions on invoice issuance: the issuing proportion of vat special invoice of engineering materials shall not be less than 70% of the total contract price of the entire contracted EPC.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Remarks: the payment method for the project accounts shall be 50% telegraphic transfer (T/T) and 50% bank acceptance bill.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5 Guarantee</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.1 Performance bond</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Performance bond: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.2 Release of performance bond</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.2.1 Within one year from the date of completion settlement, if the generating capacity of this project can not satisfy the requirements as agreed up by Party A and Party B, Party A may directly deduct the cash deposit for generating capacity in order to make up for loss, if the cash deposit for generating capacity is insufficient for making up the loss, Party B shall make supplementation and at its own expenses conduct increased work on this project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">14.5.2.2 If the contractor fails to perform the contractor's responsibilities and obligations hereunder within valid period of the performance bond, the contract letting party shall be entitled to seek recourse from the performance bond. The contract letting party shall be entitled to continue to seek recourse for the insufficient part from the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 15 Insurance">Article 15 Insurance</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1 The insurance purchased by the contractor</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.1.1 The contract parties agree upon the type, scope, amount, period and effective lasting time: project construction period of the insurance that shall be purchased by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">15.2 All-risk insurance and third-party liability. The insurance that shall be purchased by the contract letting party:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Life insurance of the employees of the contract letting party and other persons of the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Vehicle insurance of the employees of the contract letting party and other persons of the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The insurance that shall be purchased by the contractor, including but not limited to:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">All-risk insurance for construction and installation within the scope of the contracting contract;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Third-party liability insurance;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Vehicle insurance of the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The insurance companies (of the contractor and the owner) shall be chosen by bidding, bidding shall be organized and implemented by the insurance broker company chosen by the owner.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify"><a name="Article 16 Contract effectiveness and termination">Article 16 Contract effectiveness and termination</a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">The text body of this contract shall be made in duplicate with either party holding each respectively; and the copy of the contract shall be made in quadruplicate with either party holding two respectively.</p>
<p style="MARGIN: 0px"><br>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">[Appendix]:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Appendix: List of Formalities</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(No Text Below)</p>
<p style="MARGIN: 0px"><br>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Annex:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contract letting party (Party A): Pu'an Zhonghong New Energies Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Contractor (Party B): Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article I This agreement shall be signed according to the following documents:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.1 Contract Law of People's Republic of China and Regulations of Contract for Prospecting and Designing of Construction Engineering.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.2 National and Local Regulations and Rules of Project Design Management.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1.3 Approval Documents of Construction Engineering.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article II Name, scale, phase and scope of the project stated in this agreement:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Project name: Photovoltaic Power Generation Project</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.1 Overview of the work: the project locates at Moshega Village, Louxia Town, Pu'an County, Guizhou, which is a photovoltaic power station with total installed capacity of 50MW (subject to filing documents of the government).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.2 Scope of the work: interim consulting reports and effective approvals required for getting the governmental approvals before the prepayment, the synchronization and completion and during quality warranty period.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.2.1 All documents that shall be prepared before the first progress payment:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Table 1:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">No.</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Documents and file name</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">1</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Project Due Diligence Report (issued by the contract letting party)</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">2</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Approval on Power Access Report</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2.2.2 All documents that shall be prepared before synchronization (including but not limited to the contents in Table 2):</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Table 2:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="8%">
<p style="MARGIN: 0px">No.</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Documents and file name</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">1</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Opinions on Project Planning and Site Location, Red Line Chart of Construction Land, Land Lease Agreement and Land Preliminary Review</p></td></tr>
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<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">2</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Official Reply to Water and Soil Conservation Report</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">3</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Official Reply to Environmental Assessment</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">4</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Safety Pre-evaluation</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">5</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Energy Conservation Register and Report</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">6</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Geological Disaster Assessment</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">7</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Investigation on Mineral Resources below Construction Projects (without certification of mines below construction project)</p></td></tr>
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<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">8</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Power Purchasing and Selling Agreement</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">9</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Scheduling protocol of synchronization</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">10</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Official Reply to Electricity Price of Project</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">11</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Submission of Land Certificate for Construction Land</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">12</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Forestry Certificate</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak3c1acf26-9573-4956-928b-6795c19301c7" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">62</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2.2.3 All documents that shall be prepared before project completion (including but not limited to the contents in Table 3):</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Table 3:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="2" width="100%" align="center" border="0">

<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="8%">
<p style="MARGIN: 0px">No.</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Documents and file name</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">1</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Fire acceptance</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">2</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Environmental Protection Acceptance on the Principles of Three Simultaneities, and Pilot Production for Environmental Protection</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">3</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Safety Assessment upon Completion</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">4</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Acceptance Certificate of Water Conservation</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">5</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Letter of Consent on Use of Forest Land or Certification or Agreement for Permit of Construction of Power Station on Grassland</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">6</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Backup of Project Completion Acceptance issued by Power Quality Supervision Department</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">7</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">License of Power Generation Business</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">8</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Bid, Auction and Listing of Construction Land (non-compulsion)</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">9</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Certificate of Construction Land</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">10</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Others (procedures which shall be handled according to actual conditions in each province)</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2.2.4 All documents that shall be prepared during quality warranty period (including but not limited to the contents in Table 4):</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Table 4:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="BORDER-RIGHT: black 1px solid; BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="2" width="100%" align="center" border="0">

<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top" width="8%">
<p style="MARGIN: 0px">No.</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Documents and file name</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">1</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Construction License</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">2</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Planning Permission of Construction Land</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">3</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Planning Permission of Construction Engineering</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">4</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Property Ownership Certificate</p></td></tr>
<tr height="15">
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">5</p></td>
<td style="BORDER-TOP: black 1px solid; BORDER-LEFT: black 1px solid" valign="top">
<p style="MARGIN: 0px">Others (procedures which shall be handled according to actual conditions in each province)</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.3 The interim report issued by Party B shall meet with requirements of the governmental authority that Party A has declared to, both of which demand legal and effective governmental approvals.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2.4 All handling charges mentioned in Article 2.2 and all expenses for design, supervision, construction, compensation and economic input caused due to water and soil conservation and environmental protection acceptance were involved in this EPC contract.</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak2ea48257-8887-4f87-9532-802577dac4ce" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">63</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td><i></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article III Both parties' responsibilities</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.1 Party A&rsquo;s responsibilities:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) During implementation of the project, Party A will assign Mr./Ms._________ to take charge of cooperation, assistance and communication about procedures of documents of the project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) Party A will check the progress of procedures handled by Party B, and keep documents and certificates acquired by Party B in archives.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3) In case Party A requires Party B to provide documents for procedures of the project prior to specified date of submission as stated in the contract, both parties shall crash the schedule according to the agreed date once both parties have reach a consensus on the new schedule.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3.2. Responsibilities of Party B.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">1) Party B shall have engineering consulting according to requirements of national technical specification, standards, regulations and technical requirements, provide qualified documents regarding consultation results according to specified period in the contract, and shall be liable to the quality of such documents.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">2) Party B shall deliver the consultant paper to Party A according to contents, time and copies specified in Article IV of this contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">3) Party B will assign Mr./Ms._________ to take charge of the document procedures of this project and arrange _________ persons for assistance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">4) Party B shall be responsible for amendment or supplemental in case of any missing or mistake in the documents for procedures of this project.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">5) After Party B delivers the documents for procedures of the project, such documents shall be reviewed by the relevant higher authorities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">6) Party B has the obligation of maintaining confidentiality of any documents got from Party A for the purpose of finishing the design works of contract, and shall not reveal the above documents to any third party without agreement of Party A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">7) Documents delivered from Party B for project procedures of Party A shall not be reproduced or handled to any third party. Intellectual property, ownership and other rights of documents for project procedures, which are delivered to the contract letting party from Party B, shall belong to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article 4 Breaching liabilities</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">If the progress that Party B handles the procedures of documents is seriously delayed, which may affect the project synchronization and collection of electric charge, Party A has the right to look for a third party for additional entrustment, and all relevant expenses causes thereof will be deducted directly from the turkey project funds of Party B.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">(No Text Below)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Signing page:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15">
<td valign="top" width="50%">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Contract Letting Party:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><u>[seal] </u><u>Pu'an Zhonghong New Energies Co., Ltd.</u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Pu'an Zhonghong New Energies Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Date signed: 9/26/2016</p></td>
<td valign="top" width="50%">
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Contractor:</p>
<p style="MARGIN: 0px 0px 0px 0in">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in"><u>[seal] Solarmax Technology (Jiangsu) Co., Ltd.</u></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Date signed: 9/26/2016</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cols="1" cellpadding="0" width="100%" align="center" border="0">

<tr>
<td style="BORDER-BOTTOM: black 1px solid">
<p style="MARGIN: 0px" align="center">64</p></td></tr></table></p></body></html>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>7
<FILENAME>filename7.htm
<TEXT>
<html><head><title>solarmax_ex1020.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><strong>EXHIBIT 10.20&nbsp; </strong></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="right"><i>Liquidity Loans Contract</i> (2015 version)</p>
<p style="MARGIN: 0px 0px 0px 0in" align="right">No.: 3672022016005</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><font size="5">Liquidity Loans Contract </font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font size="4"></font></b>&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font size="4"></font></b>&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b style="MARGIN: 0px"><font size="4">China Everbright Bank</font></b></p>
<p style="MARGIN: 0px"><br>&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak8eb7c7dc-4552-4096-bd96-2386ce23d0fd" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<tr></tr>
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<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><a name="Contents"><b><font size="4">Contents</font></b><b><font size="4"></font></b></a></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr height="15" bgcolor="#ffffff">
<td width="10%">Chapter 1</td>
<td>General rules</td>
<td width="10%">
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 2</td>
<td>Intended use of the loan</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 3</td>
<td>The loan currency, amount, term and remit money</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 4</td>
<td>The loan interest rate and interest method</td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 5</td>
<td>The grand, payment and use of the loan fund</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 6</td>
<td>Repayment method</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 8</td>
<td>Undertaking and compensation of costs</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 9</td>
<td>Statement, guarantee and commitment of the borrower</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 10</td>
<td>Event of default</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 11</td>
<td>Others</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 12</td>
<td>Application of law and resolution of disputes</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 13</td>
<td>Entry into force, change and dissolution of the contract</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 14</td>
<td>Attachments</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>&nbsp;</td>
<td>&nbsp;</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr>
<tr height="15" bgcolor="#ffffff">
<td>Chapter 15</td>
<td>Supplementary provisions</td>
<td>
<p style="MARGIN: 0px" align="right">&nbsp;</p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px">
<table id="pagebreak69f253a1-a954-4c06-af7a-0c20f7a009d8" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<td class="hpbhr">&nbsp;</td></tr>
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<tr></tr>
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<td>
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<tr>
<td>&nbsp;</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower : SOLARMAX TECHNOLOGX, INC.&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">address: Room, 901, No.1600 of West Zhongshan Road&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Postal code: 200235&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative: DIVID BINGWEN XU&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Authorized agent: /&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Operator: Fan Lina&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Tel: 64289658&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Fax: 64289652&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Bank of deposit: Shanghai Putuo Subbranch of China Everbright Bank&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Account number: FTN36933672000006</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">The loan bank: Shanghai Putuo Subbranch of China Everbright Bank&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">address: No.188, Lanxi Road&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Postal code: 200062&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative/person in charge: Yu Wenhuan&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">authorized agent: /&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">operator: Wu Yue&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Tel: 63797565&nbsp;</p>
<p style="MARGIN: 0px">Fax: 63797588</p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px" align="center">
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<p style="MARGIN: 0px" align="center"><br><b><a name="Chapter I">Chapter I</a> General rules</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower applies for loan to the loan bank for business needs. After examination, the loan bank agrees to offer loans to the borrower according to the terms and conditions of this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">In order to define the rights and obligations of both parties, according to the relevant laws and regulations of our country and provisions of supervision departments, and by mutual agreement, the following terms and conditions are reached voluntarily to be followed. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter II">Chapter II</a> Intended use of the loan</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 1 It is determined by mutual consultation that: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. The borrower can only use the loan under this contract for the turnover of circulating fund, the specific use being the payment for the purchase of raw materials. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. The borrower can not use the loan fund for investment of fixed assets, stock rights and so on, nor can it be used in the fields or for the purposes of production and business prohibited by the nation. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. Without the written approval of the loan bank in advance, the borrower can not change the intended use of the loan determined in this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter III">Chapter III </a>The loan currency, amount, term and remit money</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 2 The currency and amount (capital form) of the loan under this contract are RMB thirty-eight million and five hundred thousand Yuan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 3 The loan time limit under this contract starts from October 24<sup>th</sup>, 2016 to October 24<sup>th</sup> 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 4 Under the condition that the prerequisites stipulated in Article 11 of this contract are fully met, the loan bank shall remit the loan amount into the account opened at the loan bank by the borrower according to the following method 1: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. One-time remit, the loan bank remit the full loan amount into the account opened at the loan bank by the borrower on October 24<sup>th</sup>, 2016; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. Fractional remit, the detailed remit amount and date are as following: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The first remit: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) remit amount: (capital form)____________________________;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) remit date:______Year_______Month_______Day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The second remit: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) remit amount: (capital form)____________________________;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) remit date:______Year_______Month_______Day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The third remit: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) remit amount: (capital form)____________________________;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) remit date:______Year_______Month_______Day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. Irregular fractional remit: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Remitting according to actual requirement, the number of times, amount of money and time limit recorded on the IOU / loan voucher at remit shall prevail. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Other agreements: ____________________________________________________________________________</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Once the principal amount of loan under this contract is remitted out of the loan bank, it is deemed that the loan has been loaned and the interest of the loan shall be calculated since the day it is remitted. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter IV">Chapter IV</a> The loan interest rate and interest method</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">Article 5 The borrower shall pay the loan interest of the loan under this contract remitted by the loan bank to the loan bank, and the fixed (fixed / floating) interest rate is adopted as the annual interest rate of the loan under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. If the fixed interest rate is adopted, the annual interest rate of the loan is 3.8%. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. If the floating rate is adopted, the annual interest rate is determined according to the following method /: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">A: To execute the benchmark interest rate of the People's Bank of China: /%</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">B: To increase/fall /% by ratio /based on the benchmark interest rate /%(fill in the benchmark interest rate at the corresponding period) of the People's Bank of China, actually executing the annual interest rate of %. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">C: To increase/fall /% by value / based on the benchmark interest rate /%(fill in the benchmark interest rate at the corresponding period) of the People's Bank of China, actually executing the annual interest rate of %. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The adjustment period of the interest rate is/</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The specific adjustment date is/</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. (1)The loan currency of this contract is RMB: after the loan under this contract is given out, if the People's Bank of China implements the policy of marketization of RMB loan interest rate, then the borrower shall consult with the loan bank to determine the interest rate standard. If no agreement is reached within (5) banking days after the consultation begins, then the borrower shall pay off the full principal [capital] and interest within thirty(30) banking days upon the agreement is reached. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) The loan currency of this contract is foreign currency: after the loan under this contract is given out, if at 11 o'clock am(London time) on the offering day of the relevant interest period, there is no bank offering the USD deposit rate to the main banks in the London inter-bank market, then the borrower shall consult with the loan bank to determine the alternative interest rate; If no agreement is reached within (5) banking days after the consultation begins, the borrower shall pay off the full principal [capital] and interest within thirty(30) banking days upon the date the agreement is not reached. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">4. Other agreements: ___________________________________________________________________________</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 6 The two parties agree that within the loan time limit of this contract, if the People's Bank of China adjust the benchmark lending rate or the interest accrual method, which applies to the loan under this contract, the loan bank has the right to determine the new lending interest rate of this contract according to the same increase/fall rate/value mentioned above based on the adjusted benchmark lending rate or interest accrual method. The loan bank has no need to ask for the borrower&rsquo;s agreement before making the adjustment, and has the right to calculate and collect the interest according to the adjusted lending interest rate or interest accrual method since the adjustment date stipulated by the People's Bank of China. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 7 The interest of the loan under this contract will be settled quarterly/monthly, and the interest settlement date is the 20<sup>th</sup> of the last month of a quarter. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 8 The interest loan under this contract is calculated with 360days a year as the cardinal number, according to the loan amount actually remitted out from the loan bank account and the occupation days since the date the loan is remitted out from the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 9 If the borrower fails to pay back the loan according to the agreement of this contract, the loan bank has the right to calculate and collect the interest according to the default interest rate since the day the loan is overdue, until the borrower pay off the full principal and interest. The overdue default interest rate is 30%(30%-50%) plus on the level of the lending interest rate agreed in Article 5 in this contract. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">If the borrower fails to use the loan according to the agreement of this contract, the loan bank has the right to collect interest according to default interest rate for embezzlement since the day thee borrower fails to use the loan according to the purpose agreed in this contract, until the borrower pays off the full loan principal and interest. The default interest rate for embezzlement is 50%(50%&#8212;100%) plus based on the level of lending interest rate stipulated in Article 5 in this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 10 For the interest the borrower can not pay on time, the loan bank has the right to collect the compound interest according to the default interest rate.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter V">Chapter V</a> The grand, payment and use of the loan fund</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 11 Unless the following prerequisites for money withdrawal are satisfied, the loan bank does not have the obligation to offer the loan under this contract to the borrower: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. The borrower has provided all the documents required by the loan bank to be provided (including but not limited to the capital payment plan, <i>Note of Entrusted Payment of Loan</i>, trade contract and other transaction background information relevant to loan payment that shall be provided by the borrower before the loan release), the conditions clearly stated have no change, and these documents are sustained effective, or the borrower has made the explanation on the changes happened that satisfy the loan bank; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. The borrower has fill in the IOU / loan voucher relevant to this fund withdrawal. IOU / loan voucher is the constituent part of this contract, and has the same legal effect with this contract. If the amount of the loan under this contract, the loan time limit, lending interest rate, actual loan-making day, the expiration day and other detailed loan conditions do not conform to the records in the IOU / loan voucher, the records in the IOU / loan voucher shall prevail; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. The borrower must properly handle the government permission, approval, registration and other legal procedures relevant to this loan according to relevant laws and regulations; if required by the loan bank, the notarial acts of this contract shall be handled properly too; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">4. If the loan under this contract is guaranteed, the borrower shall properly handle the legal formalities of guaranty contract, notarization of guaranty, registration/guaranty insurance and so on according to the requirements of the loan bank, and the guarantee and insurance shall sustain effective; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">5. The borrower does not have any event of default listed in this contract; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Under the premise of meeting the above conditions for fund withdrawal, the loan bank can arrange remitting the loan to the account opened by the borrower at the loan bank according to the stipulation of Article 4 in this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Bank of deposit: China Everbright Bank, Shanghai Putuo Branch </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Account: FTN36933672000006</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Unless agreed by the loan bank, the online bank payment service of the account for loan release won&rsquo;t be opened. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 12 Payment of the loan fund</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. Mode of payment of the loan fund</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The mode of payment of the loan fund under this contract is divided into the loan bank&rsquo;s entrusted payment or the borrower&rsquo;s payment itself. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The loan bank&rsquo;s entrusted payment means that the loan bank pays the loan to the borrower&rsquo;s transaction object conforming to the use purpose agreed in the contract through the borrower account according to the application for fund withdrawal and payment entrust of the borrower; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower&rsquo;s payment itself means that after the loan bank remits the loan fund to the borrower account according to the borrower&rsquo;s application for fund withdrawal, the borrower pays the fund to the borrower&rsquo;s transaction object conforming to the use purpose agreed in this contract by itself. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. Payment terms for the loan fund</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) The conditions and amount standard of the entrusted payment of the loan bank</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower agrees that for the liquidity loan with one of the following circumstances, the loan bank has the right to adopt the mode of entrusted payment according to relevant national laws, regulations and rules of the supervision departments: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">
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<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The credit service relationship is established with the borrower and the credit standing of the borrower is not so good;</td></tr>
<tr>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">The payment object is definite and the amount of the single payment is relatively large;</td></tr>
<tr>
<td valign="top" width="3%"><font style="FONT-FAMILY: Symbol">&#183;</font></td>
<td valign="top">Other circumstances affirmed by the loan bank.</td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower agrees that, the entrusted payment amount standard of the loan fund under this contract is 10 million Yuan RMB, that is, for the payment of the loan fund with the single payment amount larger than 10 million Yuan RMB, the loan bank&rsquo;s entrusted payment is adopted. Within the valid period of this contract, the loan bank has the right to lower the point of calculation of the single payment amount. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">If the single payment amount exceeds the above-mentioned starting point of amount, the loan bank&rsquo;s entrusted payment must be adopted, for which the borrower shall use <i>Note of Entrusted Payment of Loan</i> conforming to the format required by the loan bank as the one and only voucher of fund payment, otherwise, if consequences like overdue payment, refused payment, refund, claim, compensation and so on are caused, the borrower will shoulder the responsibility itself. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) For circumstances other than the entrusted payment terms in item (1), the mode of borrower&rsquo;s payment by itself will adopted. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">If the mode of the borrower&rsquo;s payment by itself is adopted, the borrower shall submit the plan of payment of the loan fund according to the requirements of the loan bank, and after it is examined and approved by the loan bank, and the loan fund is remitted to the corresponding account according to the requirements of the payment plan, the borrower shall pay the loan fund according to the plan of payment of the loan fund submitted, and the borrower shall report the payment conditions of the loan fund on monthly/quarterly basis to the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 13 Change of mode of payment and conditions triggering the change</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">During the process of loan payment, if the borrower has the following circumstances, the loan bank has the right to consult with the borrower to supplement the loan grant and payment terms, or change the mode of payment of the loan fund: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. The drop of the borrower&rsquo;s credit standing;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. The not-strong profitability of the main business;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. The abnormal use of loan fund;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px">4. Other circumstances the loan bank thinks suitable .&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 14 Restricted and prohibited actions for the payment of the loan fund</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">After the date this contract is signed, if the following conditions occur, the loan bank can restrict until stop the grant and payment of relevant loan fund: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. Circumstances described in Article 13.&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. The loan bank finds that the borrower fails to pay or use the loan fund according to the loan purpose and has other acts violating the agreements of this contract;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. The borrower violates this contract by evading the entrusted payment of the loan bank in the mode of breaking up the whole into parts;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">4. The borrower violates other agreements of this contract;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">5. Other circumstances the loan bank thinks suitable. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 15 The record and data of the use of the loan fund the borrower shall be provided in time: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The borrower promises to provide the record and data of the use of the loan fund in time according to the requirements of the loan bank, including but not limited to: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. Transaction data(including but not limited to commodities, labor service, financial contract and / or invoice and other written or electronic document data that can prove the clear and definite use purposes of the loan fund;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. Remit voucher, payment and settlement voucher;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. Other data required by the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter VI">Chapter VI</a> Repayment method</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 16 The borrower shall pay the interests according to this contract and pay back the principal amount of loan according to the following item 1 under this article. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. To pay back the principal at one time. The borrower shall pay back the full principal amount of loan on October 24<sup>th</sup>, 2017; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. To pay back the principal fractionally, and the detailed principal amount and date to be paid back are as following: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Principal to be paid back at the first time: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) Principal amount to be paid back: (capital form)/;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) The date of principal repayment is/year/month/day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Principal to be paid back at the second time: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) Principal amount to be paid back: (capital form)/;&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2) The date of principal repayment is______Year_______Month_______Day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Principal to be paid back at the third time: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1)Principal amount to be paid back: (capital form);&nbsp;&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2)The date of principal repayment is_______Year_______Month_______Day. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Other agreements: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The repayment account: FTN36933672000006</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">If the repayment day is not the working day of the loan bank, then the repayment day will be postponed to the next working day of the loan bank, and the non-working day of the loan bank will be calculated into the actual loan-occupation days. When the borrower pays back the last term of principal amount of loan, the interests shall be settled along with the principal. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 17 The borrower shall prepare substantial interests, principal or other fees payable at the corresponding term on the account opened at the loan bank before the expiry date for interest or date of repayment of principal agreed in this contract or recorded on the IOU / loan voucher, and take the following measures to pay back the loan:&nbsp;[1] 1. Entrust the loan bank to collect the fund actively from the borrower account on the agreed expiry date for interest or date of repayment of principal; 2. Make repayment itself. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 18 The borrower shall pay back the loan under this contract to the loan bank in full amount on time. If the borrower fails to pay the principal and interest on time, the loan bank has the right to deduct the borrowers&rsquo; payable fees, loan interests, compound interest and the amount of loan principal from the account opened by the borrower at the loan bank or any account opened at the branch within the system of the loan bank in proper sequence. For the principal amount of loan or the interests not collected back for 90 overdue days, the sequence of deduction of repayment shall be implemented according to the relevant stipulations of the Ministry of Finance. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">If on some date of principal and interest payment, the sum of fund paid by the borrower is not sufficient for repaying the accounts payable at the current period, the sum of fund shall be used first to pay the fees payable for the borrower, and then used to pay the loan interest and compound interest, and finally used to repay the principal amount of loan. For the principal amount of loan or the interests not collected back for 90 overdue days, the sequence of deduction of repayment shall be implemented according to the relevant stipulations of the Ministry of Finance. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 19 If the borrower plans to return the loan ahead of schedule, it shall raise written application to the loan bank 30 working days( of the loan bank) in advance, and ask for the written approval of the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">The standard of interest collection when repaying interests in advance is [1]: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. The interest will be calculated to the repayment day according to the interest rate agreed in this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. Others: /</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Article 20 If the borrower can not repay the loan under the contract for lease on schedule, and needs to extend the repayment period, it shall submit the written application for loan period extension to the loan bank [&nbsp; ] working days (of the loan bank) before the date of expiry of the loan. If it is examined and approved by the loan bank, the two parties sign the <i>Loan Extension Contract</i> separately as the supplement contract to this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b></b>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><a name="Chapter VII">Chapter VII</a> Guarantee</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 21 The guarantee method of the loan under this contract is: 3. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. /(the guarantor) provides joint liability warrandice; the contract number is guaranteed to be /. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. /(the mortgagor) provides the underlying security of /(the object given as a pledge); the number of mortgage contract is /. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. Shanghai Cichang New Energy Science and Technology Co., Ltd (pledgor) provides the pledge guarantee of the unit certificate of deposit (pledged property/pledge right); and the number of the contract of pledge is 3672022016005-1. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 22 The loan bank and the guarantor shall sign the corresponding contract of guaranty on specific security matters, and handle the notarization of the contract of guaranty, and/or the formalities of guaranty insurance, registration and so on. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 23 If the time period of the contracts for lease is extended, the borrower and the guarantor shall make sure to continue to undertake the responsibility of guarantee during the extended period, and the contract of guaranty remains effective during the extended period of lease. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter VIII">Chapter VIII</a> Commitment and compensation of costs</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 24 If the borrower is the litigant, it shall undertake the expenses needed for signing and performing this contract and the corresponding contract of guaranty in the principle of &ldquo;who entrusts, who pays&rdquo;, including fees of notarization, registration, insurance and so on. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 25 Once required by the loan bank, the borrower shall pay in full amount and compensate the loan bank for the expenses and costs to the loan bank performs for performing its rights under this contract, including but not limited to litigation costs, attorney's fees, travel expenses, and other fees for realizing the creditor's rights. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter IX">Chapter IX</a> The borrower&rsquo;s representations, warranties and commitments</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 26 The borrower is a legal entity /other organization established according to American Law and persisting effectively. It has independent capacity for civil conduct and enjoys full power, authorization and right to undertake civil liability and engage in business activities with all its assets. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 27 The borrower has full power, authorization and right to sign this contract and carry out the transaction under this contract, has taken or obtained the necessary corporate action actions and other actions, and agrees to sign and perform this contract through authorization. This contract is effectively signed by the borrower&rsquo;s legal representative or its authorized agent, with the borrower&rsquo;s official seal stamped. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 28 The borrower has obtained all the approvals of government departments and the consent of the third party needed for signing this contract, and the borrower&rsquo;s signing and performing of this contract does not violate the borrower&rsquo;s legal entity document/ document of approval(if any) or any other contract or agreement with the borrower as one party of it. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 29 All documents, materials and vouchers offered to the loan bank by the borrower for signing this contract and performing the transactions under this contract must be true, complete, accurate and effective. And the financial statements submitted by the borrower truly reflect the financial standing of the borrower when the statements are issued. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 30 This contract is lawful and effective, and constitutes the legally binding obligations to the borrower. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 31 The borrower shall open account at the loan bank according to the requirements of the loan bank, and the fund under this contract will be settled and used through that account. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 32 In order to ensure the validity, effectiveness or forcible execution of this contract, the borrower has completed or will complete all the formalities of registration, record or notarization needed. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 33 The borrower has no litigation, arbitration or administrative procedure that has negative effect on its ability of performing its obligations under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 34 The statement, guarantee and commitment of the borrower shall always be correct before all the loan principal and interest under this contract are paid off, and the borrower will provide relevant documents at any time according to the requirements of the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 35 No event of default to the borrower has happened or existed. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 36 The borrower has carefully read and completely understands and accepts the contents of this contract. The borrower&rsquo;s signing and performance of this contract are voluntary and all its expressions under this contract are true. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 37 According to the requirements of the loan bank, the materials provided by the borrower shall be true, complete and effective. If the borrower belongs to the group customers determined by the loan bank according to Commercial Bank&rsquo;s Risk Management Guidelines for Credit Extension to Group Customers, the borrower shall report to the loan bank the conditions of the connected transaction of above 10% of its net asset according to Article 17 of the<i> Guidelines</i>, including the incidence relations of all the transaction parties, transaction items, transaction nature, transaction amount or corresponding ratio, and pricing policy (including transactions without fund amount but only nominal amount). </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 38 The borrower promises to cooperate with the loan bank to carry out loan payment management, after-loan management and relevant checks. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 39 The borrower shall accept forwardly and cooperate actively in the loan bank&rsquo;s investigation, understanding and supervision of its relevant production, business and financial status; the borrower has the obligation to provide the loan bank with the financial statements of <i>Balance Sheet, Account of Business </i>and other financial statements or other materials of the latest month reflecting the credit position of the borrower on a monthly basis. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 40 If matters of alteration of the borrower&rsquo;s name, legal representative, legal address and so on happen within this contract&rsquo;s term of validity, the borrower shall notify the loan bank thirty working days(of the loan bank) in advance in written form. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 41 Before paying off all its debts under this contract, if the borrower has significant events, such as external investment, substantial increase in debt financing, merging, separation, capital reduction, transfer of equities and assets, application for stopping doing business for internal rectification, application for dissolution, voluntary bankruptcy, and other actions substantial to affect the rights and interests of the loan bank or substantial to cause the change of the relations of the creditor's rights and debts under this contract, it shall notify the loan bank in written form thirty working days(of the loan bank) in advance, and at the same time, execute its obligation of paying off the debt or paying off the debt in advance, or it is not allowed to take the above-mentioned actions. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 42 The borrower guarantees that during this contract term of validity, without the written consent of the loan bank, the borrower can not make warrandice for or shoulder the debt of other business entity, organization or individual that is substantial to affect the borrower&rsquo;s repayment ability under this contract, nor can it make mortgage or pledge with the borrower&rsquo;s assets and interests that is substantial to affect the repayment ability of the borrower under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 43 For any other significant adverse event that is dangerous to the borrower&rsquo;s normal business, that has significant adverse effects for its performance of its obligation of repayment under this contract and affects it repayment ability, the borrower shall notify the loan bank in written form immediately. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 44 The borrower is aware of and agrees that: at any time, the loan under this contract is issued according to the discretionary decision of the loan bank; the loan accepts the regular or irregular inspections by the loan bank on dates of its discretionary decision, in order to decide whether to continue to grant the loan in any form to the borrower or not. The loan bank has the right to terminate or suspend all or part of the loans and cancel the borrower&rsquo;s further use of the loan, without the need of notifying the borrower beforehand. As long as the loan is not released, the loan bank has the right to reject the borrower&rsquo;s application of withdrawal at any time and cancel all or part of the loan under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 45 The loan bank has the right to require the borrower to open the following account at the loan bank as the special fund-withdrawal account, and the borrower shall open that account according to the requirements of the loan bank and sign the agreement on account management. The borrower shall provide the loan bank with the conditions of funds in and out of the account, and accept the loan bank&rsquo;s management of the advanced funds. The loan bank has the right to call in the loan in advance according to the borrower&rsquo;s conditions of fund withdrawal . The detailed account information is as following: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Bank of deposit: China Everbright Bank, Shanghai Putuo Branch </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Account: FTN36933672000006</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Unless agreed by the loan bank, the online bank payment service of the fund withdrawal account won&rsquo;t be opened. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter X">Chapter X</a> Event of default</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 46 Any one of the following matters will constitute the event of default under this contract: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. The borrower fails to pay the interests or repay the principal according to the due course in this contract; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. The borrower fails to use the loan fund according to the purpose stipulated in this contract; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. The borrower fails to pay the loan fund in the agreed mode; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">4. The borrower fails to abide by its commitments.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">5. The borrower breaks through the agreed financial index(the requirements of the approval of the loan bank credit extension shall prevail); </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">6. When significant cross events of default happen. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">7. The borrower provides the loan bank with the <i>Balance Sheet, Account of Business</i>, or other financial statements which are false or with material facts concealed, or refuses to accept the loan bank&rsquo;s supervision and examination of its loan use, relevant production, business and financial activities; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">8. The representations, warranties and commitments the borrower or the guarantor makes under this contract, or representations, warranties and commitments made by the guarantor under relevant contract of guaranty are proved untrue or misleading; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">9. The borrower or the guarantor violates the contract with itself as one party; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">10. The borrower or the guarantor&rsquo;s business and financial standing deteriorate severely; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">11. The object given as a pledge and pledged property/pledge right relevant to the loan under this contract have depreciation, damage or loss; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">12. When the borrower or the guarantor merges, separates or conduct share reform, it fails to make the repayment arrangement or debt restructuring plan that can satisfy the loan bank. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">13. The borrower or the guarantor goes bankrupt, dismissed, closed, canceled, or revoked. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">14. The borrower fails to inform the loan bank of the following conditions: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(1) Any material alteration to its articles of association and any substantial change to its business activities; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(2)Material alteration of its accounting principles; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(3)Any substantial change in finance, economy and other aspects of it, its subsidiary corporations or its parent companies; </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">15. The borrower is involved in any litigation, arbitration or administrative procedure that can constitute severe negative effect to its financial standing or its performance of the obligations under this contract . </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">16. The borrower&rsquo;s properties are seized, frozen, detained or controlled according to law, which may or already has affect the borrower&rsquo;s performance of its obligations under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">17. The borrower, as the group customer determined by the loan bank according to <i>Commercial Bank&rsquo;s Risk Management Guidelines for Giving Credit to Group Customers</i>, goes to the bank to make discount or pledge with creditor's rights of bill receivable and accounts receivable that have no real trade background by using the false contracts with the related parties, to cash the bank&rsquo;s fund or gain credit extension; or evades from creditor's rights of the bank through connected transactions. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">18. The borrower violates any other clause of this contract, and fails to make remedy satisfying the loan bank; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">19. Any other incident or condition happens that causes substantial negative effects on the rights of the loan bank under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 47 The loan bank judges whether the above-mentioned event of default happens or not and notifies the borrower. After any of the above-mentioned event of default happens, the loan bank has the right to take any one or several measures below: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">1. Stop the remit of the loan under this contract; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">2. Announce that all the remitted loan expires immediately and request the borrower to pay back all the remitted principal amount of loan, interest or other expenses realizing creditor's rights immediately; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">3. Request the borrower to add or change the guarantor, the object given as a pledge, and the pledged property/pledge right; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">4. Deduct any payment due but not paid by the borrower from the account opened by the borrower at the loan bank or any account opened at any branch within the system of the loan bank; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">5. Announce the implementation or realization of the rights under any guarantee of the relevant loan; </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">6. Other methods the loan bank thinks suitable. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter XI">Chapter XI</a> Others</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 48 Within the term of validity of this contract, the loan bank has the right to check the condition of use of the loan, and the borrower shall provide condition representation and materials to the loan bank according to its requirements. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 49 Both parties to the contract shall keep secret the debt, finance, production, business data and conditions of the other party learned because of signing and performing this contract, except for the relevant conditions of the borrower inquired according to law. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 50 Without the consent of the loan bank beforehand, the borrower can not transfer or dispose in other modes all or part of its obligations under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 51 Without the need to ask for the borrower&rsquo;s approval beforehand, the loan bank can transfer the creditor's rights under this contract to any third party, and only needs to notify the borrower in written form after the transfer. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 52 All the funds payable by the borrower under this contract shall be paid in full amount and can not be offset of any nature, deducted or withdrawn in advance, nor can the funds be offset with any debt the loan bank owes to the borrower. If any law requires the borrower to deduct or withdraw in advance any fund paid by the borrower to the loan bank, the borrower shall pay an extra amount of fund to the loan bank, to guarantee that the fund the loan bank receives equals to the fund receivable if there is no such deduction or withdrawal in advance. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 53 No moratorium, preference or extension the loan bank gives to the borrower will affect, damage or restrict any right enjoyed by the loan bank according to this contract, laws and regulations; and no moratorium, preference or extension the loan bank gives to the borrower shall be deemed as the loan bank&rsquo;s abandoning of the rights and interests under this contract, nor will any of them affect any responsibility or obligation the borrower undertakes under this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 54 If at any time, any clause of this contract becomes illegitimate, invalid or non-performable, the legitimacy, validity or performability of other clauses of this contract will not be affected or weakened. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 55 Any alteration or supplement to this contract shall be made in written form and effectively signed by the two parties to this contracts. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 56 The subtitles of this contract are only made for the convenience of reading and can not be used for the explanation of this contract or other purposes. The handwritten contents chosen and filled in this contract have the same legal effect with the printed contents in this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 57 The notices and requirements relevant to this contract the two parties send to each other shall be made in written form and sent to the addresses or faxes listed on the front page of this contract. If any party change its address or fax, it shall inform the other party in written form in time. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 58 If the correspondence between the two parties are delivered by specially-assigned personnel, they are deemed delivered after they are handed over; if they are sent by certified mail, they are deemed delivered 3 days after they are sent off; if they are sent by fax, they are deemed delivered at the moment they are sent out. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter XII">Chapter XII</a> Application of law and resolution of disputes</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 59 This contract and all the matters it involves shall be subject to the Chinese law, and explained by Chinese law. The disputes happening during the performance of this contract between the two parties shall first be solved through negotiation by the two parties; if negotiation fails, the dispute can be submitted to the court where the loan bank is located in the form of action. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter XIII">Chapter XIII</a> Entry into force, change and dissolution of the contract</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 60 This contract takes effect once it is stamped with official seals and signed or sealed by the legal representatives of the two parties or their authorized agents. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 61 After this contract takes effect, unless otherwise stipulated by laws and regulations or otherwise agreed in this contract, neither party can change or dissolve this contract without authorization. If alteration or dissolution of this contract is needed, the two parties shall reach consensus and form written agreement on it, and before the written agreement is reached, this contract clause remains effective. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter XIV">Chapter XIV</a> attachment</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 62 For the matters uncovered in this contract, the two parties can reach another written agreement as the attachment to this contract. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center"><b><a name="Chapter XV">Chapter XV</a> Supplementary provisions</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 63 The this contract is made in quadruplicate, the borrower holds one copy and the loan bank holds three copies. The four copies have equal legal effect. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Article 64 This contract was signed in Shanghai on October 24<sup>th</sup> 2016. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Article 65 Both parties to this contract agrees to make notarization of this contract and promise to endow the compulsory execution effect to this contract. When the borrower refuse to perform or incompletely perform the debt or when the circumstances of the loan bank realizing the creditors&rsquo; rights agreed by laws, regulations and this contract occur, the loan bank has the right to apply to the people's court with jurisdiction for forcible execution, and there won&rsquo;t be objection against the application. (This article is optional and both parties can choose whether it is [1]. 1. Applicable; 2. Not applicable for this contract)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">(This page is the sign page for both parties to the contract with no straight matter.)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">the borrower (seal): </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative: <img src="solarmax_ex1020img1.jpg"></p>
<p style="MARGIN: 0px">(or authorized agent)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">the loan bank(seal): seal for loan contract of China Everbright Bank, Shanghai Putuo Branch(specially used for company business)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Legal representative/the person in charge: Yu Wenhuan</p>
<p style="MARGIN: 0px">(or the authorized agent)</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Date of seal verification:2016-10-21 15:57:34; account 36728802406463259; account name: SOLARMAXTECHNOLOGY, INC; Type of voucher: contract; security code of voucher number: none; Seal verification operator: 738360 Zhou Minwei; the 1<sup>st</sup> seal(1, 1 hand signature ): manual effective; </p>
<p style="MARGIN: 0px">&nbsp;</p>
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<DOCUMENT>
<TYPE>EX-10
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<FILENAME>filename8.htm
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<html><head><title>solarmax_ex1021.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><strong>EXHIBIT 10.21</strong></p>
<p style="MARGIN: 0px" align="center"><b></b>&nbsp;</p>
<p style="MARGIN: 0px" align="center"><b><font size="3">Contract No.:</font></b></p>
<p style="MARGIN: 0px" align="center"><font size="4">&nbsp;</font></p>
<p style="MARGIN: 0px" align="center"><b><font size="4">Project Contracting Contract for</font></b></p>
<p style="MARGIN: 0px" align="center"><font size="4">&nbsp;</font></p>
<p style="MARGIN: 0px" align="center"><b><font size="4">70MW Photovoltaic Power</font></b></p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font size="4">Generation Project of Qingshui River,</font></b></p>
<p style="MARGIN: 0px" align="center"><b style="MARGIN: 0px"><font size="4">Xingyi City, Guizhou</font></b></p>
<p style="MARGIN: 0px" align="center"><font size="4">&nbsp;</font></p>
<p style="MARGIN: 0px" align="center"><b><font size="4">Business Part</font></b></p>
<p style="MARGIN: 0px" align="center"><font size="4">&nbsp;</font></p>
<p style="MARGIN: 0px" align="center"><b><font size="4">02/15/2016</font></b></p>
<p style="MARGIN: 0px"><br></p>
<p style="MARGIN: 0px">
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">1</td></tr>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><font size="3"><strong><a name="Table of Contents">Table of Contents</a></strong></font></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify">Part I Contract</p></td>
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<p style="MARGIN: 0px" align="right">6</p></td>
<td width="1%"></td></tr>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">I. Project overview</p></td>
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<p style="MARGIN: 0px" align="right">6</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">II. Main technical sources</p></td>
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<p style="MARGIN: 0px" align="right">7</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">III. Main dates</p></td>
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<p style="MARGIN: 0px" align="right">7</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">IV. Project quality standards</p></td>
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<p style="MARGIN: 0px" align="right">7</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">V. Contract composition, price and payment currency</p></td>
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<p style="MARGIN: 0px" align="right">8</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">VI. Undertakings of the contractor</p></td>
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<p style="MARGIN: 0px" align="right">8</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">VII. The meanings of related words hereof shall be the same with the definitions and interpretations granted by the general contract provisions.</p></td>
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<p style="MARGIN: 0px" align="right">10</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">VIII. Contract effectiveness</p></td>
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<p style="MARGIN: 0px" align="right">10</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<p style="MARGIN: 0px">&nbsp;</p></td></tr>
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<p style="MARGIN: 0px" align="justify">Part II General Provisions</p></td>
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<p style="MARGIN: 0px" align="right">12</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 1 General stipulations</p></td>
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<p style="MARGIN: 0px" align="right">12</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.1 Definitions and interpretations</p></td>
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<p style="MARGIN: 0px" align="right">12</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.2 Contract documents</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">17</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.3 Language and words</p></td>
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<p style="MARGIN: 0px" align="right">18</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.4 Governing laws</p></td>
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<p style="MARGIN: 0px" align="right">19</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.5 Standards and codes</p></td>
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<p style="MARGIN: 0px" align="right">19</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.6 Compliance with laws</p></td>
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<p style="MARGIN: 0px" align="right">20</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">1.7 Confidentiality matters</p></td>
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<p style="MARGIN: 0px" align="right">21</p></td>
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 2 Contract letting party</p></td>
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<p style="MARGIN: 0px" align="right">21</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">2.1 The contract letting party's obligations and rights</p></td>
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<p style="MARGIN: 0px" align="right">21</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">2.2 Representative of the contract letting party</p></td>
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<p style="MARGIN: 0px" align="right">22</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">2.3 Supervisor</p></td>
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<p style="MARGIN: 0px" align="right">22</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">2.4 Safety guarantee and security guard responsibility</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">23</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 3 Contractor</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">23</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.1 The contractor's obligations and rights</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">23</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.2 Project manager</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">24</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.3 Project quality assurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">25</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.4 Safety assurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">25</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.5 Occupational health and environmental protection assurance</p></td>
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<p style="MARGIN: 0px" align="right">26</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.6 Progress guarantee</p></td>
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<p style="MARGIN: 0px" align="right">26</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.7 Spot security guard</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">26</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">3.8 Subcontracting</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">27</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 4 Progress plan, delay and suspension</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">28</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.1 Project progress plan</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">28</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.2 Design progress plan</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">29</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.3 Purchase progress plan</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">29</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.4 Construction progress plan</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">30</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.5 Delay compensation</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">31</p></td>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">4.6 Suspension</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">32</p></td>
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<p style="MARGIN: 0px">&nbsp;
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 5 Technologies and design</p></td>
<td valign="top" width="9%">
<p style="MARGIN: 0px" align="right">34</p></td>
<td width="1%"></td></tr>
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<p style="MARGIN: 0px 0px 0px 30px" align="justify">5.1 Production processing technologies and construction art models</p></td>
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<p style="MARGIN: 0px" align="right">34</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">5.2 Design</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">35</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">5.3 Design stage verification</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">37</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">5.4 Training of operators and maintenance persons</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">38</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">5.5 Intellectual properties</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">38</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 6 Project materials</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">38</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.1 Provision of project materials</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">38</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.2 Test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">40</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.3 Imported project materials and customs declaration &amp; customs clearance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">42</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.4 Transportation and transportation of the materials beyond limits</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">42</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.5 Reorder and consequences</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">43</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">6.6 Custody and surplus of project materials</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">43</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 7 Construction</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">43</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.1 The contract letting party's obligations</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">43</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.2 The contractor's obligations</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">44</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.3 Construction technologies and methods</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">47</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.4 Human, machine and tool resources</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">47</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.5 Quality and inspection</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">48</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.6 Concealed project and midway inspection &amp; acceptance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">51</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.7 Dispute on the construction quality result</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">53</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">7.8 Health, safety and environment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">53</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 8 Completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">59</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.1 Completion test obligation</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">59</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.2 Examination and inspection &amp; acceptance of completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">61</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.3 Completion test safety and examination</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">62</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.4 Delayed completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">64</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.5 Retest and inspection &amp; acceptance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">65</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.6 Failure to pass completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">65</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">8.7 Dispute on completion test result</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">66</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 9 Project receipt</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">67</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">9.1 Project receipt</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">67</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">9.2 Receipt certificate</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">68</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">9.3 Project receipt responsibilities</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">68</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">9.4 Failure to receive the project</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">69</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 10 Post-completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">69</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.1 Rights and obligations</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">69</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.2 Post-completion test procedures</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">72</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.3 Post-completion test and trial operation assessment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">73</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.4 Delay in post-completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">74</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.5 Conducting post-completion test again</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">75</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.6 Failure to pass assessment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">75</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.7 Post-completion test and assessment inspection &amp; acceptance certificate</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">76</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">10.8 Loss of production value and use value</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">77</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 11 Quality assurance responsibility</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">77</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">11.1 Quality assurance responsibility agreement</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">77</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">11.2 Quality assurance amount</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">78</p></td>
<td></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<p style="MARGIN: 0px">
<table id="pagebreak585e9d51-60c9-47ea-87c0-8396bdbf0b82" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
<tr>
<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">3</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
<tr>
<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
<table style="TEXT-ALIGN: justify; FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 12 Project completion inspection &amp; acceptance</p></td>
<td valign="top" width="9%">
<p style="MARGIN: 0px" align="right">78</p></td>
<td width="1%"></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">12.1 Completion inspection &amp; acceptance report and complete completion materials</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">78</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">12.2 Completion inspection &amp; acceptance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">79</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 13 Alteration and contract price adjustment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">80</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.1 Alteration rights</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">80</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.2 Alteration scope</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">80</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.3 Alteration procedures</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">82</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.4 Emergent alteration procedures</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">84</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.5 Determination upon alteration price</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">85</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.6 Interest sharing of suggested alteration</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">85</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.7 Adjustment to the contract price</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">86</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">13.8 Dispute in adjustment to the contract price</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">86</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 14 Total contract price and payment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">87</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.1 Total contract price and payment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">87</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.2 Guarantee (not applicable to this contract)</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">87</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.3 Prepayment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">87</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.4 Project progress accounts</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">88</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.5 Provisional deduction and payment of quality assurance amount.</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">89</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.6 Applying for payment according to the payment schedule</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">90</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.7 Payment condition and schedule</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">91</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.8 Delay in payment time</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">91</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.9 Tax and tariff</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">92</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.10 Payment of claim accounts</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">93</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">14.11 Completion settlement</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">93</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 15 Insurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">97</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">15.1 The insurance purchased by the contractor</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">97</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">15.2 All-risk insurance and third-party liability insurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">98</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">15.3 Miscellaneous provisions on insurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">98</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 16 Breach, claim and arbitration</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">98</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">16.1 Breach liabilities</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">98</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">16.2 Claim</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">100</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">16.3 Dispute and adjudication</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">102</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 17 Force majeure</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">103</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">17.1 Obligations upon occurrence of force majeure.</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">103</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 30px" align="justify">17.2 Consequences of force majeure.</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">103</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 18 N/A</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">104</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 19 Contract effectiveness and termination</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">104</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 20 Supplementary provisions</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">104</p></td>
<td></td></tr></table>
<p style="MARGIN: 0px">&nbsp;
<p style="MARGIN: 0px">
<table id="pagebreakd39d7734-2d65-4c14-8046-e74a0e1079b3" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

<tr>
<td class="hpbhr">&nbsp;</td></tr>
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<td style="BORDER-BOTTOM: black 1px solid; TEXT-ALIGN: center">4</td></tr>
<tr></tr>
<tr>
<td>
<div style="WIDTH: 100%; PAGE-BREAK-AFTER: always; LINE-HEIGHT: 0px"></div></td></tr>
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<td>&nbsp;</td></tr></table>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px" align="justify">Part III Special provisions</p></td>
<td valign="top" width="9%">
<p style="MARGIN: 0px" align="right">105</p></td>
<td width="1%"></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 1 General stipulations</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">105</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 2 Contract letting party</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">106</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 3 Contractor</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">106</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 4 Progress plan, delay and suspension</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">107</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 5 Technologies and design</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">108</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 6 Project materials</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">109</p></td>
<td></td></tr>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 7 Construction</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">110</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 8 Completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">112</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 9 Project receipt</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">113</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 10 Post-completion test</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">114</p></td>
<td></td></tr>
<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 11 Quality assurance responsibility</p></td>
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<p style="MARGIN: 0px" align="right">115</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 12 Project completion inspection &amp; acceptance</p></td>
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<p style="MARGIN: 0px" align="right">115</p></td>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 13 Alteration and contract price adjustment</p></td>
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<p style="MARGIN: 0px" align="right">116</p></td>
<td></td></tr>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 14 Total contract price and payment</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">116</p></td>
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<tr bgcolor="#ffffff">
<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 15 Insurance</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">119</p></td>
<td></td></tr>
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<td valign="top">
<p style="MARGIN: 0px 0px 0px 15px" align="justify">Article 16 Contract effectiveness and termination</p></td>
<td valign="top">
<p style="MARGIN: 0px" align="right">120</p></td>
<td></td></tr></table>&nbsp;&nbsp;
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px"><b><font size="4"><a name="Part I Contract">Part I Contract</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Contract letting party (Party A): Xingyi Zhonghong New Energies Co., Ltd.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Contractor (Party B): Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In accordance with the Contract Law of the People's Republic of China, Construction Law of the People's Republic of China as well as related laws and administrative regulations, based upon the principles of equality, willingness, fairness and integrity, the contract parties enter into this contract through negotiation with respect to the matter relating to the contracting of 70MW photovoltaic power generation project of Qingshui River, Xingyi City, Guizhou.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="I. Project overview">I. Project overview</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Name of project: 70MW (actual volume: 70MW) photovoltaic power generation project of Qingshui River, Xingyi City, Guizhou</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Address of project: Qingshui River Development Zone, Xingyi City</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Contracting scope of project: all work necessary for constructing a complete photovoltaic power generation system by the contractor from the project development of this project to the start of commercial running of the photovoltaic power generation system and passing of inspection and acceptance conducted by relevant national, provincial and municipal authorities until expiry of the quality assurance period. The contents of this project include but be not limited to the project development, survey and design (including but not limited to preliminary design, construction drawing design, completion drawing design and access system design), civil engineering projects (including but not limited to foundation treatment, booster station and conveying lines), equipment and material supply, commodity and spare part preparation, transportation, custody, insurance, installation project, technical service, production preparation, employee training, debugging, test, inspection &amp; acceptance and synchronization, completion inspection &amp; acceptance, handling of all kinds of formalities and documents as well as obtaining of certification documents from relevant governmental authorities, after-sale service and project information system, standardized management, post appraisal and cooperation within complete scope of EPC project of 70MW photovoltaic power generation project of Qingshui River, Xingyi City (including outgoing line project, station transformation lines, installation test and equipment on both sides). The total contracting price includes the material and equipment purchase (including photovoltaic components) of the whole project and all expenses occurring (except for supervision) during the project construction period and relating to this project.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Such general contracting agreement does not include all one-off expenses including but not limited to project land lease, indemnification, site-clearing fee, young crop compensation and fee adjustment fee, Party B shall be responsible for handling the above related matters, however, Party A shall bear the expenses.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="II. Main technical sources">II. Main technical sources</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Current technical standards promulgated by the State and the industry.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="III. Main dates">III. Main dates</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Contract period (absolute date or relative date): not later than expiry of the quality assurance period.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Construction period (absolute date or relative date): November 10, 2015</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Date of synchronization: synchronization and power generation shall be accomplished before June 30, 2016.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="IV. Project quality standards">IV. Project quality standards</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Project quality standards: refer to <i>Photovoltaic Power Station Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II for details) and relevant technical standards promulgated by the State and the industry.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font size="3"><a name="V. Contract composition, price and payment currency"><b>V</b><b>. Contract composition, price and payment currency</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract shall have the contents including but not limited to project development, equipment purchase, design and construction installation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The total contract price is RMB 518,000,000.00 yuan (in words: RMB FIVE HUNDRED AND EIGHTEEN MILLION YUAN ONLY, tax inclusive), the specific amount of each item shall be subject to final settlement of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The total volume of this project is 70MWp, wherein, the unit contracting price for settlement of the project shall be RMB 7.4 yuan/W. If the owner requires to conduct any increased work on the project, the unit project settlement price for the increased part shall be RMB 7.4 yuan/W.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Except for the amount that shall be increased or decreased in the project implementation process as set forth herein, the contract price shall not be adjusted.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="VI. Undertakings of the contractor">VI. Undertakings of the contractor</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Whereas, the contractor shall be responsible for the development of the whole 70MW photovoltaic power generation project of Qingshui River, Xingyi City, Guizhou, and under the premise that the contractor undertakes to obtain electricity price subsidy of RMB 1 yuan/kwh for such project, the contract letting party chooses Party B as contractor of such project. The contractor shall be responsible for obtaining electricity price subsidy of RMB 1 yuan/kwh for such project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In the event that, as of June 30, 2016, the contractor still fails to accomplish overall synchronization and power generation of such project, the contractor shall bear the contract letting party's cost of funds <b>(the cost of funds shall be calculated based upon the annual interest according to the bank loan interest rate of the same period).</b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The equipment selection of this project shall be recognized by the contract letting party or the design supervisor designated by the contract letting party (the specific details shall be subject to the technical terms).</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor undertakes to, according to contract provisions, timely pay any and all sub-contractor equipment accounts and project accounts and guarantee that any and all sub-contractor shall not affect the construction of this project and subsequent operation work, should the contractor's failure to timely pay project and equipment accounts cause the construction of this project and subsequent operation to be affected, the contractor shall be entitled to pay reasonable accounts to any and all sub-contracting units of the contractor, the accounts paid shall be directly deducted from the total contract price or subject to recourse from the contractor, any and all other losses caused shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor guarantees to the contract letting party that, it will conduct project development, design, purchase, construction and debugging until overall synchronization of this project in strict accordance with contract provisions in order to make this project be operated according to the provisions hereof and shall be responsible for renovating any and all faults and defects caused by any reason attributable to the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor undertakes that, consent and written confirmation of the contract letting party shall be obtained for supplier selection and type selection of main equipment purchase (including but not limited to component, inverter, support, cable and box transformer).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for handling land formalities for the project. The contractor undertakes that, the land shall satisfy the 70MW volume requirement of the power station and the land is free from any ownership dispute (the leased land circulation formalities shall conform to Party A's requirement), the land shall satisfy 25-year service life of the project and the land rental (including but not limited to indemnification, site-clearing fee, young crop compensation and fee adjustment fee) shall be settled according to the actual expenses.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Before this project is handed over to the contract letting party, the contractor undertakes to finish handling all certificates and approval files necessary for such project and guarantees that all formalities and documents are authentic, complete, legal and effective.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for developing the whole project and handling formalities as well as conducting all work for the construction and synchronization of the whole power station, the contract letting party fully trusts the contractor's professional capacity, the contractor undertakes that such project can certainly obtain approval and response file on the electricity price of RMB 1.0 yuan/kwh for the target project issued by the Price Bureau.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="VII. The meanings of related words hereof shall be the same with the definitions and interpretations granted by the general contract provisions.">VII. The meanings of related words hereof shall be the same with the definitions and interpretations granted by the general contract provisions.</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="VIII. Contract effectiveness">VIII. Contract effectiveness</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">This contract shall come into effectiveness after being signed and affixed with official unit seals by the parties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Date of contract conclusion: February 15, 2016</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Place of contract conclusion:<br></p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">(This page is intentionally left blank) This page is intentionally left blank as the signing page of Project Contracting Contract for 70MW Photovoltaic Power Generation Project of Qingshui River, Xingyi City, Guizhouentered into by and between Xingyi Zhonghong New Energies Co., Ltd. and Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px"><b>(Signing page)</b></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><strong>Contract letting party: Xingyi </strong><b>Z</b><b>h</b><b>onghong New Energies Co., Ltd.</b></p></td>
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<p style="MARGIN: 0px"></td>
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<p style="MARGIN: 0px"><b>Contractor: Solarmax Technology </b><b>(Jiangsu) Co., Ltd.</b></p></td></tr>
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<p style="MARGIN: 0px"><b>Legal representative:</b></p></td></tr>
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<p style="MARGIN: 0px"><strong>Postal code: </strong></p></td>
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<p style="MARGIN: 0px"><strong>Telephone:</strong></p></td>
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<p style="MARGIN: 0px"><strong>Fax:</strong></p></td>
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<p style="MARGIN: 0px"><strong>E-mail: </strong></p></td>
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<p style="MARGIN: 0px"><b>E-mail:</b></p></td></tr>
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<p style="MARGIN: 0px"><strong>Account opening bank: </strong></p></td>
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<p style="MARGIN: 0px"><strong>Account opening bank: </strong></p></td></tr>
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<p style="MARGIN: 0px"><strong>Account No.:</strong></p></td>
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<p style="MARGIN: 0px">
<p style="MARGIN: 0px"><b>Account No.:</b></p></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="4"><a name="Part II General Provisions">Part II General Provisions</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 1 General stipulations">Article 1 General stipulations</a></font></b></p>
<p style="MARGIN: 0px"><font size="3"></font>&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="1.1 Definitions and interpretations">1.1 Definitions and interpretations</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.1 General provisions refer to ordinary provisions observed by the contract parties in the process of performing the project contracting contract according to the provisions of laws and administrative regulations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.2 Special provisions refer to the provisions for supplementation, modification and perfection to the general provisions according to the actual situation of the contracting project that are jointly observed with consent.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.3 Project contracting, means that, upon entrustment of the contract letting party, the contractor conducts project contracting of the whole process as well as the design and other stages including but not limited to the design, purchase, construction (including completion test) and trial operation of the engineering construction project according to contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.4 Contract letting party refers to the party called contract letting party as agreed upon in the contract, including its legal successor and licensed assignee.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.5 Contractor refers to the party accepted by the contract letting party and having the qualification of project contracting subject as agreed upon in the contract, including its legal successor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.6 Subcontractor refers to any legal person or other organization with relevant qualification who accepts the subcontracting of part of the project or services by the contractor according to contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.7 Representative of the contract letting party refers to the representative designated by the contract letting party for performing this contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.8 Supervisor refers to the project supervising unit with relevant qualification entrusted by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.9 Project director refers to the general supervising engineer authorized by the supervisor and responsible for performing the supervision contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.10 Project manager refers to the representative appointed by the contractor to be responsible for performing this contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.11 Permanent project refers to the project subject to design, construction, completion test, post-completion test, completion inspection &amp; acceptance and trial operation assessment and delivery to the contract letting party for production, operation or use by the contractor according to contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.12 Project development: the contractor shall be responsible for obtaining all formalities and documents necessary for 70MW photovoltaic power generation project of Qingshui River, Xingyi City before overall synchronization and guarantee that all formalities for this project are complete, legal and effective. See Appendix VI List of Formalities for details (According to the governmental regulations, if there is any formality that does not have to be handled or it is necessary to additionally handle any other document, the governmental regulations shall apply).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Including but not limited to:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Obtaining project archival filing, being responsible for handling all formalities of the archival filing period including but not limited to preliminary verification of land use, land surveying and mapping, geological prospecting, environmental assessment, energy assessment, safety assessment, stability assessment, water protection, preliminary verification comments of land and resources bureau, land circulation &amp; land use formalities, geological disaster assessment, overlaid and covered mineral report, planning and address selecting opinion as well as red-line drawing;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for handling power grid access, construction license, land use planning and license, construction project planning and license, fire protection inspection &amp; acceptance, environmental protection inspection &amp; acceptance and land use right certificate etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall guarantee that the land conforms to the requirements of power station construction, including but not limited to: the land ownership and use purpose conform to relevant requirements, the land area conforms to the requirements of power station, a series of expenses including but not limited to design, supervision, construction, compensation and economic input incurred by water and land preservation and environmental protection inspection and acceptance are all included in this contract.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.13 Provisional project refers to any provisional building and structure that shall be constructed on the spot as well as any project not constituting permanent project entity for implementing, accomplishing permanent project and repairing any quality defect.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.14 Spot or field refers to any site used by the contractor for work on the spot, residence, storage of equipment, materials and parts, construction machines, tools and facilities as well as implementation of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.15 Project basic materials refer to the approval or ratification files by relevant authority on the project that shall be provided and handled by the contractor upon entrustment of the contract letting party, reports (factory selection report, resource report and reconnaissance report), materials (weather, hydrology and geology), agreements (water, electricity, gas and transportation) and relevant data etc. as well as basic materials necessary for design.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.16 Spot obstacle materials, refer to the coordinate locations and data of existing aboveground and underground buildings, structures, historic buildings and ancient trees etc. that shall be protected as well as the materials of other situations necessary for the contractor to accomplish design and conduct spot construction.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.17 Design stage refers to the stage of planning design, overall design, preliminary design, technical design and construction drawing design.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.18 Project materials refer to the materials necessary for the equipment, materials and components constituting the permanent project entity as set forth in the design documents as well as the materials for post-completion test and completion inspection &amp; acceptance etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.19 Construction refers to the process that the contractor converts the design documents into the project, including the operation of civil engineering, installation and completion test etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.1.20 Completion test, refers to the test that shall be conducted by the contractor and relevant governmental authority upon accomplishment of civil engineering and installation of the project and before the project is received by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.21 Construction completion means that the civil engineering and installation of the project have been accomplished according to the contract provisions and design requirements and the project has passed completion test and completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.22 Project receipt, refers to the process that, after the project passes completion test and completion inspection &amp; acceptance, in order to make the operators and users of the contract letting parties to assume their posts to make preparation for post-completion test and trial operation, the contractor and the contract letting party handle project handover and take over and the contract letting party issues receipt certificate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.23 Post-completion test refers to, after the project is received by the contract letting party, the test organized by the contract letting party on its own according to the contract provisions or the function test on the project under the organization and leading or the contract letting party and guidance by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.24 Trial operation assessment refers to all tests including the contract objective assessment inspection &amp; acceptance conducted by the contract letting party on its own or under the organization and leading of the contract letting party and under the guidance of the contractor according to the contract provisions and upon completion test after the project is accomplished.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.25 Assessment inspection &amp; acceptance certificate refers to the inspection &amp; acceptance certificate issued by the contract letting party upon accomplishment and inspection &amp; acceptance of all trial operation assessment tests.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.26 Synchronization inspection &amp; acceptance: means that, upon overall synchronization of this project, in order to obtain the synchronization inspection &amp; acceptance certificate issued by the contract letting party for this project, the contractor shall, according to the procedures and standards as set forth in the technical part of national industrial standards, conduct 240-hour continuous trial operation without any fault on this project, hand over all project materials, pass verification to be qualified and obtain the certification documents issued by the power grid and relevant governmental authority on synchronization permission and electricity power approval file of the material price authority.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.27 Project completion inspection &amp; acceptance refers to the project settlement and inspection &amp; acceptance organized by the contract letting party after the contractor receives assessment inspection &amp; acceptance certificate, accomplishes round-off project and defect renovation and submits completion inspection &amp; acceptance report, completion materials and completion settlement materials submitted according to the contract provisions. The project quality assurance period shall be calculated from the date of accomplishment of the project completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.28 Project progress plan refers to the time schedule and arrangement of all project implementation stages (including design, purchase, construction, completion test, project receipt, post-completion test, completion inspection &amp; acceptance all trial operation stages) as set forth herein or several implementation stages as set forth herein from the date of effectiveness of the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.29 Date of construction start refers to the absolute date or relative date on which the contractor starts spot construction as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.30 Date of completion refers to the absolute date or relative date on which the contractor finishes project construction (including completion test) as set forth in the contract, including any postponed date as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.31 Alteration refers to any alteration made to the project as notified or approved in writing by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.32 Contract price refers to the price for the work conducted by the contractor including but not limited to design, purchase, construction, completion test, post-completion test, completion inspection &amp; acceptance and service as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.33 Adjustment to the contract price refers to relevant adjustment made to the contract price according to any increase or decrease in the expenses that shall be effected according to the contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.34 Total contract price refers to the contract price upon adjustment according to the contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.1.35 Prepayment refers to the accounts that shall be prepaid to the contractor by the contract letting party according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.36 Project progress accounts refer to the progress accounts for design, purchase and construction as well as the service fees etc. for post-completion test and completion inspection &amp; acceptance paid by the contract letting party to the contractor by installments according to the payment contents and payment conditions as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.37 Project quality assurance responsibility agreement refers to the quality assurance responsibility agreement entered into by and between the contract letting party and the contractor according to the laws and regulations on quality assurance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.38 Written form refers to the form that may tangibly reflect the contents stated, including contract, letter and data message. Data message includes: telex, fax, EDI (electronic data interchange) and email.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.39 Breach liabilities refer to the liabilities that shall be borne by the contract party who fails to perform contract obligations or whose performance of contract obligations does not conform to the contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.40 Force majeure refers to the objective situations that can not be foreseen, avoided or overcome.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.41 According to the features of the project as set forth herein, other definitions that shall be supplemented as agreed upon.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.1.42 The headlines of the articles shall not be deemed as basis for contract interpretation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="1.2 Contract documents">1.2 Contract documents</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.2.1 Composition of contract documents. The contract documents interpret and explain to and for each other. Unless otherwise set forth in the special provisions, the documents constituting this contract and the priority sequence of interpretation are as follows:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) This contract</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(2) Special provisions of this contract</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(3) General provisions of this contract</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(4) Standards, codes and relevant technical documents</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(5) Design documents, materials and drawings</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(6) Other documents constituting part hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Written documents including but not limited to notice, minute, memorandum, supplementary document, directive, fax, email, alteration and discussion formed in the process of contract performance by both parties constituting integral part hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.2.2 In case of unclearness or inconsistency in the contents of the provisions hereof and failure in explanation for clearness according to the interpretation sequence as set forth in the contract, under the circumstance of not affecting normal implementation of the project, the parties may either negotiate for settlement or adopt the interpretations of the supervisor. In case of no agreement reached upon negotiation by the parties or refusal to accept the interpretations of the supervisor, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.2.3 The headlines of the articles hereof are only for the convenience of reading, shall not be deemed as basis for interpretations on the contract articles.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.2.4 The "date", "month" and "year" used herein refer to the calendar date, month and year. The starting date of any period used herein refers to the date immediately following the date of occurrence of any relevant event. If the starting of any time is based upon the expiry of certain period, such starting date shall be the date immediately following the date of expiry of such period. The date of expiry of any period shall be the date on which such period expires. "Working day" refers to any calendar day other than legal holidays in China.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="1.3 Language and words">1.3 Language and words</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract is written, interpreted and explained in Simplified Chinese words. If the contract parties agree upon the use of two and more kinds of languages in the special provisions, Chinese shall be the dominating language for interpretation and explanation of this contract in priority.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">In minority areas, the parties may agree upon the use of any minority language for writing, interpreting and explaining this contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px"><b><font size="3"><a name="1.4 Governing laws">1.4 Governing laws</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">This contract shall be governed by the laws of the People's Republic of China (excluding Hong Kong Special Administrative Region, Macao Special Administrative Region and Taiwan). The names of specific governing laws that shall be indicated expressly are stated in special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="1.5 Standards and codes">1.5 Standards and codes</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.5.1 The names (or numbers) of the national standards and codes, industrial standards and codes, standards and codes of the place in which the project is located as well as enterprise standards and codes applicable to this project are stated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.5.2 If the contract letting party uses foreign standards and codes, it shall be responsible for providing the version of the original language and Chinese translation text as well as stipulating in special provisions the names and counterparts of the standards and codes that shall be provided and the dates on which the standards and codes shall be provided.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.5.3 Without relevant written standards and codes, the contract letting party shall specify technical requirements in special provisions within the time as set forth, the contractor shall propose implementation methods within the time as set forth and according to the technical requirements, such implementation methods shall only be effected upon recognition of the contract letting party. If the contractor needs to conduct research and development test on the implementation methods or provide the construction employees with special training, agreement shall be otherwise entered into as appendix hereto and the expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.5.4 Design, purchase, processing and construction shall be conducted in accordance with the standards and codes as set forth in the provisions hereof, neither party shall alter the stipulations of national mandatory standards and codes.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.5.5 The contract letting party shall be entitled to, in accordance with the contract as well as the standards and codes as set forth in applicable laws, raise suggestion, modification and alteration (without any additional fee) to the safety, quality, environmental protection and occupational health.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="1.6 Compliance with laws">1.6 Compliance with laws</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.6.1 During the period of contract performance, in accordance with the provisions of national laws and administrative regulations, the contractor shall handle and obtain the formalities including but not limited to project initiation, urban planning, regional planning approval file, land use license, project start approval or construction license, project quality supervision as well as any other permission, license, certificate and approval file, the contractor shall also be responsible for coordinating the relationship with any relevant authority and unit.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.6.2 During the period of contract performance, the contractor shall, in accordance with applicable laws, administrative regulations or industrial regulations, conduct design, purchase, processing, construction, completion test, post-completion test and completion inspection &amp; acceptance etc. and assume quality assurance responsibility. The contractor shall handle all kinds of permissions, licenses, approval files and formalities etc. necessary for contract performance that shall be handled by the contractor and guarantee that the contract letting party shall be protected from any loss caused thereby. In case of causing any loss against the contract letting party, the contractor shall make compensation according to the reasonable fees actually added of the contract letting party. In case of delay in the date of synchronization, the contractor shall be liable for compensating for any loss therefore caused against the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.6.3 The contractor shall pay salaries and wages to the employees on time, purchase all kinds of insurance as set forth in laws and pay relevant taxes and charges.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.6.4 In order to strengthen the supervision on engineering construction work, standardize the probity and discipline in contract conclusion and implementation according to law as well as prevent the occurrence of all kinds of illegitimate behaviors, according to relevant national and local regulations, in line with the work practice, anti-bribery and anti-corruption declaration shall be entered into, see Appendix IV.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="1.7 Confidentiality matters">1.7 Confidentiality matters</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Either party shall be obliged to keep the trade secrets and technical secrets of the other party known in the process of contract conclusion and performance confidential, without consent, shall not disclose or use for any purpose beyond what is set forth herein. If either party discloses or uses any such trade secret or technical secret beyond this contract, which causes any loss against the other party, it shall assume damage compensation liability. If either party needs any information necessary for contract performance, the other party shall offer.If the parties deem as necessary, they may enter into confidentiality agreement as appendix hereto.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 2 Contract letting party">Article 2 Contract letting party</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px"><font size="3">&nbsp;</font></p>
<p style="MARGIN: 0px"><b><font size="3"><a name="2.1 The contract letting party's obligations and rights">2.1 The contract letting party's obligations and rights</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.1.1 Shall perform the contract price adjustment, payment and completion settlement obligations as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.1.2 Shall be entitled to raise suggestions on the implementation work including but not limited to the design, purchase and construction of the contractor according to the contract provisions and mandatory stipulations of national laws on safety, quality, standard, environmental protection and occupational health etc., modification and alteration may only be made after such suggestions are acknowledged by both parties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.1.3 Shall be entitled to, according to the contract provisions, raise compensation requirement for any loss and damage caused by any reason attributable to the contractor against the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.1.4 When the contract letting party deems as necessary, it shall be entitled to give notice on suspension in writing. If any reason attributable to the contract letting party causes any increase in the fees, such increase in the fees shall be borne by the contract letting party. In case of delay in any key route of the project caused thereby, the date of synchronization shall be extended accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">2.1.5 Perform other rights and obligations as set forth in the contract.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="2.2 Representative of the contract letting party">2.2 Representative of the contract letting party</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.2.1 The representative designated by the contract letting party shall exercise the rights entrusted by the contract letting party and perform the obligations of the contract letting party. The representative of the contract letting party shall perform his/her duty according to this contract and within the scope of authorization. Any notice given by the representative of the contract letting party be given to the contractor according to the contract provisions and submitted to the project manager after being signed by himself/herself in writing.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.2.2 The name, title and duty of the representative of the contract letting party shall be set forth in the special provisions. If the contract letting party decides to replace its representative, it shall notify the contractor in writing of the name, title, function of power and date of appointment of the new representative 15 days before the new representative takes up the post.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="2.3 Supervisor">2.3 Supervisor</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.3.1 If the contract letting party conducts supervision on the project, the name of the supervisor, project director, supervision scope, contents, function of power and authority shall be specified in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The supervisor shall conduct supervision on the contractor on behalf of the contract letting party according to the scope, contents, function of power and authority of supervision entrusted by the contract letting party. Any notice given by the supervisor to the contractor shall be signed by the project director in writing and subsequently submitted to the project manager.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.3.2 In case of overlapping or unclear function of power of the project director and the representative of the contract letting party, the contract letting party shall coordinate, make clear and notify the contractor in writing.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.3.3 Unless otherwise expressly set forth in the special provisions or with consent of the contract letting party, the project director shall not be entitled to alter any right and obligation of the contract parties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2.3.4 If the contract letting party intends to replace the project director, it shall notify the contractor of the name, title, function of power, authority and date of appointment of the substitute in writing 15 days in advance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="2.4 Safety guarantee and security guard responsibility">2.4 Safety guarantee and security guard responsibility</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The safety and security guard agreement shall be otherwise entered into.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b style="MARGIN: 0px"><font size="3"><a name="Article 3 Contractor">Article 3 Contractor</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b style="MARGIN: 0px"><font size="3"><a name="3.1 The contractor's obligations and rights">3.1 The contractor's obligations and rights</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.1.1 Shall be responsible for handling relevant formalities including but not limited to project verification and approval, ratification or archival filing, obtaining the use right of all project land, processing relevant formalities including but not limited to change from agricultural land into project land, lease and contracting of the project land, as well as accomplishing demolition and compensation work to make the project have the work start conditions as set forth in laws. The contractor shall be obliged to accomplish design, purchase, construction, completion test, post-completion test, completion inspection &amp; acceptance according to this contract as well as the standards, codes, project functions, scale, assessment object and date of synchronization as set forth in the contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.1.2 The contractor shall be obliged to, according to the contract provisions, at its own expenses, renovate any defect in any design, document, equipment, material, part, construction, completion test, post-completion test, completion inspection &amp; acceptance caused by any reason attributable to the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.1.3 The contractor shall be obliged to submit related statements according to the contract provisions and the requirements of the contract letting party. The types, contents and dates of submission of the statements shall be stated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.1.4 In case of notice on suspension on account of any reason attributable to the contract letting party, the contractor shall be entitled to propose to increase the fees or postpone the date of completion according to the provisions of Article 2.1.4 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.1.5 With respect to any loss, damage or delay in any key route of the project caused by any reason attributable to the contract letting party, the contractor shall be entitled to require compensation or postpone the date of completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.2 Project manager">3.2 Project manager</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.2.1 The project manager shall have relevant occupational qualification, is authorized to be responsible for performing this contract on behalf of the contractor. The name, duty and authority of the project manager shall be stated in the special provisions. The project manager shall not simultaneously assume the post of project manager for any other project. With prior consent of the contract letting party, the project manager may leave the project site and designate an experienced person with consent of the contract letting party to provisionally perform his/her duty on behalf of him/her. If the contractor violates the above provisions, it shall assume breach liabilities according to the stipulations of such special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.2.2 The project manager shall organize project implementation according to the project progress plan as set forth in the contract and any directive delivered by the representative of the contract letting party or the project director in accordance herewith. In case of emergency and failure to contact with the representative of the contract letting party or the project director, the project manager shall be entitled to take necessary measures to safeguard the human body, project and property safety, however, he/she shall notify the representative of the contract letting party or the project director within <font style="FONT-FAMILY: Wingdings">o</font> hours upon the emergency and submit written report to the representative of the contract letting party or the project director within 48 hours upon the emergency.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.2.3 If the contractor needs to replace the project manager, it shall notify the contract letting party in writing 15 days in advance and obtain consent of the contract letting party. The succeeding project manager shall continue to perform the duty and authority as set forth in Article 3.2.1. If, without consent of the contract letting party, the contractor arbitrarily replaces the project manager, it shall assume breach liabilities according to the stipulations of Article 3.2.1 Special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.2.4 The contract letting party shall be entitled to replace any project manager it deems as incompetent by written notice, the contractor shall submit written improvement report to the contract letting party within 15 days upon the receipt of notice on replacement. Hereinafter, if the contract letting party still notifies of replacement in writing, the contractor shall effect replacement within 15 days after receipt of the second notice on replacement and notify the contract letting party of the name and resume of the newly appointed project manager in writing. The new project manager shall continue to perform the authority as set forth in Article 3.2.1.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.3 Project quality assurance">3.3 Project quality assurance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.3.1 Quality assurance system.The contractor's quality assurance system authentication certificate shall be kept continuously effective in the contract implementation process, and the quality assurance system hereunder shall be established.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.3.2 Quality assurance of the implementation process. The contractor shall ensure about the quality of design, purchase, processing &amp; manufacture, construction, completion test, post-completion test, assessment and inspection &amp; acceptance as well as completion acceptance according to the quality standards and codes as set forth in the contract. The contractor shall also guarantee to keep the project in good repair in accordance with national regulations on quality assurance responsibilities. The quality assurance period of the project shall be calculated from the date of completion inspection &amp; acceptance of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.4 Safety assurance">3.4 Safety assurance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.4.1 Project safety performanceThe contractor shall conduct design, purchase, construction, completion test, completion inspection &amp; acceptance in order to guarantee about the project safety performance according to the contract provisions and in compliance with construction project design management rules, construction project quality management rules as well as relevant laws and regulations on safe production.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.4.2 Safe construction on the spot and environmental safety. The contractor shall comply with the provisions of health, safety and environment as set forth in Article 7.8 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.5 Occupational health and environmental protection assurance">3.5 Occupational health and environmental protection assurance</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.5.1 Project design. The contractor shall conduct environmental protection design and occupational health protection design of the project in order to guarantee that the project conforms to the laws and regulations on environmental protection and occupational health according to the contract provisions and in compliance with construction project design management rules, construction project quality management rules as well as relevant laws and regulations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.5.2 Occupational health and environmental protection on the spot. The contractor shall comply with the provisions on health, safety and environment as set forth in Article 7.8 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.6 Progress guarantee">3.6 Progress guarantee</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall, in accordance with the project progress plan as set forth in Article 4 hereof, reasonably organize all kinds of resources necessary for design, purchase, construction, completion test, post-completion test and completion inspection &amp; acceptance in an orderly way and take effective implementation methods and organization methods to guarantee about the realization of the project progress plan.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.7 Spot security guard">3.7 Spot security guard</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall assume the spot security guard responsibility (including pre-manufacture processing field, office and living zones) after it enters the spot, starts the construction and before the contract letting party accepts the project. The contractor shall also be responsible for formulating relevant security guard system, responsibility system and report system and submitting to the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="3.8 Subcontracting">3.8 Subcontracting</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.1 Subcontracting provisions. The contractor shall only conduct subcontracting bidding for the subcontracting matters (including but not limited to design, purchase, construction and completion test) specified in the special provisions and in the shortlist of its subcontractors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">With respect to the subcontracting matters and the shortlist of the subcontractors not specified in the special provisions, the contract letting party shall decide upon whether to approve or raise opinions within 15 days after receiving the subcontracting matters and shortlist of the subcontractors. If the contract letting party neither approves nor raise opinions within 15 days, the contractor shall be not entitled to subcontract the matters to be subcontracted as proposed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.2 Subcontractor qualification. Any subcontractor with enterprise qualification level as set forth in national laws may be chosen as a subcontractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.3 The contractor shall neither subcontract the whole project contracted with the method of dismemberment nor wholly subcontract the project contracted.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="left">3.8.4 No subcontractor is allowed to subcontract the project contracted again.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="left">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.5 With respect to the payment to any subcontractor, the contractor shall pay the subcontractor progress accounts on time in accordance with the provisions of the subcontracting contract. If the contractor is behind in payment of worker wages or accounts payable to any subcontractor, upon written notification by the contract letting party, the contractor still refuses to correct, the contract letting party shall be entitled to directly deduct such accounts payable from the contract and shall be punished as per once of the amount in arrears, otherwise, the contractor shall be deemed as breaching the contract and shall assume all losses caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.6 The contractor shall be liable to any subcontractor. If any breach behavior, inappropriate management, negligence or any other fault of any subcontractor causes any defect in the project quality, which leads to any loss against the contract letting party or leads to postponement of the date of completion, the contractor shall be liable to any subcontractor, the contractor and any subcontractor shall assume joint liabilities to the contract letting party with respect to the subcontracting project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.8.7 The contractor shall be responsible for comprehensive management of any subcontractor and shall pay the subcontracting party project accounts on time, in case of any subcontractor provoking caused by and reason attributable to the contractor, for each occurrence, the contractor shall compensate for any and all losses of the contract letting party, the contractor shall be entitled to impose penalty of RMB 50,000 yuan/time upon the contractor, such penalty shall be directly deducted from the total contract price by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b style="MARGIN: 0px"><font size="3"><a name="Article 4 Progress plan, delay and suspension">Article 4 Progress plan, delay and suspension</a></font></b></p>
<p style="MARGIN: 0px" align="justify"><font size="3">&nbsp;</font></p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="4.1 Project progress plan">4.1 Project progress plan</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.1.1 Project progress planWith respect to the project progress plan formulated by the contractor, the construction period shall conform to the provisions as set forth herein. The project progress plan shall only be approved by the contract letting party. The approval of the contract letting party shall not exempt the contractor from the contract liabilities of the contractor. The counterparts of the project progress plan submitted by the contractor and the time of submission shall be specified in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.1.2 Shall at its own expenses catch up with the project progress plan.If any reason attributable to the contractor causes the actual progress of the project to be obviously behind the project progress plan, the contractor shall be obliged and the contract letting party shall also be entitled to require the contractor to at its own expenses take measures to catch up with the project progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="4.2 Design progress plan">4.2 Design progress plan</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.2 Design progress plan. The contractor shall formulate progress plan according to the approved project progress plan and the schedule for verification meeting of any design verification stage and the design stage organized by the contract letting party as set forth in Article 5.3.1. The design progress plan shall only be implemented upon recognition by the contract letting party. The recognition of the contract letting party shall not exempt the contractor from the contract liabilities of the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.2.2 Date of design start. The first day upon contract conclusion shall be deemed as the date of design start.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.2.3 Delay in the date of design start. If any reason attributable to the contractor causes delay in the date of design start, according to the provisions of Article 4.1.2, it shall at its own expenses catch up with the design progress plan.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.2.4 Delay in the date of verification in any design stage</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Due to any reason attributable to the contractor, in case of failure to submit the design documents of any relevant stage according to the schedule of any design verification stage and verification meeting as set forth in Article 5.3.1 or incompliance of relevant design documents submitted with the design depth of any relevant verification stage, which causes delay in any design verification meeting, in accordance with the provisions as set forth in Article 4.1.2 hereof, the contractor shall at its own expenses take measures and catch up with progress. In case of delay in the date of completion caused thereby, any and all economic losses of the verification meeting preparation caused against the contract letting party shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="4.3 Purchase progress plan">4.3 Purchase progress plan</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.3.1 Purchase progress plan. The contractor's purchase progress plan conforms to the schedule of the project progress plan and connects with the progress plan of design, construction, completion test, post-completion test and completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.3.2 Date of purchase start. As set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.3.3 Delay in the purchase progress. If any reason attributable to the contractor leads to purchase delay, which causes work stop, any loss on slow work of the labor and delay in the date of completion, the contractor shall be liable. If any reason attributable to the contract letting party leads to purchase delay, which causes work stop and any loss on slow work of the labor against the contract letting party and delay in any key route, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="4.4 Construction progress plan">4.4 Construction progress plan</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.4.1 Construction progress plan. The contractor shall submit an overall construction organizing design including the construction progress plan 15 days before start of spot construction. The construction progress plan conforms to the schedule of the project progress plan and connects with the progress plan of design, purchase and completion inspection &amp; acceptance. If the contract letting party requires the contractor to submit sub-divisional construction progress plan of key sub-divisions, it shall stipulate in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.4.2 Delay in the date of construction start. According to the following provisions, the postponement of the date of completion shall be determined:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) If any reason attributable to the contract letting party causes the failure of the contractor to start construction on time, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) If any reason attributable to the contractor causes the failure to start construction on time, it shall specify legitimate reasons and at its own expenses take measures to start construction as soon as possible but not to postpone the date of synchronization.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) If force majeure causes to postpone the date of construction start, the date of synchronization shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.4.3 Date of completion</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1. If the contracting scope includes completion test, the planned date of completion and actual date of completion shall be determined with the following methods:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) The date of project completion as set forth in the special provisions of Article 9.1</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Project receipt shall be the planned date of project completion; for the project, the planned date of completion for the last project shall be the planned date of project completion;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The date of 14 days after the project passes completion test, overall project inspection &amp; acceptance and starts formal power generation (definition of formal power generation: the license document has been obtained from the government or the electric power authority) shall be the actual date of project completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2. If the contracting scope excludes completion test, the planned date of completion and actual date of completion shall be determined with the following methods:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) The date of project completion as set forth in the special provisions of Article 9.1</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Project receipt shall be the planned date of project completion; for the project, the planned date of completion for the last project shall be the planned date of project completion;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The date on which the contractor accomplishes all construction work of the project as set forth in the construction drawings and conforms to the quality standards as set forth shall be the actual date of project completion;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The date on which the contractor accomplishes all construction work of the last project as set forth in the construction drawings and conforms to the quality standards as set forth shall be the actual date of project completion;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3. Any construction location reserved by the contractor for completion test or post-completion test or any construction location required by the contractor shall neither affect the fragmentary round-off project and defect renovation used by the substantial operation of the contract letting party nor affect the determination upon the date of completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="4.5 Delay compensation">4.5 Delay compensation</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If any reason attributable to the contractor causes delay in the date of project completion, the contractor shall assume delay compensation. The daily delay compensation amount and the maximum accumulated compensation amount shall be stipulated in the special provisions. The contract letting party shall be entitled to deduct the compensation amount from the project progress accounts, completion settlement accounts and the performance bond submitted as stipulated.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="4.6 Suspension">4.6 Suspension</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.1 Suspension caused by any reason attributable to the contract letting party. The contract letting party may notify the contractor of suspending any work in the project implementation in writing. The notice shall specify the date of suspension and anticipated period of suspension.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Any increase in the fees suffered by the contractor due to the implementation of such suspension or reasonable expenses increased by return to work shall be borne by the contract letting party. In case of delay in any key route of the project caused thereby, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.2 Suspension caused by force majeure. The work of the parties shall be arranged according to the provisions on obligations upon occurrence of force majeure as set forth in Article 17.1 and the provisions on consequences of force majeure as set forth in Article 17.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.3 The contractor's work upon suspension. Under the circumstance of suspension as set forth in Article 4.6.1 Suspension caused by any reason attributable to the contract letting party and Article 4.6.2 Suspension caused by force majeure hereof, the contractor shall immediately stop the implementation work on the spot. During the period of suspension, according to the contract provisions, the contractor shall be responsible for attending, protecting and supervising the employees, project, materials and the contractor's documents etc. If the failure of the contractor to perform attending, protecting and supervising responsibilities causes any damage and metamorphism etc., which leads to any increase in the expenses of the contract letting party or delay in the date of completion, the contractor shall be liable.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.6.4 The contractor's requirement on return to work. According to the suspension advised by the contract letting party as set forth in Article 4.6.1, the contractor shall be entitled to notify of and require return to work 45 days upon the suspension. In case of failure in return to work, the contractor shall be entitled to adjust and decrease part of the project affected by suspension according to the provisions on adjustment to and decrease of part of the project as set forth in Article 13.2.5 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Should the suspension of the contract letting party last for more than 45 days and affect the whole project, or last for more than 180 days, or the suspension caused by force majeure causes the failure in contract performance, the contractor shall be entitled to give notice on contract cancellation according to the provisions on contract cancellation by the contractor as set forth in Article 18.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.5 The contract letting party's return to work. After the contract letting party gives notice on return to work, the contract letting party shall be entitled to organize for the contractor to examine the project, equipment, materials and parts affected by suspension, the contractor shall notify the contract letting party of the examination result and the contents that needs recovery and renovation as well as the estimation, upon acknowledgement by the contract letting party, the recovery and renovation expenses incurred thereby shall be borne by the contract letting party. In case of delay in any key route of the project caused by recovery and renovation, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.6 Suspension caused by any reason attributable to the contractor. If any reason attributable to the contractor causes suspension of part of the project or the project, which leads to any loss, damage and delay in the date of completion, the contractor shall be liable.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.6.7 Payment upon project suspension. In case of unreasonable suspension caused by the contract letting party, in addition to the payment for the project that has been accomplished according to the contract provisions, the contract letting party shall compensate for any economic loss caused against the contractor by work stop, slow work of the labor, profiteering by buying cheap and selling dear, relocation of mechanical equipment, overstock of materials and components etc.:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) With respect to the equipment, materials and components purchased by the contractor and constituting the project entity but of which the payment can not be effected according to the purchase progress accounts, the contractor shall independently list such accounts into the statements of Article 14.6 Applying for payment according to the monthly project progress or Article 14.7 Applying for payment according to the payment schedule, the contract letting party shall arrange payment according to the date of payment as set forth in Article 14.8 hereof;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) With respect to the permanent project equipment, materials and components purchased and delivered to the spot by the contractor that have not been subject to inspection &amp; acceptance and payment, both parties shall conduct inspection &amp; acceptance and handover &amp; takeover. The contractor shall at its own expenses renovate any defective equipment, material and component. Upon accomplishment of renovation and inspection &amp; acceptance by the contract letting party, according to the provisions as set forth in Article 14.4.1 hereof, the purchase progress accounts wherein shall be paid.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contract letting party shall assume relevant accounts for the equipment, materials and components purchased by the contractor but having not been delivered to the spot for permanent project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) If the contract letting party requires the contractor to return any equipment, materials or component that has been ordered for the permanent project, the contract letting party shall assume relevant expenses including but not limited to the indemnification and compensation required by any supplier or manufacturer.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 5 Technologies and design">Article 5 Technologies and design</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="5.1 Production processing technologies and construction art models">5.1 Production processing technologies and construction art models</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.1.1 Processing technologies or construction art models provided by the contractor When the contractor is responsible for providing production processing technologies (including patent technologies, proprietary technologies and process package) and construction art models (including construction design), the contractor shall be liable for the processing technology data, processing conditions, software, analysis manual, operation instructions, equipment manufacture instructions and other materials, other requirements or construction art models that have been provided and the structural design.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for the trial operation assessment guaranteed value and explanations on the guarantee of use functions as set forth in such special provisions. The trial operation assessment guaranteed value and explanations on the guarantee of use functions shall be the appraisal basis for the trial operation assessment as set forth in Article 10.3.3. According to the project features, the trial operation assessment guaranteed value and explanations on the guarantee of use functions for the project shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.1.2 Processing technologies or construction art models provided by the contract letting party</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">When the contract letting party is responsible for providing production processing technologies (including patent technologies, proprietary technologies and process package) and construction art models (including construction design), the contract letting party shall be liable for the processing technology data, processing conditions, software, analysis manual, operation instructions, equipment manufacture instructions as well as other documents and materials of the contractor, the requirements of the contract letting party or the requirements of the construction art models.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract letting party shall be obliged to guide, verify and acknowledge the production processing design and construction design documents conducted according to the above materials provided by the contract letting party. All guaranteed values of project trial operation assessment or the responsibilities that shall be respectively assumed in the instructions on guarantee of use functions as set forth in the special provisions shall be appraisal basis for the trial operation assessment and assessment responsibilities as set forth in Article 10.3.3.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="5.2 Design">5.2 Design</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.2.1 Compliance with standards and codes<br></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The standards and codes as set forth in Article 1.5 shall be applicable to the project receipt or whole project receipt by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) In the process of contract performance, if any new standard or code is promulgated by the State, the contractor shall be obliged to submit proposal on any relevant new standard or new code to the contract letting party. Any mandatory standard or code therein shall be observed and deemed as alteration for disposal; the contract letting party may decide to adopt or not to adopt any optional and recommended standard or code, if it decides to adopt, it shall be deemed as alteration for disposal.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The design drawings accomplished according to applicable laws as well as the standards and codes as set forth herein, the technical data and technical conditions in the design documents shall be the basis for the equipment, materials, component purchase quality, construction quality and completion test quality of the permanent project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.2.2 Operation and maintenance manual. The contractor shall guide post-completion test, trial operation assessment test and completion inspection &amp; acceptance etc. as well as formulate operation and maintenance manual, the licenser shall provide operation guidance and analysis manual and be liable for the authenticity, accuracy, completeness and timeliness of the materials, unless otherwise set forth in the special provisions. The contract letting party shall submit operation guidance and analysis manual and the contractor shall submit operation and maintenance manual, the counterparts and the period of submission thereof shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.2.3 Counterparts and time of submission of design documents. The counterparts and dates of submission of the design documents, materials and drawings of any relevant design stage to be submitted shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.2.4 Renovation of any design defect at its own expenses and catch up with the progress at its own expenses. In case of any omission, error, defect and deficiency in the design documents caused by any reason attributable to the contractor, the contractor shall renovate at its own expenses. In case of delay in the design progress, the contractor shall at its own expenses take measures to catch up with the progress.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="5.3 Design stage verification">5.3 Design stage verification</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.3.1 Design verification stage and date of verification meeting. The design stage of this project and the schedule for the verification meeting of the design stage shall be stipulated in the special provisions. The expenses incurred by the verification meeting and participation of the contract letting party's superior unit and relevant governmental authority in the verification meeting shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.3.2 According to the provisions as set forth in Article 5.3.1 hereof, the contractor shall submit design documents of any relevant design verification stage to the contract letting party and conform to the in-depth stipulations of administrative regulations on the design documents, drawings and materials of any relevant design stage. The contractor shall be obliged to at its own expenses attend the design verification meeting organized by the contract letting party, introduce, answer and interpret to any and all verifiers and at its own expenses and in the verification process, provide supplementary materials that shall be provided.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.3.3 The contract letting party shall be obliged to provide the contractor with the approval files and minutes of the design verification meeting according to Article 5.3.2 hereof. The contractor shall be obliged to make modification, supplementation and perfection to relevant design in accordance with the approval files and minutes of any relevant verification stage, the contract provisions and the stipulations of relevant design regulations.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.3.4 If any reason attributable to the contractor causes the failure to submit complete design documents, drawings and materials of any relevant design verification stage to the contract letting party according to the time as set forth in Article 5.2.5 hereof, which leads to the failure to convene the meeting of any relevant design verification stage or failure to convene the meeting of any relevant design verification stage as scheduled, the contractor shall be liable for the delay in the date of completion, any loss on slow work of the labor or any increase in the expenses for the contract letting party to organize the meeting.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.3.5 The contract letting party shall be entitled to, before any and all design verification stages as set forth in Article 5.3.1, raise suggestion, verification and acknowledgement on the design documents, drawings and materials of any relevant design stage, any suggestion, verification and acknowledgement by the contract letting party shall not relieve the contractor of or exempt the contractor from any contract liability and contract obligation.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.3.6 The contractor's design scheme may only be implemented upon recognition by the design supervisor and the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="5.4 Training of operators and maintenance persons">5.4 Training of operators and maintenance persons</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for formulating training plan and methods as well as formulating training manual and materials for the contract letting party's operators and maintenance persons.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="5.5 Intellectual properties">5.5 Intellectual properties</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If this contract involves intellectual properties including but not limited to technical patent, construct art model, know-how and copyright of either party or both parties (including any related licenser and independent architect of either party or both parties), relevant agreement on intellectual properties and confidentiality shall be entered into as appendix hereto.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 6 Project materials">Article 6 Project materials</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="6.1 Provision of project materials">6.1 Provision of project materials</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.1 The equipment, materials and components provided by the contract letting party for the permanent project</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) In case of any defect in the equipment, materials and components purchased by the contract letting party or subject to purchase designated by the contract letting party or delay in delivery thereof to the spot, which causes slow work of the labor, work stop, increase in expenses or delay in any key route against the contractor, the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof shall apply.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) If the contract letting party invites the contractor to participate in foreign purchase, the expenses incurred thereby shall be borne by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.2 The equipment, materials and components provided by the contractor for the permanent project</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) According to the technical parameters, technical conditions, function requirements and use requirements as set forth in the design documents, the contractor shall be responsible for the purchase of the equipment, materials and components for the permanent project and delivery thereof to the spot and liable for the quality examination results and performance results. The types, estimated quantity or specification list of the equipment, materials and components provided by the contractor for the permanent project shall be specified in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor shall at its own expenses renovate any quality defect caused by incompliance of the equipment, materials and components (including but not limited to building components) provided by the contractor with national mandatory standards, in case of therefore causing delay in the progress, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The types or list of productive materials provided by the contractor for post-completion test and completion test shall be specified in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.3 Selection of suppliers by the contractor. Based upon the list of suppliers submitted by the contractor and approved by the contract letting party according to the provisions as set forth in Article 3.8.1 hereof, the suppliers or manufacturers of relevant materials shall be chosen by bidding.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall not designate any supplier or processing manufacturer in the design documents or oral implications, except under any special circumstance or if there is only one factory.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.4 Ownership of the project materials. The ownership of the equipment, materials and components provided for the permanent project according to the provisions as set forth in Article 6.1.1 and Article 6.1.2 hereof shall be transferred to the contract letting party after being delivered to the destination on the spot. The contract letting party shall perform the payment obligation as set forth in the contract. Before the contract letting party receives the project, the contractor shall be obliged to keep, preserve and maintain the project equipment, materials and components that shall not be transported out of the spot without approval by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="6.2 Test">6.2 Test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">6.2.1 Factory test and report</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contractor shall comply with relevant laws and regulations, be responsible for the equipment, materials, components and spare parts for the permanent project as set forth in Article 6.1.2 hereof as well as the mandatory examination, test, supervision and experiment on the materials subject to post-completion test and completion inspection &amp; acceptance and submitting relevant reports to the contract letting party. The contents, periods and counterparts of each report shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) If the contractor invites the contract letting party to participate in examination, before conducting examination, test, supervision and experiment of any relevant processing manufacture stage, the contractor shall notify the contract letting party of the contents, address and time in writing. Within 5 days upon receipt of the invitation, the contract letting party shall notify the contractor whether it will participate in examination or not in writing. If the contract letting party intends to participate in examination, it shall notify the contractor within 5 days upon receipt of written notice or report sent by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall assume the salaries, subsidies, traveling expenses and accommodation fees etc. of its examination participants during the period of participating in examination, be responsible for handling the license for access to any relevant factory and offer convenience.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) If the contract letting party entrusts any qualified and experience third party to at its own expenses participate in examination on behalf of the contract letting party, within 5 days upon receiving the letter of invitation or report from the contractor, it shall notify the contractor in writing and specify the designation, name as well as function of power granted of any entrusted unit and entrusted person.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The participation in examination by the contract letting party and its entrusted person shall not exempt the contractor from the quality liabilities for the project equipment, materials and components purchased by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.2.2 Covering and packaging consequences. The contract letting party has notified the contractor of participating in examination in writing within the date as set forth in Article 6.2.1 and arrives at the designated place prior to the date as stipulated or on time, however, the processed and manufactured equipment, materials and components (including the materials subject to post-completion test and completion inspection &amp; acceptance) have been covered, packaged or delivered to place of departure, the contract letting party shall be entitled to order the contractor to transport back to the original place, remove the coverage and package as well as conduct examination or test or inspection or experiment or recovery again, the contractor shall assume the expenses incurred thereby. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.2.3 Failure to participate in examination on time. If the contract letting party fails to participate in examination according to the provisions as set forth in Article 6.2.1, the contractor may on its own organize examination, test, inspection and experiment, the quality inspection result shall be deemed as authentic. If the contract letting party orders to conduct examination, test, inspection and experiment again hereinafter or add any experiment detail or alter the experiment place, it shall be entitled to notify the contractor of the alteration order. Upon conformity by quality inspection, the expenses incurred thereby shall be borne by the contract letting party, in case of causing delay in any key route of the project, the date of completion shall be postponed accordingly; upon inconformity by quality inspection, the expenses incurred thereby shall be borne by the contractor and the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">6.2.4 Spot count and examination</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall notify the contract letting party 5 days before the equipment, materials and components provided by the contractor for the permanent project according to the provisions as set forth in Article 6.1.2 hereof are delivered to the spot. The contractor (including contractor or any supplier or subcontractor providing the contractor with equipment, materials and components) and the contract letting party (including the contract letting party or its representative or its supervisor) shall count the carton quantity according to the delivery document for each batch of goods and conduct examination on the appearance as well as count the in-carton quantity, certificates of compliance for appearance, drawings and document materials according to the packing list and conduct examination on the appearance. Upon examination and count, both parties shall sign the handover and takeover list.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In case of carton shortage detected in spot examination and count, for the shortage of the in-carton quantity, drawings and materials or any defect in the appearance, the contractor shall be responsible for supplementation and renovation at its own expenses, before defect renovation, no use in the project shall be allowed. The contractor shall be liable for any increase in the fees and delay in the date of completion caused thereby.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.2.5 Participation in examination by the quality supervision, fire protection and environmental protection authorities. The contract letting party and the contractor shall, from time to time, accept the on-site inspection on the manufacture factory, installation and experiment process conducted by professional inspectors from the quality supervision authority, fire protection authority, environmental protection authority and the industry etc., the expenses shall be borne by the contractor. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">With respect to the opinions on modification and replacement proposed in examination, the liable party as set forth in Article 6.1.1 or Article 6.1.2 shall assume relevant expenses. In case of delay in any key route of the project caused thereby, if the liable party is the contractor, the date of completion shall not be postponed; if the liable party is the contract letting party, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><font size="3"><a name="6.3 Imported project materials and customs declaration &amp; customs clearance"><b>6.3 Imported project materials and customs declaration &amp; </b><b>customs clearance</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.3.1 The party responsible for imported purchase of the equipment, materials and components for the permanent project as well as the bidding and inquiry methods shall be stipulated in the special provisions. The party responsible for purchase shall be responsible for customs declaration &amp; customs clearance, and the other party shall be obliged to offer assistance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.3.2 If the delay in customs declaration &amp; customs clearance of imported project equipment, materials and components causes delay in any key route of the project, if it is the contractor who is responsible for imported purchase, the date of completion shall not be postponed and any increase in the expenses shall be borne by the contractor; if it is the contract letting party is responsible for imported purchase, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="6.4 Transportation and transportation of the materials beyond limits">6.4 Transportation and transportation of the materials beyond limits</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be responsible for the transportation of project materials beyond limits (beyond the weight, length, width and weight limits), all expenses for transportation of the materials beyond limits and special measures etc. are included in the bid-winning contract price. Any increase in the expenses due to the transportation of the materials beyond limits shall be borne by the contractor. In case of delay in any key route of the project caused thereby, the date of completion shall not be postponed.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="6.5 Reorder and consequences">6.5 Reorder and consequences</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the provisions as set forth in Article 6.1.2 and Article 6.1.3 hereof, in case of any defect in the equipment, materials and components provided by the contractor for the permanent project and in case of inconformity upon renovation by the contractor, the contractor shall be responsible for reorder and delivery to the spot. The contractor shall be liable for any increase in the fees and delay in the date of completion caused thereby.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="6.6 Custody and surplus of project materials">6.6 Custody and surplus of project materials</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.6.1 Custody of project materials. If the project materials provided by the contract letting party according to Article 6.1.1 hereof and those provided by the contractor according to Article 6.1.2 are subject to custody by the contractor upon entrustment, the types and estimated quantity of the project materials shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall keep, preserve and maintain according to relevant provisions of the instructions in order to prevent deformation, deterioration, pollution and human body injury. The time within which the contractor shall submit custody and maintenance scheme is stipulated in the special provisions, such scheme includes: classification and custody of project materials, maintenance, security guard and obtaining system as well as warehouse, special custody warehouse, pile, road, lighting, fire protection, facility and appliance planning etc. All expenses necessary for custody shall be included in the bid-winning contract price.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.6.2 Handover of surplus project materials. With respect to the materials kept by the contractor for the permanent project, upon accomplishment of completion test, the surplus project materials shall be handed over to the contract letting party free of charge (unless otherwise set forth in special provisions).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 7 Construction">Article 7 Construction</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="7.1 The contract letting party's obligations">7.1 The contract letting party's obligations</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.1.1 Verify overall construction organization and design. The contract letting party shall be entitled to conduct verification on the overall construction organization and design submitted by the contractor according to the provisions as set forth in Article 7.2.2 hereof as well as raise suggestions, requirements and supplementary requirements within 20 days upon receipt. The contract letting party's suggestions and requirements will not relieve the contractor of or exempt the contractor from any contract liability. If the contract letting party fails to raise any suggestion and requirement within 20 days, the contractor shall be entitled to conduct implementation according to the overall construction organization and design submitted.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.1.2 Entry conditions and entry date. The contract letting party shall agree with the contractor upon entry conditions and determine upon the entry date according to the approved preliminary design and provisional land occupation materials submitted by the contractor according to the provisions as set forth in Article 7.2.3. The contract letting party shall guarantee that the contractor can enter the spot and start preparation work on time. The entry conditions and entry date shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In case of delay in the contractor's entry date caused by any reason attributable to the contract letting party, the date of completion shall be postponed accordingly. The contract letting party shall assume relevant expenses for slow work of the labor incurred thereby against the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="left">7.1.3 Urge the contractor to handle approval formalities for construction start etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.1.4 The contract letting party shall make acknowledgement within 20 days upon receipt of "health, safety and environment" management plan submitted by the contractor according to the provisions as set forth in Article 7.8 hereof. The contract letting party shall be entitled to inspect its implementation status and raise correction suggestions on any problem detected in the inspection, the contractor shall correct according to the contract letting party's reasonable suggestions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.1.5 The contract letting party shall perform other obligations that shall be performed by the contract letting party as set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="7.2 The contractor's obligations">7.2 The contractor's obligations</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.1 Coordinate review and despooling. The contractor shall be obliged to review the benchmark coordinate materials (including benchmark control point, benchmark control elevation and benchmark coordinate control line). The contractor shall be liable for the despooling of the project and construction part and liable for the despooling accuracy.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.2 Construction organization and design. Within 15 days before construction start or within other time as stipulated, the contractor shall submit overall construction organization and design to the contract letting party. Along with the construction progress, the contractor shall submit the construction organization and design of main divisions and main items submitted by the contract letting party. The contractor shall at its own expenses make modification and perfection according to the reasonable suggestions and requirement proposed by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The counterparts and time of submission of the overall construction organization and design as well as the name, counterparts and dates of submission of main divisions and main items of the construction organization and design that shall be submitted are stipulated in special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.3 Submitting provisional land occupation materials. The contractor shall, within the time as set forth in the special provisions, submit:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) According to the provisions on custody of project materials as set forth in Article 6.6.1 hereof, shall submit the explanations on the coordinate locations, areas, land use time and use purposes of the land used for warehouse, pile and road and shall independently list the explanations on the coordinate locations, areas, land use time and use purposes of the land that shall be rented by the contract letting party;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Shall submit the explanations on the coordinate locations, areas, land use time and use purposes of the land used for construction and shall independently list the explanations on the coordinate locations, areas, land use time and use purposes of the land that shall be rented by the contract letting party;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) Shall indicate the coordinate location of the entrance to the road of the construction site, and specify the direction, length, width, level, bridge and culvert bearing, turning circle radius of the road that the contract letting party is required to pave for connecting to urban and rural public roads as well as the requirements on the time of paving.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contractor fails to submit the above materials on time, which causes delay in the entry date as set forth in the provisions of Article 7.1.3 hereof, any increase in the expenses or delay in the date of completion caused thereby shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.4 The contractor shall be responsible for solving the problems of provisional water and electricity use etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.5 The contractor shall handle construction start approval or construction license, project quality supervision formalities and any other license, certificate and approval file etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.6 Any approval that shall be handled in the construction process upon notification. In the construction process, if the contractor provisionally adds off-site provisional land, provisional requires to cut off water supply, cut off power supply, cut off road communication and conduct blasting operation, or may damage public facilities relating to road, pipeline, power, post &amp; telecommunications and communication, the contractor shall be responsible for handling relevant formalities.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.7 Provide construction obstacle materials. The contractor shall, according to the provisions hereof, provide the coordinate locations of relevant underground buildings, structures and other facilities within the project scope.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.8 Newly discovered construction obstacle. With respect to any building, structure, historical and cultural relic, ancient tree and famous tree newly discovered in the construction process neighboring and close to the site as well as underground pipeline, wire, structure, cultural relic, fossil and tomb etc., the contractor shall immediately take protection measures and timely notify the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.9 The contractor shall be obliged to guarantee that the human power, machines and tools, equipment, facilities, measure materials, circulation materials and other construction resources can satisfy the demands of project implementation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.10 The contractor shall be obliged to, before construction, explain the intention of the design document and interpret the design documents to the construction subcontractor and supervisor and timely solve any relevant problem occurring in the construction process.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.11 Project protection and maintenance. From the date of construction start to the date on which the project is received by the contract letting party, the contractor shall be responsible for the protection, maintenance and security guard of the project and shall guarantee that the project will not be subject to any loss or damage due to the contractor's construction.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.12 Site clearing. The contractor shall be responsible for site clearing and classified piling in the construction process and upon accomplishment of the project, and shall deliver the residue, waste and garbage etc. to any place designated by the contract letting party or any local relevant authority. Any machine and tool, equipment, facility and provisional project etc. that will not be used by the contractor again shall be evacuated from the site or delivered to any field designated by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.2.13 The contractor shall be obliged to perform other related obligations that shall be performed by the contractor as set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="7.3 Construction technologies and methods">7.3 Construction technologies and methods</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor's construction technologies and methods are in compliance with relevant laws and operation procedures, safety procedures and quality standards.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract letting party shall make acknowledgement on key construction technologies and methods, and within 5 days after receiving any such method submitted by the contractor, shall make acknowledgement or raise suggestions, any such acknowledgement and suggestion of the contract letting party will not relieve the contractor of or exempt the contractor from any contract liability.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="7.4 Human, machine and tool resources">7.4 Human, machine and tool resources</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.4.1 The contractor shall submit schedule of human resource plan for construction to the contract letting party according to the format, contents, counterparts and time of submission as set forth in the special provisions. The human resource plan for construction shall satisfy the demands of the construction progress plan. The contractor shall also provide the contract letting party with the information about the human resources subject to actual entry according to the format, contents, counterparts and time of submission as set forth in the special provisions.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contractor fails to input sufficient work and human resources according to the schedule of human resource plan for construction, which causes the actual construction progress to be obviously behind the construction progress plan, the contract letting party shall be entitled to notify the contractor of adjusting and designating any relevant person to enter the site according to the work type and number of persons listed in the schedule of plan within reasonable time. Otherwise, the contract letting party shall be entitled to order the contractor to separately subcontract some parts and some items of the project, the expenses incurred thereby and the time of delay shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.4.2 The contractor shall submit schedule of main machine and tool resource plan for construction to the contract letting party according to the format, contents, counterparts and time of submission as set forth in the special provisions. The machine and tool resource plan for construction shall satisfy the demands of the construction progress plan. The contractor shall also provide the contract letting party with the information about main machines and tools subject to actual entry according to the format, contents, counterparts and time of submission as set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contractor fails to input sufficient machines and tools according to the schedule of machine and tool plan for construction, which causes the actual construction progress to be obviously behind the construction progress plan, the contract letting party shall be entitled to notify the contractor of adjusting and designating any relevant machine and tool to enter the site according to the number of machines and tools listed in the schedule of plan within reasonable time. Otherwise, the contract letting party shall be entitled to order the contractor to otherwise lease machines and tools, the expenses incurred thereby and the time of delay shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="7.5 Quality and inspection">7.5 Quality and inspection</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.5.1 Quality and inspection</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contractor and its subcontractors shall, from time to time, accept safety quality supervision and inspection conducted by the contract letting party, project director, administrative authority, quality administration authority, safety administration authority and industrial safety inspectors or any third-party quality inspection unit designated by the contract letting party. The contractor shall provide such supervision and inspection with convenience and assume relevant expenses.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) When the contract letting party entrusts any third party to conducts examination, inspection, test and experiment on the construction quality, it shall notify the contractor in writing. The third-party inspection and acceptance result shall be the contract letting party's inspection and acceptance result.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall comply with relevant regulations on construction quality administration and shall be responsible for providing the operators with training, assessment, drawing disclosure, technical disclosure, operation procedure disclosure, safety procedure disclosure and quality standard disclosure to eliminate accident and hidden danger.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor shall conduct examination, inspection, test and experiment on the equipment, materials and components (including building parts and accessories) of the permanent project according to the provisions of the design documents and construction standards as well as the contract provisions, but shall not use disqualified equipment, materials and components. The contractor shall also be obliged to at its own expenses renovate and replace disqualified equipment, materials and components, the delay in the date of completion caused thereby shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The contractor's construction shall conform to the quality standards as set forth in the contract. The assessment of quality standards shall be based upon the assessment standards for quality inspection as set forth in the contract. With respect to the construction part not in compliance with the quality standards, the contractor shall be obliged to at its own expenses renovate, rework or replace or reset, the delay in the date of completion caused thereby shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.5.2 Quality inspection parts and inspection participants. The quality inspection parts are: the part subject to inspection by the contract letting party, supervisor and the contractor; the part subject to inspection by the supervisor and the contractor; the part subject to inspection by either any third party or the contractor. The parts subject to inspection on the construction quality, inspection standards as well as inspection &amp; acceptance table format are stipulated in the special provisions.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the above provisions, any part inspected as qualified by the contractor shall be reported to the contract letting party or the supervisor for archival filing. The contract letting party and the project director shall be entitled to, from time to time, conduct spot inspection or overall inspection on the parts subject to archival filing.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.5.3 Notify inspection participants of participation in inspection. If the contractor on its own examines, inspects, tests and experiments the conformity, it shall notify relevant inspection participating units of participating in inspection according to the quality inspection parts and inspection participants as set forth in the special provisions of Article 7.5.2 hereof. If any inspection participant fails to participate on time, the contractor shall submit the self-inspection result of conformity to the contract letting party or the supervisor for signing within 24 hours thereafter, in case of failure to be signed after 24 hours, the quality inspection result shall be deemed as having been recognized by the contract letting party. Within 3 days thereafter, the contractor shall send notice on the fact that the contract letting party or the supervisor has been deemed to have acknowledged such quality inspection result.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.5.4 Quality inspection rights. The contract letting party or the supervisor or any third party authorized thereby shall, under the circumstance of not hindering normal operation of the contractor, have to rights to conduct quality supervision, examination, inspection, test and experiment on any construction zone. The contractor shall provide such quality inspection activity with convenience. If the examination, inspection, test and experiment result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In case of detecting any quality defect caused by any reason attributable to the contractor upon quality inspection, shall be entitled to place directives on renovation, suspension, demolition, rework, reconstruction and replacement etc. Any increase in the expenses caused thereby shall be borne by the contractor, in case of delay in the date of completion, the date of completion shall not be postponed.</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.5.5 Conduct quality inspection again. According to the provisions as set forth in Article 7.5.3 hereof, with respect to the project parts certified to be qualified upon quality inspection, the contract letting party shall be entitled to conduct quality inspection again under the condition of not affecting normal project construction. If the examination, inspection, test and experiment result indicates inconformity, the expenses incurred thereby shall be borne by the contractor, in case of delay in any key route of the project, the date of completion shall not be postponed; if the examination, inspection, test and experiment result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.5.6 Other additional expenses incurred by any reason not attributable to the contract letting party shall be completely borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="7.6 Concealed project and midway inspection &amp; acceptance">7.6 Concealed project and midway inspection &amp; acceptance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.6.1 Concealed project and midway inspection &amp; acceptance.The classification, parts, quality inspection contents, quality inspection standards, quality inspection tables and inspection participants of the concealed project that shall be subject to quality inspection and the parts of midway inspection &amp; acceptance are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.6.2 Notice on inspection &amp; acceptance and inspection &amp; acceptanceWith respect to the concealed project or midway inspection &amp; acceptance parts certified to be qualified upon self inspection, the contractor shall notify the contract letting party and the supervisor of inspection &amp; acceptance in writing 48 hours before the concealed project or midway inspection &amp; acceptance. The notice shall specify the contents of concealment and midway inspection &amp; acceptance, inspection &amp; acceptance time and place. If the inspection &amp; acceptance result indicates conformity, both parties shall sign on the inspection &amp; acceptance records in order to cover, conduct subsequent operation, formulate and submit concealed project completion materials.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party and the supervisor do not sign on the inspection &amp; acceptance records within 24 hours after the inspection &amp; acceptance result indicates conformity, the contract letting party and the supervisor shall be deemed as having recognized the inspection &amp; acceptance records, the contractor can conceal or conduct subsequent operation. If the contract letting party and the supervisor's inspection &amp; acceptance result indicates inconformity, the contractor shall correct within the time as limited by the contract letting party and the supervisor and notify the contract letting party and the supervisor of inspection &amp; acceptance again.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.6.3 Failure to participate in inspection &amp; acceptance on time. If the contract letting party and the supervisor fail to participate in the inspection &amp; acceptance of the concealed project and the parts subject to midway inspection &amp; acceptance on time, within 24 hours upon receipt of notice on inspection &amp; acceptance, the contract letting party and the supervisor shall apply to the contractor for postponement, the inspection &amp; acceptance shall not be postponed for more than 48 hours. In case of failure to apply for postponement of inspection &amp; acceptance within the above time and failure to participate in inspection &amp; acceptance, the contractor shall on its own organize inspection &amp; acceptance, and the inspection &amp; acceptance records shall be deemed as having been recognized by the contract letting party and the supervisor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.6.4 Re-inspection. Within any time, the contract letting party and the supervisor shall be entitled to require re-inspection on the concealed project that has been inspected and accepted, the contractor shall remove coverage, conduct stripping or trepanning and shall recover or renovate upon inspection. If the inspection result indicates inconformity, the expenses incurred thereby shall be borne by the contractor, in case of delay in any key route of the project, the date of completion shall not be postponed; if the inspection result indicates conformity, any increase in the expenses incurred against the contractor or delay in any key route of the project shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px"><b><font size="3"><a name="7.7 Dispute on the construction quality result">7.7 Dispute on the construction quality result</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.7.1 Any dispute on the construction quality result shall be firstly settled through negotiation. If no consensus is reached upon negotiation, any project quality test institution with relevant qualification shall be entrusted to conduct authentication with consent of the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the authentication result, if the liable party is the contractor, the contractor shall be liable for any increase in the expenses incurred against the contractor or delay in any key route of the project; if the liable party is the contract letting party, the contract letting party shall be liable for any increase in the expenses incurred against the contractor, in case of delay in any key route of the project duet to any dispute, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.7.2 According to the authentication result, if both contract parties are liable, according to the liabilities of either party, they shall negotiate for assuming respective expenses; in case of delay in any key route of the project caused thereby, they shall discuss about postponement of the date of completion. If both parties fail to reach consensus on the assuming of expenses and postponement of the date of completion, the procedures as set forth in Article 16.3 Dispute and adjudication shall apply to settlement.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="7.8 Health, safety and environment">7.8 Health, safety and environment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.8.1 Health, safety and environment management</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Both parties shall be obliged to observe all laws and regulations on health, safety and environment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Implementation plan for health, safety and environment management. Before construction start on the spot or within other time as stipulated, the contractor shall submit implementation plan for health, safety and environment management to the contract letting party. The management and implementation fees of such plan are included in the contract price. The contract letting party shall raise suggestions and make acknowledgement within 15 days upon receipt of such plan, the contractor shall at its own expenses correct according to the suggestions of the contract letting party. The counterparts and time of submission of such plan are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) In the process of carrying out the implementation plan for health, safety and environment by the contractor, if the contract letting party needs to take special measures beyond such plan, it shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor ensures that all employees of the contractor and its subcontractors on the spot have been sufficiently trained and experienced and are competent for health, safety and environment management work.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The parties shall comply with all laws and regulations on spot health, safety and environment relating to implementation of this project and use of construction equipment and respectively handle related formalities as stipulated.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) The contractor shall establish health security conditions, construct safe facilities and take environmental protection measures etc. for the part subject to spot construction start of the project. If any reason causes delay in the approval of construction license due to any reason attributable to the contractor, the contractor shall be liable for any increase in the expenses or delay in any key route of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(7) The parties shall have full-time engineers or management persons responsible for managing, supervising and guiding employee health, safety protection and environmental protection work. The contractor shall be liable to any subcontractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(8) The contractor shall from time to time accept the supervision and inspection conducted by the health, safety and environment inspectors of any relevant governmental administrative authority, industrial institution, contract letting party and project director and shall therefore provide convenience.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(9) According to the Regulations on Safety, Health and Environment Management Work of Power Construction and relevant provisions of laws, in case of any accident against safety and violation in the contents of Appendix I, the contract letting party shall be entitled to directly deduct penalty from the total contract price of the project accounts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.8.2 Occupational health management on the spot</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) The contractor shall comply with applicable laws and regulations on occupational health as well as the contract provisions (including the provisions on employment, health, safety and benefit etc.) and be responsible for the occupational health and protection of the persons in the spot implementation process.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor shall comply with applicable labor laws to protect legal rights and interests of its employees including but not limited to legal holiday right and shall provide the employees on the spot with labor protection articles, protective device, heatstroke prevention products, necessary spot boarding and lodging conditions as well as safe production facilities.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall provide the constructors with occupational health knowledge training for relevant operation, disclosure of dangerous and hazardous factors, disclosure of safe operation procedures, shall take effective measures and shall provide protective device to prevent human body injury according to relevant provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor shall set warning marks and instructions in poisonous and harmful operation zones. Any injury caused by the contract letting party and its entrusted persons due to entry into such operation zones without permission of the contractor and not equipped with relevant protection appliance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The contractor shall conduct preventive examination on the poisonous and harmful posts and timely ratify and correct disqualified protection facilities, appliance and erection etc. in order to eliminate hidden danger that is harmful to health.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) The contractor shall take health and anti-epidemic measures to be equipment with medical workers and first-aid facilities, keep the food health of dining hall, maintain the environmental health of the residence and its surrounding areas and protect the health of constructors.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.8.3 Safety management on the spot</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The supervisor shall provide the employees on the spot with safety education and shall be liable for any accident against safety caused thereby. The supervisor shall not force the contractor to violate relevant safety regulations on safe construction, safe operation, completion test, post-completion test and completion inspection &amp; acceptance. The supervisor shall assume relevant liabilities and the expenses incurred thereby for any human body injury and property loss caused by any reason attributable to the supervisor and its employees on the spot. In case of delay in any key route of the project, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall be liable for any human body injury, property loss and delay in any key route of the project caused by violation of relevant safety regulations on safe construction, safe operation, completion test, post-completion test and completion inspection &amp; acceptance due to any reason attributable to the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The employees of the parties shall comply with attention to no entry, including no entry to the work field and no closeness to special zones of the work field. In case of failure to comply with such provisions, the party failing to comply with such provisions shall be liable for any injury, damage and loss caused thereby.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall be responsible for the safe work on the spot according to the contract provisions, including the spot of any subcontractor. Any spot with relevant conditions shall be subject to closed management. According to the project features, shall formulate relevant technical safety measures in the construction organization and design documents and formulate special safe construction organization and design to the project part with strong specialty, including but not limited to the measures for maintaining safety, prevent danger and prevent fire.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor (including subcontractors, suppliers and transportation units of the contractor) shall take preventive measures to protect the roads, bridges and underground facilities etc. on the spot and on the way entering into and exiting from the spot, unless otherwise set forth in special provisions. The contractor shall be liable for any damage and delay in the date of completion caused by failure to take preventive measures as stipulated.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The contractor shall provide its constructors with safe operation training, disclosure of safe operation procedures, take safety protection measures, set safe warning marks and instructions and conduct safety inspection to eliminate accident and hidden danger.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) When the contractor conducts operation in power equipment, electric transmission line, underground pipeline, sealed quakeproof workshop, high temperature and high pressure, inflammable and explosive zones and sections as well as in the neighborhood of vital communication lines close to street, the contractor shall take safety protection measures to any damage that may be caused against the construction site and neighboring buildings, structure and special operation environment. Before construction start, safety protection measures and schemes shall be submitted to the contract letting party or the supervisor and may only be implemented after being recognized.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(7) If the contractor intends to conduct blasting, radioactive, electric and toxic operation as well as conduct operation by using inflammable and explosive, toxic and corrosive articles (including transportation, storage and custody), the contractor shall, within 10 days before construction start, notify the contract letting party and the supervisor in writing, submit relevant safety protection measures and schemes which shall only be implemented after being recognized.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(8) Safety and protection inspection. Before start of operation, the contractor shall notify the representative of the contract letting party and the supervisor of conducting inspection on any influence that may be generated by the safety measures and schemes submitted and construction of safe facilities on the spot, safe passages, safe appliance and fire protection appliance and configuration on the safety of surrounding environment, and shall at its own expenses make ratification and correction according to the ratification and correction raised by the contract letting party and the supervisor. The supervisor's suggestions and requirements will not relieve the contractor of or exempt the contractor from any contract liability.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.8.4 Environmental protection and management on the spot</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contractor shall be responsible for protecting the buildings, structure, cultural relic buildings, ancient trees and famous trees as well as underground pipelines, wire, structures, cultural relics, fossils and tombs etc. on the spot and in the neighborhood in the spot construction process. The contractor shall be liable for any increase in the expenses including but not limited to damage, loss and compensation and delay in the date of completion due to the failure of the contractor to notify the contract letting party and failure to obtain further instructions from the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor shall take measures and be responsible for controlling and disposing of the pollution and damage caused by the dust, waste gas, waste water, solid waste and noise against the environment on the spot. The contractor shall be liable for any increase in the expenses including but not limited to injury, compensation and penalty and delay in the date of completion.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall timely and periodically transport the residual and waste garbage on the construction site to any place designated by the contract letting party or relevant local administrative authority to prevent the pollution on the surrounding environment and influence on the operation. The contractor shall be liable for any increase in the expenses including but not limited to injury and compensation imposed by local administrative authority.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.8.5 Accident treatment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) If the contractor or any employee of any subcontractor is deceased or suffers injury in the spot operation process, the contractor or its subcontractor shall immediately take rescue measures, immediately report to the contract letting party and the rescue unit, the contract letting party shall be obliged to provide such rescue with necessary conditions. The contractor shall maintain the spot and take relevant measures to prevent the spreading of any accident.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) With respect to significant casualty, significant damages on properties and the environment as well as other accidents against safety, the contractor shall, according to relevant provisions, immediately report to relevant authority and immediately notify the representative of the contract letting party and the supervisor. Meanwhile, it shall be handled according to the requirements of relevant governmental authority.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) If the contract parties have any dispute on the liabilities for any accident, the final result identified by relevant governmental authority upon investigation shall apply.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) If the construction project causes human body and property damage within reasonable use period and equipment assurance period, the contractor shall assume damage compensation liability.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) In case of any food poisoning, endemic disease and occupational health event among the employees, the contractor shall be liable.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px"><b><font size="3"><a name="Article 8 Completion test">Article 8 Completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The project as set forth herein includes completion test, the provisions hereof shall be observed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="8.1 Completion test obligation">8.1 Completion test obligation</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">8.1.1 The contractor's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Before start of the project completion test, the contractor shall accomplish the construction operation of relevant project; and before start of the completion test, shall accomplish examination, inspection, test and experiment that shall be conducted according to the contract provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Before start of the completion test, the contractor shall submit relevant quality inspection materials and its completion materials to the contract letting party according to the provisions of concealed project and midway inspection and acceptance parts as set forth in Article 7.6 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) According to the provisions on post-completion test as set forth in Article 10 hereof, the contractor shall guide the contract letting party to conduct post-completion test, the contractor shall accomplish the training for operators and maintenance persons according to the provisions as set forth in Article 5.4 and submit the operation and maintenance manual as set forth in Article 5.2.2 before post-completion test.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) Completion test scheme. Within 20 days before the completion test conditions are satisfied, the contractor shall submit the completion test scheme to the contract letting party. The contract letting party shall raise suggestions and opinions within 10 days, the contractor shall at its own expenses amend the completion test scheme according to the suggestions and comments raised by the contract letting party. After the completion test scheme is acknowledged by the contract letting party as appendix hereto, it shall be implemented by the contractor. The counterparts and time of submission of completion test scheme are stipulated in the special provisions. The scheme shall include:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1) The basis and principles based upon which the completion test scheme is formulated;</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">2) Establishment and responsibility division of the organizational framework;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3) Test procedures and test conditions of completion test for the project;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4) Test procedures and test conditions of single, individual and joint test for the project;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5) Types, performance standards, test, inspection &amp; acceptance format of the equipment, materials and components subject to completion test;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6) The quality and quantity requirements on the water, electricity and power conditions etc.;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7) Safe procedures, safe measures and protection facilities;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8) Progress plan, measures and schemes, human resource as well as machine and tool plan and arrangement of completion test;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">9) Others</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) The completion test of the contractor shall include the completion test of the equipment, materials and components newly entrusted by the contract letting party to the contractor according to Claus (3) of Article 8.1.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) The contractor shall accomplish completion test according to the test conditions and test procedures as well as the standards, codes and data as set forth in Clause (3), Article 5.2.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">8.1.2 The contract letting party's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In the inspection &amp; acceptance process, if it is necessary for the contract letting party to organize inspection &amp; acceptance group, the contract letting party shall cooperate with the contractor in accomplishing the organization of inspection &amp; acceptance and acknowledgment on the inspection &amp; acceptance result.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.1.3 Completion test leading organ. The completion test leading organ shall be responsible for leading, organizing and coordinating the completion test. The contractor shall provide relevant conditions as set forth in the human resource, machine and tool as well as completion test schemes and be responsible for accomplishing the test. The contract letting party shall be responsible for organizing the inspection &amp; acceptance of completion test.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="8.2 Examination and inspection &amp; acceptance of completion test">8.2 Examination and inspection &amp; acceptance of completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.2.1 The examination and inspection &amp; acceptance shall be conducted according to the standards, codes and data as set forth in Clause (3), Article 5.2.3 hereof and Sub-clause 5) of Clause 4 Completion test scheme of Article 8.1.1.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.2.2 Before start of the completion test, after the contractor examines and verifies the test conditions provided by the parties according to the provisions as set forth in Article 8.1.1 hereof, both parties shall sign on relevant tables. In case of delay in the completion test progress plan of any key route, the date of completion shall be postponed accordingly; if any reason attributable to the contractor causes the failure to verify the completion test conditions on time, any increase in the expenses shall be borne by the contractor, in case of delay in the completion test, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.2.3 Within 36 hours before start of certain completion test, the contractor shall send notice to the contract letting party and the supervisor, the notice shall include the test items, contents, place and inspection &amp; acceptance time. Within 24 hours upon receipt of notice, the contractor or (and) the supervisor shall notify the contractor of participating in writing, if the test result indicates conformity, both parties shall sign on the test records and inspection &amp; acceptance table.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">If the contract letting party and the supervisor do not sign on the inspection &amp; acceptance records and inspection &amp; acceptance table within 24 hours after the inspection &amp; acceptance result indicates conformity, the contract letting party and the supervisor shall be deemed as having recognized the inspection &amp; acceptance records, the contractor can conceal or conduct subsequent operation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the inspection &amp; acceptance result indicates inconformity, within the time as ordered by the contract letting party and the supervisor, the contractor shall make amendment and notify the contract letting party and the supervisor of conducting inspection &amp; acceptance again.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.2.4 If the contract letting party and the supervisor fail to participate in the test and inspection &amp; acceptance on time, they shall apply to the contractor in writing for postponement within 24 hours upon receipt of notice, the time shall not be postponed for more than 24 hours. In case of failure to apply for postponed test within the above time and failure to participate in test and inspection &amp; acceptance, the contractor may on its own organize test according to the test items as notified, the test result shall be deemed as recognized by the contract letting party and passing inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.2.5 No matter whether the contract letting party and the supervisor participate in completion test and inspection &amp; acceptance or not, the contract letting party shall be entitled to order to conduct test again. If the retest result indicates inconformity, any increase in the expenses incurred against the contractor shall be borne by the contractor, in case of delay in the completion test progress, the date of completion shall not be postponed; if the retest result indicates conformity, any increase in the expenses incurred against the contractor and delay in the date of completion shall be deemed as alteration according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">8.2.6 Provisions on date of inspection &amp; acceptance of completion test</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Date and time of inspection &amp; acceptance of certain completion test. The date and time of passing such completion test shall be deemed as the date and time of inspection &amp; acceptance of such completion test.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Date and time of completion test of the project. The date and time of passing completion test of the last project shall be deemed as the date and time of completion test of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="8.3 Completion test safety and examination">8.3 Completion test safety and examination</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.3.1 According to the provisions on health, safety and environment as set forth in Article 7.8 hereof, in combination with electricity access, water access, pressure test, leakage test and turning features etc. of completion test, the contractor shall formulate safe operation schemes including but not limited to safe procedures, safe system, fire protection measures, accident report system and accident disposal scheme for completion test with respect to electric shock hazard, inflammable and explosive as well as running of mechanic equipment, and shall submit such schemes to the contract letting party for acknowledgement and raise suggestions, comments and requirements to the contract letting party, the contractor shall at its own expenses make amendment and put into implementation upon acknowledgement by the contract letting party. The acknowledgement of the contract letting party shall not relieve the contractor of or exempt the contractor from the contract liabilities of the contractor. The expenses for the contractor to provide the completion test with safe protection measures and protection articles have been included in the contract price.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.3.2 The contractor shall provide its employees with training on the safety of completion test and disclose the safe operation procedures, field environment, operation system and emergency disposal measures etc. of completion test.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.3.3 The contract letting party and the supervisor shall be obliged to, according to the safe procedures, safe system and safe measures etc. in the safe schemes of completion test acknowledged, provide its management persons, operators and maintenance persons with education on the safety of completion test and at its own expenses provide the supervisors and inspectors with protection facilities.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.3.4 The contract letting party and the supervisor shall be entitled to supervise and examine the work and implementation status listed in the safe schemes of completion test, and shall be entitled to propose safe ratification and correction as well as deliver regulation orders. The contractor shall be obliged to make ratification, correction and regulation according to the order and bear any increase in the expenses. In case of delay in the completion test progress plan of the project caused thereby, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.3.5 Shall, according to the decision of the completion test leading organ as set forth in Article 8.1.3 hereof, organize, coordinate and implement completion test to prevent the occurrence of human body injury and accident.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">With respect to any accident caused by any reason attributable to the contract letting party, the contract letting party shall assume its relevant liabilities, expenses and compensation. In case of delay in the completion test progress plan of the project caused thereby, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">With respect to any accident caused by any reason attributable to the contractor, the contractor shall assume its relevant liabilities, expenses and compensation. In case of delay in the completion test progress plan of the project caused thereby, shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="8.4 Delayed completion test">8.4 Delayed completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.4.1 If any reason attributable to the contractor causes certain project to be behind the completion test progress plan, the contractor shall at its own expenses take measures to catch up with the completion test progress plan according to the provisions as set forth in Article 4.1.2.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.4.2 In case of delay in the completion test caused by any reason attributable to the contractor, which leads to delay in the date of completion of the project as set forth in the contract, according to the provisions on delay and damage compensation as set forth in Article 4.5, the contractor shall be liable for delay and damage compensation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.4.3 Completion test organized by the contract letting party. Without any legitimate reason, if the contractor fails to conduct certain completion test according to the completion test progress plan decided by the completion test leading organ, and within 10 days upon receipt of notice sent by the test leading organ, the contractor still fails to conduct certain completion test without any legitimate reason, the contract letting party shall be entitled to on its own organize such completion test, the test risks and expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.4.4 If the contract letting party fails to perform its obligations as set forth in Article 8.1.2 hereof, which causes delay in the completion test, in case of any increase in the expenses, the contract letting party shall bear reasonable expenses, in case of delay in the completion test progress plan, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="8.5 Retest and inspection &amp; acceptance">8.5 Retest and inspection &amp; acceptance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.5.1 If the contractor fails to pass relevant completion test, it shall conduct such test again according to the provisions as set forth in Clause (6), Article 8.1.1 hereof and conduct test and inspection &amp; acceptance according to the provisions as set forth in Article 8.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.5.2 No matter whether the contract letting party and the supervisor participate in completion test and inspection &amp; acceptance or not, if the contractor fails to pass completion test, the contract letting party shall be entitled to notify the contractor of conducting such completion test again according to the provisions as set forth in Clause (6), Article 8.1.1 hereof and conducting test and inspection &amp; acceptance according to the provisions as set forth in Article 8.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><font size="3"><a name="8.6 Failure to pass completion test"><b>8</b><b>.</b><b>6 Failure to pass completion test</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In case of failure to pass the completion test due to any reason attributable to the contractor, it is permitted that such completion test should be conducted again, however, it shall only be conducted for at least twice, in case of inconformity with the inspection &amp; acceptance conditions upon twice test, the date of completion shall not be postponed, relevant expenses and relevant matters shall be handled according to the following provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) In case of failure to pass such completion test, which does not have any substantial influence on the operation or use, the contractor shall at its own expenses renovate. In case of failure to renovate, the contract letting party shall be entitled to deduct relevant accounts of such part, and it shall be deemed as passing such completion test;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) In case of failure to pass such completion test, which has any substantial influence on the operation or use of such project, the contract letting party shall be entitled to deduct relevant accounts of such part, and it shall be deemed as passing such completion test;</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) In case of failure to pass such completion test, which has any substantial influence on the operation or use, the contract letting party shall be entitled to order the contractor to replace relevant parts and conduct completion test. Any increase in the expenses incurred against the contract letting party shall be borne by the contractor. In case of delay in the date of completion caused thereby, the contractor shall be liable for delay and damage compensation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) In case of failure to pass the completion test, which causes any main part of the project to lose the production and use functions, the contract letting party shall be entitled to order the contractor to replace any relevant part, the contractor shall be liable for any increase in the expenses and delay in the date of completion caused thereby. In case of any increase in the expenses incurred against the contract letting party, the contract letting party shall be titled to claim to the contractor according to the provisions on claim as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) In case of failure to pass the completion test, which causes the whole project to lose the production and use functions, the contract letting party shall be entitled to order the contractor to redesign and reset any relevant part, the contractor shall be liable for any increase in the expenses and delay in the date of completion caused thereby. The contract letting party shall be titled to claim to the contractor according to the provisions on claim as set forth in Article 16.2.1 hereof. Or shall be entitled to cancel the contract according to the provisions as set forth in Article 18.4 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="8.7 Dispute on completion test result">8.7 Dispute on completion test result</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.7.1 Negotiation for settlement.Any dispute on the completion test result shall be firstly settled through negotiation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">8.7.2 Entrustment of authentication institution. Upon negotiation, should there still be any dispute on the completion test result, a test institution with relevant qualification shall be jointly entrusted to conduct authentication. Upon authentication,</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) If the liable party is the contractor, the necessary authentication fees and any increase in the reasonable expenses therefore incurred against the contract letting party shall be borne by the contractor, the date of completion shall not be postponed;</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) If the liable party is the contract letting party, the necessary authentication fees and any increase in the reasonable expenses therefore incurred against the contractor shall be borne by the contract letting party, the date of completion shall be postponed accordingly;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) If both parties are liable, they shall negotiate for respectively bearing the expenses according to their liabilities and postponing the date of completion based upon the delay in the completion test plan. In case of any dispute between the parties on the expense bearing and postponement of the date of completion, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 9 Project receipt">Article 9 Project receipt</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="9.1 Project receipt">9.1 Project receipt</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.1.1 Receipt based upon the project. According to the specific situation and features of the engineering project, the project receipt shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) Receipt based upon the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the provisions on post-completion test as set forth in Article 10 hereof, the contractor shall be responsible for guiding the contract letting party to conduct post-completion test and assume the assessment responsibility for trial operation. The schedule for the project is stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party is responsible for post-completion test of the project and the assessment responsibility for trial operation, the arrangement for the date of project receipt shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) With respect to the project without completion test or post-completion test, the contractor shall accomplish the round-off project and defect renovation, and in case of compliance with the inspection &amp; acceptance standards as set forth in the contract, the project receipt and completion inspection &amp; acceptance shall be handled according to the contract provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.1.2 The materials that shall be submitted by the contractor upon project receipt. In addition to the materials that have been submitted according to the provisions as set forth in Clause (1) to (3) of Article 8.1.1 hereof, the types, contents, counterparts and time of submission of the inspection &amp; acceptance materials for accomplishment of completion test that shall be submitted are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="9.2 Receipt certificate">9.2 Receipt certificate</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.2.1 Within 10 days after the project satisfies the receipt conditions, the contractor shall submit application for receipt certificate to the contract letting party, and within 10 days upon receipt of the application, the contract letting party shall organize receipt and issue project receipt certificate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The date of project receipt shall be subject to the date as set forth in Clause 2, Article 8.2.6 as the date of receipt.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.2.2 Round-off project and defect renovation: the round-off project and defect renovation having not substantial influence on the operation and use of the project shall not be deemed as the reason for the contract letting party's refusal to receive the project.The reasonable time determined upon negotiation by the contract letting party and the contractor for the contractor to accomplish such round-off project and defect renovation shall be deemed as appendix to the receipt certificate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="9.3 Project receipt responsibilities">9.3 Project receipt responsibilities</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.3.1 Security guard responsibility: the contract letting party shall assume security guard responsibility upon overall project receipt, and the employees of the contractor shall all evacuate or basically evacuate from the site.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.3.2 Attention responsibility: from the date of overall project receipt, the contract letting party shall assume its attention responsibility. And shall be responsible for the preservation, maintenance and repair of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">9.3.3 Project insurance coverage responsibility: according to the contract provisions, during the construction period, if the party that shall purchase insurance is the contractor, the contractor shall keep the insurance coverage period of the project until the date on which the contract letting party receives the project as set forth in Article 9.2.1. The party that shall purchase insurance shall be contract letting party thereafter.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="9.4 Failure to receive the project">9.4 Failure to receive the project</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.4.1 Refusal to receive the project: within 15 days upon receipt of the application for overall project receipt certificate submitted by the contractor, if the contract letting party does not organize receipt, it shall be deemed that the application for project receipt certificate has been recognized by the contract letting party. From the 16th day, the contract letting party shall assume relevant liabilities according to the provisions as set forth in Article 9.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">9.4.2 Failure to receive the project according to the contract provisions: if the contractor fails to submit application for project receipt certificate or fails to pass the project receipt conditions, the contract letting party shall be entitled to refuse the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party fails to comply the provisions of this article, uses or forces to receive the project, it shall, according to the provisions on project receipt as set forth in Article 9.3, assume relevant liabilities and shall be liable for any loss, breakdown, damage and compensation caused by the operation and use of the project upon use or forced receipt.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 10 Post-completion test">Article 10 Post-completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The project as set forth herein includes post-completion test, the provisions hereof shall be observed.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.1 Rights and obligations">10.1 Rights and obligations</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.1.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) The contract letting party shall be entitled to verify and approve the post-completion test scheme submitted by the contractor according to the provisions as set forth in Clause (2), Article 10.1.2, the contract letting party's approval will not relieve the contractor of or exempt the contractor from the contract liabilities.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contract letting party shall be obliged to establish post-completion test united coordinating and leading organ and arrange work division, organize and accomplish preparation work, post-completion test and trial operation assessment according to the post-completion test scheme that has been approved. The establishment scheme and the work division &amp; duties of the united coordinating and leading organ shall be deemed as part hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contract letting party shall be entitled to give the contractor notice on refusal or acceptance of any suggestion raised by the contract letting party to the contractor according to Clause (4), Article 10.1.2 hereof. In case of failure to accept such suggestion, the contractor shall be obliged to implement according to any original organization, arrangement, directive and notice.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) Any organization, arrangement, directive and notice delivered by the contract letting party to the contractor at the post-completion test stage shall be delivered to the project manager of the contractor in writing, and the project manager shall sign thereupon with date, time and signature.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Under emergency, the contract letting party shall be entitled to issue emergent directive to the contractor orally and in writing, and the contract shall immediately implement. If the contractor fails to implement any directive of the contract letting party, the contractor shall be liable for any accident liability, human body injury and project damage caused thereby. Within 12 hour after giving oral directive, the contract letting party shall send supplementary directive in writing to the project manager.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) Other obligations and work of the contract letting party at the post-completion test stage are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.1.2 The contractor's responsibilities and obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Under unitary arrangement of the post-completion test united coordinating and leading organ established by the contract letting party, the contractor shall designate any person with relevant qualification and experience to guide the post-completion test. During the post-completion test period, the power station initiation manger and its guiding persons designated by the contractor shall only leave the site upon approval by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor shall formulate post-completion test scheme according to the contract provisions and the post-completion test features of this project. And shall submit post-completion test scheme to the contract letting party before start of post-completion test. Such scheme shall include: the operation test procedures, resource conditions, test conditions, operation procedures, safe procedures, accident disposal procedures and progress plan etc. of the project and its relevant parts. The scheme shall only be implemented after being verified and approved by the contract letting party. The counterparts and time of submission of post-completion test scheme are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) If the contractor fails to implement any arrangement, directive and notice of the contract letting party, the contractor shall be liable for any accident, human body injury and project damage caused thereby.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor shall be obliged to raise suggestions and make explanations on any organization, arrangement, directive and notice of the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Under emergency, the contractor shall immediately implement the operation, work and assignment ordered by the contract letting party orally. The contractor shall make records for such directive and make implementation records. With respect to such directive, the contract letting party shall deliver the oral directive in writing again to the contractor within 12 hours.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party fails to deliver supplementary notice on such oral directive in writing within 12 hours, the contractor and its project manager shall be entitled to, within 24 hours upon receipt of the oral directive, submit such oral directive in writing to the contract letting party, the contract letting party shall sign for confirmation on the receipt with the date and time of receiving. If the contract letting party fails to sign for confirmation on the receipt within 24 hours, it shall be deemed as confirmed by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The contract letting party shall be liable for any accident liability, human body injury, project damage and increase in the expenses due to implementation of such oral directive. </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(6) Liability for any defect of the operation and maintenance manual. With respect to the operation and maintenance manual formulated by the contractor, the contractor shall be liable for any accident liability, human body injury and project damage caused by any defect of the manual; if any defect existing in the operation guidance provided by the contract letting party (including any licenser of its) causes any defect of the contractor's operation manual, the contract letting party shall be liable for any accident liability, human body injury, project damage and increase in the expenses incurred against the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(7) Other obligations and work of the contractor at the post-completion test stage according to the contract provisions and industrial regulations are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.2 Post-completion test procedures">10.2 Post-completion test procedures</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.1 The contract letting party shall organize and arrange its management persons, operators, maintenance persons and all other preparation work according to the post-completion test scheme approved by the united coordinating and leading organ.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.2 The contractor shall, according to the post-completion test scheme that has been approved, provide all electric power, water, power, raw materials, auxiliary materials, consumable materials and other test conditions as well as provide other equipment, facilities, tools and appliances necessary for post-completion test that shall be provided by the contractor as set forth in the scheme and accomplish other preparation work that shall be finished by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.3 The contractor shall organize post-completion test according to the post-completion test scheme that has been approved as well as the post-completion test procedures and test conditions for any part of the project, among different projects and the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.4 The united coordinating and leading organ shall organize, fully examine and carry out the resource conditions, test conditions, safe facilities and conditions, fire protection facilities and conditions, emergency and accident disposal facilities, conditions and relevant measures necessary for post-completion test of the project and any part thereof, in order to guarantee about the completeness of recording instruments and special recording tables and the sufficiency of quantity thereof.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.5 Notice on date of post-completion test. The contract letting party shall, within 15 days upon the date of project receipt, notify the contractor of the date of post-completion test start. Unless otherwise set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.3 Post-completion test and trial operation assessment">10.3 Post-completion test and trial operation assessment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.3.1 Test shall be conducted according to the test procedures, test conditions and operation procedures of the post-completion test scheme that has been approved in order to achieve the production function and use function of the project as set forth in the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.3.2 The contract letting party's operators and the contractor's instructors shall truthfully fill out data, conditions, status, time, name and other contents as stipulated in the test condition records, test records and tables of the same post in the process of post-completion test.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.3.3 Trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) According to the provisions as set forth in Article 5.1.1 hereof, if the contractor provides production process and technologies or construction design, it shall guarantee to achieve the assessment guaranteed value or use function as set forth in the special provisions of Article 5.1.1 within the trial operation assessment period.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) According to the provisions as set forth in Article 5.1.2 hereof, if the contract letting party provides production process and technologies or construction design, the contractor shall guarantee to achieve the assessment guaranteed value or use function as set forth in the special provisions of Article 5.1.2 within the trial operation assessment period.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) According to the regulations of relevant industries on the trial operation assessment period, the trial operation assessment period shall be stipulated in the special provisions.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) After passing the trial operation assessment or use function, both parties shall jointly clear up the post-completion test and its trial operation test result and compile appraisal report. The report shall be made in duplicate with either party holding each respectively after being signed or sealed by both contract parties and shall be deemed as part hereof. The contract letting party shall issue assessment inspection &amp; acceptance certificate according to the provisions as set forth in Article 10.7 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.3.4 Ownership of product and service income. Any product income or service income during the period of post-completion test of the project and trial operation assessment shall belong to the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.3.5 One of the trial operation assessment indexes is that, after the power station experiences trial operation of a period of time, only when the generating capacity of the power station reaches the agreement value, the trial operation may be subject to closure in a real sense.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="10.4 Delay in post-completion test">10.4 Delay in post-completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.4.1 In case of delay in the post-completion test caused by any reason attributable to the contractor, relevant measures shall be take to organize post-completion test as soon as possible. If the delay causes any increase in the expenses against the contract letting party, the contract letting party shall be entitled to claim from the contractor according to the provisions as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.4.2 According to the provisions on trial operation assessment as set forth in Article 10.3.3 hereof, during the trial operation assessment period, in case of assessment suspension or shutoff, and the accumulative days of suspension or shutoff exceeds the trial operation assessment period as set forth in the special provisions of Clause (3), Article 10.3.3, trial operation assessment shall be conducted again within 20 days upon suspension or shutoff, beyond such period, the project shall be deemed as having passed the trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.5 Conducting post-completion test again">10.5 Conducting post-completion test again</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.5.1 According to the provisions as set forth in Article 5.1.1 or Article 5.1.2 and their special provisions, if any reason attributable to the contractor causes the project or any part thereof to fail to pass the post-completion test, the contractor shall at its own expenses renovate its defect and conduct such test again according to the test procedures and test conditions as set forth in Article 10.2.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.5.2 According to the provisions on conducting test again as set forth in Article</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.5.1 hereof, if the contractor still fails to pass such test, the contractor shall at its own expenses continue to renovate the defect and conduct such test again according to the test procedures and test conditions as set forth in Article 10.2.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.5.3 If the post-completion test conducted again by the contractor causes any increase in the expenses against the contract letting party, the contract letting party shall be entitled to claim to the contractor according to the provisions as set forth in Article 16.2.1 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.6 Failure to pass assessment">10.6 Failure to pass assessment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If any reason attributable to the contractor causes the failure of the project to pass the assessment, however, it still has production function and use function, it shall be handled according to the following provisions:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) Compensation for failure to pass the trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1) The production process and technologies or construction design provided by the contractor fail to pass trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the project trial operation guaranteed value or instructions on use function guarantee as set forth in the special provisions of Article 5.1.1 hereof, and in accordance with the amount of compensation or the amount calculated based upon the compensation computation formula for failure to pass trial operation assessment as set forth in the special provisions of this article, after relevant amount of compensation is paid to the contract letting party, the contractor shall be deemed as having passed the trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2) The production process and technologies or construction design provided by the contract letting party fail to pass trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to relevant liabilities that shall be assumed by the contractor in the project trial operation assessment as set forth in the special provisions of Article 5.1.2 hereof, and in accordance with the amount of compensation as set forth in the special provisions of this article for relevant liabilities or the amount calculated based upon the compensation computation formula, after relevant amount of compensation is paid to the contract letting party, the contractor shall be deemed as having passed the trial operation assessment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) With respect to the project failing to pass trial operation assessment, the contractor shall at its own expenses investigate, adjust and amend until the project is accepted by the contract letting party, both parties shall discuss about relevant investigation, amendment and test periods, and the contract letting party shall therefore provide convenience. Before passing such assessment, the contract letting party may provisionally not claim for compensation according to the provisions as set forth in Clause (1), Article 10.6 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) When the contract letting party accepts the provisions as set forth in Clause (2) of this article, however, within the period as agreed upon, if the contract letting party fails to provide the contractor with convenience, which causes the failure of the contractor to conduct investigation, adjustment and amendment within the period as agreed upon, it shall be deemed as having passed such trial operation assessment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><font size="3"><a name="10.7 Post-completion test and assessment inspection &amp; acceptance certificate"><b>10.7 Post-completion test and assessment inspection &amp; </b><b>acceptance certificate</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.7.1 It is stipulated in the special provisions that post-completion test and assessment inspection &amp; acceptance certificate shall be issued based upon the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.7.2 According to the provisions as set forth in Article 10.3, Article 10.4, Article 10.5.1, Article 10.5.2 and Article 10.6 hereof, if the contract letting party passes or is deemed to pass post-completion test and trial operation assessment, it shall issues post-completion test and assessment inspection &amp; acceptance certificate according to Article 10.7.1. The date and time of passing trial operation assessment as specified in such certificate shall be the date and time of actually accomplishing assessment or being deemed to pass trial operation assessment.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="10.8 Loss of production value and use value">10.8 Loss of production value and use value</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If any reason attributable to the contractor causes the project or single project to fail to pass the post-completion test and causes the whole project to lose production value or use value, the contract letting party shall be entitled to claim for failure of performance and deduct the performance bond that has been submitted.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 11 Quality assurance responsibility">Article 11 Quality assurance responsibility</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font size="3"><a name="11.1 Quality assurance responsibility agreement"><b>1</b><b>1.1 Quality assurance responsibility agreement</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">11.1.1 Quality assurance responsibility agreement. To enter into quality assurance responsibility agreement according to relevant laws and regulations is one of the conditions for completion inspection &amp; acceptance. According to the assurance contents, scope, period and responsibilities as set forth in laws and regulations, the quality assurance responsibility agreement shall be entered into as Appendix III hereto. The date on which the contract letting party receives all projects hereof is the date on which the contractor's assurance responsibility starts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">11.1.2 If the contractor fails to submit quality assurance responsibility agreement and refuses to enter into quality assurance responsibility agreement with the contract letting party without any legitimate reason, the contract letting party may refuse to handle completion settlement with the contractor and refuse to assume the completion settlement accounts and relevant interest not paid, even if the interest for delayed payment is stipulated.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contractor submits quality assurance responsibility agreement, proposes to enter into such quality assurance responsibility agreement with the contract letting party and agrees upon the interest for delayed payment in the contract, however, if any reason attributable to the contract letting party causes the failure to timely enter into quality assurance responsibility agreement, the contract letting party shall bear the interest for delayed payment of completion settlement from the 11th day of receiving such responsibility agreement.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><font size="3"><a name="11.2 Quality assurance amount"><b>1</b><b>1.2 Quality assurance amount</b></a></font></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">11.2.1 Quality assurance amount. The quality assurance amount is stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">11.2.2 Provisional deduction of quality assurance amount. The provisional deduction method of quality assurance amount is stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">11.2.3 Payment of quality assurance amount. The contractor shall pay the quality assurance amount subject to provisional deduction according to the provisions on payment of quality assurance amount as set forth in Article 14.5.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 12 Project completion inspection &amp; acceptance">Article 12 Project completion inspection &amp; acceptance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="12.1 Completion inspection &amp; acceptance report and complete completion materials">12.1 Completion inspection &amp; acceptance report and complete completion materials</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.1.1 The project conforms to relevant provisions on project receipt as set forth in Article 9.1, or the post-completion test and assessment inspection &amp; acceptance certification has been issued according to the provisions as set forth in Article 10.8, the round-off project and defect renovation as set forth in Article 9.2.2 have been accomplished, upon inspection &amp; acceptance conducted by the contract letting party or the supervisor, the contractor shall submit complete project completion materials according to examination and inspection &amp; acceptance of completion test as set forth in Clause (1), (2) and (3), Article 8.1.1 and Article 8.2 and based upon the materials including but not limited to the post-completion test and its trial operation assessment result as set forth in Clause (4), Article 10.3.3. The formats, contents and counterparts of the completion inspection &amp; acceptance report and complete completion materials are stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.1.2 The contract letting party shall raise modification opinions or acknowledgement within 25 working days upon receipt of completion inspection &amp; acceptance report and complete completion materials, and the contractor shall at its own expenses be responsible for modification. In case of failure to raise modification opinions within 25 working days, it shall be deemed that the completion materials and completion inspection &amp; acceptance report have been acknowledged.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.1.3 The project subject to stage construction, stage production or stage use shall be handled according to the provisions as set forth in Article 12.1.1 and Article 12.1.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="12.2 Completion inspection &amp; acceptance">12.2 Completion inspection &amp; acceptance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.2.1 Organizing completion inspection &amp; acceptance. According to the provisions as set forth in Article 12.1.2 hereof, upon acknowledgement on completion inspection &amp; acceptance report and complete completion materials, the contract letting party shall preside over completion inspection &amp; acceptance, the specific completion inspection &amp; acceptance preparation work shall be carried out by the contractor within 20 days and the expenses shall be borne by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.2.2 Within 15 days upon inspection &amp; acceptance, the contract letting party shall raise further modification opinions on the completion inspection &amp; acceptance report or completion materials of the contractor and the contractor shall at its own expenses be responsible for modification.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">12.2.3 The completion inspection &amp; acceptance of the contract project subject to stage construction, stage production or stage use shall be handled according to the provisions as set forth in Article 12.1.3 and Article 12.1.1 hereof, and the completion inspection &amp; acceptance shall be organized by stages.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="Article 13 Alteration and contract price adjustment">Article 13 Alteration and contract price adjustment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.1 Alteration rights">13.1 Alteration rights</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.1.1 Alteration rights. The contract letting party shall have the rights to approve alteration. Within any time from effectiveness of the contract to the project completion inspection &amp; acceptance, the contract letting party shall be entitled to deliver alteration directive. The alteration directive shall be delivered in writing.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.1.2 Alteration. Both written alteration directive and oral alteration directive approved and sent by the contract letting party shall be deemed as alteration. Including: any alteration directive directly delivered by the contract letting party or any alteration directive approved by the contract letting party or delivered by the supervisor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If any reason attributable to the contractor causes any defect existing in design, purchase, construction, completion test, post-completion test and completion inspection &amp; acceptance, the contractor shall at its own expenses make amendment, adjustment and perfection which shall not be deemed as alteration.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.1.3 Alteration proposing rights. The contractor shall be entitled to submit written suggestions on alteration at any time, including: shortening work period, lowering the project, construction, maintenance and operation expenses of the contract letting party, improving the efficiency or value of completed project, bringing long-term interest and other interest to the contract letting party. Upon receipt of such suggestions, the contract letting party shall send: written notice on refusing to adopt, adopting and supplementing further materials.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.2 Alteration scope">13.2 Alteration scope</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.2.1 Design alteration scope</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Adjusting production process and procedures, but not enlarging or shrinking the production routes and scale approved by preliminary design or not enlarging or shrinking the production routes and scale as set forth herein;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Adjusting the planar layout, vertical layout and partial use function, but not enlarging the construction scale approved by preliminary design, not changing the use function approved by preliminary design; or not enlarging the construction scale as set forth herein, not changing the use function as set forth herein;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(3) Adjusting the process and use function of the supporting project system;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) Adjusting the benchmark control point, benchmark elevation and benchmark line in the region;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Adjusting the performance, specification and quantity of equipment, materials and components;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(6) N/A;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(7) Other design matters beyond the contract provisions; (8) Additional work necessary for the above alteration.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.2.2 Purchase alteration scope</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contractor has, according to the name list approved by the contract letting party, entered into purchase contract with any relevant supplier or has started processing</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&amp; manufacture, commodity supply and transportation etc., the contract letting party notifies the contractor of selecting another supplier in such name list;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contract letting party requires to change examination, inspection, test and experiment address or added additional experiment;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contract letting party requires to increase or decrease the purchase quantity of the spare parts, special tools and post-completion experiment materials.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.2.3 Construction alteration scope</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The design alteration as set forth in Article 13.2.1 hereof causes change in construction method and increase or decrease in the equipment, materials, parts and project quantity;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The additional experiment added according to the requirement of the contract letting party and change in the experiment address;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) Beyond Clause (1) and Clause (2), Article 5.2.1 hereof, newly added construction obstacle;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(4) With respect to the project certified to be qualified upon completion test inspection &amp; acceptance or municipal inspection &amp; acceptance, the contract letting party shall notify of conducting completion test again;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px">(5) Additional work necessary for the above alteration.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.2.4 The contract letting party's hurry work directive. Upon acceptance of the contract letting party's written instructions, when the contractor accelerates design, construction or the progress of any other part with any method deemed as necessary by the contract letting party, if the contractor needs to adjust the project progress plan for implementing the hurry work directive and make estimate for the added measures and resources, upon approval by the contract letting party, such adjustment shall be deemed as alteration. If the contract letting party fails to approve such alteration, the contractor shall be entitled to implement according to the progress plan of any relevant stage as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If any reason attributable to the contractor causes the actual progress to be obviously behind the project progress plan approved above, the contractor shall at its own expenses catch up with the progress according to the provisions as set forth in Article 4.1.2; in case of delay in the date of completion, the contractor shall assume compensation for delay according to the provisions as set forth in Article 4.5.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.2.5 Decrease adjustment to part of the project. According to the provisions on the contractor's requirement on return to work as set forth in Article 4.6.4 hereof, if the suspension of the contract letting party lasts for more than 45 days, the contract letting party still fails to return to work when the contractor requires return to work or fails to continue the construction due to the lasting of force majeure, as required by either party, decrease adjustment may be made to the part of the project affected by suspension with the method of alteration.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.2.6 Other alteration.Other alteration is stipulated in the special provisions according to specific features of the project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.3 Alteration procedures">13.3 Alteration procedures</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.3.1 Alteration notice. In order to avoid adverse influence of alteration on the project functions or use function etc., notice on the contract letting party's alteration in writing shall be sent to the contractor in advance.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.3.2 Proposal and report of alteration notice. The contractor shall be obliged to submit written proposal and report to the contract letting party within 10 days upon receipt of the contract letting party's alteration notice, including:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Upon acceptance of such alteration in the contract letting party's alteration notice, the proposal and report shall include: the reason for supporting such alteration, the estimate on the resources and consumables including but not limited to the work contents, equipment, materials, human resource, machines and tools for implementing such alteration. In case of delay in the date of completion caused by such alteration, the reasons shall be specified in the report and the progress plan shall be submitted. If the contractor fails to submit the estimate on any increase in the expenses and in case of delay in the date of completion, it shall be deemed that such alteration does not involve adjustment to the contract price and delay in the date of completion, the contract letting party shall not assume any expense of such alteration or be liable for delay in the date of completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) In case of refusal to accept such alteration in the contract letting party's alteration notice, the proposal and report shall include the reasons for not supporting such alteration, the reasons include:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1) Such alteration does not conform to laws and regulations etc.;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2) Or it is difficult for the contractor to obtain special equipment, materials and components necessary for alteration;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3) Or the alteration will reduce the project safety, stability and applicability;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4) Or the alteration will generate adverse influence on the realization of productive performance guaranteed value and use function guarantee.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.3.3 The contract letting party's verification and approval. Within 10 days upon receipt of written proposal and report submitted by the contractor according to the provisions as set forth in Article 13.3.2 hereof, the contract letting party shall verify such proposal and deliver written notice on approval, revocation, alteration and raising further requirements. With the time of waiting for the contract letting party's response, the contractor shall not stop or delay any work.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Upon receipt of the proposal and report submitted by the contractor according to the provisions as set forth in Clause (1), Article 13.3.2 hereof, the contract letting party shall deliver alteration directive in writing after verifying and approving the reasons, estimate and delay in the date of completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party fails to make acknowledgement on the estimate or (and) delay in the date of completion proposed by the contractor on such alteration in the delivered alteration directive, from the 11th day after the contract letting party receives written approval and report, it shall be deemed that the alteration estimate and delay in the date of completion submitted by the contractor have been approved by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) After the reasons submitted according to the provisions as set forth in Clause (2), Article 13.3.2 hereof for contractor's refusal to accept such alteration are verified by the contract letting party, the contractor shall implement the written notice delivered on revocation, alteration and submitting further supplementary materials.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.3.4 If the contractor submits the alteration proposal according to the provisions as set forth in Article 13.1.3 hereof, the alteration procedures shall be subject to such provisions on alteration procedures.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.4 Emergent alteration procedures">13.4 Emergent alteration procedures</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.4.1 The contract letting party shall be entitled to deliver emergent alteration directive in writing or orally and order the contractor to immediately implement such alteration. The contractor shall immediately implement upon receipt of such directive.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.4.2 The contractor shall, within 10 days after the implementation of emergent alteration directive is finished, submit to the contract letting party the work contents of implementing such alteration as well as the expenses actually consumed by the resources including but not limited to equipment, materials, human resources, machine and tools and relevant obtaining expenses. In case of delay in any key route of the project caused by implementation of such alteration, it shall be proposed to postpone the date of completion, specify the reasons and submit the progress plan.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contractor fails to submit the expenses actually consumed and relevant obtaining expense or (and) written materials for postponing the date of completion within 10 days after such alteration is finished, it shall be deemed that such alteration does not involve adjustment to the contract price and delay in the date of completion, the contract letting party will not be liable for such alteration any more.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">13.4.3 Within 25 days upon receipt of the written materials submitted by the contractor according to the provisions as set forth in Article 13.4.2 hereof, the contract letting party shall notify the contractor of approved reasonable expenses in writing or reasonably postpone the date of completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Within 25 days upon receipt of such written report of the contractor, if the contract letting party fails to approve the expenses of the contractor or postpone the date of completion, from the 26th day of receiving such report, it shall be deemed that the expenses submitted and the delay in the date of completion have been approved by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="13.5 Determination upon alteration price">13.5 Determination upon alteration price</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">With respect to the determination upon each alteration price, the alteration price shall be determined based upon the unit price (including obtaining expenses) of the human resources, machines and tools as well as project quantity etc.; or the alteration price shall be determined based upon the price of similar altered project; or the alteration price shall be determined based upon the price as negotiated; or the alteration price shall be determined with any other method.As set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="13.6 Interest sharing of suggested alteration">13.6 Interest sharing of suggested alteration</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the contract letting party approves and adopts any alteration suggestion raised by the contractor according to the provisions as set forth in Article 13.1.3 hereof, which causes decrease in project investment, shortening of work period and achievement of long-term operating efficiency or other interest, the interest sharing methods shall be stipulated in the special provisions, then supplementary agreement on interest sharing shall be otherwise entered into as contract appendix.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.7 Adjustment to the contract price">13.7 Adjustment to the contract price</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Within 30 days under any of the following circumstances, the contractor shall notify the contract letting party or the supervisor in writing of the reasons for adjustment to the contract price and adjustment amount. The reasonable amount acknowledged by the contract letting party shall be adjustment amount of the contract price and the amount that shall be paid or deducted in the payment of the project accounts of that period. The adjustment to the contract price shall include the following situations:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Upon contract conclusion, due to any change in laws, administrative regulations and national policies and the industrial regulations that shall be observed, the contract price is affected;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The increase or decrease in the alteration expenses approved by the contract letting party according to the alteration procedures as set forth in Article 13.3 to Article 13.5 hereof;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) Adjustment to any increase or decrease in other accounts as set forth herein. With respect to any increase or decrease in the accounts not set forth herein, the contract letting party will not be responsible for adjusting the contract price. Unless otherwise set forth in applicable laws;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(4) Adjustment to the contract price shall not include the contract alteration.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="13.8 Dispute in adjustment to the contract price">13.8 Dispute in adjustment to the contract price</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Upon negotiation, in case of any dispute arising out of the failure to reach consensus on the expenses of project alteration, adjustment to the contract price or delay in the date of completion, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="Article 14 Total contract price and payment">Article 14 Total contract price and payment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.1 Total contract price and payment">14.1 Total contract price and payment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.1.1 Total contract price. This contract is total-price contract, unless in accordance with the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof as well as the provisions on increase or decrease in other related amounts as set forth in the contract, the contract price shall not be adjusted.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.1.2 Payment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The currency type of the contract price shall be RMB, and the contract price shall be paid to the contractor within the territory of China.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contract letting party shall pay the contract price to the contractor based upon the type of payables and payment schedule as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.2 Guarantee (not applicable to this contract)">14.2 Guarantee (not applicable to this contract)</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.2.1 Performance bond. If the contractor shall submits performance bond to the contract letting party as set forth in the contract, the format, amount and time of submission of the performance bond shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.3 Prepayment">14.3 Prepayment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.1 Prepayment amount. The contract letting party agrees that certain proportion of the contract price shall be deemed as prepayment amount of which the specific amount shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.2 Payment of prepayment. Within 5 working days upon effectiveness of the contract and construction start of exterior lines, conclusion of main equipment contract and accomplishment of road fences (acknowledged by the contract letting party), the contract letting party shall pay the contractor the prepayment amount as set forth in the provisions of Article 14.3.1 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.3.3 Deduction of prepayment</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Deduction of prepayment. The deduction method of prepayment, deduction proportion and deduction time schedule shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) After the contract letting party issues project receipt certificate or the contract is cancelled, if the prepayment has not been fully deducted,</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1) The contract letting party shall be entitled to deduct from the accounts payable to the contractor or the accounts belonging to the contractor once or more times;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2) If the accounts deducted by the contract letting party from the accounts payable to the contractor or the accounts belonging to the contractor are insufficient for deduction, in the event that the contract does not stipulate that the contractor shall submit performance bond for prepayment but stipulates performance bond, the contract letting party shall be entitled to deduct the part of prepayment that has not been deducted from the performance bond;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3) If the accounts deducted by the contract letting party from the accounts payable to the contractor or the accounts belonging to the contractor are insufficient for deduction, in the event that the contract stipulates performance bond, the prepayment amount that has not been deducted by the contract letting party shall be paid by the contractor to the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.4 Project progress accounts">14.4 Project progress accounts</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.4.1 Project progress accounts.The project progress accounts shall include but be not limited to design progress accounts, purchase progress accounts, construction progress accounts, completion test progress accounts and post-completion test service fees, completion test progress accounts and project contracting management fees, the payment method, payment condition and payment time shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.4.2 According to specific situation of the project, other progress accounts payable shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.5 Provisional deduction and payment of quality assurance amount.">14.5 Provisional deduction and payment of quality assurance amount.</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.5.1 Provisional deduction of quality assurance amount. Shall be provisionally deducted according to the provisions on quality assurance amount as set forth in Article 11.2.1 hereof and those on provisional deduction of quality assurance amount as set forth in Article 11.2.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.5.2 Payment of quality assurance amount.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) While handling project completion inspection &amp; acceptance and completion settlement, half of the quality assurance amount subject to provisional deduction as set forth in Article 14.5.1 (unless otherwise set forth in special provisions). Hereinafter, if the contractor fails to renovate any newly detected defect or entrust the contracting party to renovate such defect according to the notice of the contract letting party, such expenses incurred against the contract letting party shall be deducted from the remaining quality assurance amount.Within 15 days upon one year from the date of receipt of the certificate issued, the contract letting party shall pay the balance of the quality assurance amount subject to provisional deduction to the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) While handling project completion inspection &amp; acceptance and completion settlement, if the contractor requires to provide performance bond for the remaining half of quality assurance amount and the contract letting party agrees to accept, upon receipt of such performance bond, the contract letting party shall pay the remaining half of such assurance amount. Hereinafter, if the contractor fails to at its own expenses renovate any newly detected defect or entrust the contract letting party to renovate such defect, the expenses incurred against the contract letting party shall be deducted from such performance bond. Within 15 working days upon one year from the date of receipt of the certificate issued, the performance bond shall be returned. The format, amount and time of submission of the performance bond for the quality assurance amount shall be stipulated in the special provisions.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.6 Applying for payment according to the payment schedule">14.6 Applying for payment according to the payment schedule</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.6.1 Applying for payment according to the payment schedule. With respect to application for payment according to the payment schedule, based upon the contract price as set forth in the contract as well as the payment installments as set forth in the special provisions, the main image progress anticipated to be achieved in each installment or the main planned project quantity (including but not limited to design, purchase, construction, completion test and post-completion test) and the payment amount of each installment as well as in accordance with the format, contents, counterparts and time of submission as set forth in the special provisions, the contractor shall submit the application report for payment of current installment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The amount as set forth in the application report for the payment of each installment shall include:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The amount of current installment subject to planned application as set forth in the special provisions of this clause;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Any increase or decrease according to the provisions on adjustment to the contract price as set forth in Article 13.7;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The accounts paid or deducted according to the provisions on prepayment as set forth in Article 14.3 hereof;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The accounts subject to provisional deduction or payment according to the provisions on quality assurance amount as set forth in Article 14.5 hereof;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Any increase or decrease in the accounts according to the claim result as set forth in Article 16.2 hereof;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) Any increase or decrease in the accounts according to supplementary agreement to this contract otherwise entered into.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.6.2 When the contract letting party effects payment according to the payment schedule, if the contractor's actual work and actual progress is obviously behind what is stipulated in the payment schedule, the contract letting party shall be entitled to negotiate with the contractor for decreasing the payment amount of current installment and shall be entitled to jointly adjust the payment schedule with the contractor. The contractor's application for payment of all subsequent installments and the contract letting party's payment shall be based upon the adjusted payment schedule.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.6.3 If it is stipulated that application for payment shall be made according to the payment schedule as set forth in Article 14.6 hereof, the application according to the monthly project progress payment as set forth in Article 14.6 hereof shall not apply.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="14.7 Payment condition and schedule">14.7 Payment condition and schedule</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.7.1 Payment condition. If it is stipulated that the contractor shall submit performance bond, the submission of performance bond shall be the condition for the contract letting party to pay all accounts; in case of no performance bond stipulated, the contract letting party shall pay all accounts as agreed upon.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.7.2 Payment of prepayment shall be subject to the provisions on payment of prepayment as set forth in Article 14.3.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.7.3 Project progress accounts</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Application and payment according to the monthly project progress. If it is stipulated to apply for payment and effect payment according to the monthly project progress as set forth in Article 14.5.1 hereof, the contract letting party shall, within 25 days after receiving the monthly payment application report submitted according to Article 14.5.1 hereof, conduct verification and effect payment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Application and payment according to the payment schedule as set forth herein. In case of applying for payment and effecting payment according to the payment schedule as set forth in Article 14.6.1 hereof, the contract letting party shall, within 25 days after receiving the application report for the payment of each installment submitted according to Article 14.6.1 hereof, conduct verification and effect payment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="14.8 Delay in payment time">14.8 Delay in payment time</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.8.1 If any reason attributable to the contract letting party causes the failure to pay the contractor all accounts hereunder, from the 15th day thereafter, the interest for overdue payment shall be paid to the contractor as per the interest rate of similar loans during the same period published by the People's Bank of China as liquidated damages for overdue payment.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.8.2 If the contract letting party has been behind in payment for over 15 days, the contractor shall be entitled to send notice on payment requirement to the contract letting party, if the contract letting party still does not effect payment upon receipt of notice, the contractor may suspend part of the work, it shall be deemed as suspension caused by the contract letting party and subject to the provisions on suspension caused by any reason attributable to the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">In case of negotiation for entering into overdue payment agreement, the contract letting party shall effect payment according to the installments, time, amount and interest as set forth in the overdue payment agreement; if both parties fail to reach overdue payment agreement, which causes the failure to implement the project, the contractor may stop part or whole of the project, the contract letting party shall assume breach liabilities, in case of delay in any key route of the project, the date of completion shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.8.3 If the contract letting party has been behind in payment for over 60 days, which affects the implementation of the whole project, the contract letting party shall pay the contractor interest for overdue payment as per twice of the interest rate of similar loans during the same period published by the People's Bank of China as liquidated damages for overdue payment, the interest for overdue payment shall be calculated from the date of overdue payment to the date of actual payment and deemed as liquidated damages for overdue payment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="14.9 Tax and tariff">14.9 Tax and tariff</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.9.1 The contract letting party and the contractor shall respectively perform their tax (including import tariff) payment obligations according to national regulations on tax payment.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<td><i><a href="#Table of Contents">Table of Contents</a></i></td></tr></table></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.9.2 If either party enjoys tax reduction and exemption on the import value added tax and tariff for the imported project equipment, materials, equipment parts etc. as set forth herein), the other party shall be obliged to handle the formalities for tax reduction and exemption as well as assist and cooperate.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.10 Payment of claim accounts">14.10 Payment of claim accounts</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.10.1 With respect to the claim accounts deserved by the contract letting party determined by negotiation, adjudicated by arbitration or judged by the court, the contract letting party may deduct such claim accounts from the payment paid to the contractor according to the monthly project progress accounts or payment schedule of current installment. If the project progress accounts of all installments paid to the contractor are insufficient for deduction of the contract letting party's claim accounts, and the contract stipulates that the contractor shall submit performance bond, then the insufficiency of the claim accounts may be deducted from the performance bond. If the performance bond is insufficient for deduction, or in case of no performance bond stipulated, <b>the contractor shall otherwise pay such claim accounts.</b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.10.2 With respect to the claim accounts deserved by the contractor determined by negotiation, adjudicated by arbitration or judged by the court, the contractor may separately list such claim accounts in the monthly project progress accounts or payment schedule of current installment, and the contract letting party shall pay such claim accounts in the payment of current installment. If the contract letting party fails to pay such claim accounts, and it is stipulated in the contract that the contract letting party shall submit performance of bond for payment, the contractor shall be entitled to deduct from the performance of bond for payment submitted by the contract letting party. If both parties do not agree upon the performance of bond for payment, the contract letting party shall otherwise pay such claim accounts.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="14.11 Completion settlement">14.11 Completion settlement</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.11.1 Submitting completion settlement materials. According to the provisions as set forth in Article 12.1 hereof, within 12 days after the completion inspection &amp; acceptance report and complete completion materials submitted by the contractor are recognized by the contract letting party, the contractor shall deliver the completion inspection &amp; acceptance report and complete completion materials to the contract letting party.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.11.2 Final completion settlement materials. Within 15 days upon receipt of the completion inspection &amp; acceptance report and complete completion materials submitted by the contractor, the contract letting party shall make verification and raise modification opinions, upon consensus through negotiation, the contractor shall at its own expenses make amendment and submit the final completion inspection &amp; acceptance report and final completion materials. The contractor shall be liable for delay in the completion settlement and delay in subsequent payment caused by incompleteness of the settlement materials provided by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.11.3 Paying up completion settlement accounts. Within 15 days after the contractor submits final completion settlement materials according to the provisions as set forth in Article 14.11.2 hereof, the contract letting party shall pay up the completion settlement accounts. Upon settlement, the contract letting party will return the performance bond submitted by the contractor according to the provisions as set forth in Article 14.2.1 hereof to the contractor; the contractor shall return the performance of bond submitted by the contract letting party according to the provisions as set forth in Article 14.2.2 hereof to the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.11.4 Failure to make response to the completion settlement report. Within 15 days upon receipt of completion settlement report and complete completion settlement materials submitted according to the provisions as set forth in Article 14.11.1 hereof, if the contract letting party fails to raise modification opinions and fails to make response, it shall be deemed that the contract letting party has recognized such completion settlement materials as final completion settlement materials. The contract letting party shall pay up the completion settlement accounts according to the provisions as set forth in Article 14.11.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.11.5 The contract letting party's failure to pay the completion settlement accounts</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) If the contract letting party fails to pay up the remaining completion settlement accounts payable to the contractor according to the provisions as set forth in Article 14.11.3 hereof, the contractor shall be entitled to deduct such remaining accounts from the performance of bond for payment submitted by the contract letting party according to the provisions as set forth in Article 14.2.2 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If it is not stipulated in the contract that the contract letting party shall submit the performance of bond for payment according to the provisions as set forth in Article 14.2.2 hereof, from the 31st day after the contractor submits final settlement materials, the contract letting party shall pay the remaining completion settlement accounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) According to the provisions as set forth in Article 14.11.4 hereof, if the contract letting party fails to raise modification opinions and response on the completion settlement materials within 30 days as stipulated, and fails to pay the contractor the remaining completion settlement accounts, from the 31st day of submitting such report by the contractor, the contract letting party shall pay the remaining completion settlement accounts owing to the contractor and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Within 15 days after the contractor submits final completion settlement materials, if the contract letting party still fails to effect payment, the contract may seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.11.6 Failure to submit completion settlement report and complete settlement materials on time. Within 15 days after the project completion inspection &amp; acceptance report is recognized by the contract letting party, the contractor fails to submit completion settlement report and complete settlement materials to the contract letting party, which causes the failure to conduct project completion settlement normally or failure to conduct project completion settlement on time, if the contract letting party requires the contractor to pay for the project, the contractor shall effect payment; if the contract letting party does not require payment for the project, the contractor shall assume custody, preservation and maintenance expenses and be responsible for custody, preservation and maintenance, excluding any part of the project that has been used and received by the contract letting party according to the provisions on project receipt as set forth in Article 9 hereof.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.11.7 The contractor's failure to pay the completion settlement accounts</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) If the contractor fails to pay up the remaining completion settlement accounts payable to the contract letting party according to the provisions as set forth in Article 14.11.3 hereof, the contract letting party shall be entitled to deduct such remaining accounts from the performance of bond submitted by the contractor according to the provisions as set forth in Article 14.2.1 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">If the amount of the performance bond is insufficient for deduction, from the 31st day from the submission of final completion settlement materials, the contractor shall pay the remaining completion settlement accounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China. If the contractor still fails to effect payment within 60 days upon submission of the final completion settlement materials, the contract letting party shall be entitled to seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) In case of no performance bond stipulated in the contract, from the 31st day from the submission of final completion settlement materials, the contractor shall pay the contract letting party the remaining amounts in arrears and the interest thereof as per the interest rate of similar loans during the same period published by the People's Bank of China. If the contractor still fails to effect payment within 60 days upon submission of the final completion settlement materials, the contract letting party shall be entitled to seek for settlement according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.11.8 Dispute on completion settlement. Within 30 days upon receipt of the completion settlement report and complete settlement materials submitted by the contractor, if the contract letting party has any objection to the project completion settlement price, they shall jointly entrust a project construction cost consultation unit to conduct verification on the completion settlement, and the completion settlement accounts shall be paid up according to the verification result. In case of any dispute on the verification result, it shall be settled according to the provisions on dispute and adjudication as set forth in Article 16.3 hereof.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="Article 15 Insurance">Article 15 Insurance</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="15.1 The insurance purchased by the contractor">15.1 The insurance purchased by the contractor</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.1.1 According to the insurance coverage categories as set in applicable laws, administrative regulations and rules as well as special provisions, the types of insurance that shall be purchased by the contractor are stipulated, and the insurance premium is included in the contract price. The types, scope, amount, period and effective lasting time of the insurance etc. that shall be purchased by the contractor are stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contractor shall be responsible for purchasing the insurance as set forth in applicable laws, administrative regulations and rules as well as special provisions on schedule and according to the needs of the project implementation stage;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) In the contract performance process, with respect to the mandatory insurance that shall be purchased by the contractor according to newly promulgated applicable laws, regulations and rules, the contract price shall be adjusted according to the provisions on alteration and adjustment to the contract price as set forth in Article 13 hereof.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.1.2 If any insurance policy provides the joint insured with insurance, the insurance compensation shall respectively apply to each joint insured. The contractor shall, on behalf of its insured, guarantee that its insured will comply with the conditions and its compensation amount as set forth in the insurance policy.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.1.3 The claim accounts received by the contractor from the insurer shall be used for renovating any loss, damage and injury as set forth in the insurance policy and used for acquisition, reconstruction and compensation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.1.4 With respect to the insurance items and within the insurance period, the contractor shall provide the contract letting party with duplicate of insurance policy, copy of premium payment voucher and certification on effectiveness of the insurance policy.</p>
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<p style="MARGIN: 0px"><b><font size="3"><a name="15.2 All-risk insurance and third-party liability insurance">15.2 All-risk insurance and third-party liability insurance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">With respect to all-risk insurance of the construction project, all-risk insurance of the installation project and third-party liability insurance, no matter the party that shall purchase insurance is which party, it shall at the same list the other party hereunder as the insured under the insurance contract while purchasing insurance. The specific insurance applicant shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="15.3 Miscellaneous provisions on insurance">15.3 Miscellaneous provisions on insurance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.3.1 The contractor shall purchase transportation insurance for the equipment, materials and components purchased and transported by the contractor. Such insurance premium has been included in the contract price. Unless otherwise set forth in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.3.2 Upon occurrence of any accidental event under the insurance matters, the present parties shall be obliged to make efforts to take necessary measure to prevent the expansion of any loss and damage.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.3.3 Any insurance beyond this contract shall be purchased as needed, and the insurance premium shall be borne respectively.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 16 Breach, claim and arbitration">Article 16 Breach, claim and arbitration</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="16.1 Breach liabilities">16.1 Breach liabilities</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.1.1 The contract letting party's breach liabilities. Under any of the following circumstances:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) The contract letting party fails to perform the provisions as set forth in Article 5.1.1 and Clause (1) and (2), Article 5.1.2 hereof and fails to provide authentic, accurate and complete process technologies and construction models, project basic materials and spot obstacle materials on time;</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contract letting party fails to adjust the contract price according to the provisions as set forth in Article 13 hereof and fails to pay relevant accounts as per the account type, amount and time as set forth by the prepayment, project progress accounts and completion settlement;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contract letting party fails to perform any other responsibility and obligation as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract letting party shall take remedy measures and compensate for any loss caused by the above breach behavior against the contractor. In case of delay in any key route of the project, the date of completion shall be postponed accordingly. The contract letting party's assuming of the breach liabilities will not relieve the contract letting party of or exempt the contract letting party from other responsibilities and obligations that shall be assumed by the contract letting party continually as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.1.2 The contractor's breach liabilities. Under any of the following circumstances:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor fails to perform the provisions on inspection of the equipment, materials and components provided for the permanent project as set forth in Article 6.2 and the provisions on construction quality and inspection as set forth in Article 7.5 and fails to renovate any defect;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) The contractor still fails to pass completion test after having being tested for three times, still fails to pass post-completion test after having being tested for three times, or fail to pass completion inspection &amp; acceptance, any main part or the whole of the project to lose use value, production value and use interest;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor fails to perform any other responsibility and obligation as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Without consent of the contract letting party, or without necessary permission, or not allowed by applicable laws, the contractor transfers the project to any other person.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall take remedy measures and compensate for any loss caused by the above breach behavior against the contract letting party. The contractor's assuming of the breach liabilities will not relieve the contractor of or exempt the contractor from other responsibilities and obligations that shall be assumed by the contractor continually as set forth herein.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="16.2 Claim">16.2 Claim</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.2.1 The contract letting party's claim. If the contract letting party deems that, the contractor fails to perform any duty, responsibility and obligation as set forth herein, and according to any relevant situation and matter of the documents and materials as set forth herein and relating hereto, the contract letting party deems to be entitled to the compensation for any loss, damage and injury that shall be borne by the contractor, the contractor fails to perform its compensation liability according to the provisions as set forth herein, the contract letting party shall be entitled to file claim against the contractor. The claim shall conform to laws and the contract provisions and be handled in compliance with the following procedures:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Within 30 days upon occurrence of any claim event, the contract letting party submits notice on claim to the contractor. In case of failure to send notice on claim within 30 days upon occurrence of any claim event, the contractor will not assume any liability any more, unless otherwise set forth by laws;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Within 30 days after sending notice on claim, the contract letting party provides the contractor in writing with relevant materials including but not limited to legitimate reasons, article basis, effective provable evidence and claim estimate for specifying the claim event;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) Within 30 days upon receipt of the claim materials submitted by the contract letting party, the contractor negotiates with the contract letting party for settlement or makes response, or requires the contract letting party to further provide claim reasons and evidence;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) Within 30 days upon receipt of the claim materials submitted by the contract letting party, if the contractor does not negotiate with the contract letting party, does not make response or does not raise further requirements to the contract letting party, it shall be deemed that such claim has been recognized by the contractor.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) If the claim event raised by the contract letting party continually has influence, the contract letting party shall send the lasting influence of the claim event to the contractor on a weekly basis, within 30 days upon stop of the lasting influence of the claim event, the contract letting party shall submit final claim report and final claim estimate to the contractor. The claim procedures shall be the same with those as set forth in Clause (1) to (4) of this article.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.2.2 The contractor's claim. The contractor deems that, if the contract letting party fails to perform any duty, responsibility and obligation as set forth herein, and according to the provisions of article hereof, any relevant situation and matter of the documents and materials relating hereto, it deems that it shall be entitled to the compensation for any loss, damage and injury that shall be borne by the contract letting party and delay in the date of completion, the contract letting party fails to perform its compensation liability as set forth herein, the contractor shall be entitled to file claim against the contract letting party. The claim shall conform to laws and the contract provisions and be handled in compliance with the following procedures:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Within 30 days upon occurrence of any claim event, sending notice on claim to the contract letting party. In case of failure to send notice on claim within 30 days upon occurrence of any claim event, the contract letting party will not assume any liability any more, unless otherwise set forth by laws;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Within 30 days after sending notice on claim, the contractor provides the contractor in writing with relevant materials including but not limited to legitimate reasons, article basis, effective provable evidence and claim estimate for specifying the claim event;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) Within 30 days upon receipt of the claim materials submitted by the contractor, the contract letting party negotiates with the contractor for settlement or makes response, or requires the contractor to further provide claim reasons and evidence;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) Within 30 days upon receipt of the report and supplementary materials according to Clause (3) of this article, if the contract letting party does not negotiate with the contractor, does not make response or does not raise further requirements to the contractor, it shall be deemed that such claim has been recognized by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) If the claim event raised by the contractor continually has influence, the contractor shall send the lasting influence of the claim event to the contract letting party on a weekly basis, within 30 days upon stop of the lasting influence of the claim event, the contractor shall submit final claim report and final claim estimate to the contract letting party. The claim procedures shall be the same with those as set forth in Clause (1) to (4) of this article.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="16.3 Dispute and adjudication">16.3 Dispute and adjudication</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.3.1 Dispute settlement procedures: in case of any dispute, the parties shall firstly negotiate for reconciliation; upon negotiation, in case of failure in reconciliation or the parties indicates unwillingness to negotiate for reconciliation, arbitration or lawsuit shall be adopted for settling the claim dispute. The name and address of the arbitration institution as agreed upon shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.3.2 No dispute shall affect the contract performance. Upon occurrence of any dispute, the performance of the responsibilities and obligations as set forth herein shall be continued to keep the continuing implementation of the project. Except under any of the following circumstances, neither party shall stop the implementation of the project or part of the project:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Breach by either party causes the exact failure to perform the contract, the implementation is stopped upon agreement by the contract parties;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(2) The arbitration institution or the court orders to stop the implementation.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">16.3.3 Protection of the project of which the implementation is stopped. According to the provisions as set forth in Article 16.3.2 hereof, with respect to the project or part of project of which the implementation is stopped, the parties shall, according to the duties, responsibilities and obligations as set forth herein, protect all documents, materials and drawings relating to the project as set forth herein as well as the project that has been accomplished and the equipment, materials and components for the permanent project that have not been used.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 17 Force majeure">Article 17 Force majeure</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="17.1 Obligations upon occurrence of force majeure.">17.1 Obligations upon occurrence of force majeure.</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">17.1.1 Notice obligation. The party sensing or detecting any force majeure event shall be obliged to immediately notify the other party. According to the provisions as set forth herein, upon occurrence of any force majeure event, the party responsible for custody on the project spot shall promptly take measures as possible as it can to reduce the loss to its ability; and the other party shall spare no effort to assist and take measures. The construction or work of which the implementation shall be suspended shall be immediately stopped.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">17.1.2 Notification obligation. Within 48 hours upon the end of any force majeure event, if the party responsible for custody on the project spot is the contractor, the contractor shall notify the contract letting party of the victim and loss information. If any force majeure event occurs and lasts, the contractor shall report the victim information to the contract letting party and the project director on a weekly basis. Unless the reporting period is otherwise stipulated.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="17.2 Consequences of force majeure.">17.2 Consequences of force majeure.</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The expenses incurred by any loss, damage and injury due to any force majeure event and the delay in the date of completion shall be subject to the following provisions:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The contract letting party shall be liable for any loss and damage on the permanent project and its equipment, materials and components etc.;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Any injury suffered by any employee shall be respectively subject to the employment contract relationship;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(3) The contractor shall be liable for any loss and damage on the machines and tools, equipment, properties and provisional project of the contractor;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(4) The contractor shall be liable for the shutdown loss suffered by the contractor due to any force majeure event;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(5) Upon occurrence of any force majeure event, with respect to any lasting loss and damage caused by either party's delay in the performance of the protection obligation as set forth in the contract, the party subject to delay in the performance of any obligation shall assume any relevant liability and loss;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(6) If the contract letting party notifies of recovery in construction, within 20 days upon receipt of the notice or within the time as agreed upon by both parties as the case may be, the contractor shall submit clearing and renovating scheme and its estimate as well as the materials and report as arranged by the progress plan, upon acknowledgement by the contract letting party, the necessary clearing and renovating expenses shall be borne by the contract letting party. The date of completion upon recovery in construction shall be postponed accordingly.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 18 N/A">Article 18 N/A</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 19 Contract effectiveness and termination">Article 19 Contract effectiveness and termination</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">19.1 Contract EffectivenessThe contract shall come into effectiveness after satisfying the contract effectiveness conditions as set forth in the contract. The counterparts of the original and copy of the contract shall be stipulated in the special provisions.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Article 19.2 Unless otherwise set forth in the provisions on quality assurance responsibility agreement as set forth in Article 11.1 hereof, if the contract parties have performed all obligations as set forth herein and paid up the completion settlement accounts, this contract shall be immediately subject to termination.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">19.3 Upon termination of the contract, the contract parties shall observe the principles of integrity and credit to perform the obligations of notice, assistance and confidentiality etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 20 Supplementary provisions">Article 20 Supplementary provisions</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to relevant laws, administrative regulations and industrial regulations, in line with the project implementation status, upon consensus through negotiation, specific stipulations, supplementations or modifications may be made to such general provisions in the special provisions. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="4"><a name="Part III Special provisions">Part III Special provisions</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.1">Article 1 General stipulations</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.1 Definitions and interpretations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">According to the features of the project as set forth herein, other definitions that shall be supplemented as agreed upon: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.2 Language and words</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">This contract shall be written, interpreted and explained in Chinese.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.3 Governing laws</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The laws and administrative regulations that shall be expressly indicated by the contract parties: according to the laws, regulations as well as the department regulation as stipulated and the local regulations of the place in which the project is located.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.4 Standards and codes</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.4.1 The standards and codes (names) applicable to this contract: <i>Typical Design of Photovoltaic Power Generation Project </i>(see Appendix I), <i>Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1.4.2 Names, counterparts and time of foreign standards and codes provided by the contract letting party: provisionally N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.4.3 The stipulations not set forth in written codes and standards: provisionally N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contract letting party's technical requirements: <i>Typical Design of Photovoltaic </i><i>Power Generation Project </i>(see Appendix I), <i>Construction Quality Examination and </i>standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The time for the contractor to submit construction organization and design scheme: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Training agreement: to be supplemented upon negotiation by the parties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1.5 Confidentiality matters</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">1. The commercial confidentiality agreement entered into: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">2. The technical confidentiality agreement entered into: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.2">Article 2 Contract letting party</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">2.1 Representative of the contract letting party</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Name of representative of the contract letting party: ;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Title of representative of the contract letting party: project manager;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Duty of representative of the contract letting party: supervising project construction including but not limited to project safety, quality, progress, operation and management according to relevant laws, regulations and rules.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.3">Article 3 Contractor</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.1 General obligations and rights of the contractor</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">3.1.1 As agreed upon by the contract parties, the types, names, requirements, reporting periods, time of submission and counterparts of the statements that shall be submitted by the contractor: to be otherwise determined.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.2 Project manager</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.2.1 Name of project manager:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Duty of project manager: being fully responsible for the project construction of such project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Authority of project manager: being only limited to such project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Provisions on breach, for example, arbitrary replacement of project manager or the project manager being any other project manager: such project manager shall not assume the post of project manager for any other project, for the replacement of project manager, it is necessary to obtain consent from the contract letting party in advance. The contractor shall have 2 persons specially responsible for handling exterior formalities, the human resource and commission charges shall be borne by the contractor.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.3 Subcontracting</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">3.3.1 Subcontracting provisions</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Shortlist of subcontracting matters and subcontractors as agreed upon: to be supplemented upon negotiation by the parties;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.4">Article 4 Progress plan, delay and suspension</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.1 Project progress plan</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.1.1 The counterparts and time of submission of the project progress plan that shall be submitted by the contractor: 7 counterparts in writing, 1 in electric form, within 10 days upon contract conclusion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.1.2 Upon project construction start, the contractor shall send the prepared weekly project report and monthly project report to the contract letting party between 16:00 of each Friday and before the 25th day of each month. The contents to be compiled shall include: construction safety, quality and progress status of the week and the month, as well as the construction plan of the following week and the following month as well as all construction safety and technical measures etc.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.3 Material purchase and progress plan</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">4.3.1 Provisions on project material purchase and date of start: 1) specification, model No. and quantity of the materials purchased and the list of equipment provided by the design institution; 2) the date shall be determined according to the project progress plan.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.4 Construction progress plan</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">4.4.1 Construction progress plan (expressed in table or words)</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Submitting key construction plan (name): see the construction organization and design scheme approved by the contract letting party.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Submitting the divisional project construction plan of any key part (name): see the construction organization and design scheme approved by the owner.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.5">Article 5 Technologies and design</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.1 Production processing technologies and construction art models</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.1.1 The explanations provided by the contractor on the production processing technologies or construction art models and project trial operation assessment guaranteed value and use function are as follows: <i>Typical Design of Photovoltaic Power Generation Project </i>(see Appendix I), <i>Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries. Or the explanations on project trial operation assessment guaranteed value and use function are as follows: <i>Typical Design of Photovoltaic Power Generation Project </i>(see Appendix I), <i>Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.1.2 The explanations provided by the contract letting party on the production processing technologies or construction art models and project trial operation assessment guaranteed value and use function are as follows: see <i>Typical Design of Photovoltaic Power Generation Project </i>(see Appendix I) for main technical indexes, <i>Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Or the explanations on project trial operation assessment guaranteed value and use function are respectively as follows: <i>Typical Design of Photovoltaic Power Generation Project </i>(see Appendix I), <i>Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II) as well as relevant technical standards promulgated by the State and relevant industries.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.2 Design</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.2.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) Providing project basic materials. The types, contents, counterparts and time of submission of the project basic materials that shall be provided by the contract letting party: the contract letting party entrusts Solarmax Technology (Jiangsu) Co., Ltd. to be responsible for neatening and providing basic materials for free.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(2) Providing spot obstacle materials. The types, contents, counterparts and time of submission of the spot obstacle materials that shall be provided by the contract letting party: the contract letting party entrusts Solarmax Technology (Jiangsu) Co., Ltd. to be responsible for surveying, neatening and providing obstacle materials for free.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">5.2.2 The contractor's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) As agreed upon by the contract parties, with respect to the following parts of the project basic materials and spot obstacle materials provided by the contractor upon entrustment of the contract letting party, further requirements may be raised according to the following time and period as set forth herein.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">5.2.3 Operation and maintenance manual. Counterparts that shall be submitted and final submission period: 7 counterparts, 1 in electronic form, 1 month before project completion.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.6">Article 6 Project materials</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">6.1 Provision of project materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.1 The types, estimated quantity and specification list of the equipment, materials and components that shall be provided by the contract letting party for the permanent project: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">6.1.2 The types, spare part quantity and specification list of the equipment, materials and components that shall be provided by the contractor for the permanent project: based upon the list of equipment provided by the design institution.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">6.2 Custody and surplus of project materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">6.2.1 Custody of project materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The types and estimated quantity of the project materials subject to custody by the contractor upon entrustment: photovoltaic components 70MW.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The time for the contractor to submit construction custody and maintenance scheme: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The warehouse, pile, facility and equipment provided by the contract letting party: N/A.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.7">Article 7 Construction</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.1.1 Providing benchmark coordinate materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The contents and time of submission of benchmark coordinate materials: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.1.2 Entry conditions and entry date</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The contractor's entry conditions: the contractor shall be responsible.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The contractor's entry date: within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.1.3 With respect to the provisional water and electricity provision and section pavement, the contract letting party shall provide provisional water and electricity etc. and unit price of obtaining fees: the contractor shall be responsible.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.1.4 Other obligations to be performed by the contract letting party: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.2 The contractor's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.2.2 Construction organization and design.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The counterparts and time of submission of overall project construction organization and design: 7 counterparts in writing, 1 in electric form, within 10 days upon effectiveness of the contract.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The names, counterparts and time of submission of divisional project construction organization &amp; design of main parts that shall be submitted: civil engineering project, component and pile foundation, frame project, access system project, equipment installation, debugging project, supervision and control system, roof solidification and improvement (if any).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.2.2 Submitting provisional land occupation materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The time of submitting provisional land occupation materials: shall be provided at the project design stage simultaneously.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.2.3 Providing provisional water and electricity use materials</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The quality, normal use quantity, peak quantity and use time of water and electricity etc. needed by the contractor: N/A.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The type and quantity of provisional water and electricity use etc. for the contract letting party to satisfy construction demands: the contractor shall be responsible.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Time of submission for section and location materials of water and electricity etc.: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.2.4 Other obligations to be performed by the contractor: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.3 Human power, machine and tool resources</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.3.1 The format, contents, counterparts and time of submission of schedule of human resource plan for construction: see the construction organization and design scheme. The format, counterparts and reporting period of the statement for actual entry of human resources: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">7.3.2 The format, contents, counterparts and time of submission of schedule of main machine and tool plan: see the construction organization and design scheme. The format, counterparts and reporting period of the statement for actual entry of main machines and tools: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.4 Quality and inspection</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.4.1 Quality inspection parts and inspection participants</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The parts subject to quality inspection by three parties, standards and table: refer to <i>Photovoltaic Power Station Construction Quality Examination and Inspection &amp; Acceptance Procedures </i>(see Appendix II for details) and relevant technical standards promulgated by the State and the industry.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.5 Concealed project and midway inspection &amp; acceptance</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.6.1 Concealed project and midway inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The classification, parts, quality inspection contents, standards and tables of the concealed project and midway inspection &amp; acceptance parts as well as the provisions of the inspection participants: the supervising unit shall issue specific detailed rules for inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.6 Health, safety and environment</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.6.1 Health, safety and environment management</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The counterparts and time of submission of health, safety and environment management plan: 7 counterparts, 10 days before project start.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">7.6.2 Before project start, both parties enter into Project Safety Agreement, see Appendix V.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.8">Article 8 Completion test</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The project as set forth herein includes completion test.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">8.1 Completion test obligation</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">8.1.1 The contractor's general obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) Completion test scheme</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The counterparts and time of submission of completion test scheme: 7 counterparts, 10 days before project start.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.9">Article 9 Project receipt</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">9.1 Project receipt</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">9.1.1 (1) Receipt based upon the project</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Date of receipt based upon the project: 240 hours upon project trial operation, after accomplishment of defect ratification and correction, Party A shall organize project receipt with seven working days, in case of failure to receive within seven working days, it shall be deemed that the project is inspected &amp; accepted to be qualified.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">9.1.2 The materials that shall be submitted for project receipt</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The types, contents, counterparts and time of submission of completion test materials: 7 counterparts, one disc, within 1 month upon project completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided<br>&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="left"><b style="MARGIN: 0px"><font size="3"><a name="3.10">Article 10 Post-completion test</a></font></b></p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.1 Responsibilities and obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.1.1 The contract letting party's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) Other obligations and work: N/A</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.1.2 The contractor's obligations</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">(1) The counterparts and time of submission of post-completion test scheme submitted to the contract letting party: see the construction organization and design scheme.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(2) Other obligations and work: N/A</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.2 Post-completion test procedures</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">10.2.1 Shall be implemented according to the test scheme acknowledged by both parties.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.2.2 Notice on date of post-completion test</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Date of start of project post-completion test: signed for confirmation by the supervisor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.3 Post-completion test and trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.3.1 Trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">(1) Trial operation assessment period: 240 hours.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.4 Failure to pass assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.4.1 Compensation for failure to pass trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">1) Compensation for the failure of the production process and technologies or construction design provided by the contractor to pass trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Project compensation amount: both parties shall make ratification and correction within the time as agreed upon, if the contractor fails to make ratification and correction and fails to pass assessment within the time as agreed upon, upon identification and confirmation by any third-party institution, the contractor shall compensate for any loss caused against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment. The contractor against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment.</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">2) Compensation for the failure of the production process and technologies or construction design provided by the contract letting party to pass trial operation assessment</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The contractor shall compensate for any loss caused by any liability attributable to the contractor against the contract letting party, however, the compensation will not exempt from the obligation to further make ratification &amp; correction and pass assessment.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.5 Assessment inspection &amp; acceptance certificate</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">10.5.1 According to this contract, the post-completion test and assessment inspection &amp; acceptance certificate shall be issued.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.11">Article 11 Quality assurance responsibility</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">11.1 Quality assurance deposit</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">11.1.1 Quality assurance deposit</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The quality assurance deposit shall be 5% of the total contract price.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The provisional deduction method of the quality assurance deposit: see Appendix III for details, the quality assurance deposit shall be kept for one year <b>(from the date of completion inspection &amp; acceptance and issuance of compliance certificate).</b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Quality assurance period: the overall quality assurance period of the system shall be one year (from the date of completion inspection &amp; acceptance of the project), the quality assurance period of the main equipment including but not limited to the inverter and transformer shall not be less than 5 years, see the technical agreement for details.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">11.2 See Appendix III for signing of <i>Project Quality Assurance Agreement</i>.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.12">Article 12 Project completion inspection &amp; acceptance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">12.1 Completion materials and completion inspection &amp; acceptance report</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">12.1.1 Completion materials and completion inspection &amp; acceptance report inspection &amp; acceptance report: word format, 7 counterparts, one disc, within 2 months upon completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The format, number of counterparts and time of submission of complete completion inspection &amp; acceptance report: word format, 7 counterparts, one disc, within 2 months upon completion inspection &amp; acceptance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">One electric copy (shall be modifiable format including but not limited to CAD, WORD and EXCEL) for each of the above documents submission shall be provided</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.13">Article 13 Alteration and contract price adjustment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.1 Alteration scope</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.1.1 Other alteration</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">According to the features of this project, other alteration scope as agreed upon: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">13.1.2 Determination of price alteration:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Agreement upon the calculation method for each price alteration: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="3.14">Article 14 Total contract price and payment</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.1 The total contract price shall be RMB 518,000,000 yuan (in words: RMB FIVE HUNDRED AND EIGHTEEN MILLION YUAN ONLY).</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.2 Payment method of component accounts: the payment method shall be otherwise agreed upon.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3 All accounts other than the component accounts: the unit price shall not be lower than RMB 3.5 yuan/W, RMB 245,000,000 yuan (in words: RMB TWO HUNDRED AND FORTY-FIVE MILLION YUAN ONLY) (hereinafter referred to as: project accounts) shall be paid with the following mehtod:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.1 This contract shall come into effectiveness and satisfy the following conditions:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">A. The contractor enters and starts the construction of exterior lines, the main equipment contract is entered into, the roads and fences have been finished and confirmed by the contract letting party;</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">B. The project archival filing is obtained;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">C. The provincial access approval and response file is obtained; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">D. Equal-amount financial receipt;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">E. All formalities and documents as set forth in the appendix (Table I) have been accomplished;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">F. The foundation of the comprehensive building and electronic control building has been finished, 5MW of the pile foundation has been finished (field flatting and line paving have been completely finished) and confirmed by the contract letting party.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Within 5 working days of satisfying the above conditions and receiving equal-amount financial receipt from the contractor, the contract letting party shall pay 15% of the project accounts to the contractor [the payment method shall be telegraphic transfer (T/T)];</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.2 For this project, the installation of the exterior line tower frame has been finished, 20MW of the pile foundation has been finished, 20MW of the frame has been finished, within 5 working days upon confirmation by the contract letting party and receipt of equal-amount financial receipt from the contractor, the contract letting party shall pay 20% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.3.3 For this project, the exterior lines have been physically cut through, the comprehensive building and electronic control building have been wholly completed, component installation of no less than 20MW has been finished, within 5 working days upon confirmation by the contract letting party and after the contractor submits legal and effective invoice with 50% of the project accounts, the contract letting party shall pay 15% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill].</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.3.4 For this project, the installation of the frame has been finished, 50MW of the component installation has been finished, 40MW of synchronization has been finished, within 5 working days upon confirmation by the contract letting party and submission of equal-amount financial to the contract letting party, the contract letting party shall pay 10% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.5 For this project, upon accomplishment of overall synchronization and upon inspection and acceptance on synchronization, within 5 working days upon confirmation by the contract letting party and submission of equal-amount financial receipt to the contract letting party, the contract letting party shall pay 20% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill];</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.6 For this project, scheduling agreement, electricity purchase and sale agreement as well as the file issued by relevant governmental authority certifying that the target project can enjoy benchmark grid purchase price of RMB 1.0 yuan/kwh, within 5 working days upon accomplishment of project completion inspection &amp; acceptance and settlement and after the contractor finishes all formalities as set forth in the appendices (Table I, Table II and Table III) and receives 100% invoice issued by the contractor in compliance with the requirements of the contract letting party, the contract letting party shall pay the contract 15% of the project accounts to the contractor [the payment method shall be 50% telegraphic transfer (T/T) and 50% bank six-month acceptance bill] on time after deducting quality assurance deposit based upon the settlement;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.3.7 The quality assurance deposit shall be 5% of the project accounts, the quality assurance period shall be one year. 12 months upon accomplishment of completion inspection and acceptance on this project by issuance of <i>Trial Operation of the Project and Handover of Authentication on Production Inspection and Acceptance</i>, after the contract letting party confirms to be qualified without any problem and the contractor finishes all formalities as set forth in the appendices (Table I, Table II and Table III), the contract letting party shall pay the contractor quality assurance deposit.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.4 Provisions on invoice issuance:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.4.1 Material and equipment invoice with the amount accounting for 69% of the total contract price; construction and installation invoice with the amount accounting for 28% of the total contract price;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px">design invoice with the amount accounting for 3% of the total contract price;</p>
<p style="MARGIN: 0px">&nbsp;</p>
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.4.2 Due to adjustment to national tax policies and implementation of change of business tax into value added tax, if the contract letting party needs the contractor to issue value added tax invoice of construction and installation category, the contract letting party shall assume relevant value added tax as set forth by the State and shall pay such part of tax to the contractor's account before invoice issuance.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Remarks: the payment method for the project accounts shall be 50% telegraphic transfer (T/T) and 50% bank acceptance bill.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.5 Guarantee</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.5.1 Performance bond</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Performance bond: N/A.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">14.5.2 Release of performance bond</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.5.2.1 Within one year from the date of completion settlement, if the generating capacity of this project can not satisfy the requirements as agreed up by Party A and Party B, Party A may directly deduct the cash deposit for generating capacity in order to make up for loss, if the cash deposit for generating capacity is insufficient for making up the loss, Party B shall make supplementation and at its own expenses conduct increased work on this project.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">14.5.2.2 If the contractor fails to perform the contractor's responsibilities and obligations hereunder within valid period of the performance bond, the contract letting party shall be entitled to seek recourse from the performance bond. The contract letting party shall be entitled to continue to seek recourse for the insufficient part from the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px" align="justify"><b><font size="3"><a name="3.15">Article 15 Insurance</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">15.1 Insurance purchase by the contractor</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">15.1.1 The contract parties agree upon the type, scope, amount, period and effective lasting time: project construction period of the insurance that shall be purchased by the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">15.2 All-risk insurance and third-party liability</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The insurance that shall be purchased by the contract letting party:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Life insurance of the employees of the contract letting party and other persons of the contract letting party;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">Vehicle insurance of the employees of the contract letting party and other persons of the contract letting party;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">The insurance that shall be purchased by the contractor, including but not limited to:</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">All-risk insurance for construction and installation within the scope of the contracting contract;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Third-party liability insurance;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Vehicle insurance of the contractor.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The insurance companies (of the contractor and the owner) shall be chosen by bidding, bidding shall be organized and implemented by the insurance broker company chosen by the owner.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px"><b><font size="3"><a name="Article 16 Contract effectiveness and termination">Article 16 Contract effectiveness and termination</a></font></b></p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="justify">The text body of this contract shall be made in duplicate with either party holding each respectively; and the copy of the contract shall be made in quadruplicate with either party holding two respectively.</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px">February 15, 2016</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Contract letting party</p>
<p style="MARGIN: 0px"><u>[seal] Xingyi Zhonghong New Energies Co., Ltd.</u></p>
<p style="MARGIN: 0px">Xingyi Zhonghong New Energies Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">February 15, 2016</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px">Contractor</p>
<p style="MARGIN: 0px"><u>[seal] Solarmax Technology (Jiangsu) Co., Ltd.</u></p>
<p style="MARGIN: 0px">Solarmax Technology (Jiangsu) Co., Ltd.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px">[Appendix]:</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 45px">Appendix: List ofFormalities&nbsp; </p>
<p style="MARGIN: 0px" align="left">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px" align="left">(The following is intentionally left blank)</p>
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<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>9
<FILENAME>filename9.htm
<TEXT>
<html><head><title>solarmax_ex1022.htm</title><!--Document Created by EDGARMaster--></head><body spellcheck="true" style="text-align:justify;font:10pt TIMES NEW ROMAN;margin:0px 7%" scroll="yes"><p style="MARGIN: 0px" align="right"><b>EXHIBIT 10.22</b></p>
<p style="MARGIN: 0px" align="center"><b>&nbsp;</b></p>
<p style="MARGIN: 0px" align="center"><b>INSTRUMENT OF NONQUALIFIED STOCK OPTION GRANT</b></p>
<p style="MARGIN: 0px" align="center">&nbsp;&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">Instrument of Grant issued as of this 7<sup>th</sup> day of October, 2016, from SolarMax Technology, Inc., a Nevada corporation, with offices at 3080 12<sup>th</sup> Street, Riverside, CA 92507 (the &ldquo;Company&rdquo;), to [name of Option Holder] (the &ldquo;Option Holder&rdquo;).</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px" align="center"><u>W I T N E S S E T H</u>:</p>
<p style="MARGIN: 0px">&nbsp; </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">WHEREAS, the Company has, on the date of this Instrument of Grant, granted Option Holder a nonqualified stock option to purchase from the Company shares of the Company&rsquo;s common stock, par value $0.001 per share (&ldquo;Common Stock&rdquo;), pursuant to the Company&rsquo;s 2016 Long-Term Incentive Plan (the &ldquo;Plan&rdquo;) and is subject to the terms and conditions of the Plan; and </p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">WHEREAS, the exercise of the option is subject to certain conditions precedent;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">&nbsp;</p>
<p style="MARGIN: 0px; TEXT-INDENT: 45px">WHEREFORE, the Company does hereby grant to the Option Holder the following Option: </p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in">1.<font style='FONT: 7pt "Times New Roman"'></font><u>Stock Option</u>. Subject to the terms and conditions set forth in this Instrument of Grant, the Company hereby grants to the Option Holder a non-qualified stock option (the &ldquo;Option&rdquo;) to purchase from the Company [&#183;] shares (the &ldquo;Shares&rdquo;) of Common Stock at an exercise price (the &ldquo;Exercise Price&rdquo;) of $5.00 per share, being the fair value per share of Common Stock on the date of grant.</p>
<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in">2.<font style='FONT: 7pt "Times New Roman"'></font><u>Exercise Period</u>. The Option shall be exercisable cumulatively as to (a) 50% of the shares of Common Stock initially subject to the Option on the later to occur of (i) six months after a Public Stock Event or (ii) October 7, 2017, such date being the &ldquo;Initial Exercise Date&rdquo;) provided that the Option Holder is [employed by the Company or an affiliate of the Company on that dates][engaged by the Company or an affiliate of the Company as a consultant on that date], and (b) the remaining 50% of the shares of Common Stock initially subject to the Option on the first anniversary of the Initial Exercise Date., and this Option shall expire on the earlier of (a) 5:00 P.M., Pacific time, on October 6, 2023 (the &ldquo;Expiration Date&rdquo;) or (b) the date that the Option Holder ceases to be an [employee][director][officer][consultant] of the Company other than as a result of the death or a disability of the Option Holder; provided, however, that if such date is a day on which banks in the State of California are authorized or permitted to be closed, then the Exercise Period shall end at 5:00 P.M. Pacific time on the next day which is not such a day. Notwithstanding the foregoing, the Option cannot be exercised prior to the date that an S-8 registration statement covering the shares issuable pursuant to the Plan becomes effective. In the event of the Option Holder&rsquo;s death or a termination of the Option Holder&rsquo;s employment as a result of a disability, the Option may be exercised, to the extent it is exercisable on the date of death or termination as a result of a disability, until the earlier of (i) six month from the date of death or the date or termination of employment as a result of a disability or (ii) the Expiration Date. A Public Stock Event shall mean the first to occur of (i) the effective date of a registration statement covering an underwritten public offering of the Company&rsquo;s common stock on a firm commitment basis; (ii) the closing date with respect to a public offering of the Company&rsquo;s common stock other than pursuant to a firm commitment underwritten offering; (iii) the date on which the Company&rsquo;s common stock is first trading on a United States or Canadian stock exchange or stock market or in a United States or Canadian over-the-counter market; (iv) the date on which the common equity of a Successor Corporation is publicly traded on a United States or Canadian stock exchange or stock market or in a United States or Canadian over-the-counter market; (v) a Change in Control, as defined in the Plan, or (vi) such other transaction or event which the Company&rsquo;s board of directors determines, in its sole discretion, is a Public Stock Event. </p>
<p style="MARGIN: 0px">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">3. <u>Termination</u>. The Option shall terminate, and Option Holder shall have no further rights under the Option, on the Expiration Date, subject to earlier termination to the extent provided in Section 2 of the Option and subject to the provisions of the Plan.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">4. <u>Manner of Exercise</u>.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1in" align="justify">(a) The Option shall be exercised by written notice of exercise in the form of Exhibit A to this Instrument of Grant addressed to the Company and signed by the Option Holder and delivered to the Company along with this Instrument of Grant and payment in full of the Exercise Price of the Optioned Shares as to which the Option is being exercised. If the Option is exercised in part only, the Company will either issue a new Instrument of Grant with respect to the unexercised portion of the Option or shall make a notation on this Instrument of Grant reflecting the partial exercise. The Exercise Price is payable by certified or official bank check or by personal check; provided, however, that no Optioned Shares shall be issued to Option Holder until the Company has been advised by its bank that the check has cleared.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1in" align="justify">(b) The Option may also be exercised by the delivery to the Company of shares of Common Stock having a fair market value as of the date of exercise, equal to the Exercise Price of the Optioned Shares to the extent that the Option is being exercised by written notice of exercise in the form of Exhibit B to this Instrument of Grant addressed to the Company and signed by the Option Holder. The market value of the Common Stock shall be determined as follows:</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1.5in" align="justify">(i) If the Common Stock is listed on a national securities exchange or is quoted on the OTCQX, OTCQB, or OTC Pink or other service which provides information as to the last sale price, the current value shall be the reported last sale prices of one share of Common Stock on such exchange, market or system on the trading day prior to the date of exercise of the Option, or if, on any of such dates, no such sale is made on such day, the last reported sale on such exchange, market or system shall be used; or</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1.5in" align="justify">(ii) If the Common Stock is not so listed or admitted to unlisted trading privileges or traded, the current value shall be the mean average of the reported last bid and asked prices of one share of Common Stock as reported by a reporting services selected by the Company, on the last trading day prior to the date of the exercise of the Option; or</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1.5in" align="justify">(iii) If the Common Stock is not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current value of one share of Common Stock shall be an amount, not less than net tangible book value per share determined in such reasonable manner as may be prescribed by the board of directors of the Company.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 1in" align="justify">(c) The Option may also be exercised through a brokerage transaction in a manner approved by the Compensation Committee</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">5. <u>Adjustment Provisions</u>. The number of shares of Common Stock subject to the Option and the Exercise Price shall be adjusted in accordance with generally accepted accounting principles in the event of a stock dividend, stock split, stock distribution, reverse split or other combination of shares, recapitalization or otherwise, which affects the Common Stock.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;
<table id="pagebreak75bf83c8-f368-4553-8874-c61ea39082b2" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">6. <u>Not Transferable</u>. The Option is not transferable by the Option Holder, and may be exercised only by the Option Holder except that, in the event of the Option Holder&rsquo;s death or disability, the Option may be exercised by Option Holder&rsquo;s legal representative or by the persons to whom the Option is transferred by will or the laws of descent and distribution..</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">7. <u>No Rights as a Stockholder</u>. The Option Holder shall have no interest in and shall not be entitled to any voting rights or any dividend or other rights or privileges of a stockholder of the Company with respect to any shares of Common Stock issuable upon exercise of this Option prior to the exercise of this Option and payment of the Exercise Price of the Optioned Shares. </p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">8. <u>No Rights to Continued Employment</u>. Nothing in this Instrument of Grant shall be constructed as an employment agreement or to grant any rights to continue as an [employee] [director] [officer] [consultant] of the Company.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">9. <u>Legality</u>. Anything in this Option to the contrary notwithstanding, the Option Holder agrees that he or she will not exercise the Option, and that the Company will not be obligated to issue any shares of Common Stock pursuant to this Option, if the exercise of the Option or the issuance of such shares shall constitute a violation by the Option Holder or by the Company of any provisions of any law or of any regulation of any governmental authority. Any determination by the Board of Directors or the Compensation Committee (the &ldquo;Committee&rdquo;) of the Board of Directors, if appointed, shall be final, binding and conclusive. The Company shall not be obligated to take any affirmative action in order to cause the exercise of the Option or the issuance of shares pursuant thereto to comply with such law or regulation. In this connection, the Option Holder understands that the Optioned Shares, if and when issued, will be restricted securities, as defined in Rule 144 of the Securities and Exchange Commission pursuant to the Securities Act unless issued pursuant to a registration statement on Form S-8. The Company shall not be required to issue any Shares if the Company is not satisfied that the issuance thereof is permitted pursuant to the Securities Act without registration under the Securities Act.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">10. <u>Action by Company</u>. The existence of the Option shall not effect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapi-talization, reorganizations or other changes in the Company&rsquo;s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">11. <u>Interpretation</u>. As a condition of the granting of the Option, the Option Holder and each person who succeeds to the Option Holder&rsquo;s rights hereunder, agrees that any dispute or disagreement which shall arise under or as a result of or pursuant to this Option shall be determined by the Committee in its sole discretion and that any interpretation by the Committee of the terms of this Agreement shall be final, binding and conclusive. If no Committee is acting, its functions shall be performed by the Board of Directors, and each reference in this Option to the Committee shall, in that event, be deemed to refer to the Board of Directors. The rights of the Option Holder with respect to the Option are subject to the Plan and the interpretations of the Plan by the Committee.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 0.5in" align="justify">12. <u>Notice</u>. Any notice which either party hereto may be required or permitted to give to the other shall be in writing, and any be delivered personally or by mail, postage prepaid, addressed as follows: to the Company, at 3080 12<sup>th</sup> Street, Riverside, CA 92507, Attention: Chairman and Chief Executive Officer, or at such other address as the Company, by notice, may designate in writing from time to time; to the Option Holder, at the address shown on the records of the Company or at such other address as the Option Holder, by notice to the Company, may designate in writing from time to time.</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;
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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in; TEXT-INDENT: 45px" align="justify">IN WITNESS WHEREOF, the Company has executed this Instrument of Grant as of the date first above written.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<p style="MARGIN: 0px 0px 0px 0in" align="justify"><strong>SOLARMAX TECHNOLOYG, INC.</strong></p></td>
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<td>By:</td>
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<p style="MARGIN: 0px">&nbsp;</p></td>
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<td>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">David Hsu, Chief Executive Officer</p></td>
<td>&nbsp;</td></tr>
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<td>&nbsp;</td>
<td>&nbsp;</td>
<td></td>
<td>&nbsp;</td></tr>
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<td>&nbsp;</td>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify"><u>Address</u></p></td>
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<p style="MARGIN: 0px 0px 0px 0in" align="justify"><u>OPTION HOLDER</u></p></td>
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<p style="MARGIN: 0px" align="right">Exhibit A</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Date: _____________</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">SolarMax Technology, Inc.<br>3080 12th Street<br>Riverside, CA 92507<br>Attention: Chairman and CEO</p>
<p style="MARGIN: 0px 0px 0px 0in">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">Re: <u>Stock Option Exercise &#8211; Cash Exercise </u></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Gentlemen:</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">I hereby exercise the option to the extent of _________ shares, and I am tendering with this Notice full payment of the Exercise Price with respect to the Optioned Shares as to which this Option is being exercised. I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<td width="50%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="35%">
<p style="MARGIN: 0px" align="justify">Very truly yours,</p></td>
<td width="15%">
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<p style="MARGIN: 0px">&nbsp;
<table id="pagebreak464dfe47-49c2-4ab6-b42f-f28774514d8c" class="pagebreak" style="FONT: 10pt TIMES NEW ROMAN" cellspacing="0" cellpadding="0" width="100%" border="0">

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<p style="MARGIN: 0px">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="right">Exhibit B</p>
<p style="MARGIN: 0px" align="center">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Date: ____________</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">SolarMax Technology, Inc.<br>3080 12th Street<br>Riverside, CA 92507<br>Attention: Chairman and CEO</p>
<p style="MARGIN: 0px 0px 0px 0in">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in" align="center">Re: <u>Stock Option Exercise &#8211; Delivery of Stock </u></p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Gentlemen:</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">I hereby exercise the option to the extent of _________ shares, and I am tendering with this Notice full payment of the Exercise Price in the form of shares of Common Stock having a value, determined as provided in the Instrument of Grant, equal to $ , as follows:</p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Total Exercise Price: </p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Current Value of Common Stock: </p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">Number of shares of Common Stock being delivered: </p>
<p style="MARGIN: 0px 0px 0px 0in" align="justify">&nbsp;</p>
<p style="MARGIN: 0px 0px 0px 0in">I further represent and warrant to the Company that I am aware of the tax consequences of my exercise of the option.</p>
<p style="MARGIN: 0px" align="justify">&nbsp;</p>
<p style="MARGIN: 0px" align="justify">
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<tr>
<td width="50%">
<p style="MARGIN: 0px">&nbsp;</p></td>
<td width="35%">
<p style="MARGIN: 0px" align="justify">Very truly yours,</p></td>
<td width="15%">
<p style="MARGIN: 0px">&nbsp;</p></td></tr>
<tr>
<td>
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<p style="MARGIN: 0px" align="center">&nbsp;</p>
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<DOCUMENT>
<TYPE>GRAPHIC
<SEQUENCE>11
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