Amended Annual and Transition Report (foreign Private Issuer) (20-f/a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F/A

(Amendment No. 2)

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015.

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from to
OR

o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

Commission file number: 001-37678

SPI Energy Co., Ltd.

(Exact name of Registrant as specified in its charter)

N/A

(Translation of Registrant’s name into English)

Cayman Islands

(Jurisdiction of incorporation or organization)

7F/A Block, 1st Building, Jinqi Plaza

Suite 2703, 27/F, China Resources Building

26 Harbour Road, Wan Chai

Hong Kong SAR, China

(Address of principal executive offices)

Guanning Liang, Chief Financial Officer

Suite 2703, 27/F, China Resources Building

26 Harbour Road, Wan Chai

Hong Kong SAR, China

Telephone: + 852 2291 6020

Fax: + 852 2291 6030

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Name of each exchange on which registered

American depositary shares, each representing ten ordinary shares, par value $ $0.000001 per share

The NASDAQ Stock Market LLC

(The NASDAQ Global Select Market)

The NASDAQ Stock Market LLC

Ordinary shares, par value $0.000001 per share *

(The NASDAQ Global Select Market)

* Not for trading, but only in connection with the listing of American depositary shares on the NASDAQ Global Select Market.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

639,065,172 ordinary shares as of December 31, 2015

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

o Yes x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer x

Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP x

International Financial Reporting Standards as issued
by the International Accounting Standards Board o

Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

o Item 17 o Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

o Yes x No

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TABLE OF CONTENTS

	Page
Explanatory Note	1
Part III	2
Item 18. Financial Statements	2
Item 19. Exhibits	2

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EXPLANATORY NOTE

This amendment No. 2 (“Amendment No. 2”) to our annual report on Form 20-F for the fiscal year ended December 31, 2015 (the “2015 20-F”), originally filed with the Securities and Exchange Commission (the “Commission”) on May 17, 2016 and as amended by Amendment No. 1 to the 2015 20-F (“Amendment No. 1”), filed with the Commission on December 23, 2016 (our 2015 20-F as amended by Amendment No. 1, the “Original Report”), hereby amends Item 18 and Item 19 of our 2015 20-F to re-file the Report of Independent Registered Public Accounting Firm appearing on page F-4 of Amendment No. 1 by replacing that report with the same report filed herewith.

This Amendment No. 2 speaks as of the filing date of the Original Report, which is May 17, 2016. Other than as set forth above, this Amendment No. 2 does not, and does not purport to, amend, update or restate any other information or disclosure included in the Original Report or reflect any events that have occurred since May 17, 2016.

As required by Rule 12b-15 of the Securities and Exchange Act of 1934, as amended, we are also filing and furnishing the certifications required under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, respectively, as exhibits to this Amendment No. 2.

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PART III

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements of SPI Energy Co., Ltd. are included at the end of this annual report beginning on page F-1.

ITEM 19. EXHIBITS

Exhibit Number		Description of Document
1.1		Amended and Restated Memorandum and Articles of Association, as currently in effect (incorporated by reference to Exhibit 3.2 of our registration statement on Form F-4 (File No. 333-204069) filed with the Securities and Exchange Commission on May 11, 2015)

2.1		Registrant’s Specimen Certificate for Shares (incorporated by reference to Exhibit 4.1 of Amendment No. 1 to our registration statement on Form F-4 (file No. 333-204069) filed with the Securities and Exchange Commission on June 24, 2015)

2.2		Form of Deposit Agreement among the Registrant, the depositary and owners and holders of the American Depositary Shares (including Registrant’s Specimen American Depositary Share) (incorporated by reference to Exhibit 4.2 to our registration statement on Form F-4 (file No. 333-204069) filed with the Securities and Exchange Commission on September 29, 2015)

4.1		2006 Equity Incentive Plan (as amended) (incorporated by reference to Exhibit 4.2 to our Post Effective Amendment No.1 to our registration statement on Form S-8 (file No. 333-203917) filed with the Securities and Exchange Commission on January 4, 2016)

4.2		2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.2 to our registration statement on Form F-4 (file No. 333-204069) filed with the Securities and Exchange Commission on May 11, 2015)

4.3		Form of Indemnification Agreement between the directors and the Registrant (incorporated by reference to Exhibit 10.1 of our registration statement on Form F-4 (file No. 333-204069) filed with the Securities and Exchange Commission on May 11, 2015)

4.4		Translation of Capital Increase and Share Subscription Agreement among Meitai Investment (Suzhou) Co., Ltd., Beijing Dingding Yiwei New Energy Technology Development Co., Ltd. and shareholders of Beijing Dingding Yiwei New Energy Technology Development Co. Ltd., dated September 1, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on September 4, 2015)

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4.5		Exchange and Release Agreement dated December 26, 2013 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on February 21, 2014)

4.6		Form of Project Management Agreement (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on February 21, 2014)

4.7		Second Amended and Restated Operating Agreement for KDC Solar Mountain Creek Parent LLC dated February 18, 2014 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on February 21, 2014)

4.8		First Amended and Restated Exchange and Release Agreement dated April 17, 2014 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 23, 2014)

4.9		Third Amended and Restated Operating Agreement for KDC Solar Mountain Creek Parent LLC dated April 17, 2014 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 23, 2014)

4.10		Equity Cash Flow Letter dated April 17, 2014 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 23, 2014)

4.11		Julu County Ecological Agricultural Greenhouse Distributed 20MW Photovoltaic Power Generation Project General Contract by and between Hebei Yangpu New Energy Technology Co., Ltd. and Xinyu Xinwei New Energy Co., Ltd. dated October 14, 2014 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 17, 2014)

4.12		Julu County Ecological Agricultural Greenhouse Phase Two 30MW Photovoltaic Power Generation Project General Contract by and between Hebei Yangpu New Energy Technology Co., Ltd. and Xinyu Xinwei New Energy Co., Ltd. dated October 14, 2014 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 17, 2014)

4.13		Julu County Ecological Agricultural Greenhouse Phase One 50MW Photovoltaic Power Generation Project General Contract by and between Hebei Yangpu New Energy Technology Co., Ltd. and Xinyu Xinwei New Energy Co., Ltd. dated October 14, 2014 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 17, 2014)

4.14		Translation of Share Purchase Agreement by and between SPI Solar Power Suzhou Co., Ltd. and China Energy Power Group Operation and Maintenance Management Jiangsu Co., Ltd. dated October 22, 2014 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 23, 2014)

4.15		Translation of Share Purchase Agreement by and between SPI Solar Power Suzhou Co., Ltd. and Liaoning Xinda New Energy Investment Co., Ltd. dated October 22, 2014 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 23, 2014)

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4.16		Translation of Share Purchase Agreement by and between SPI Solar Power Suzhou Co., Ltd., Beijing Taihedafang Investment Development Co., Ltd. and Xinghe Chaerhu Development Co., Ltd. dated October 22, 2014 (incorporated by reference to Exhibit 10.4 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 23, 2014)

4.17		Convertible Promissory Note Purchase Agreement by and between Solar Power, Inc. and Brilliant King Group Ltd. dated December 12, 2014 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on December 18, 2014)

4.18		Convertible Promissory Note Purchase Agreement by and between Solar Power, Inc. and Poseidon Sports Limited dated December 12, 2014 (incorporated by reference to Exhibit 10.6 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on December 18, 2014)

4.19		Convertible Promissory Note Purchase Agreement by and between Solar Power, Inc. and Union Sky Holding Group Limited dated December 15, 2014 (incorporated by reference to Exhibit 10.8 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on December 18, 2014)

4.20		Purchase Agreement by and between Solar Power, Inc. and Forwin International Financial Holding Limited dated December 12, 2014 (incorporated by reference to Exhibit 10.11 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on December 18, 2014)

4.21		Stock Purchase Agreement by and among CECEP Solar Energy Hong Kong Co., Limited, SPI China (HK) Limited and Solar Power, Inc. dated January 15, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000¬50142) filed with the Securities and Exchange Commission on January 16, 2015)

4.22		Option Agreement by and between Solar Power, Inc. and Central Able Investments Limited dated January 22, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on January 23, 2015)

4.23		English translation of Exclusive Consultancy and Service Agreement by and between Yan Hua Internet Technology (Shanghai) Co., Ltd. and Solar Energy E-Commerce (Shanghai) Limited dated March 26, 2015 (incorporated by reference to Exhibit 10.55 to our annual report Form 10-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

4.24		English translation of Proxy Voting Agreement by and among Yan Hua Internet Technology (Shanghai) Co., Ltd., Solar Energy Ecommerce (Shanghai) Limited and shareholders of Solar Energy E-Commerce (Shanghai) Limited dated March 26, 2015 (incorporated by reference to Exhibit 10.56 to our annual report Form 10-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

4.25		English translation of Equity Interest Pledge Agreement by and among Yan Hua Internet Technology (Shanghai) Co., Ltd., Solar Energy E-Commerce (Shanghai) Limited and shareholders of Solar Energy E-Commerce (Shanghai) Limited dated March 26, 2015 (incorporated by reference to Exhibit 10.57 to our annual report Form 10-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

4.26		English translation of Exclusive Call Option Agreement by and among Yan Hua Internet Technology (Shanghai) Co., Ltd., Solar Energy E-Commerce (Shanghai) Limited and shareholders of Solar Energy E-Commerce (Shanghai) Limited dated March 26, 2015 (incorporated by reference to Exhibit 10.58 to our annual report on Form 10-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

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4.27		Share Purchase Agreement by and among SPI China (HK) Limited, LDK Solar Europe Holding S.A. and LDK Solar USA, Inc. dated March 30, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

4.28		Share Purchase Agreement by and among SPI China (HK) Limited., Andrew Burgess, Rami Fedda and Allied Energy Holding Pte Ltd dated March 31, 2015 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on March 31, 2015)

4.29		Membership Interest Purchase Agreement by and among Solar Power, Inc., William Hedden, as Trustee of the William H. Hedden and Sandra L. Hedden Trust, Stephen C. Kircher, the chief strategy officer of SPI, as Trustee of the Kircher Family Irrevocable Trust dated December 29, 2004, and Steven Kay dated March 31, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 6, 2015)

4.30		GK Interest Sale and Purchase Agreement by and between SPI Solar Japan G.K. and Re Capital K.K. dated April 15, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 17, 2015)

4.31		Securities Purchase Agreement by and between EnSync, Inc. (formerly known as ZBB Energy Corporation) and Solar Power, Inc. dated April 17, 2015 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 17, 2015)

4.32		Translation of Share Purchase Agreement by and among Solar Power, Inc., Meitai Investment (Suzhou) Co., Ltd., Zhong Junhao, Li Jin, Tong Ling Hong Xin Ling Xiang Investment Partnership, Shanghai Yi Ju Sheng Yuan Investment Center, Shanghai Ninecity Investment Holding (Group) Ltd., Shanghai Yi Ju Sheng Quan Equity Investment Center, Shanghai Panshi Investment Co., Ltd. and Shanghai All-Zip Roofing System Group Co., Ltd. dated April 30, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 30, 2015)

4.33		Purchase Agreement by and between Solar Power, Inc. and Yes Yield Investments Limited dated May 4, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on May 7, 2015)

4.34		Option Agreement by and between Solar Power, Inc. and Yes Yield Investments Limited dated May 4, 2015 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on May 7, 2015)

4.35		Convertible Promissory Note Purchase Agreement by and between Solar Power, Inc. and Vision Edge Limited dated June 15, 2015 (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on June 15, 2015)

4.36		Option Agreement by and between Solar Power, Inc. and Vision Edge Limited dated June 15, 2015 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on June 15, 2015)

4.37		Supply Agreement between EnSync, Inc. (formerly known as ZBB Energy Corporation) and Solar Power, Inc. dated July 13, 2015 (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on April 17, 2015)

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4.38		Governance Agreement between EnSync, Inc. (formerly known as ZBB Energy Corporation) and Solar Power, Inc. dated July 13, 2015 (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on July 14, 2015)

4.39		Second Amended and Restated Agreement and Plan of Merger and Reorganization by and among Solar Power, Inc., SPI Energy Co., Ltd. and SPI Merger Sub, Inc. dated October 30, 2015 (incorporated by reference to Exhibit 2.1 of our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on October 30, 2015)

8.1*		List of subsidiaries

11.1*		Code of Business Conduct and Ethics of the Registrant

12.1**		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

12.2**		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1***		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2***		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

15.1		Letter of Crowe Horwath LLP, dated November 24, 2014, regarding change in independent registered public accounting firm (incorporated by reference to Exhibit 16.1 of our current report on Form 8-K (file No. 000-50142) filed with the Securities and Exchange Commission on November 24, 2014)

15.2**		Consent of Independent Registered Public Accounting Firm—KPMG Huazhen LLP

15.3**		Consent of Independent Registered Public Accounting Firm—Crowe Horwath LLP

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Calculation Presentation Document

* Previously filed with the Annual Report on Form 20-F on May 17, 2016 as amended by Amendment No. 1 thereto filed on December 23, 2016.

** Filed herewith

*** Furnished herewith

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this Amendment No. 2 to its annual report on its behalf.

	SPI Energy Co., Ltd.


Date: January 26, 2017	By:	/s/ Guanning Liang
		Name: Guanning Liang
		Title: Chief Financial Officer

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Index to Financial Statements

	Page
Reports of Independent Registered Public Accounting Firms	F-2
Consolidated Balance Sheets	F-5
Consolidated Statements of Operations	F-6
Consolidated Statements of Comprehensive Loss	F-7
Consolidated Statements of Stockholders’ Equity	F-8
Consolidated Statements of Cash Flows	F-9
Notes to Consolidated Financial Statements	F-11

F- 1

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
SPI Energy Co., Ltd.:

We have audited the accompanying consolidated balance sheets of SPI Energy Co., Ltd. and subsidiaries (the “Group”) as of December 31, 2014 and 2015, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2015. These consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Group as of December 31, 2014 and 2015, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Group will continue as a going concern. As further described in Note 2(a) to the consolidated financial statements, the Group has suffered significant losses from operations and has a negative working capital as of December 31, 2015. In addition, the Group has substantial amounts of debts that will become due for repayment in 2016. These factors raise substantial doubt about the Group’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2(a). The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Group’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated May 17, 2016, expressed an adverse opinion on the effectiveness of the Group’s internal control over financial reporting.

/s/ KPMG Huazhen LLP

Shanghai, China
May 17, 2016

F- 2

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
SPI Energy Co., Ltd.:

We have audited SPI Energy Co., Ltd. and subsidiaries (the “Group”)’s internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Group’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses related to 1) resources and expertise in relation to application of U.S. generally accepted accounting principles; 2) risk assessment procedures; 3) management review controls related to significant transactions; 4) internal communication processes, have been identified and included in management’s assessment set out in Management’s Annual Report on Internal Control over Financial Reporting. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Group as of December 31, 2014 and 2015, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2015. These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the 2015 consolidated financial statements, and this report does not affect our report dated May 17, 2016, which expressed an unqualified opinion on those consolidated financial statements.

In our opinion, because of the effect of the aforementioned material weakness on the achievement of the objectives of the control criteria, the Group has not maintained effective internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

The Group acquired Solar Juice Pty Ltd. during 2015, and management excluded from its assessment of the effectiveness of the Group’s internal control over financial reporting as of December 31, 2015, Solar Juice Pty Ltd.’s internal control over financial reporting associated with total assets of $32.8 million and total revenues of $35.4 million included in the consolidated financial statements of the Group as of and for the year ended December 31, 2015. Our audit of internal control over financial reporting of the Group also excluded an evaluation of the internal control over financial reporting of Solar Juice Pty Ltd.

/s/ KPMG Huazhen LLP

Shanghai, China
May 17, 2016

F- 3

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

SPI Energy Co., Ltd. (as successor in interest to Solar Power, Inc.)

Roseville, California

We have audited the accompanying consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows of SPI Energy Co., Ltd. (as successor in interest to Solar Power, Inc.) (the “Company”) for the year ended December 31, 2013. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. 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’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and cash flows of SPI Energy Co., Ltd. (as successor in interest to Solar Power, Inc.) for the year ended December 31, 2013, in conformity with U.S. generally accepted accounting principles.

	/s/ Crowe Horwath LLP

San Francisco, California
April 15, 2014

F- 4

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SPI ENERGY CO., LTD.

CONSOLIDATED BALANCE SHEETS

(In thousands, except for share and per share data)

	December 31, 2015			December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents	$	82,124		$	156,540
Restricted cash	83,191			337
Bank deposits with maturity over three months	—			8,852
Short-term investments	—			27,354
Accounts receivable, net of allowance for doubtful accounts of $36,553 and $766, respectively	73,383			22,654
Notes receivable	3,541			—
Costs and estimated earnings in excess of billings on uncompleted contracts	32,426			73,742
Inventories, net	27,245			6,975
Project assets	35,355			73,930
Prepaid expenses and other current assets	41,197			10,930
Other receivable, related parties	2,589			—
Finance lease receivable	12,518			—
Total current assets	393,569			381,314
Intangible assets	4,526			560
Goodwill	75,969			66,045
Restricted cash, net of current portion	—			160
Accounts receivable, noncurrent	7,463			4,490
Other receivable, noncurrent	550			—
Notes receivable, noncurrent	6,399			6,611
Property, plant and equipment, net	125,793			106,438
Project assets, noncurrent	60,371			21,265
Derivative asset	2,328			—
Investment in an affiliate	13,950			—
Deferred tax assets, net	848			1,024
Finance lease receivable, noncurrent	17,804			—
Total assets	$	709,570		$	587,907
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	97,803		$	76,778
Accounts payable, related parties	5,128			34,150
Notes payable	34,301			26,707
Accrued liabilities	26,741			11,288
Income taxes payable	4,002			3,648
Advance from customers	19,693			17,690
Short term borrowings	160,400			48,286
Convertible bonds	54,062			—
Other current liabilities, related parties	42			—
Other current liabilities	71,379			33,762
Total current liabilities	473,551			252,309
Financing and capital lease obligations	8,796			10,092
Convertible bonds	—			32,575
Long term borrowings	4,451			—
Deferred tax liability, net	4,199			3,680
Other noncurrent liabilities	2,015			27,143
Total liabilities	493,012			325,799
Commitments and contingencies	—			—
Stockholders’ equity:
Preferred stock, par $0.0001, 20,000,000 shares authorized; none issued and outstanding	—			—
Common stock, par $0.0001, 1,000,000,000 shares authorized, respectively; 639,065,172 and 568,847,967 shares issued and outstanding, respectively	64			57
Additional paid in capital	475,492			327,573
Accumulated other comprehensive loss	(16,509		)	(4,252		)
Accumulated deficit	(246,068		)	(61,270		)
Total equity attributable to the shareholders of the Company	212,979			262,108
Noncontrolling interests	3,579			—
Total stockholders’ equity	216,558			262,108
Total liabilities and stockholders’ equity	$	709,570		$	587,907

The accompanying notes are an integral part of these consolidated financial statements.

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SPI ENERGY CO., LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except for share and per share data)

	For the Years Ended December 31,
	2015			2014			2013
Net sales:
Net sales	$	190,510		$	91,642		$	42,629
Cost of goods sold:
Cost of goods sold	176,469			77,430			42,582
Provision for losses on contracts	5,932			2,055			2,816
Total cost of goods sold	182,401			79,485			45,398
Gross profit	8,109			12,157			(2,769		)
Operating expenses:
General and administrative	76,747			8,286			8,231
Sales, marketing and customer service	39,428			1,401			2,050
Provision for (Reversal of) doubtful accounts and notes	45,328			(2,043		)	9,303
Impairment charges	10,853			—			7,500
Engineering, design and product management	—			—			1,761
Total operating expenses	172,356			7,644			28,845
Operating (loss) income	(164,247		)	4,513			(31,614		)
Other income (expense):
Interest expense	(9,275		)	(2,259		)	(4,321		)
Interest income	2,218			1,212			1,655
Loss on extinguishment of convertible bonds	—			(8,907		)	—
Gain from deconsolidation	—			—			3,537
Change in fair value of derivative asset/liability	(15,650		)	972			—
Loss on investment in an affiliate	(2,493		)	—			—
Net foreign exchange gain	4,412			1,498
Others	628			815			(688		)
Total other expense, net	(20,160		)	(6,669		)	183
Loss before income taxes	(184,407		)	(2,156		)	(31,431		)
Income tax expense	673			3,040			813
Net loss	$	(185,080	)	$	(5,196	)	$	(32,244	)
Net loss attributable to noncontrolling interests	(282		)	—			—
Net loss attributable to stockholders of the Company	$	(184,798	)	$	(5,196	)	$	(32,244	)
Net loss per common share:
Basic and Diluted	(0.30		)	(0.02		)	(0.16		)
Weighted average number of common shares used in computing per share amounts:
Basic and Diluted	612,047,053			307,005,057			198,214,456

The accompanying notes are an integral part of these consolidated financial statements.

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SPI ENERGY CO., LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

	For the Years Ended December 31,
	2015			2014			2013
Net loss	$	(185,080	)	$	(5,196	)	$	(32,244	)
Other comprehensive loss:
Foreign currency translation loss arising during the year	$	(12,355	)	(4,063		)	(74		)
Less: reclassification of foreign currency translation loss to net loss	—			—			172
Total comprehensive loss	$	(197,435	)	(9,259		)	$	(32,146	)
Comprehensive loss attributable to noncontrolling interests
Net loss attributable to noncontrolling interests	(282		)	—			—
Foreign currency translation loss arising during the year	(98		)	—			—
Comprehensive loss attributable to stockholders of the Company	$	(197,055	)	$	(9,259	)	$	(32,146	)

The accompanying notes are an integral part of these consolidated financial statements.

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SPI ENERGY CO., LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

	Common Stock				Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Equity attributable to Shareholders of the			Noncontrolling			Total shareholders’
	Shares		Amount		Capital			Deficit			Loss			Company			Interests			equity
Balances at December 31, 2012	198,215		20		48,219			(23,830		)	(287		)	24,122			—			24,122
Net loss								(32,244		)				(32,244		)	—			(32,244		)
Foreign currency translation adjustments											98			98			—			98
Solar Green Technology debt forgiveness					4,582									4,582			—			4,582
Stock-based compensation expense					575									575			—			575
Balances at December 31, 2013	198,215		$	20	$	53,376		$	(56,074	)	$	(189	)	$	(2,867	)	—			$	(2,867	)
Net loss								(5,196		)				(5,196		)	—			(5,196		)
Foreign currency translation adjustments											(4,063		)	(4,063		)	—			(4,063		)
Issuance of Common Stock and option	369,948		37		263,491									263,528			—			263,528
Issuance of convertible bonds					10,313									10,313			—			10,313
Exercise of stock options	685				37									37			—			37
Stock-based compensation expense					356									356			—			356
Balances at December 31, 2014	568,848		$	57	$	327,573		$	(61,270	)	$	(4,252	)	$	262,108					$	262,108
Net loss								(184,798		)				(184,798		)	(282		)	(185,080		)
Acquisition of subsidiaries																	3,945			3,945
Foreign currency translation adjustments											(12,257		)	(12,257		)	(98		)	(12,355		)
Issuance of Common Stock	70,148		7		91,913									91,920			—			91,920
Repurchase of Common Stock (see Note 23)	(10	)	—		(20		)							(20		)	—			(20		)
Debt forgiveness by LDK Group (see Note 32)					17,804									17,804			14			17,818
Exercise of stock options	79				29									29			—			29
Stock-based compensation expense					38,193									38,193			—			38,193
Balances at December 31, 2015	639,065		$	64	$	475,492		$	(246,068	)	$	(16,509	)	$	212,979		$	3,579		$	216,558

The accompanying notes are an integral part of these consolidated financial statements.

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SPI ENERGY CO., LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	December 31, 2015			December 31, 2014			December 31, 2013
Cash flows from operating activities:
Net loss	$	(185,080	)	$	(5,196	)	$	(32,244	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	4,686			1,267			1,283
Amortization	862			572			571
Provision for inventory	2,493			—
Provision for (Reversal of) doubtful accounts and notes	45,328			(2,043		)	9,303
Impairment charges	10,853			—			7,500
Loss on investment in ENS	2,493			—
Stock-based compensation expense	38,193			356			575
Gain on deconsolidation	—			—			(3,537		)
Loss on extinguishment of convertible bonds	—			8,907
Change in fair value of derivative assets/liability	15,650			(972		)
Loss (Gain) on disposal of fixed assets	71			1			(382		)
Change in deferred taxes	188			(126		)	(150		)
Provision for losses on contracts	5,932			2,055			2,816
Non-cash interest expense	5,042			1,406			—
Amortization of loan fees	—			—			307
Operating income from solar system subject to financing obligation	(1,103		)	(819		)	(1,183		)
Other non-cash expense	442			310			—
Changes in operating assets and liabilities
Accounts receivable	(86,369		)	(1,272		)	11,491
Accounts receivable, related party	—			—			3,823
Other receivable, noncurrent	(550		)	—			—
Notes receivable	(3,329		)	—			(27,931		)
Finance lease receivable	(31,183		)	—
Costs and estimated earnings in excess of billings on uncompleted contracts	41,316			(73,742		)	28,692
Restricted cash related to operating activities	(34,608		)	(337		)	—
Project assets	21,657			(55,066		)	15,993
Inventories	(7,996		)	3,838			1,025
Prepaid expenses and other assets	(25,580		)	(5,020		)	(899		)
Accounts payable	605			37,556			(5,452		)
Accounts payable, related party	(10,439		)	(12,853		)	7,815
Note payable	7,594			17,809			—
Advances from customers	1,773			17,690			—
Income taxes payable	312			2,942			—
Billings in excess of costs and estimated earnings on uncompleted contracts	—			(862		)	(4,066		)
Billings in excess of costs and estimated earnings on uncompleted contracts, related party	—			—			(49		)
Accrued liabilities and other liabilities	25,187			7,143			(4,089		)
Other liabilities, related party	42			—			—
Net cash used in operating activities	(155,518		)	(56,456		)	11,212
Cash flows from investing activities:
Proceeds from repayment of interest bearing receivables	3,165			—			7,007
Issuance of notes receivable	—			—			(1,335		)
Proceeds from disposal of fixed assets	—			1			—
Investment in affiliates	(33,390		)	(586		)	—
Acquisitions of property, plant and equipment	(22,212		)	(147		)	(3		)
Acquisitions of project assets	(22,740		)	(1,295		)	—
Prepayment for acquisitions of subsidiaries and project assets	(7,693		)	—
Proceeds from uplift of bank deposit with maturity over three months upon maturity	14,175			—
Acquisitions of subsidiaries, net of cash acquired	(5,344		)	(6,652		)	—
Acquisition of short-term investments	(31,442		)	(40,227		)	—
Placement of bank deposit with maturity over three months	(5,323		)	(8,852		)	—
Proceeds from disposal of short-term investments	58,796			12,873			—
Net cash used in investing activities	(52,008		)	(44,885		)	5,669

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	December 31, 2015			December 31, 2014			December 31, 2013
Cash flows from financing activities:
Proceeds from issuance of common stocks	62,029			167,885			—
Proceeds from line of credit and loans payable	254,608			47,467			2,666
Proceeds from loans on solarbao platform through Solar Energy	129,830			—
(Increase)/decrease in restricted cash	(48,032		)	240			20
Proceeds from issuance of convertible bonds	20,000			46,000			—
Repayments of line of credit and loans payable	(196,184		)	(4,250		)	(36,285	)
Repayment of loans on solarbao platform directly or through Solar Energy	(89,115		)	—
Net cash generated from financing activities	133,136			257,342			(33,599	)
Effect of exchange rate changes on cash	(26		)	(492		)	(74	)
(Decrease)/increase in cash and cash equivalents	(74,416		)	155,509			(16,792	)
Cash and cash equivalents at beginning of year	156,540			1,031			17,823
Cash and cash equivalents at end of year	$	82,124		$	156,540		1,031
Supplemental cash flow information:
Interest paid	2,753			191			4,280
Non-cash activities:
Debt forgiveness from related party (Note 32) and non-controlling interests	17,818			—			4,582
Netting off balance due to/from related party	—			3,905			—
Netting off balance due to/from third party (Note 18)	548			—
Contribution of other assets to investment in affiliate	—			790			7,536
Coupons issued to settle accounts payable (Note 1)	10,942			—
Common Stock issued to acquire project assets (Note 23)	5,500			3,300			—
Common Stock issued to acquire subsidiaries (Note 23)	23,845			78,955			—
Common Stock issued to settle payable (Note 23)	726			—
Common Stock issued in connection with convertible bond extinguishment	—			11,000
Derivative liability issued to acquire project assets	—			983			—
Exchange of notes receivable and other assets to acquire project assets	—			9,448			—
Exchange of investment in affiliate to acquire project assets	—			8,912			—
Exchange of Beaver run accounts receivable to acquire inventory and other assets	—			2,296			—
Exchange of Apple Orchard accounts receivable to acquire inventory	—			7,887			—
Exchange of Seashore accounts receivable to acquire inventory	—			1,395			—

The accompanying notes are an integral part of these consolidated financial statements.

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SPI ENERGY CO., LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2013, 2014 AND 2015
(Amounts in US$ thousands, except share and per share data)

1. Description of Business

SPI Energy Co., Ltd. (“SPI Energy” or the “Company”) was incorporated in the Cayman Islands on May 4, 2015 for the sole purpose of effectuating the redomicile of the Company’s predecessor, Solar Power, Inc., a California corporation (“SPI California”). The redomicile was approved by the shareholders of SPI California on May 11, 2015, pursuant to which one share of common stock of SPI California held by the shareholders was converted into one SPI Energy’s ordinary share. On January 4, 2016, SPI California completed the redomicile, resulting in SPI Energy becoming the publicly held parent company of SPI California. SPI Energy’s shares then began quotation on the OTC Markets under the symbol “SRGYY” effective January 4, 2016. On January 19, 2016, SPI Energy’s shares were listed on the Nasdaq Global Select Market and traded under the symbol “SPI”.

The Company and its subsidiaries (collectively the “Group”) is a provider of photovoltaic (“PV”) solutions for business, residential, government and utility customers and investors. The Group provides a full spectrum of engineering, procurement and construction services (“EPC”) to third party project developers, as well as develop, own and operate solar PV projects that sell electricity to the grid in multiple countries in Asia, North America and Europe.

Prior to 2014, the Group was primarily engaged in providing EPC services to developers in the U.S. Since 2014, the Group commenced its global project development business by ramping up its portfolio of global solar projects, including projects that the Group intends to hold in the long term and derive electricity generation revenue.

The major subsidiaries of the Company as of December 31, 2015 are summarized as below:

Major Subsidiaries	Abbreviation	Location
Xinwei Solar Engineering and Construction (Suzhou) Co., Ltd.	Xinwei Suzhou	China
Xinyu Xinwei New Energy Co., Ltd.	Xinyu Xinwei	China
Sinsin Renewable Investment Limited	Sinsin	Greece
Gonghe County Xinte Photovoltaic Co., Ltd.	Xinte	China
SPI Renewables Energy (Luxembourg) Private Limited Company S.a.r.l. (formerly known as CECEP Solar Energy (Luxembourg) Private Limited Company (S.a.r.l.)) and Italsolar S.r.l. (Note 3)	CECEP	Luxembourg, Italy
Solar Juice Pty Ltd. (Note 3)	Solar Juice	Australia
Solarbao E-commerce (HK) Limited	Solarbao E-commerce	Hong Kong
Jiangsu Solarbao Leasing Co., Ltd.	Jiangsu Solarbao	China
Yanhua Network Technology (Shanghai) Co., Ltd.	Yanhua Network	China
SPI Solar Japan G.K.	SPI Japan	Japan
Solar Power Inc UK Service Limited	SPI UK	United Kingdom

Solarbao E-commerce, Jiangsu Solarbao and Yanhua Network were incorporated by the Group in 2015 to raise interest bearing funds from individual investors through an online platform owned by Solar Energy E-Commerce (Shanghai) Limited (“Solar Energy”) for use in the purchases and leasing of solar related products to the Group or third party developers. Pursuant to the terms of the agreements entered with individual investors, Solar Energy, the Group and/or third party project developers, the Group incurs interest expenses in respect of the funds provided by individual investors (See Note 18). For those transactions of which the solar related products are leased to the third party developers, the Group earns finance lease income (See Note 2(r) and Note 11). For those transactions in which the solar related products are leased to entities within the Group, they are eliminated in the consolidated financial statements as they are inter-company transactions between two subsidiaries of the Company (with one of the subsidiaries as accounting lessor and the other one as accounting lessee). As the Group use the on-line platform owned by Solar Energy which also served as an agent to collect funds from and repay funds to individual investors on behalf of the Group, the Group pay commission fee to Solar Energy for the services provided (See Note 32).

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Solar Energy was incorporated in China on December 8, 2014 by Xiaofeng Peng (“Mr. Peng”), Min Xiahou and Jing Liu, who are the chairman of the Company’s board of directors, deputy chairman of the Company’s board of directors and former chief financial officer of the Group respectively. Solar Energy operates the “www.solarbao.com” e-commerce and investment platform which primarily targets retail customers residing in the PRC. On March 26, 2015, the Group, through Yanhua Network, entered into a series of contractual arrangements (“VIE Agreements”) with Solar Energy and its shareholders. The contractual arrangements include power of attorney, call option agreement, equity pledge agreement, and a consulting services agreement. As of the date of these consolidated financial statements, the Group has not established the legal enforceability of these contractual agreements described above including the registration of the equity pledge agreement in the relevant government bureau in the PRC. Therefore, the financial results of Solar Energy have not been included in the accompanying consolidated financial statements of the Company as the legal enforceability of the contractual agreements is yet to be established.

2. Summary of Significant Accounting Policies

(a) Basis of Presentation

The accompanying consolidated financial statements of the Group are prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

The accompanying 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’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.

The Group incurred a net loss of $185,080 and had operating cash outflow of $155,518 during the year ended December 31, 2015. The Group had accumulated deficit of $246,068 as of December 31, 2015. Working capital (current assets less current liabilities) levels have decreased significantly from $129,005 at December 31, 2014 to negative $79,982 at December 31, 2015. Further, the Company has outstanding debts that will be due for repayment during the year ending December 31, 2016.

These and other factors disclosed in these financial statements raise substantial doubt as to the Company’s ability to continue as a going concern. Management believes that it has developed a liquidity plan, as summarized below, that, if executed successfully, will provide sufficient liquidity to meet the Company obligations for a reasonable period of time.

· Restructuring of liabilities

On March 15, 2016, the Group entered into a settlement agreement (“Settlement Agreement”) with Sinsin’s previous owners to extend its payment obligation of $46,038 (EUR42,396) arising from the business acquisition of Sinsin which was originally due for payment in 2016 and was included in Other current liabilities as of December 31, 2015. Pursuant to the Settlement Agreement, the Group paid EUR3,283 and pledged PV plants of 26.57 MW to Sinsin’s previous owners. Pursuant to the Settlement Agreement, the remaining EUR 39,113 is to be settled on or before November 30, 2017 with an interest rate of 6% per annum. Please refer to Note 33 (b)—Subsequent events for details.

· Project assets financing

On March 28, 2016, the Group entered into a sales and leaseback arrangement with a third party leasing company through which the Group obtained proceeds of RMB140 million at an interest rate of 6.125% per annum, which will be repayable by lease instalments over a 10-year period. Please refer to Note 33 (c)—Subsequent events for details.

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· Equity investments from shareholders and management members

On May 10, 2016, certain shareholders and management members entered into share purchase agreements with the Group and agreed to purchase 75.99 million shares of common stock of the Company at an aggregate consideration of $57.68 million. Please refer to Note 33 (d)—Subsequent events for details.

· New banking facilities

After the balance sheet date, the Group obtained banking facilities from two banks in the PRC. The banking facilities include letter of credits and bank loans and amounted to RMB600 million in total, and are available to the Group until March 2017 and May 12, 2017 respectively.

· Delay in capital expenditure and improvement in working capital management

The Group has decided to postpone a substantial portion of its planned capital expenditures, including acquisition or development of project assets, for the next 12 months until liquidity position improve for management to be comfortable in incurring such or a portion of such expenditures. To actively manage the Group’s cash flow and working capital requirements, management expects to implement measures to closely monitor the Group’s inventory and project asset levels and manage the collection of the Group’s receivable balances.

While management believes that the measures in the liquidity plan will be adequate to satisfy its liquidity and cash flow requirements for the twelve months ending December 31, 2016, 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 Group’s business, results of operations and financial position, and may materially adversely affect its ability to continue as a going concern. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Group be unable to continue as a going concern.

(b) Principles of Consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated upon consolidation. For consolidated subsidiaries where the Group’s ownership in the subsidiary is less than 100%, the equity interest not held by the Group is shown as non-controlling interests. The Company was not the primary beneficiary of any variable interest entities during the years ended December 31, 2015, 2014 and 2013. The Company accounts for investments over which it has significant influence but not a controlling financial interest using the equity method of accounting. The Company deconsolidates a subsidiary when the Company ceases to have a controlling financial interest in the subsidiary. When control is lost, the parent-subsidiary relationship no longer exists and the parent derecognizes the assets and liabilities of the subsidiary.

(c) Use of estimates

The preparation of the consolidated financial statements in conformity with US GAAP requires the Group to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounting estimates reflected in the Company’s consolidated financial statements include the allowance made for doubtful accounts receivable, inventory write-downs, the estimated useful lives of long-lived assets, the impairment of goodwill, long-lived assets and project assets, fair value of derivative liability, valuation allowance of deferred income tax assets, accrued warranty expenses, the grant-date fair value of share-based compensation awards and related forfeiture rates, and fair value of financial instruments. Changes in facts and circumstances may result in revised estimates. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

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(d) Foreign currency translation and foreign currency risk

The functional currency of the Company and subsidiaries located in the United States is the United States dollar (“US$”). The functional currency of the Company’s subsidiaries located in the PRC, Europe and Australia are Renminbi (“RMB”), EURO (“EUR”) and AUD respectively. Transactions denominated in foreign currencies are re-measured into the functional currency at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in foreign currencies are re-measured into the functional currency at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are included in the consolidated statements of operations.

The Group’s reporting currency is the US$. Assets and liabilities of subsidiaries, whose functional currency is not the US$, are translated into US$ using exchange rates in effect at each period end, and revenues and expenses are translated into US$ at average rates prevailing during the year. Gains and losses resulting from the translations of the financial statements of these subsidiaries into US$ are recognized as other comprehensive income in the statement of comprehensive income.

(e) Fair value of financial instruments

The Group estimates fair value of financial assets and liabilities as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants. The fair value measurement guidance establishes a three-level fair value hierarchy that prioritizes the inputs into the valuation techniques used to measure fair value.

· Level 1 — Valuation techniques in which all significant inputs are unadjusted quoted prices from active markets for assets or liabilities that are identical to the assets or liabilities being measured.

· Level 2 — Valuation techniques in which significant inputs include quoted prices from active markets for assets or liabilities that are similar to the assets or liabilities being measured and/or quoted prices for assets or liabilities that are identical or similar to the assets or liabilities being measured from markets that are not active. Also, model-derived valuations in which all significant inputs and significant value drivers are observable in active markets are Level 2 valuation techniques.

· Level 3 — Valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Unobservable inputs are valuation technique inputs that reflect the Group’s own assumptions about the assumptions that market participants would use to price an asset or liability.

The Group uses quoted market prices to determine the fair value when available. If quoted market prices are not available, the Group measures fair value using valuation techniques that use, when possible, current market-based or independently-sourced market parameters, such as interest rates and currency rates.

(f) Cash and cash equivalents

Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and all highly liquid investments with original maturities of three months or less, and which are unrestricted as to withdrawal and use.

(g) Restricted cash

Restricted cash represent bank deposits held as collateral for issuance of notes payable, letters of credit, or bank borrowings. Upon maturity of the notes payable and letters of credit as well as repayment of bank borrowings, the deposits are released and become available for general use by the Group. Restricted cash are reported within cash flows from operating, investing or financing activities in the consolidated statements of cash flows with reference to the purpose of being restricted. Restricted cash, which matures twelve months after the balance sheet date, is classified as non-current assets in the consolidated balance sheets.

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(h) Accounts Receivables and Allowance for Doubtful Accounts

The Group grants open credit terms to credit-worthy customers. Accounts receivable are primarily related to the Group’s EPC contracts. For EPC contracts in the PRC, the Group normally requests a down payment of 3%-10% upon signing of contract, payment of up to 90%-95% in 90 days after connection to the grid and customers’ acceptances of project completion, and the remaining balance of 5%-10% one year thereafter. For EPC projects in other countries, the payment terms were normally negotiated based on achievement of certain contractual milestones as follows: 5% payment upon submittal of engineering documents, 75% payment upon delivery of certain procurements, 10% payment upon completion of construction, and remaining 10% payment 30 days after final completion. Contractually, the Group may charge interest for extended payment terms and require collateral.

The Group maintains allowances for doubtful accounts for uncollectible accounts receivable. The Group regularly monitors and assesses the risk of not collecting amounts owed by customers. This evaluation is based upon a variety of factors, including an analysis of amounts current and past due along with relevant history and facts particular to the customer. The Group does not have any off-balance-sheet credit exposure related to its customers.

(i) Notes Receivable

Notes receivable consists of non-interest bearing commercial bank acceptance notes received from EPC customers in China and a 15-year interest-bearing promissory note issued by a EPC customer in 2013. As at December 31, 2015, all bank acceptances notes was due for settlement within the next 12 months after the balance sheet date and were classified as current assets on the consolidated balance sheet. The promissory note carries interests at LIBOR plus 460bps and is settled by pre-determined installments. Installment payments that fall due within 12 months and over 12 months after the balance sheet date are classified as current assets and non-current assets respectively on the consolidated balance sheet. As of December 31, 2015 and 2014, allowance of nil and $288 was made against the notes receivable.

(j) Inventories

Inventories are carried at the lower of cost or market, determined by the first in first out cost method. Provisions are made for obsolete or slow-moving inventories based on management estimates. Inventories are written down based on the difference between the cost of inventories and the market value based upon estimates about future demand from customers, specific customer requirements on certain projects and other factors. Inventory provision charges establish a new cost basis for inventory and charges are not subsequently reversed to income even if circumstances later suggest that increased carrying amounts are recoverable.

(k) Project Assets

The Group acquires or constructs PV solar power systems (“project assets”) that are (i) held for development and sale or (ii) held for the Group’s own use to generate income or return from the use of the project assets. Project assets are classified as either held for development and sale or as held for use within property, plant and equipment based on the Group’s intended use of project assets. The Group determines the intended use of the project assets upon acquisition or commencement of project construction. Classification of the project assets affects the accounting and presentation in the consolidated financial statements. Transactions related to the project assets held for development and sale are classified as operating activities in the consolidated statements of cash flows and reported as sales and costs of goods sold in the consolidated statements of operations upon the sale of the project assets and fulfillment of the relevant recognition criteria. The costs to construct project assets intended to be held for own use are capitalized and reported within property, plant and equipment on the consolidated balance sheets and are presented as cash outflows from investing activities in the consolidated statements of cash flows. The proceeds from disposal of project assets classified as held for own use are presented as cash inflows from investing activities within the consolidated statements of cash flows.

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Project assets costs consist primarily of capitalizable costs for items such as permits and licenses, acquired land or land use rights, and work-in-process. Work-in-process includes materials and modules, construction, installation and labor, capitalized interests and other capitalizable costs incurred to construct the PV solar power systems.

The project assets held for development and sale are reported as current assets on the consolidated balance sheets when upon completion of the construction of the project assets, the Group initiates a plan to is actively market the systems for immediate sale in their present condition to potential third party buyers subject to terms that are usual and customary for sales of these types assets and it is probable that the system will be sold within one year. Otherwise, the project assets held for development and sale are reported as non-current assets.

No depreciation expense is recognized while the project assets are under construction or classified as held for sale. If facts and circumstances change such that it is no longer probable that the PV solar systems will be sold within one year of the system’s completion date, the PV solar systems will be reclassified to property, plant and equipment and subject to depreciation charges.

For project assets held for development and sale, the Group considers a project commercially viable if it is anticipated to be sold for a profit once it is either fully developed or fully constructed. The Group also considers a partially developed or partially constructed project commercially viable if the anticipated selling price is higher than the carrying value of the related project assets plus the estimated cost to completion. The Group considers a number of factors, including changes in environmental, ecological, permitting, market pricing or regulatory conditions that affect the project. Such changes may cause the cost of the project to increase or the selling price of the project to decrease. The Group records an impairment loss of the project asset to the extent the carrying value exceed its estimated recoverable amount. The recoverable amount is estimated based on the anticipated sales proceeds reduced by estimated cost to complete such sales. In 2015, the Group provided impairment loss of $5,932 for certain project assets held for development and sale.

In addition to PV solar power systems that are developed for sale or held for the Group’s own use, the Group also invested in several PV solar power projects under engineering, procurement and construction (“EPC”) contracts with third party project owners during the year ended December 31, 2015 and 2014. In respect of these EPC contracts, there was mutual understanding between the Group and the respective project owners upon the execution of the EPC contracts that the title and ownership of the PV solar power systems would transfer to the Group upon the completion of construction. Management determined that the substance of the arrangements is for the Group to construct the PV solar power systems under the legal title of the project owners and with the title and ownership of the systems transferred to the Group upon the construction completion, at which time such title transfer is permitted under local laws. The project assets under construction were pledged to the Group before title transfer. Like normal project assets, classification in consolidated statement of cash flow as operating activities or investing activities for these project assets are based on the intention for own use or sale. Based on the Group’s intention to hold for own use, the projects costs incurred for these EPC contracts are presented as investing activities in the consolidated statement of cash flows. In 2015, the Group provided impairment loss of $10,853 for such project assets.

(1) Property, plant and equipment

The Group reports its property, plant and equipment at cost, less accumulated depreciation. Cost includes the prices paid to acquire or construct the assets, interest capitalized during the construction period and any expenditure that substantially extends the useful life of an existing asset. The Group expenses repair and maintenance costs when they are incurred. Depreciation is recorded on the straight-line method based on the estimated useful lives of the assets as follows:

Plant and machinery	5 or 6.67 years
Furniture, fixtures and equipment	3 or 5 years
Computers	3 or 5 years
Automobile	3 or 5 years
Leasehold improvements	The shorter of the estimated life or the lease term
PV solar system	17, 20, 25 or 27 years

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(m) Intangible assets other than goodwill

Intangible assets consist of customer relationships, patents and software. Amortization is recorded on the straight-line method based on the estimated useful lives of the assets.

(n) Impairment of long-lived assets

The Group’s long-lived assets include property, plant and equipment, project assets and other intangible assets with finite lives. The Group evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Group first compare 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. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Any impairment write-downs would be treated as permanent reductions in the carrying amounts of the assets and a charge to operations would be recognized. Impairment losses on project assets of $10,853, nil and nil was recognized for the years ended December 31, 2015, December 31, 2014 and December 31,2013, respectively.

(o) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is reviewed for impairment at least annually. In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more-likely-than-not that the fair value of a reporting is greater than its carrying amount, the two-step goodwill impairment test is not required.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

The Group performs its annual impairment review of goodwill at December 31, and when a triggering event occurs between annual impairment tests. No impairment loss was recorded for any of the periods presented.

(p) Product warranties

The Group offers the industry standard warranty up to 25 years PV modules and industry standard five to ten years on inverter and balance of system components. Due to the warranty period, the Group bears the risk of extensive warranty claims long after products have been shipped and revenues have been recognized. For the Group’s cable, wire and mechanical assemblies business, historically the related warranty claims have not been material. For the Group’s solar PV business, the greatest warranty exposure is in the form of product replacement.

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During the quarter ended September 30, 2007 and continuing through the fourth quarter of 2010, the Group installed own manufactured solar panels. Other than this period, the Group only installed panels manufactured by unrelated third parties as well as the Company’s principal shareholder and formerly controlling shareholder, LDK and its subsidiaries (collectively the “LDK Group”). PV construction contracts entered into during the recent years included provisions under which the Group agreed to provide warranties to the customers. The warranty the Group offers to its customers is identical to the warranty offered to the Group by its suppliers, therefore, the Group passes on all potential warranty exposure and claims, if any, with respect systems sold by the Group to its suppliers. Due to the absence of historical material warranty claims and identical warranty terms, the Group has not recorded any additional warranty provision relating to solar energy systems sold since 2011. The warranty exposure before 2011 was estimated based on the Group’s own historical data in combination with historical data reported by other solar system installers and manufacturers.

(q) Income taxes

The Group accounts for income taxes under the asset and liability method. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax reporting bases of assets and liabilities and are measured using enacted statutory tax rates applicable to future years. Realization of deferred tax assets is dependent upon the weight of available evidence, including expected future earnings. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Should we determine that we would be able to realize deferred tax assets in the future in excess of the net recorded amount, we would record an adjustment to the deferred tax asset valuation allowance. This adjustment would increase income in the period such determination is made.

Profit from non-U.S. activities is subject to local country taxes but not subject to U.S. tax until repatriated to the U.S. It is the Group’s intention to permanently reinvest these earnings outside the U.S., subject to our management’s continuing assessment as to whether repatriation may, in some cases, still be in the best interests of the Group. The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations.

The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, management presumes that the position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. In addition, a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to be recognized in the financial statements. The tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. The Group records interest and penalties related to an uncertain tax position, if and when required, as part of income tax expense in the consolidated statements of operations. No reserve for uncertainty tax position was recorded by the Group as of January 1, 2015 and for the year ended December 31, 2015.

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(r) Revenue recognition

Product sales

Revenue on product sales is recognized when there is evidence of an arrangement, title and risk of ownership have passed (generally upon delivery), the price to the buyer is fixed or determinable and collectability is reasonably assured. The Group makes determination of our customer’s credit worthiness at the time it accepts their initial order. For cable, wire and mechanical assembly sales, there are no formal customer acceptance requirements or further obligations related to our assembly services once the Group ships its products. Customers do not have a general right of return on products shipped therefore the Group makes no provisions for returns.

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Construction contracts

Revenue on photovoltaic system construction contracts is generally recognized using the percentage-of-completion method of accounting, unless we cannot make reasonably dependable estimates of the costs to complete the contract or the contact value is not fixed, in which case we would use the completed contract method. Under the percentage-of-completion method, the Group measures the cost incurred on each project at the end of each reporting period and compares the result against the estimated total costs at completion. The costs incurred for construction contract mainly include the purchase costs of direct materials and solar modules, which are included in assessing percentage-of-completion when they have been permanently placed or affixed to the solar power system as required by engineering designs. The percentage of cost incurred determines the amount of revenue to be recognized. Payment terms are generally defined by the contract and as a result may not match the timing of the costs incurred by the Group and the earnings accrued thereon. Such differences are recorded as costs and estimated earnings in excess of billings on uncompleted contracts (an asset account) or billings in excess of costs and estimated earnings on uncompleted contracts (a liability account). For the years ended December 31, 2015 and 2014, $2,161 and $5,600 of progress payments have been netted against contracts costs disclosed in the account costs and estimated earnings in excess of billings on uncompleted contracts.

The percentage-of-completion method requires the use of various estimates, including, among others, the extent of progress towards completion, contract revenues and contract completion costs. Contract revenues and contract costs to be recognized are dependent on the accuracy of estimates, including direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs. The Group has a history of making reasonable estimates of the extent of progress towards completion, contract revenues and contract completion costs. However, due to uncertainties inherent in the estimation process, it is possible that actual contract revenues and completion costs may vary from estimates. Under the completed-contract method, contract costs are recorded to a deferred project costs account and cash received are recorded to a liability account during the periods of construction. All revenues, costs, and profits are recognized in operations upon completion of the contract. A contract is considered complete and revenue recognized when all costs except insignificant items have been incurred and final acceptance has been received from the customer and receivables are deemed to be collectible. Provisions for estimated losses on uncompleted contracts, if any, are recognized in the period in which the loss first becomes probable and reasonably estimable. For the years ended December 31, 2015, 2014 and 2013, nil, nil and $2,816 estimated losses on uncompleted contracts have been recorded respectively.

Sales of project assets

The Group recognizes the revenue for project assets sales with the concurrent sale or the concurrent lease of the underlying land, whether explicit or implicit in the transaction, in accordance with ASC 360-20, Real Estate Sales. For these transactions, the Group has determined that the project asset sale represents the sale of real estate and is therefore subject to the revenue recognition guidance applicable to real estate. A PV solar system is determined to be integral equipment when the cost to remove the equipment from its existing location, ship and reinstall at a new site, including any diminution in fair value, exceeds ten percent of the fair value of the equipment at the time of original installation. Generally, the Group recognizes revenue and profit using the full accrual method once the sale is consummated, the buyer’s initial and continuing investments are adequate to demonstrate its commitment to pay, the receivable from buyer is not subject to any future subordination, and the Group has transferred the usual risk and rewards of ownership to the buyer.

If the criteria for recognition under the full accrual method are met except that the buyer’s initial and continuing investment is less than the level determined to be adequate, then the Group will recognize revenue using the installment method. Under the installment method, the Group record revenue up to the costs incurred and apportion each cash receipt from the buyer between cost recovered and profit in the same ratio as total cost and total profit bear to the sales value.

If the Group retains some continuing involvement with the project assets and do not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the continuing involvement, provided the other criteria for the full accrual method are met. In certain cases, the Group may provide the customers guarantees of system performance or uptime for a limited period of time and the Group’s exposure to loss is contractually limited based on the terms of the applicable agreement. In accordance with real estate sales accounting guidance, the profit recognized is reduced by the maximum exposure to loss (and not necessarily the most probable exposure), until such time that the exposure no longer exists.

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Other forms of continuing involvement that do not transfer substantially all of the risks and rewards of ownership preclude revenue recognition under real estate accounting and require the Group to account for any cash payments using either the deposit or financing method. Such forms of continuing involvement may include contract default or breach remedies that provide the Group with the option or obligation to repurchase the project assets. Under the deposit method, cash payments received from customers are reported as deferred revenue for the project assets on the consolidated balance sheet, and under the financing method, cash payments received from customers are considered debt and reported as the financing and capital lease obligations on the consolidated balance sheet.

Financial service revenue

The Group records financial services revenue associated with finance leases. The Group records a finance lease receivable and de-recognizes the leased equipment at lease inception. The finance lease receivable is recorded at the aggregate future minimum lease payments, estimated unguaranteed residual value of the leased equipment less unearned income. Residual values, which are reviewed periodically, represent the estimated amount the Group expect to receive at lease termination from the disposition of the leased equipment. Actual residual values realized could differ from these estimates. The unearned income is recognized in Net sales-financial service revenue in the consolidated statements of operations over the lease term, in a manner that produces a constant rate of return on the lease.

The lease receivables expected to be received within one year after the balance sheet date is classified as current finance lease receivable and the lease receivable expected to be received over one year after the balance sheet date is classified as noncurrent finance lease receivable.

As discussed in Note 1) above and Note 18, the Group raised funds from individual investors through the on-line platform of Solar Energy to purchase solar related products for leasing to third party project developer with guarantees of fund principle repayment provided by the Group. Although a tri-party lease agreement is signed among the individual investors, the Group and the third party developer with individual investors as legal lessor and the third party developers as legal lessee, the Group is considered as the accounting lessor in substance because 1) the lease terms, rate of return on the investment funds from individual investors, the initial purchase price and the lease rental of the solar related products payable by the PV developers and the purchase contract of the solar related products entered with manufacturer are negotiated and concluded by the Group without any involvement by the individual investors; and 2) individual investors are entitled to a minimum interest rate as return that are guaranteed by the Group in respect of their funds provided and does not take credit risk in respect of any default payment by the lessee nor risk of claim on the leased assets; 3) the Group is subject to the credit risk as a principal of the lease transaction and has unconditional commitment to return the funds to the individual investors and assume the title of the leased asset after the lock-up period. In substance, the individual investors provided funds (as lender) to finance the Group (as borrower) for its purchases of the Underlying PV Products for leasing to third party in return for a fixed return. In this regard, lease accounting is adopted with Group as accounting lessor and the third party developer as accounting lessee under finance lease in the Group’s consolidated financial statements upon the inception of the leases.

The Group recognized interest earned on finance leases as “Net sales-financial service revenue” in the amount of $1,486, nil and nil in 2015, 2014 and 2013, respectively.

Services revenue under power purchase agreements

The Group derives services revenues from PV solar systems held for own use through the sale of energy to grid operators pursuant to terms set forth in power purchase agreements or local government regulations (“PPAs”). The Group has determined that none of the PPAs contains a lease since (i) the purchaser does not have the rights to operate the project assets, (ii) the purchaser does not have the rights to control physical access to the project assets, and (iii) the price that the purchaser pays is at a fixed price per unit of output. Revenue is recognized based upon the output of electricity delivered multiplied by the rates specified in the PPAs, assuming all other revenue recognition criteria are met.

Operation and maintenance revenue is billed and recognized as services are performed. Costs of these revenues are expensed in the period they are incurred.

(s) Stock-based compensation

The Group’s share-based payment transactions with employees, such as restricted shares and share options, are measured based on the grant-date fair value of the equity instrument issued. The fair value of the award is recognized as compensation expense, net of estimated forfeitures, over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period.

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(t) Derivative instruments

The Group enters into derivative financial instrument arising from the business combination as mentioned in Note 3 and the investment as mentioned in Note 13 to the consolidated financial statements. The Group recognizes all derivative instruments as either assets or liabilities in the balance sheet at their respective fair values. Changes in the fair value are recognized in earnings.

(u) Capitalized interest

The Group’s policy is to capitalize interest cost incurred on debt during the construction of major projects exceeding three months. A reconciliation of total interest cost to “Interest Expense” as reported in the consolidated statements of operations for 2015, 2014 and 2013 is as follows:

	December 31,		December 31,		December 31,
	2015		2014		2013

Interest cost capitalized	$	2,268	$	—	—
Interest cost charged to income	9,275		2,259		4,321
Total interest cost	$	11,543	$	2,259	4,321

(v) Advertising

Advertising costs amounted to $22,448, nil and $42 in 2015, 2014 and 2013, respectively. The Group expenses the costs of producing advertisements as incurred. Regarding the sponsorships of events, the sponsorship amounts are amortized over the period during which the performance under the sponsorship is received.

(w) Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated. Legal and other fees incurred in connection with loss contingencies are expensed as incurred.

(x) Recently Adopted and Recently Issued Accounting Guidance

In May 2014, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. This ASU was originally effective for fiscal years and interim periods beginning after December 15, 2016. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (“ASU 2015-14”), which amends ASU 2014-09 and defers its effective date to fiscal years and interim reporting periods beginning after December 15, 2017. ASU 2015-14 permits earlier application only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact of this standard on the consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15 is effective for annual periods ending after December 15, 2016 and interim periods within annual periods beginning after December 15, 2016, with early adoption permitted. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

In January 2015, the FASB issued ASU No. 2015-01, Income Statement — Extraordinary and Unusual Items (Subtopic 225- 20), which eliminates the concept of reporting for extraordinary items. ASU 2015-01 is effective for the Group for fiscal years, and interim periods within those fiscal years, beginning on January 1, 2016. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

On February 18, 2015, the FASB issued ASU No. 2015-02, Consolidation, which reduces the number of consolidation models and simplifies the current standard. Entities may no longer need to consolidate a legal entity in certain circumstances based solely on its fee arrangements when certain criteria are met. ASU 2015-02 reduces the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity. ASU 2015-02 is effective for the Group’s fiscal year ending December 31, 2016. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

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In April 2015, the FASB issued ASU No. 2015-03, Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. ASU 2015-03 is effective for the Group on a retrospective basis on January 1, 2016. Early adoption is permitted, but only for debt issuance costs that have not been reported in financial statements previously issued or available for issuance. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. ASU 2015-11 applies to inventory that is measured using the first-in, first-out (“FIFO”) or average cost method and requires measurement of that inventory at the lower of cost and 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. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement Period Adjustments. ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. This ASU requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Any current period adjustments to provisional amounts that would have impacted a prior period’s earnings had they been recognized at the acquisition date are required to be presented separately on the face of the income statement or disclosed in the notes. This ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. This ASU should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. Therefore the amendments in ASU 2015-16 became effective for the Group as of the beginning of 2015 fiscal year. The adoption of this ASU has no impact on the Group’s consolidated financial statements.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17 requires that deferred tax liabilities and assets be classified as noncurrent in a classified balance sheet. The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by the amendments in this ASU. This ASU are effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Group has elected to adopt this update as of the fourth quarter of fiscal 2015. The adoption of this ASU has no impact on the Group’s consolidated balance sheet since all deferred tax liabilities and assets have been reported as noncurrent in the Group’s consolidated balance sheet as of December 31, 2014.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). Under the new guidance, lessees will be required to recognize the following for all leases (with the exception of short-term leases) at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. Certain targeted improvements were made to align, where necessary, lessor accounting with the lessee accounting model and Topic 606, Revenue from Contracts with Customers. The new lease guidance simplified the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. Lessees (for capital and operating leases) and lessors (for sales-type, direct financing, and operating leases) must apply a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. The modified retrospective approach would not require any transition accounting for leases that expired before the earliest comparative period presented. Lessees and lessors may not apply a full retrospective transition approach. ASU 2016-02 is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. The Group is currently evaluating the impact of this standard on the Group’s consolidated financial statements.

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(y) Reclassifications

Certain prior period balances have been reclassified to conform to the current period presentation in the Group’s consolidated financial statements and the accompanying notes. Such reclassifications had no effect on previously reported results of operations or accumulated deficit.

3. Business Acquisitions

(a) Acquisition of CECEP

On January 15, 2015, the Group entered into a stock purchase agreement (the “CECEP Purchase Agreement”) with CECEP Solar Energy Hong Kong Co., Limited (“CECEP HK”). Pursuant to the CECEP Purchase Agreement, the Group agreed to purchase 100% equity interests in CECEP from CECEP HK.

Through its respective wholly and non-wholly owned subsidiaries in Italy, CECEP are engaged in the development, management and operation of energy projects and facilities dedicated to the production of alternative energy sources through four photovoltaic plants with a total capacity of 4.3 MW in Italy.

The purchase consideration of CECEP consists of cash and the Company’s common stock. In addition to the purchase considerations, the Group is also required to settle the borrowings in the amount of Euro 7,870 (equivalent to $8,967) due to CECEP HK on behalf of CECEP (“Payable Settlement”). Including the Payable Settlement, the Group was required to settle cash of Euro 3,125 (equivalent to $3,561) (“Cash Settlement”) and 5,722,977 shares of the Company’s common stock. The Cash Settlement was fully settled in the form of several installments in March and April 2015. The Stock Consideration was settled on January 30, 2015 by the Group, and the common stock was subject to a three-month lockup period as agreed in the CECEP Purchase Agreement. The acquisition was consummated on February 16, 2015 upon completion of all closing conditions.

The Group issued 5,722,977 shares of its Common Stock to CECEP HK on January 30, 2015. The fair value of the Stock Consideration was determined to be $8,269, which was based on the closing market price of the Company’s common stock on the acquisition date of February 16, 2015, with adjustments for the lockup period and other factors.

The acquisition has been accounted for under ASC 805 Business Combinations. The Group made estimates and judgments in determining the fair value of acquired assets and liabilities, based on management’s experiences with similar assets and liabilities and with the assistance from an independent valuation firm. The allocation of the purchase price is as follows:

Identifiable assets acquired and liabilities assumed
Cash and cash equivalents	$	1,389
Accounts receivable	394
Other receivable	1,137
Property, plant and equipment	11,041
Deferred tax asset	180
Accounts payable	(244		)
Income tax payable	(130		)
Other accrued liabilities	(1,234		)
Loans payable	(884		)
Identifiable net assets acquired (a)	11,649
Consideration and Payment Settlement (b)	11,830
Non-controlling interests (c)	1,236
Goodwill (b+c-a)	$	1,417

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During the period from the acquisition date to December 31, 2015, CECEP contributed revenue of $1,395 and earnings of $242 to the Group’s consolidated results.

Goodwill primarily represents the expected synergies from combining operations of the Group and CECEP, which are complementary to each other, and any other intangible benefits that would accrue to the Group that do not qualify for separate recognition.

Pro forma financial information is not presented for the acquisition of CECEP as its revenue and earnings were not material to the consolidated statements of operations.

(b) Acquisition of Solar Juice

On March 31, 2015, the Group agreed to acquire 80% of equity interests in Solar Juice Pty Ltd. (“Solar Juice”), an Australian company, from its shareholders (the “Solar Juice Sellers”) pursuant to a share purchase agreement (“Solar Juice Purchase Agreement”) entered between the Group and the Solar Juice Sellers. The acquisition was consummated on May 28, 2015 upon completion of all closing conditions.

The purchase consideration consisted of 14,073,354 shares of the Company’s common stock (“Consideration”). The fair value of the Consideration was determined to be $15,578, which was based on the closing market price of the Company’s common stock on the acquisition date of May 28, 2015, with adjustment for the lockup period and other factors. The lockup period end for shares of 2,638,754 and 6,157,092 are three-month and nine-month after the closing date respectively. The earliest date of lockup period end for another 2,638,753 shares and the remaining 2,638,753 shares are December 31, 2016 and 2017 respectively, subject to the fulfillment of certain conditions by Solar Juice.

Identifiable assets acquired and liabilities assumed
Cash and cash equivalents	$	1,037
Accounts receivable	6,124
Inventories, net	14,728
Prepaid expenses and other current assets	263
Other current assets	525
Intangible assets	4,579
Property, plant and equipment net	301
Deferred tax asset	295
Accounts payable	(10,934		)
Accrued liabilities	(534		)
Prepaid income tax	89
Advance from customers	(230		)
Short term borrowings	(4,305		)
Deferred tax liability	(1,889		)
Identifiable net assets acquired (a)	10,049
Consideration (b)	15,578
Non-controlling interests (c)	2,709
Goodwill (b+c-a)	$	8,238

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During the period from the acquisition date to December 31, 2015, Solar Juice contributed revenue of $35,452 and losses of $1,269 to the Group’s consolidated results.

Solar Juice is engaged in the distribution of solar photovoltaic panels, solar inverters and other energy efficient solutions, both domestically and internationally. As a result of the acquisition of Solar Juice, the Group would be able to have immediate access to the solar PV market in Australia, New Zealand and South East Asia, which could enhance the Group’s development of PV projects in those markets. Goodwill primarily represents such expected synergies the Group obtained from the acquisition.

Pursuant to Solar Juice Purchase Agreement, the Group was granted a call option by the Solar Juice Sellers to acquire remaining 20% equity interest in Solar Juice from them. The exercise price per share of the call option is to be determined based on Solar Juice’s earnings before interest, taxation, depreciation and amortization (“EBITDA”) per share for the year ended December 31, 2015 multiplied by six. The acquisition consideration will be settled with the Company’s common stock if the Group exercises the option. The number of shares to be issued by the Company will be determined by the share price on the exercise date. The call option will be expired on May 28, 2016 and meets the definition of a derivative. The Group recognized the call option at its fair value of $420 as of the inception date as a derivative asset in Other current assets on the consolidated balance sheet. Loss arising from change in fair value of $420 was recorded as Other income (expense)-Change in market value of derivative asset/liability in the consolidated statement of operations for the year ended December 31, 2015. The fair value measurement of this call option was further discussed in Note 14 — Fair value measurement.

The following table provides unaudited pro forma consolidated results of the Group for the years ended December 31, 2015 and 2014 as if Solar Juice had been acquired as of January 1, 2014.

	Pro forma year ended
	December 31,
	2015			2014
	(Unaudited)			(Unaudited)
Net sales	$	214,953		$	171,038
Net loss	(184,296		)	(3,699		)
Basic and diluted earnings per share	(0.30		)	(0.01		)

The unaudited pro forma results do not include any anticipated cost savings or other effects of future integration efforts. Unaudited pro forma amounts are not necessarily indicative of results had the 2015 acquisition occurred on January 1, 2014.

(c) Acquisition of EnSync, Inc.

On April 17, 2015, the Company and EnSync, Inc. (formerly known as ZBB Energy Corporation) (“ENS”), a Wisconsin corporation, entered into a Securities Purchase Agreement pursuant to which ENS will issue and sell to the Group for an aggregate cash purchase price of $33,390 of (i) 8,000,000 shares of ENS’s common stock based on a purchase price per common share of $0.6678 (the “Purchased Common Stock”) and (ii) 28,048 shares of the ENS’s convertible preferred stock (the “Convertible Preferred Stock”) which are convertible into an aggregate of 42,000,000 shares of common stock, representing a purchase price of $0.6678 per common stock on an as-if converted basis. The Convertible Preferred Stock will be convertible over a four-year period with 25% becoming convertible in each of the next four years if the Company meets certain conditions relating to the Company’s purchases of minimum megawatt of solar related products from ENS in each of the next four years as set out in the Securities Purchase Agreement. The purchase prices of the products are not fixed or determinable in the agreements, but ENS shall not at any time sell a lower quantity of the products under similar terms and conditions to other buyers at prices below those provided to the Company. The conversion is subject to adjustment for stock splits, stock dividends, and other designated capital events. ENS also entitles the Company to acquire 50,000,000 shares of ENS’s common stock (the “Warrant”) for an aggregate amount of $36,729, or $0.7346 per share, subject to adjustment for stock splits, stock dividends, and other designated capital transactions. The consummation of the Securities Purchase Agreement is subject to certain closing conditions.

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ENS develops, licenses, and manufactures innovative energy management systems solutions serving the commercial and industrial building utility and off-grid markets.

On July 13, 2015, all closing conditions relating to the Securities Purchases Agreement were met and the Purchased Common Stock, Convertible Preferred Stock and Warrant were issued to the Company. The Purchased Common Stock represents approximately 16.8% of the outstanding common stock of ENS as at July 13, 2015. Additionally, assuming the full conversion of the Convertible Preferred Stock (and that no other shares of common stock of ENS are issued), the Company would own greater than a majority of the outstanding common stock of ENS.

The Company also entered into a supply agreement with ENS pursuant to which ENS will sell and the Company will purchase certain products offered by ENS from time to time, including energy storage systems for solar projects (the “Supply Agreement”). Convertibility of the Convertible Preferred Stock is dependent upon the Company making purchases of and payments for energy storage systems under the Supply Agreement as follows: the first one-fourth (the “Series C-1 Preferred Stock”) of the Convertible Preferred Stock only become convertible upon the receipt of final payment for 5 megawatts (“MW”) that are purchased by the Company in accordance with the Supply Agreement; the second one-fourth (the “Series C-2 Preferred Stock”) only become convertible upon the receipt of final payment for an aggregate of 15 MW worth of the Supply Agreement; the third one-fourth (the “Series C-3 Preferred Stock”) only become convertible upon the receipt of final payment for an aggregate of 25 MW worth of the Supply Agreement; and the last one fourth (the “Series C-4 Preferred Stock”) only become convertible upon the receipt of final payment for an aggregate of 40 MW worth of the Supply Agreement. If the Company complies with the provisions of the Supply Agreement, it will make sufficient purchases for each tranche of the Convertible Preferred Stock to vest and become convertible over the next four years. However, the Convertible Preferred Stock will become convertible at any time when the relevant payments are received by ENS for the specified purchases, even if the payments are made later or earlier than the schedule set out in the Supply Agreement. As of December 31, 2015, there is no any purchase made by the Group under the Supply Agreement and therefore no Convertible Preferred Stock could be converted into the Common Stock of ENS.

The Convertible Preferred Stock possesses no voting rights except as required by law or for certain matters specified in the agreement. The Convertible Preferred Stock are perpetual, are not eligible for dividends, and are not redeemable. Besides, so long as any shares of Convertible Preferred Stock are outstanding, ENS may not pay dividends on its common stock and may not redeem more than $100 in common stock per year. The Convertible Preferred Stock has a liquidation preference equal to the greater of $28,048 and the distribution of the entire assets on an as-converted basis.

The Warrant vests and becomes exercisable once the Group purchases and pays for 40 MW of the Supply Agreement, and will not vest or become exercisable if those purchases and payments do not occur before the termination of the Warrant, which will occur, whether the Warrant has vested or not, on July 13, 2019. Prior to exercise, the Warrant provides the Company with no voting rights. The Warrant may not be partially exercised. As the closing price of ENS’s common stock at December 31, 2015 was below the exercise price of the Warrant, the Warrant was out-of-the-money at that date.

In connection with the Securities Purchase Agreement, the Company entered into a governance agreement with ENS (the “Governance Agreement”). Under the Governance Agreement, the Company is entitled to nominate one director to the board of directors of ENS for so long as the Company holds at least 10,000 convertible preferred shares or 25 million shares of common stock or common stock equivalents (the “Requisite Shares”). Additionally, for so long as the Company holds the Requisite Shares (1) following the time at which the Series C-2 Preferred Stock shall have become convertible in full, the Group shall be entitled to nominate a total of two directors and (2) following the time at which the Series C-3 Preferred Stock shall have become convertible in full, the Company shall be entitled to nominate a total of three directors. Provided in no event shall the Company be entitled to nominate a number of directors to the Board that would represent a percentage of the Board greater than the percentage determined by dividing the number of Common Stock Equivalents held by the Company by the sum of (A) the total shares of ENS’s Common Stock outstanding and (B) the number of shares of Common Stock into which the Preferred Stock held by the Company is convertible.

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The Group accounts for the investment in the Purchased Common Stock under the equity method with balances recorded under Investment in an affiliate on the consolidated balance sheet. The Group includes its proportionate share of net earnings or loss attributable to common stockholders under loss on investment in an affiliate in the consolidated statements of operations (See Note 13 - Investment in an affiliate). The Group records the investment in the Convertible Preferred Stock at cost less provision for permanent decline in value under Investment in an affiliate on the consolidated balance sheet. The Group accounts for the Warrant as a derivative asset at fair value which is included in Derivative asset, noncurrent on the consolidated balance sheet. The derivative asset was initially recorded at its fair value of $16,947. The decrease in fair value of $14,619 was recorded under Other income (expenses) -Change in fair value of derivative asset/liability in the consolidated statement of operations for the year ended December 31, 2015. The total consideration of $33,390 less the fair value of warrants as of July 13, 2015 was allocated, based on relative fair value, between the investments in the Purchased Common Stock and in the Convertible Preferred Stock, which were initially recorded at $3,244 and $13,199, respectively.

4. Deconsolidation of SGT

In November 2013, the board of directors of Solar Green Technology S.P.A. (“SGT”) approved a voluntary plan for liquidation. On December 30, 2013, the board of directors of SGT appointed a liquidator. Under Italian regulations, the liquidation process was administered by the liquidator and the Company did not have the ability to exercise influence over SGT. As a result of these actions, the Company deconsolidated SGT on December 30, 2013 when the Company ceased to have a controlling financial interest in SGT. The fair value of the Company’s retained investment in SGT was zero as of December 31, 2013.

5. Restricted cash

At December 31, 2015 and December 31, 2014, the Group had restricted bank deposits of $83,191 and $337 respectively. The restricted bank deposits as at December 31, 2015 represents guarantee deposits, which primarily include reserves of $34,286 for bank acceptance notes issued by the Group to suppliers with maturity period of 6 months, reserves of $689 for letters of credit issued by the Group to suppliers and reserves of $48,192 for short term loans of RMB312 million from PRC commercial banks. Subsequently, the restricted cash of $46,312 was released to the Group since the guaranteed loan was repaid on January 4, 2016.

6. Short-term investments

In November 2014, the Group invested $27,354 (equivalent to RMB170 million) in two financial products managed by banks in the PRC. The investments were both principal protected with estimated but not guaranteed return rate of 4.5% and 5% per annum respectively. One financial product of $19,309 (equivalent to RMB120 million), was pledged as security deposit for a one-year short term loan of $5,506 (equivalent to RMB35 million) borrowed from the same PRC bank in December 2014. Both of the investments were redeemed in full on maturity date during the year ended December 31, 2015, and the fund was released to the Group’s bank accounts upon the maturity of the investments. The total investment income was $488 and $144 for the years ended December 31, 2015 and 2014 respectively and was recorded as interest income.

7. Accounts Receivable

Accounts receivable, current and non-current, mainly represent amounts due from customers for 1) sales of Solar PV projects; 2) rendering of EPC services; 3) supply of electricity under power supply agreements (“PPA”); and 4) sales of solar PV related components.

The allowance for doubtful accounts is provided against gross accounts receivable balances based on the Group’s best estimate of the amount of probable credit losses in the Group’s accounts receivable. The Group grants credit terms to credit-worthy customers. Terms vary per contract terms and range from 30 to 90 days. Contractually, the Group may charge interest for extended payment terms and require collateral. The Group regularly monitors and assesses the risk of not collecting amounts owed by customers. This evaluation is based upon a variety of factors, including an analysis of amounts current and past due along with relevant history and facts particular to the customer. The Group does not have any off-balance-sheet credit exposure related to its customers.

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The movements of allowance for doubtful accounts are as follows:

	2015			2014			2013
Balance as at January 1	$	766		$	5,887		$	393
Addition	36,468			—			9,303
Written off	(616		)	(2,142		)	(3,809		)
Written back	(65		)	(2,979		)	—
Balance as at December 31	$	36,553		$	766		$	5,887

The ageing of accounts receivable as of December 31, 2015 and 2014, prepared based on credit period offered, consisted of the followings:

	December 31, 2015							December 31, 2014
	Gross		Allowance			Net		Gross		Allowance			Net
Current	26,054		(60		)	25,994		22,670		(16		)	22,654
0-90 days past due	65,737		(22,664		)	43,073		—		—			—
91-180 days past due	3,488		—			3,488		—		—			—
181-365 days past due	582		—			582		—		—			—
over 1 year past due	14,075		(13,829		)	246		750		(750		)	—
Total	$	109,936	$	(36,553	)	$	73,383	$	23,420	$	(766	)	$	22,654

Included in the current receivable balances arising from EPC services as at December 31, 2015 were $12,964 due from Xinyu Realforce Energy Co., Ltd. (“Realforce”). In the second half of 2014, the Group entered into an EPC contract with Realforce, a customer in the PRC, to construct a 21MW rooftop PV station. The construction of the PV station was completed prior to December 31, 2014. In April 2015, Realforce entered into a sales and leaseback arrangement with the Group for the purpose of settling part of the outstanding receivable arising from the EPC contract. At that time, the outstanding receivable balances due from Realforce amounted to $23,770. Pursuant to the sales and leaseback arrangement, Realforce sold the Group certain solar PV components installed in the 21MW rooftop PV station at their fair value of $10,806 and immediately leased them back over a 10-year period with annual interest rate of 10% under a finance lease contract. As a result of the above arrangement, the Group reduced the receivable balance due from Realforce by the fair value of the solar PV components of $10,806 and recognized a finance lease receivable of $10,806 due from Realforce. As of December 31, 2015, $712 and $9,952 were recorded as current and noncurrent finance lease receivables respectively. No gain or loss was recognized in the consolidated statement of operation in relation to the above settlement through sales and leaseback arrangement. As at December 31, 2015, accounts receivable balances due from Realforce amounted to $12,964. 100% equity interests in Realforce were pledged to the Group to secure its repayment obligations under the finance lease contract and the outstanding accounts receivable balances. On February 23, 2016, the Group and Realforce has reached another sales and leaseback arrangement to settle the outstanding receivable of $12,350.

As of December 31, 2015, bad debt allowance of $35,628 and $925 had been recognized for the accounts receivable of $75,950 arose from EPC service revenue and of $33,986 arose from other revenues respectively on the basis of their expected recoverable amount of these receivables. Corresponding constructed PV systems have been pledged to the Group to secure the customers’ payment obligation pursuant to the EPC contracts.

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8. Inventories

Inventories consisted of the following:

	December 31,		December 31,
	2015		2014
Raw materials	1,740		—
Goods in Transit	3,354		—
Finished goods	$	22,151	$	6,975
Total	$	27,245	$	6,975

In 2015, 2014 and 2013, inventories were written down by $2,493, nil and nil, respectively, to reflect the lower of cost or market price.

9. Project Assets

As of December 31, 2015, project assets, current and non-current, mainly consist of the SEF development across U.S.A., United Kingdom, Japan and the PRC, with the amount of $41,326 (2014: $48,520), $9,193 (2014: $14,000), $21,132 (2014: $12,826) and $24,075 (2014: 19,849) respectively.

Project assets consist of the following:

	December 31,		December 31,
	2015		2014
Under development-Company as project owner	$	72,405	$	75,346
Under development-Company expected to be project owner upon the completion of construction*	23,321		19,849
Total project assets	95,726		95,195
Current, net of impairment loss	$	35,355	$	73,930
Noncurrent	$	60,371	$	21,265

* All of the projects costs under this category were recorded as project assets, noncurrent.

Project assets under development-Company as project owner are primarily related to the following major projects:

Solar Mountain Creek Parent LLC

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The carrying amount of this project amounted to $17,239 and $17,864, net of impairment of $3,084 and $2,055 as of December 31, 2015 and December 31, 2014 respectively.

Pursuant to a letter of intent dated November 10, 2014 and a sales agreement dated December 31, 2014, the Group agreed to sell the PV solar systems of this project upon its completion of construction at a consideration of $17,864. In July 2015, the Group entered into a supplemental agreement to compensate the buyer up to $625 for the delay of final completion. The compensation would be deducted from the consideration. Management assessed the recoverable amounts of this project asset and as a result the carrying amount of this project asset was written down to the recoverable amount of $17,239 and $17,864 as of December 31, 2015 and December 31, 2014. The estimate of recoverable amount of this project asset was based on this asset’s fair value less costs of disposal, and the fair value was determined by reference to the quoted price from buyer. The Group accounted for this sales transaction using the deposit method under ASC 360-20, Real Estate Accounting, and did not recognize any revenue and profit for this sales transaction for the year ended December 31, 2015 and December 31, 2014 as certain closing conditions as specified in the sales agreement had not been met. The management expected that the sales would be consummated before December 31, 2016 and has recorded the carrying amount of the project of $17,239 as Project assets, current as of December 31, 2015.

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RE Capital Projects

In April 2015, the Group entered into an interest purchase agreement with RE Capital Pte. Ltd. to acquire its 100% membership interests in seventeen PV project companies in Japan (“RE Capital companies”) at a consideration of $8,800 consisting of $3,300 cash and $5,500 worth of the Company’s common stock (See Note 23 — Stockholders’ Equity). RE Capital companies’ total assets and liabilities only included land and pre-contract cost related to solar projects of 52MWs in total. Additionally, RE Capital companies had not entered into any power generation contracts with any utility companies. As a result, Management concluded that the acquisition of 100% managing member interests in RE Capital companies did not meet the definition of a business combination as the primary inputs (the solar plant, which had yet to be constructed) were not available on the acquisition date. The management expected that the sales of projects owned by RE Capital companies wouldn’t be consummated before December 31, 2016. The costs incurred of $8,092 in total were included and recorded as Project assets, noncurrent, as of December 31, 2015.

Sukagawa Project

In 2014, the Group acquired solar PV assets, primarily including land title and pre-contract costs relating to a solar PV system of 25MW in Japan. The carrying amount of this project amounted to $4,989 and $4,520, net of impairment of $1,177 and nil as of December 31, 2015 and December 31, 2014, respectively. In 2015, the Group changed its development strategy on such large target capacity project and agreed to sell these assets before further development to a third party pursuant to a sales agreement dated in 2015. The sales had not been consummated as of December 31, 2015 as certain closing conditions set forth in the sales agreement had not been met. The Group assessed their recoverable amounts and as a result the carrying amount of this project asset was written down to the recoverable amount by $1,177 which is recorded as cost of goods sold in the consolidated statement of operations for the year ended December 31, 2015. The estimate of recoverable amount of this project asset was based on this asset’s fair value less costs of disposal, and the fair value was determined by reference to the quoted price from third party. The Management expected that the sales of this project would be consummated before December 31, 2016 and has recorded the carrying amount of the project of $4,989 as Project assets, current, as of December 31, 2015.

Calwaii Projects

The carrying amount of these projects amounted to $24,086 and $23,943 as of December 31, 2015 and December 31, 2014 respectively.

In 2014, the Group acquired solar PV assets, primarily including land use right and pre-contract costs relating to forty-three solar PV systems owned by Calwaii Power Holdings, LLC (“Calwaii”). During the year ended December 31, 2015, sales of four solar PV systems were consummated (see below). The Management expected that the sales of the completed PV systems would not be consummated before December 31, 2016 and has recorded the carrying amount of these projects of $24,086 as Project assets, noncurrent, as of December 31, 2015.

Other Projects

In addition to the above significant projects, the Group’s project assets consists of a number of individually insignificant projects of $17,999 in aggregate as of December 31, 2015, of which $8,955 of project assets were under construction, $4,171 of project assets had been completed for construction and $4,873 of project assets (consisted of permits and other pre-development costs) without major construction work being commenced.

During the year ended December 31, 2015, the Group recognized sales revenue for the following projects:

Calwaii Projects

Pursuant to a sales agreement dated September 18, 2014, the Group agreed to sell four out of the thirty-nine PV solar systems of Calwaii’s project upon their completion of construction at a consideration of $5,860. The Group accounted for this sales transaction under ASC 360-20, Real Estate Accounting, and did not recognize any revenue and profit for this transaction for the year ended December 31, 2014 as certain closing conditions, including but not limited to grid connection specified in the sales agreement, had not been met. During the year ended December 31, 2015, all closing conditions had been met and the Group recognized revenue and cost for these solar projects of $5,813 and $6,051, respectively. The Group initiated a dispute resolution process to request the settlement of the remaining receivable of $2,099 pursuant to the sales agreement. After the settlement negotiation, the Group agreed to waive the receivable of $616 in exchange of Hi-Kilowatts’ settlement of the remaining balance in November 2015. The waiver of $616 was included in the provision and written-off for bad debts in 2015.

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Projects in United Kingdom

In 2015, the Group entered into three shares sales agreements to transfer the 100% outstanding share of Solar Park Development 2 Ltd, Solar Park Development 3 Ltd, and Solar Park Development 4 Ltd at consideration of $24,142 (equivalent to GBP15,831), $16,061 (equivalent to GBP10,532) and $10,141 (equivalent to GBP6,650), respectively, which owned grid-connected solar projects developed by the Group in United Kingdom, with a total capacity of 30.5 MW. The Group accounted for the sales transaction under ASC 360-20, Real Estate Accounting. As of December 31, 2015, all closing conditions specified in the shares sales agreement had been met. Accordingly, the Group recognized revenue and costs for the three solar projects of $50,345 and 50,506, respectively during the year ended December 31, 2015.

Beaver Run Project

In 2014, the Group acquired solar PV assets, primarily including land use right and pre-contract costs relating to a solar PV project of 9.9 MW owned by Beaver Run Solar Farm, LLC in New Jersey. In December 2015, the Group entered into a sales agreement to transfer a grid-connected solar project of 9.9 MW developed by the Group at a consideration of $21,281. The Group accounted for this sales transaction under ASC 360-20, Real Estate Accounting. In December 2015, all closing conditions specified in the agreement had been met and the Group recognized revenue and cost for this solar project of $21,281 and 25,841, respectively during the year ended December 31, 2015.

Project assets under development-Company expected to be project owner upon completion of construction are related to the following projects:

In 2014 and 2015, the Group entered into two and four EPC contracts, respectively, with third-party projects owners under arrangements pursuant to which there was mutual understanding between the Group and the respective project owners that the title and ownership of the PV solar power systems would be transferred to the Group upon the completion of construction and grid connection of the PV systems under the EPC contracts by the Group. The PV solar systems were pledged to the Group, as part of the EPC contract terms, to secure the expected title transfer upon grid connection.

Unlike other EPC contracts which are accounted for in accordance with ASC 605, no revenue is recognized for these contracts as no revenue is expected to be realized or earned from the contracts, which were signed to facilitate the construction of the related solar PV systems by the Group and to secure the Group’s financial interests in these projects through the pledge of the related solar PV systems. Given the substance of the transactions, the mutual understanding reached between the Group and the third-party project owners and the remote possibility of not obtaining the legal title upon grid connection, the Group accounts for these projects as owned and record the costs incurred under Project assets on the consolidated balance sheets. Based on the Group’s intention to sell or hold for own use, the projects costs incurred for these contracts are presented as operating activities or investing activities respectively in the consolidated statements of cash flows.

In 2015, the Group had entered pre-acquisition agreements with each of the project owners to secure the future transfer of the titles and ownerships upon the completion of construction and grid connection of the related PV systems. As of December 31, 2015, the Group has obtained the ownership of one grid-connected project and reclassified the related project asset costs incurred of $10,181 to Property, plant and equipment in the consolidated balance sheet.

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10. Prepaid expenses and other current assets

	December 31, 2015		December 31, 2014
Value-added tax recoverable	$	10,331	$	3,969
Receivable from the Group’s executives and employees, net of provision of $3,233 and nil, respectively (a)	11,966		—
Deposit and prepayment for acquisitions, net of provision of $3,518 and nil, respectively (b)	8,426		5,250
Other deposit and prepayment (c)	7,626		423
Other receivable	1,610		—
Others, net of provision of $249 and $648, respectively	1,238		1,288
Total of prepaid expenses and other current assets	$	41,197	$	10,930

(a) Receivable from the Group’s executives and employees

Pursuant to the PRC tax regulations, the income derived from the exercise of the share options and RSU (See Note 24-Stock-based Compensation) is subject to individual income tax (“IIT”), which should be withheld by the Group from these executives and employees for payment to the PRC tax authorities. As of December 31, 2015 and 2014, the Group had an outstanding receivable, net of provision, of $11,966 and nil from the executives and employees and the Group had payable to the PRC tax authorities of US$15,199 and nil in relation to the IIT liabilities arising from the exercise of share options and RSU by these executives and employees. During the year ended December 31, 2015, the Group recognized a full provision for doubtful recoveries of such receivable of $3,233 due from a former executive. The provision is included in impairment charges in the consolidated statements of operations.

(b) Deposit and prepayment for acquisitions

Other deposit and prepayment primarily include a deposit of $4,630 (equivalent to RMB30 million) paid to acquire 95.68% of the shares in Guo Dian Nai Lun Te Zuo Qi Photovoltaic Power Generation LLC (“Guo Dian”), prepayment of $3,507 made to acquire All-Zip Roofing System Group Co., Ltd., and prepayment of $2,695 made to acquire a project in Japan. All these acquisitions had not been closed as of December 31, 2015. The Group is negotiating the cancellation of the acquisition of Guo Dian with its sellers and no final agreement is reached as of the date of issuance of these financial statements. The Group recognized a provision of $3,241 for doubtful recoveries of the receivable in relation to the acquisition of Guo Dian during the year ended December 31, 2015 which is included in impairment charges in the consolidated statements of operations.

(c) Other deposit and prepayment

Other deposit and prepayment primarily represents the prepayment of $2,923 made to vendors to purchase PV modules and rental deposits of $2,996 and other deposits as at December 31, 2015.

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11. Finance lease receivables

During the year ended December 31, 2015, the Group entered into finance lease contracts with contract value of $9,216 for leasing those Underlying PV Products to third-party PV developers through the on-line platform owned by Solar Energy (see Note 1— Description of Business). The Group also entered into several sales and leaseback arrangements with total contract value of $23,284 with the third parties. These leases are accounted for as finance lease.

Finance lease receivables are as follows:

	December 31,			December 31,
	2015			2014
Minimum lease payments receivable	$	42,526		$	—
Unearned income	(12,204		)	—
Net finance lease receivables	$	30,322		$	—
Current	$	12,518		$	—
Noncurrent	17,804			—

As at December 31, 2015, future maturities of minimum lease payments receivable are as follows

	USD
2016	12,518
2017	1,653
2018	1,620
2019	1,750
2020	1,747
Thereafter	11,034
	$	30,322

During the year ended December 31, 2015, the Group earned total interest income of $1,507 for these finance lease contracts.

12. Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	December 31,			December 31,
	2015			2014
Photovoltaic (“PV”) solar systems	$	124,326		$	110,553
Furniture, fixtures and equipment	1,170			302
Automobile	314			75
Computers	1,806			1,296
Leasehold improvements	114			4
	127,730			112,230
Less: accumulated depreciation	(10,478		)	(5,792		)
	117,252			106,438
Construction in progress	8,541			—
	$	125,793		$	106,438

The cost of PV solar system include costs of acquiring permits, construction fees of PV solar system, costs of items installed in the PV solar system including solar panels, and other costs incurred that are directly attributable to getting the PV solar system ready for its intended use of grid connection with customer for supply of electricity. Depreciation of property, plant and equipment was $4,686, $1,267 and $1,283 for the years ended December 31, 2015, 2014 and 2013, respectively.

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In 2009, the Group capitalized a PV solar system relating to the Aerojet 1 solar development project along with the associated financing obligation, recorded under financing and capital lease obligations, net of current portion, in the Consolidated Balance Sheets. Due to certain guarantee arrangements as disclosed in Note 29 — Commitments and Contingencies, the Group will continue to record this PV solar system in property, plant and equipment with its associated financing obligation in Financing and capital lease obligations as long as it maintains its continuing involvement with this project. The income and expenses relating to the underlying operation of the Aerojet 1 solar development project are recorded in the Consolidated Statement of Operations.

Pursuant to the share purchase agreement entered between the Group and TBEA Xinjiang Sunoasis Co., Ltd. (“TBEA Sunoasis”) regarding the acquisition of Xinte in 2014, 100% equity interests in Xinte were pledged to TBEA Sunoasis to secure purchase consideration and obligation arising from EPC service provided by TBEA Sunoasis. As of December 31, 2015, the carrying amount of one PV solar system owned by Xinte is $24,602.

13. Investment in an affiliate

Investment in an affiliate represent investment in ENS, which consists of investment in Purchased Common Stock and Convertible Preferred Stock of ENS (See Note 3 — Business Acquisitions). During the year ended December 31, 2015, provision for decline in value of $1,090, which is considered to be other-than-temporary, was recorded under loss on investment in an affiliate in the consolidated statement of operations. As at December 31, 2015, the carrying amounts of investments in Purchased Common Stock and Convertible Preferred Stock were $1,841 and $12,109 respectively.

Summarized unaudited financial information of ENS as of and for the year ended December 31, 2015 follows:

	December 31,
	2015
	(unaudited)
Financial position
Current assets	37,857
Property, plant, and equipment, net	3,795
Other assets	3,143
Total assets	$	44,795
Current liabilities	3,493
Long-term debt	14,178
Total liabilities	17,671
Stockholders’ equity	27,124
Total liabilities and stockholders’ equity	$	44,795

	July 1, 2015
	through
	December 31,
	2015*
	(unaudited)
Sales	$	655
Net loss	(8,352		)
Net loss attributed to noncontrolling interest	(149		)
Net loss attributed to the shareholders of ENS	$	(8,203	)
Preferred stock dividend	(147		)
Net loss attribute to common stockholders of ENS	$	(8,350	)
Net loss attributable to the Company	$	(1,403	)

* The results of ENS during the period from July 1, 2015 to July 13, 2015, the date of acquisition of the Purchased Common Stock is considered to be immaterial.

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The difference between the carrying value of the Company’s investment in the Purchased Common Stock and the amount of the underlying equity in the net assets of ENS is as follows:

	December 31,
	2015
Underlying equity in net assets of ENS (16.8% of net assets of ENS)	$	4,285
Difference between the cost of investment and the underlying equity in net assets	(2,444		)
Investment in Purchased Common Stock	$	1,841

14. Fair value measurement

The following table presents the carrying amounts and estimated fair values of the Group’s financial instruments at December 31, 2015 and 2014. Fair value is defined as the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

	December 31, 2015				December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	82,124	$	82,124	$	156,540	$	156,540
Restricted cash and bank deposits with maturity over three months	83,191		83,191		9,349		9,349
Accounts and notes receivable	90,786		90,786		33,755		33,755
Short-term investments	—		—		27,354		27,354
Other receivable	3,139		3,139		—		—
Finance lease receivable	30,322		30,322		—		—
Investment in an affiliate	13,950		15,149		—		—
Derivative asset	2,328		2,328		—		—
Total assets	305,840		307,039		226,998		226,998
Financial liabilities:
Borrowings	164,851		164,851		48,286		48,286
Accounts and notes payable	137,232		137,232		137,635		137,635
Other liabilities	73,436		73,436		60,905		60,905
Convertible bonds	54,062		54,315		32,575		39,423
Financing and capital lease obligations	8,796		8,796		10,092		10,092
Total liabilities	$	438,377	$	438,630	$	289,493	$	296,341

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There were no assets or liabilities measured at fair value on a non-recurring basis as of December 31, 2015 and December 31, 2014. The following method and assumptions were used to estimate the fair value as at December 31, 2015 and December 31, 2014:

Cash and cash equivalents, restricted cash, accounts receivable and payable, short term investments, bank deposits with maturity over three months, finance lease receivables, current, short term borrowings, accrued liabilities, advance from customers and other current liabilities — costs approximates fair value because of the short maturity period.

Notes receivable, current, and notes receivable, noncurrent — The fair value of Notes receivable, current were based on anticipated cash flows, which approximates carrying value, and were classified in Level 2 of the fair value hierarchy. The fair value of Notes receivable, noncurrent were classified in Level 3 of the fair value hierarchy. The Group used multiple techniques, including an income approach applying discounted cash flows approach, to measure the fair value using Level 3 inputs; the results of each technique have been reasonably weighted based upon management’s judgment applying qualitative considerations to determine the fair value at the measurement date. The fair value of notes receivable is determined to approximate its carrying value.

Convertible bonds. The estimated fair value was $54,315 and $39,423 as of December 31, 2015 and December 31, 2014. The fair value of convertible bonds was classified in Level 2 of the fair value hierarchy. The Group determines the fair value using binomial model with significant input on prices and votes observable in the market.

Investment in an affiliate. Investment in an affiliate consists of Purchased Common Stock and Convertible Preferred Stock of ENS with carrying amount of $1,841 and $12,109 respectively. The fair value of Purchased Common Stock was classified in Level 1 of the fair value hierarchy and its fair value was determined as $3,040 based on the closing market price of common stock of ENS as at December 31, 2015. The estimated fair value of Convertible Preferred Stock was $12,109 as of December 31, 2015. The fair value of Convertible Preferred Stock of ENS was classified in Level 3 of the fair value hierarchy in which management has used at least one significant unobservable input in the valuation model. The fair value of the Convertible Preferred Stock of ENS is determined by the fair value of the total common stock with a discount for Lack of Marketability Discount (“LOMD”). The LOMD as of the Valuation Date is derived by reference to put option based on Black-Scholes Option Pricing Model, with significant inputs on the volatility and expected terms of each tranche of the Preferred Stock unobservable in the market. The volatility is determined by the average standard derivation of the comparable companies applicable over a period with length commensurate to the expected term of the Convertible Preferred Stock, and the expected term of each tranche of the Convertible Preferred Stock is based on management’s estimation of the conversion schedule. Significant variance of the above-mentioned inputs would result in a significantly lower or higher fair value measurement.

Finance lease receivables, noncurrent, and other noncurrent liabilities. The Group used discounted cash flow approach to determine the fair value, which was classified in Level 3 of the fair value hierarchy. The fair value of finance lease receivables, noncurrent, and other noncurrent liabilities is determined to approximate its carrying value.

The derivative asset relating to the call option as discussed in Note 3- Business Acquisitions was classified in Level 3 of the fair value hierarchy in which management has used at least one significant unobservable input in the valuation model. The fair value of the derivative asset was $420 and nil at the grant date of May 28, 2015 and December 31, 2015 respectively, which were recorded as other financial assets in the Consolidated Balance Sheet as of December 31, 2015. The Group determines the fair value using binomial model with significant input on the fair value of the remaining 20% equity interest of Solar Juice and volatility unobservable in the market. The volatility is determined by the average standard derivation of the comparable companies applicable over a time period corresponding to the remaining life of the call option. Significant increases or decreases in this unobservable input would result in a significantly lower or higher fair value measurement.

The derivative asset relating to the Warrant to acquire ENS’s common stock as discussed in Note 13- Investment in an affiliate was classified in Level 3 of the fair value hierarchy in which management has used at least one significant unobservable input in the valuation model. The fair value of the derivative asset was $2,328 on December 31, 2015, which were recorded as Derivative asset in the Consolidated Balance Sheet as of December 31, 2015. Loss arising from change in fair value of $14,619 was recorded as Other income (expense)-Change in market value of derivative asset/liability in the consolidated statement of operations for the year ended December 31, 2015. The Group determines the fair value of the Warrant using binomial model with significant inputs on the vesting schedule and volatility unobservable in the market. The vesting schedule of the Warrant is estimated by the Management based on expected timetable to fulfill the vesting condition. The volatility is determined by the average standard derivation of the comparable companies applicable over a period with length commensurate to the time to maturity of the Warrant as of the Valuation Date. Significant variance of the above-mentioned inputs would result in a significantly lower or higher fair value measurement.

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The following table represents a reconciliation from opening balance to the closing balance for recurring fair value measurements categorized within Level 3 of the fair value hierarchy during the year ended December 31, 2015 and 2014:

	Derivative asset		Derivative asset
	relating to the call		relating to the		Derivative
	option		Warrant		liability
December 31, 2013	—		—		—
Purchase and issuances	—		—		(983	)
Change in fair value	—		—		972
December 31, 2014	—		—		(11	)
Purchase and issuances	420		16,947		—
Change in fair value	(420	)	(14,619	)	11
December 31, 2015	—		2,328		—

There is no recurring fair value measurement categorized within level 3 of the fair value hierarchy as at January 1, 2013 and for the year ended December 31, 2013.

The Group did not have any derivatives valued using Level 1 and Level 2 inputs as of December 31, 2015 and December 31, 2014. If a fair-value measurement reflects inputs at multiple levels within the fair value hierarchy, the fair-value measurement is characterized based upon the lowest level input. Recurring fair-value measurements are performed for the derivative assets. The Group does not have any derivative asset that reduce risk associated with hedging exposure and has not designated the derivative asset as a hedge instrument.

There have been no transfers between Level 1, Level 2, or Level 3 categories.

15. Notes payable

Notes payable represents bank acceptance notes issued to third party suppliers. These notes payable are due within six months from the date of issuance.

16. Accrued liabilities

Accrued liabilities are as follows:

	December 31, 2015		December 31, 2014
Other tax payables	$	7,961	$	9,683
Accrued expense	13,521		430
Other payable	3,064		527
Other accrual and payables	2,195		648
Total accrued liabilities	$	26,741	$	11,288

Other tax payables primarily represents value added tax payables of $6,137 (2014: $9,235) related to the EPC service revenue.

17. Advance from customers

The Group requires its customers to make deposits before sale of PV projects. Such payments are recorded as advances from customers in the Group’s consolidated financial statements, until the sales completed.

The balance as at December 31, 2015 consists of the advances received from the buyers of Mountain Creek project of $14,291 (2014:$14,291) (See Note 9—Project Assets), Sukagawa project of $2,494 (2014: nil) (See Note 9—Project Assets) and others of $2,908 (2014: $3,399).

18. Short term borrowings and long term borrowings

	December 31, 2015		December 31, 2014
Bank Loan	$	103,223	$	48,286
Loan financing through on-line platform	56,898		—
Other short term borrowings	279		—
Total short term borrowings	160,400		48,286
Other long term borrowings	829		—
Loan financing through on-line platform	3,622		—
Total long term borrowings	4,451		—
Total borrowings	$	164,851	$	48,286

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As of December 31, 2015, bank loan primarily represents $48,164 short term loan borrowed from China Mingsheng Bank (“CMB”) at an interest rate of 4.5675% per annum and $46,312 short term loan borrowed from Bank of Suzhou (“BoS”) at an interest rate of 6.6% per annum. Bank deposits with equivalent amount of bank loan were pledged as the loan security deposit. The Group repaid the loan of $46,312 borrowed from CMB and the loan of $46,312 borrowed from BoS in January 2016.

The Group’s subsidiary, Solar Juice, entered into loan agreements with Westpac Bank, whereby Westpac Bank provided Solar Juice loans of $4,106 (equivalent to AUD5,635) at fixed interest rates ranging from 2.27% to 5.35%. These loans will mature from February 2, 2016 to April 29, 2016. Also, Solar Juice has a short term borrowing from Solar Juice’s minority shareholders of $278 (equivalent to AUD382). The loan was non-interest bearing and unsecured with no specific repayment term.

As discussed in Note 1 — Description of Business, the Group raised interest bearing funds from individual investors through the on-line platform of Solar Energy. Individual investors, who need to register as a member on the platform, provided funds through subscription for certain on-line products launched by the Group. Each on-line products launched on the platform are set with a targeted amount of funds in renminbi to be raised for that product, which is divided into units (“Investment Unit”) with unit value ranging from RMB16.7 to RMB300,000. Individual investors may subscribe for Investment Unit of these on-line products which are generally structured in the way of using the funds from individual investors to purchase solar module or PV related products (“Underlying PV Products”) for leasing to the PV project developers on PV project basis over a specified period. Investments made into each on-line product are subject to lock-up period, which ranges from nil to 1,080 days, depending on the terms of each on-line product. During the lock-up period, the individual investors could not transfer or redeem their subscribed Investment Units. After the lock-up period, individual investors are permitted either to transfer their investments in respect of the principal portion to other investors through the on-line platform or, for substantially all products launched, to request the Group to redeem their subscribed Investments Units (“Redemption Right”) which means that the principal repayment are guaranteed by the Group. Any Investments Units so redeemed by the Group could be put on the on-line platform for re-sale to other investors. Once Investment Units are subscribed and funds are provided, individual investors are guaranteed by the Group with a minimum investment return. During the year ended December 31, 2015, the Group raised funds of $126,099 (RMB817 million) from the individual investors through Solar Energy’s online platform at an interest rates ranging from 5.25% to 11.9% per annum. The Group also offered, from time to time, discount from 5% to 20% on the unit value for Investment Units subscribed by individual investors. Such discount is amortized as interest expense using the effective interest rate method through the end of the lock-up period, which is the earliest date that the Group could be required to repay the unit value in respect of the investment made by individual investors. As of December 31, 2015, outstanding borrowings from individual investors through Solar Energy on-line platform amounted to $60,520 in total, of which $56,898 and $3,622 are recorded as short term borrowings and long term borrowings respectively. The long term borrowings of $1,937 and $1,685 will mature in 2017 and 2018, respectively.

In August 2015, the Group and CEV IV 01 Holdings Limited (“CEV”) entered into a loan agreement, whereby CEV agreed to provide the Group a loan of $1,500 at an interest rate of 10% per annum. Pursuant to the loan agreement, the loan amount should be solely used to finance the daily operation and asset restructure of Convertergy Energy, an affiliate of CEV. The Group has borrowed $548 from CEV and lent Convertergy Energy $853 as of December 31, 2015. Subsequently, other receivable of $853 due from Convertergy Energy and borrowing of $548 due to CEV was offset, the remaining receivable of $305 was waived by the Group pursuant to a mutual agreement on March 24, 2016 which was included in impairment charges for the year ended December 31, 2015.

The average interest rate on short term borrowings was 7.20% and 6.27% per annum in 2015 and 2014, respectively.

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19. Other liabilities:

	December 31,		December 31,
	2015		2014
Derivative liability	$	—	$	11
Due to individual investors	4,887		—
Withholding individual income tax payable (See Note 24)	15,199		—
Other current liabilities	51,293		33,751
Total other current liabilities	71,379		33,762
Other non-current liabilities	421		25,535
Accrued warranty reserve	1,594		1,608
Total other non-current liabilities	2,015		27,143
Total of other liabilities	$	73,394	$	60,905

Amount due to individual investors are related to funds raised through the on-line platform of Solar Energy. From time to time, individual investors may have funds in their members’ accounts without subscribing for any on-line products. Such funds provided to the Group are not entitled to any interest. These non-interest bearing funds are recorded as amount due to individual investors under other current liabilities.

Other liabilities primarily include unpaid purchase consideration of $49,567 and $59,086 for business acquisitions as at December 31, 2015 and 2014 respectively. At December 31, 2015 and 2014, $49,567 and $33,551 were recorded as other current liabilities and nil and $25,535 were recorded as other noncurrent liabilities respectively.

20. Goodwill and Other Intangible Assets

(a) Goodwill

The carrying amount of goodwill is as follows:

	USD
Balance as of December 31, 2014	$	66,045
Acquisition of Solar Juice (Note 3)	8,238
Acquisition of CECEP (Note 3)	1,417
Acquisition of Energiebau	269
Balance as of December 31, 2015	$	75,969

Based on the fair value of the reporting unit which is higher than the carrying amount (including goodwill) as at December 31, 2015 and 2014, step 2 impairment test was not performed and no provision for impairment for goodwill was made.

(b) Other Intangible Assets

Intangible assets consisted of the following:

	Useful Life			Impairment		Accumulated
	(in months)	Gross		Charge		Amortization			Net
As of December 31, 2015
Patent	57	2,700		—		(2,700		)	—
Customer Relationship	120	4,728		—		(274		)	4,454
Website	36	100		—		(28		)	72
		$	7,528			$	(3,002	)	$	4,526

As of December 31, 2014	57	$	2,700	$	—	$	(2,140	)	$	560
Patent		$	2,700	$	—	$	(2,140	)	$	560

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The customer relationship was mainly contributed by the acquisition of Solar Juice (See Note 3 — Business Acquisitions) in May 2015. As customer relationship with their clients was the key driver of the revenue for Solar Juice, which will bring further economic benefit to its business. Therefore, the customer relationship was separately identified as an intangible asset on the acquisition date. The balance will be amortized over the useful life of 10 years.

Amortization expense for other intangible assets was $862, $560 and $571 for the years ended December 31, 2015, 2014 and 2013, respectively.

As of December 31, 2015, the estimated future amortization expense related to other intangible assets is as follows:

	USD
2016	522
2017	522
2018	491
2019	488
2020	471
Thereafter	2,032
	$	4,526

21. Convertible Bonds

In December 2014, the Company entered into three convertible promissory note purchase agreements with Brilliant King Group Limited (“Brilliant King”), Poseidon Sports Limited (“Poseidon”) and Union Sky Holding Group Limited (“Union Sky”), respectively whereby the Company agreed to sell and issue to these three investors convertible promissory notes in an aggregate principal amount of $35,000 which could be converted into 17,500,000 Common Shares at a fixed conversion price of $2 unless adjusted for anti-dilution. The convertible notes bore no interest, and might be partially or wholly converted into shares of the Company’s common stock at any time prior to maturity at the option of the investor. The convertible promissory notes was due and payable on June 11, 2016 and are reclassified as current liabilities as of December 31, 2015.

On June 15, 2015, the Company agreed to issue to Vision Edge Limited (“Vision Edge”) convertible promissory note in an aggregate amount of $20,000 which could be converted into 7,407,410 Common Shares at a fixed conversion price of $2.70 unless adjusted for anti-dilution pursuant to the agreement entered between the Company and Vision Edge. The convertible notes bore no interest, and might be wholly converted into shares of the Company’s common stock at any time prior to maturity at the option of the investor. The commitment date of the convertible promissory note is on June 29, 2015. The convertible promissory note was due and payable on June 29, 2016. Also, as mentioned in Note 22—Stock option, on June 15, 2015, the Company agreed to grant Vision Edge an option to purchase from the Company a total of 7,407,410 shares of the Company’s common stock for an aggregate purchase price of $20,000, or $2.70 per share, prior to December 15, 2015 pursuant to an option agreement. The above instruments issued to Vision Edge on June 15, 2015, including convertible promissory note and stock option, were accounted for as a bundled transaction. The proceeds from the issuance of convertible promissory note were allocated to the two elements based on the relative fair values of the convertible promissory note and the stock options at the time of issuance. There is no beneficial conversion feature in this convertible promissory note because the initial conversion price of US$2.66 per share after the proceeds are allocated to the option is greater than the fair value of the Company’s common stock on the commitment date of June 29, 2015. The convertible promissory note and stock options were initially recorded at $19,705 and $295, respectively, according to the allocation of the total proceeds. The discount of $295 of the convertible promissory note is amortized as interest expense using the effective interest rate method through the earliest demand payment date, i.e. June 29, 2016. The stock option was accounted for as an equity instrument and was recorded within equity.

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22. Stock option

The Company granted warrants to Brilliant King, Poseidon and Union Sky to purchase from the Company a total of 27,500,000 common stock for an aggregate purchase price of $55,000 or $2 per share together with issuance of convertible promissory notes (See Note 21—Convertible Bonds) in December 2014. 20,000,000 shares of option granted to Union Sky was expired on March 15, 2015, the remaining 7,500,000 shares of option could be exercised on or prior to the date of completion of the listing of the Shares on the New York Stock Exchange or the NASDAQ Stock Market, pursuant to the terms of the option agreement and subject to the closing conditions therein. Brilliant King and Poseidon exercised their options and remitted $12,000 and $3,000 to the Company on December 28, 2015, respectively.

In 2014 and 2015, the Company granted Forwin International Financial Holding Limited (Hong Kong) (“Forwin”), Border Dragon Limited (“Boarder Dragon”), Central Able Investments Limited (“Central Able”), Yes Yield Investments Limited (“Yes Yield”) and Vision Edge options to purchase 26,667,410 shares of the Company’s common stock in total at an exercise price of $2.0 and $2.7 per share respectively for an aggregate purchase price of $65,002. All these options expired subsequently except that Yes Yield exercised its option to purchase 3,700,000 shares at a consideration of $10,000 and the payment was made on November 18, 2015 and the Company extended Yes Yield’s right to purchase the remaining 5,560,000 shares to June 30, 2016 pursuant to a supplemental agreement on October 31, 2015.

23. Stockholders’ Equity

(a) Common stock

In the second quarter of 2014, the Company amended its articles of incorporation to increase the authorized shares of common stock from 250,000,000 shares to 1,000,000,000 shares. The following table summarizes the Company’s issuance of common stock in 2015:

		Date of securities
Purchasers	Securities sold	issued	Consideration
Forwin	5,000,000 Shares	January 16, 2015	$10,000, or $2 per Share
Central Able	2,500,000 Shares	January 30, 2015	$5,000, or $2 per Share
CECEP HK (see Note 3)	5,722,977 shares	January 30, 2015	$8,269, or $1.44 per Share
Restricted Stocks, Exercised	18,700,000 Shares 1	March 2, 2015	Nil
Restricted Stocks, Exercised	500,000 Shares 1	March 26, 2015	Nil
Huang Zheng	338,679 Shares 2	June 4, 2015	$726, or $2.14 per Share
RE Capital Pte. Ltd.	2,849,741 Shares 3	June 2, 2015	$5,500 or $1.93 per Share
Solar Juice	14,073,354 Shares 4	June 11, 2015	$15,578 or $1.11 per Share
Yes Yield	9,260,000 Shares	July 1, 2015	$25,000 or $2.70 per Share
Employee options exercise	78,750 Shares	December 2015	$29 or $0.3 to $0.44 per Share
Yes Yield (see Note 22)	3,703,704 Shares	December 31, 2015	$10,000 or $2.7 per Share
Brilliant King (see Note 22)	6,000,000 Shares	December 31, 2015	$12,000 or $2 per Share
Poseidon (see Note 22)	1,500,000 Shares	December 31, 2015	$3,000 or $2 per Share
Repurchase	-10,000 Shares	December 28, 2015	-$20 or $1.98 per Share

Note:

(1) On March 2, 2015 and March 26, 2015, the Company issued Restricted Stock underlying 19,200,000 shares of the Company’s common stock to certain management members, which were exercised in March 2015.

(2) The Company should issue 338,679 shares of Common Stock to Lang Lang, an internationally renowned pianist, as part of the consideration to be brand spokesman for Solarbao within three years. According to Lang Lang’s instruction, the Group directly issued the shares to Huang Zheng, Lang Lang’s agent, on June 4, 2015.

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(3) On June 2, 2015, the Company issued 2,849,741 shares of Common Stock as part of the consideration to acquire all interest in solar PV projects of 30 MW in Japan from RE Capital Pte. Ltd. as described in Note 9 — Project assets.

(4) On June 11, 2015, the Company issued 14,073,354 shares of Common Stock as part of the consideration to acquire the outstanding capital stock of Solar Juice as described in Note 3 — Business Acquisitions.

(b) Noncontrolling Interest

In 2015, loss from continuing operations of $184,798 and $282 was attributable to the stockholders of the Company and noncontrolling interest, respectively. In 2014, loss from continuing operations of $5,196 and nil was attributable to the stockholders of the Company and noncontrolling interest, respectively.

(c) Statutory reserve

Relevant PRC statutory laws and regulation permit payments of dividends by the Company’s subsidiaries in the PRC only out of their retained earnings, if any, as determined in accordance with the PRC accounting standards and regulations.

Under the Law of the PRC on Enterprises with Wholly Owned Foreign Investment, the Company’s subsidiaries in the PRC are required to allocate at least 10% of their after tax profits, after making good of accumulated losses as reported in their PRC statutory financial statements, to the general reserve fund and have the right to discontinue allocations to the general reserve fund if the balance of such reserve has reached 50% of their registered capital. These statutory reserves are not available for distribution to the shareholders (except in liquidation) and may not be transferred in the form of loans, advances, or cash dividend.

For the year ended December 31, 2015 and 2014, $135 and $920 were appropriated from retained earnings and set aside for the statutory reserve by the Company’s subsidiaries in the PRC.

24. Stock-based Compensation

The Company measures stock-based compensation expense for all stock-based compensation awards based on the grant-date fair value and recognizes the cost in the financial statements over the employee requisite service period.

The following table summarizes the consolidated stock-based compensation expense, by type of awards for the years ended December 31:

	For the Years Ended
	December 31,		December 31,		December 31,
	2015		2014		2013
Employee stock options	$	6,350	$	332	$	575
Restricted stock grants	31,843		24		—
Total stock-based compensation expense	$	38,193	$	356	$	575

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The following table summarizes the consolidated stock-based compensation by line items for the years ended December 31:

	For the Years Ended
	December 31, 2015		December 31, 2014		December 31, 2013
General and administrative	$	37,810	$	326	$	429
Sales, marketing and customer service	383		30		100
Engineering, design and product management	—		—		46
Total stock-based compensation expense	38,193		356		575
Tax effect on stock-based compensation expense	—		—		—
Total stock-based compensation expense after income taxes	$	38,193	$	356	$	575

As stock-based compensation expense recognized in the consolidated statements of operations is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. Forfeitures are required to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Determining Fair Value

Valuation and Amortization Method — The Company estimates the fair value of service-based and performance-based stock options granted using the Black-Scholes option-pricing formula. The fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. In the case of performance-based stock options, amortization does not begin until it is determined that meeting the performance criteria is probable. Service-based and performance-based options typically have a five to ten year life from date of grant and vesting periods of one to four years.

Expected Term — The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For awards granted subject only to service vesting requirements, the Group utilizes the simplified method for estimating the expected term of the stock-based award, instead of historical exercise data. For its performance-based awards, the Group has determined the expected term life to be four years based on contractual life and the seniority of the recipient.

Expected Volatility —The Company uses historical volatility of the price of its common shares to calculate the volatility for its granted options.

Expected Dividend —The Company has never paid dividends on its common shares and currently does not intend to do so, and accordingly, the dividend yield percentage is zero for all periods.

Risk-Free Interest Rate — The Company bases the risk-free interest rate used in the Black-Scholes valuation model upon the implied yield curve currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the assumption in the model.

Assumptions used in the determination of the fair value of share-based payment awards using the Black-Scholes model for stock option grants during the years ended December 31 were as follows:

	For the Years Ended
	December 31, 2015	December 31, 2014	December 31, 2013
Expected term	4	4	3.75
Risk-free interest rate	1.49% - 1.72%	1.39% - 1.85%	0.95% - 1.2%
Expected volatility	139% -141%	141% - 144%	106% -118%
Expected dividend yield	0%	0%	0%

Equity Incentive Plan

On November 15, 2006, subject to approval of the stockholders, the Company adopted the 2006 Equity Incentive Plan (the “2006 Plan”) which permits the Company to grant stock options to directors, officers or employees of the Company or others to purchase shares of Common Stock of the Company through awards of incentive and nonqualified stock options (“Option”), stock (“Restricted Stock” or “Unrestricted Stock”) and stock appreciation rights (“SARs”). The Plan was approved by the stockholders on February 7, 2007.

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The Company has granted time-based share options and restricted stock under the Plan to directors, officers, employees and individual consultants of the Company. The time-based options generally vest 25% annually and expire three to ten years from the date of grant. Total number of shares reserved and available for grant and issuance pursuant to the 2006 Plan is equal to 9% of the number of outstanding shares of the Company. Shares issued under the Plan will be drawn from authorized and unissued shares or shares now held or subsequently acquired by the Company. Outstanding shares of the Company shall, for purposes of such calculation, include the number of shares of stock into which other securities or instruments issued by the Company are currently convertible (e.g., convertible preferred stock, convertible debentures, or warrants for Common Stock), but not outstanding options to acquire stock. At December 31, 2015 there was no share available for grant under the 2006 plan. (9% of the outstanding shares of 639,065,172 plus outstanding warrants of 5,560,000 shares, plus 24,907,410 shares if converted from the convertible bond, less options and restricted stock outstanding and exercised since inception).

The exercise price of any Option will be determined by the Company when the Option is granted and may not be less than 100% of the fair market value of the shares on the date of grant, and the exercise price of any incentive stock option granted to a stockholder with a 10% or greater shareholding will not be less than 110% of the fair market value of the shares on the date of grant. The exercise price per share of a SAR will be determined by the Company at the time of grant, but will in no event be less than the fair market value of a share of Company’s stock on the date of grant.

On January 12, 2015 and June 29, 2015, the Board of Directors approved the grants of restricted stock unit awards (“RSU”) to core management members, other management and staff, pursuant to the terms of the 2006 Plan. The total number of RSUs granted is 20,468,400 shares. Among these, the vesting schedules for the chairman, deputy chairman and CFO (“core management”) are 100% vested at the grant date and the vesting schedules for the rest RSUs granted to other management and staff would be vested within the next one year or four years equally. The core management exercised all RSUs of 19,200,000 and all these shares were issued to them in March 2015 (See Note 23 — Stockholders’ Equity). The Group used the market price of its share at grant date as the fair value of the RSUs in calculating the stock based compensation expense.

On May 8, 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”) which permits the Company to grant stock options to directors, officers or employees of the Company or others to purchase shares of Common Stock of the Company through awards of incentive and Option, Restricted Stock or Unrestricted Stock and SARs which was approved by the stockholders. The total number of shares which may be issued under the 2015 Plan is 9% of the number of outstanding and issued ordinary shares of the Company. The Option Price per Share shall be determined by the compensation committee of the Board (“Compensation Committee”), unless expressly approved by the Compensation Committee, shall not be less than 100% of the fair market value of the shares on the date an Option is granted.

The following table summarizes the Group’s stock option activities:

	Shares		Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value ($000)
Outstanding as of January 1, 2013	5,836,500		$	0.45
Granted	4,450,000		0.06
Exercised	—		—
Forfeited	(3,172,250	)	0.47
Outstanding as of December 31, 2013	7,114,250		0.20		3.91	—
Granted	24,345,000		0.88
Exercised	(895,000	)	0.22
Forfeited	(5,135,250	)	0.25
Outstanding as of December 31, 2014	25,429,000		0.84		5.65	$	30,302
Granted	46,521,000		1.81
Exercised	(78,750	)	0.37
Forfeited	(8,322,500	)	1.64
Outstanding as of December 31, 2015	63,548,750		1.45		7.85	87,401
Vested and exercisable as of December 31, 2015	7,583,000		0.78		4.49	7,472
Expected to vest as of December 31, 2015	50,175,237		1.41		7.73	70,565

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The following table presents the exercise price and remaining life information about options exercisable at December 31, 2015:

Range of exercise price	Shares Exercisable	Weighted average remaining contractual life	Weighted average exercise price	Aggregate Intrinsic ($000)

$1.18 - $2.65	2,230,000	8.40	1.83	350
$0.40 - $1.17	2,143,750	2.46	0.53	2,465
$0.05 - $0.39	3,209,250	3.14	0.23	4,657
	7,583,000			7,472

Changes in the Group’s non-vested stock awards are summarized as follows:

	Time-based Options				Restricted Stock
	Shares		Weighted Average Exercise Price Per Share		Shares		Weighted Average Grant Date Fair Value Per Share
Non-vested as of January 1, 2013	4,227,000		$	0.38	—		$	—
Granted	4,450,000		0.06		—
Vested	(802,750	)	0.41		—
Forfeited	(2,195,500	)	0.64		—
Non-vested as of December 31, 2013	5,678,750		$	0.13	—		$	—
Granted	24,345,000		0.88		525,000		0.75
Vested	(1,708,500	)	0.24		(500,000	)	0.75
Forfeited	(4,378,250	)	0.24		—		—
Non-vested as of December 31, 2014	23,937,000		$	0.84	25,000		$	0.75
Granted	46,521,000		1.81		20,468,400		1.66
Vested	(6,169,750	)	0.78		(20,065,800	)	1.68
Forfeited	(8,322,500	)	1.64		—		—
Non-vested as of December 31, 2015	55,965,750		1.28		427,600		1.79

The total fair value of shares vested during the year ended December 31, 2015, 2014, and 2013 was $4,812, $410, and $657 respectively. There were no changes to the contractual life of any fully vested options during the years ended December 31, 2015, 2014 and 2013.

Following is a summary of our restricted stock awards as follows:

	Number of Shares		Weighted Average Grant-Date Fair Value
Restricted stock units at January 1, 2013	1,325,868		$	0.63
Granted	—		—
Forfeited	—		—
Restricted stock units at December 31, 2013	1,325,868		$	0.63
Granted	525,000		0.75
Forfeited	—		—
Restricted stock units at December 31, 2014	1,850,868		0.66
Granted	20,468,400		1.59
Forfeited	(488,400	)	1.75
Restricted stock units at December 31, 2015	21,830,868		1.51

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25. Provision for doubtful accounts and notes

Provision for doubtful accounts and notes consist of the following for the years ended December 31:

	2015	2014		2013
Accounts receivable (Note 7)	36,403	(2,979	)	9,303
Note receivables	—	288		—
Prepaid expenses and other current assets (Note 10)	7,000	648		—
Other receivable, related parties (Note 32)	1,925	—		—
Total of provision for doubtful accounts and notes	45,328	(2,043	)	9,303

26. Impairment Charges

Impairment charges consist of the following for the years ended December 31:

	2015	2014	2013
Project assets (Note 2(k))	10,853	—	—
Investment in affiliates	—	—	7,500
Total of impairment charges	10,853	—	7,500

In April 2012, the Company entered into an EPC agreement with KDC to construct a 4.5 MW photovoltaic solar electricity project located in Mountain Creek, New Jersey (the “Mountain Creek Project”). In December 2013, the Company entered into an exchange and release agreement with KDC and agreed to exchange a $15,036 note receivable due to the Company from KDC under the EPC agreement for construction of the Mountain Creek Project in exchange for a 64.5% limited ownership interest in KDC Solar Mountain Creek Parent LLC (the “LLC”). The LLC holds all of the assets of the Mountain Creek Project. KDC was the managing member and held a 35.5% managing member interest in the LLC as of December 31, 2013. The construction of the Mountain Creek Project was approximately 25% complete as of December 31, 2013. The LLC needed to obtain $10,000 of additional financing to continue construction of the Mountain Creek Project as of December 31, 2013.

In December 2013 when the Company received the 64.5% ownership interest in the LLC and as of December 31, 2013, the Company determined the LLC was not a variable interest entity (“VIE”) because (1) the amount of equity in the LLC was sufficient for the LLC to finance its activities without additional subordinated financial support; (2) the equity interest holders, as a group, did not lack the characteristics of a controlling financial interest in the LLC as the equity interest holders possessed all voting rights and controlled the LLC; (3) the LLC was not structured with non-substantive voting rights as the voting rights of the equity interest holders correspond to their respective obligation to absorb the entity’s expected losses and receive its expected residual returns. The Company accounted for its investment in the LLC using the equity method of accounting as of December 31, 2013. As of December 31, 2013 the Company determined that the fair value of its investment in the LLC was $7,500 based on the discounted future cash flows of the LLC and recorded a $7,500 impairment charge in the Consolidated Statement of Operations during the year ended December 31, 2013. The Company’s $7,500 interest in the LLC was recorded as an investment in affiliate as of December 31, 2013.

27. Income Taxes

Loss before provision for income taxes is attributable to the following geographic locations for the years ended December 31:

	2015			2014			2013
United States	$	(75,336	)	$	(15,007	)	$	(20,887	)
Foreign	(109,071		)	12,851			(10,544		)
	$	(184,407	)	$	(2,156	)	$	(31,431	)

The provision for income taxes consists of the following for the years ended December 31:

	2015		2014		2013
Current:
Federal	$	—	$	—	$	—
State	2		—		7
Foreign	671		3,040		979
Total current	673		3,040		986
Deferred:
Federal	$	—	—		—
State	—		—		—
Foreign	—		—		(173		)
Total deferred	—		—		(173		)
Total provision for income taxes	$	673	$	3,040	$	813

The reconciliation between the actual income tax expense and income tax computed by applying the statutory U.S. Federal income tax rate of 35% to pre-tax (loss) income before provision for income taxes for the years ended December 31 is as follows:

	2015			2014			2013
Provision for income taxes at U.S. Federal statutory rate	$	(64,542	)	$	(755	)	$	(11 , 001	)
State taxes, net of federal benefit	(1,436		)	13			4
Foreign taxes at different rate	26,552			(1,444		)	4,500
Non-deductible expenses	67			(2		)	100
Non-taxable income	(288		)	—			—
Valuation allowance	26,344			6,263			7,078
Other	807			2			(114		)
Prior year deconsolidation	—			(1,237		)	—
Impairments and intangible amortization	194			200			246
Stock Based Compensation	12,975			—			—
	$	673		$	3,040		$	813

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Deferred income taxes reflect the net tax effects of loss carry forwards and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Group’s deferred tax assets and liabilities for federal, state and foreign income taxes are as follows at December 31 are presented below:

	2015			2014
Deferred income tax assets:
Net operating loss carry forwards	$	55,294		$	31,785
Temporary differences due to accrued warranty costs	666			706
Temporary differences due to bonus and vacation accrual	22			16
Employment turnover	283			666
Investment in subsidiaries	3,103			3,257
Credits	16			16
Allowance for bad debts	335			1,196
Fair value adjustment arising from subsidiaries acquisition	3,377			358
Other temporary differences	3,077			1,041
	66,173			39,041
Valuation allowance	(65,325		)	(38,017		)
Total deferred income tax assets	848			1,024
Deferred income tax liabilities:
Fair value adjustment arising from subsidiaries acquisition	4,031			3,680
Other	168
Total deferred income tax liabilities	4,199			3,680
Net deferred tax liabilities	$	3,351		$	2,656

As of December 31, 2015, the Group had a net operating loss carry forward for federal income tax purposes of approximately $96,967, which will start to expire in the year 2027. The Group had a total state net operating loss carry forward of approximately $93,087, which will start to expire in the year 2017. The Group has foreign net operating loss carry forward of $55,433, some of which begin to expire in 2017. The Group had a federal AMT credit of $16, which does not expire.

Utilization of the federal and state net operating losses is subject to certain annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 and similar state provisions. However, the annual limitation may be anticipated to result in the expiration of net operating losses and credits before utilization.

The Group recognizes deferred tax assets if it is more likely than not that those deferred tax assets will be realized. Management reviews deferred tax assets periodically for recoverability and makes estimates and judgments regarding the expected geographic sources of taxable income in assessing the need for a valuation allowance to reduce deferred tax assets to their estimated realizable value. Realization of the Group’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Because of the Group’s lack of earnings history, the net deferred tax assets have been fully offset by a valuation allowance in the US and China. The valuation allowance increased by $27,308, $8,757 and $9,484 during the years ended December 31, 2015, 2014 and 2013, respectively.

The Group has not provided for deferred taxes on the excess of the financial reporting over the tax basis in our investments in foreign subsidiaries that are essentially permanent in duration. The determination of the additional deferred taxes that have not been provided is not practicable. The undistributed earnings for the Group’s foreign subsidiaries (primarily the subsidiaries in China and Greece) will be permanently reinvested. As of December 31, 2015 and 2014, the total amount of the undistributed earnings for these subsidiaries amounted to $3,100 and $8,800 respectively.

The Group had no unrecognized tax benefits for the years ended December 31, 2015 and 2014, respectively. The Group currently files income tax returns in the U.S., as well as California, New Jersey, and certain other foreign jurisdictions. The Group is currently not the subject of any income tax examinations. The Group’s tax returns generally remain open for tax years after 2009.

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28. Net Loss Per Share of Common Stock

Basic loss per share is computed by dividing loss attributable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution of shares by adding other common stock equivalents, including stock options, warrants, and restricted common stock, in the weighted average number of common shares outstanding for a period, if dilutive. Potentially dilutive shares are excluded from the computation if their effect is anti-dilutive. As a result of the net loss for the years ended December 31, 2015, 2014 and 2013, there is no dilutive impact to the net loss per share calculation for the period.

The following table presents the calculation of basic and diluted net loss per share:

	December 31,			December 31,			December 31,
	2015			2014			2013
Numerator:
Net loss	$	(185,080	)	$	(5,196	)	$	(32,244	)
Denominator:
Basic weighted-average common shares	612,047,053			307,005,057			198,214,456
Diluted weighted-average common shares	612,047,053			307,005,057			198,214,456
Basic net loss per share	(0.30		)	$	(0.02	)	$	(0.16	)
Diluted net loss per share	(0.30		)	(0.02		)	(0.16		)

For the years ended December 31, 2015, 2014 and 2013, the following securities were excluded from the computation of diluted net loss per share as inclusion would have been anti-dilutive.

	December 31,	December 31,	December 31,
	2015	2014	2013
Share options and non-vested restricted stock	69,536,350	57,954,000	7,414,250
Convertible bonds (see Note 21)	24,907,410	17,500,000	—
Total	94,443,760	75,454,000	7,414,250

29. Commitments and Contingencies

(a) Commitments

Guarantee — On December 22, 2009, in connection with an equity funding of STP related to the Aerojet 1 solar development project, the Group along with STP’s other investors entered into a Guaranty (“Guaranty”) to provide the equity investor, Greystone Renewable Energy Equity Fund (“Greystone”), with certain guarantees, in part, to secure investment funds necessary to facilitate STP’s payment to the Group under the EPC. Specific guarantees made by Solar Power, Inc. include the following in the event of the other investors’ failure to perform under the operating agreement:

· Operating Deficit Loans—the Group would be required to loan Master Tenant or STP monies necessary to fund operations to the extent costs could not be covered by Master Tenant’s or STP’s cash inflows. The loan would be subordinated to other liabilities of the entity and earn no interest; and

· Exercise of Put Options—At the option of Greystone, the Group may be required to fund the purchase by Managing Member of Greystone’s interest in Master Tenant under an option exercisable for 9 months following a 63 month period commencing with operations of the Facility. The purchase price would be equal to the greater of the fair value of Greystone’s equity interest in Master Tenant or $1,000. This option has been exercised on December 30, 2014 and this guarantee has been released accordingly.

The Group has recorded on its consolidated balance sheet the guarantees of $57 and $71 at December 31, 2015 and 2014, respectively. These amounts, less related amortization, are included in other noncurrent liabilities. These guarantees for the Aerojet 1 project are accounted for separately from the financing obligation related to the Aerojet 1 project because they are with different counterparties.

Financing Obligation — the guarantees associated with Aerojet 1 constitute a continuing involvement in the project. While the Group maintains its continuing involvement, it will apply the financing method and, therefore, has recorded and classified the proceeds received of $9,854 and $10,911 from the project in financing and capital lease obligations as of December 31, 2015 and 2014, respectively. At December 31, 2015 and 2014, $8,796 and $10,092, respectively, were recorded as noncurrent Financing and capital lease obligations, with $1,058 and $819 recorded as other current liabilities.

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Performance Guaranty — On December 18, 2009, the Group entered into a 10-year energy output guaranty related to the photovoltaic system installed for STP at the Aerojet 1 facility in Rancho Cordova, CA. The guaranty provided for compensation to STP’s system lessee for shortfalls in production related to the design and operation of the system, but excluding shortfalls outside the Group’s control such as government regulation. The Group believes that the probability of shortfalls is unlikely and if they should occur they would be covered under the provisions of its current panel and equipment warranty provisions. For the fiscal year ended December 31, 2015, 2014 and 2013 there continues to be no charges against our reserves related to this performance guaranty.

Product Warranties — The Group offer the industry standard warranty up to 25 years for its PV panels and industry standard five to ten years on inverter and balance of system components. Due to the warranty period, the Group bear the risk of extensive warranty claims long after the Group has shipped product and recognized revenue. In the Group’s cable, wire and mechanical assemblies business, the Group’s historically warranty claims have not been material. In the Group’s solar PV business, the greatest warranty exposure is in the form of product replacement.

During the quarter ended September 30, 2007 and continuing through the fourth quarter of 2010, the Group installed own manufactured solar panels. Other than this period, the Group only installed panels manufactured by unrelated third parties as well as the Group’s principal shareholder and formerly controlling shareholder, LDK. Certain PV construction contracts entered into during the recent years included provisions under which the Group agreed to provide warranties to the buyer. As a result, the Group recorded the provision for the estimated warranty exposure on these contracts within cost of sales. Since the Group do not have sufficient historical data to estimate its exposure, the Group have looked to its own historical data in combination with historical data reported by other solar system installers and manufacturers. Due to the absence of historical material warranty claims, the Group have not recorded a material warranty accrual related to solar energy systems as of December 31, 2015 and 2014.

Operating leases — The Group leases offices, facilities and vehicles under various operating leases, some of which contain escalation clauses. Rental expenses under operating leases included in the statement of operations were $2,860, $453 and $463 for the years ended December 31, 2015, 2014 and 2013 respectively.

Future minimum payments under all of our non-cancelable operating leases are as follows as of December 31, 2015:

2016	$	3,519
2017	3,084
2018	1,720
2019	1,096
2020	709
Thereafter	8,601
	$	18,729

Capital commitments — As of December 31, 2015 and 2014, the Group had capital commitments of approximately $66,515 and $59,354, respectively. These capital commitments were solely related to contracts signed with vendors for procurement of services or PV related products used for the construction of solar PV systems being developed by the Group.

The capital commitments as at balance sheet dates disclosed above do not include those incomplete acquisitions for investment and business as at balance sheet dates as the agreements could either be terminated unconditionally without any penalty or cancelable when the closing conditions as specified in the agreements could not be met. The occurrence of non-fulfillment of those closing conditions are not considered as remote.

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(b) Contingencies

On June 26, 2015, Aaron Read & Associates (“Aaron Read”) filed a complaint against the Company for commissions with respect to a solar project in North Palm Springs, California. Araon Read is seeking damages in the amount of approximately $460 plus attorney’s fees and claimed it is due commissions ranging from 0.25% to 2.0% of the project’s gross revenues depending on the level of involvement by Aaron Read in assisting in obtaining the project by the Company. The Company denies that Aaron Read assisted in the project acquisition, and even if it is deemed that Aaron Read assisted, they would be entitled to only 0.25%, i.e. $58. As of the date of issuance of these financial statements, this matter is at its early stage of the proceeding and it is uncertain how the United States Court will rule on the plaintiff’s appellate brief. Based on information available to the Company, management does not believe that it is probable that a loss had been incurred. Accordingly, no accrual was made as of December 31, 2015.

The Company’s several previous employees filed suits in November 2015, December 2015, February 2016 and March 2016 against the Company for breach of their prior employment contracts with the Company. As of the date of issuance of these financial statements, these lawsuits are at early stage of the proceeding and it is uncertain how the United States Court will rule on the plaintiff’s appellate brief. Based on the information available to the Company, management does not believe that it is probable that a loss had been incurred and accordingly, no accrual was made as of December 31, 2015.

On February 26, 2016, Hanhua New Energy Co., Ltd. filed a complaint against the Group in a PRC court alleging that the Group delayed payment of $6,862 for purchasing of solar modules over one year. The court instructed two PRC banks to freeze the Group’s bank accounts balances of $7,063. The Company believes that the resolution of this matter is not expected to result in any material impact on the consolidated financial statements of the Group.

From time to time, the Group is involved in various other legal and regulatory proceedings arising in the normal course of business. While the Group cannot predict the occurrence or outcome of these proceedings with certainty, it does not believe that an adverse result in any pending legal or regulatory proceeding, individually or in the aggregate, would be material to our consolidated financial condition or cash flows; however, an unfavorable outcome could have a material adverse effect on our results of operations for a specific interim period or year.

30. Operating Risk

Concentrations of Credit Risk and Major Customers — A substantial percentage of the Group’s net revenue comes from sales made to a small number of customers to whom sales are typically made on an open account basis. Details of customers accounting for 10% or more of total net revenue for the years ended December 31, 2015, 2014 and 2013 are as follows:

	2015				2014				2013
			% of Total				% of Total				% of Total
Customer	Revenue		Revenue		Revenue		Revenue		Revenue		Revenue
Blackrock Income UK Holding Limited	26,202		14	%	—		—		—		—
RI Income UK Holding Limited	24,142		13	%	—		—		—		—
Inner Mongolia Zhaojing Photovoltaic Power Generation Co. Ltd.	21,635		11	%	—		—		—		—
Shotoco Energy, LLC	21,281		11	%	—		—		—		—
Zhongwei Hanky Wiye Solar Co., Ltd.	8,387		4	%	27,871		30	%	—		—
Alxa League Zhiwei Photovoltaic Power Generation Co., Ltd.	5,085		3	%	23,939		26	%	—		—
Realforce	—		—		23,585		26	%	—		—
KDC Solar Credit LS, LLC	—		—		11,886		13	%	22,829		54	%
Thermi Venture S.A.	—		—		—		—		13,854		32	%
	$	106,732	56	%	$	87,281	95	%	$	36,683	86	%

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Details of customers accounting for 10% or more of total accounts receivable, notes receivable, costs and estimated earnings in excess of billings on uncompleted contracts and finance lease receivable at December 31, 2015 and 2014, respectively are:

	2015			2014
Customer		% of Total			% of Total
Zhongwei Hanky Wiye Solar Co., Ltd.	37,050	19	%	28,751	27	%
Alxa League Zhiwei Photovoltaic Power Generation Co., Ltd.	30,481	16	%	27,008	25	%
Realforce	23,628	12	%	24,776	23	%
Inner Mongolia Zhaojing Photovoltaic Power Generation Co., Ltd.	21,228	11	%	—	—
	112,387	58	%	80,535	75	%

Pursuant to the contracts entered with the above customers except for Realforce, 3%-10% of the contract amount is payable after signing the contract, 80%-90% of the contract amount is payable in 90 days after the connection to the grid and customers’ acceptances of the project completion with the remaining 5%-10% of the contract amount payable one year after connection to the grid. For the payment term of Realforce, 10% of the contract amount is payable within 7 days after signing the contract, 30% of the contract amount is payable within 15 days after the major equipment transported to construction site and completion of quality inspection, 30% of the contract amount is payable within 15 days after the major equipment installed, 20% of the contract amount is payable in 10 days after the connection to the grid and customers’ acceptances of the project completion with the remaining 10% of the contract amount payable one year after connection to the grid. In February 2016, the Group and Realforce entered into sales and leaseback arrangement to settle the above outstanding receivable as at December 31, 2015.Please refer to the Note 7-Accounts Receivable for the details of the receivable due from Realforce and the subsequent sales and leaseback arrangement.

31. Segment information

Operating segments are defined as components of a company which separate financial information is available that is evaluated regularly by the client operating decision maker in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is the Chairman, Mr. Peng. Based on the financial information presented to and reviewed by the chief operating decision maker, the Group has determined that it has a single operating and reporting segment: solar energy products and services. The types of products and services in this single segment primarily include: (i) EPC services, (ii) Sales of PV solar system, (iii) Electricity revenue under PPAs, (iv) Sales of PV solar components, (v) Pre-development project sales (vi) Financial service revenue.

Net sales by major product and services are as follows:

	2015		2014		2013
Sales of PV solar system	$	77,438	—		$	—
EPC revenue	48,014		$	87,281	39,290
Sales of PV solar components	41,623		1,080		—
Electricity revenue with PPAs	16,226		2,144		2,037
Pre-development project sales	4,545		—		—
Financial service revenue	1,486		—		—
Others	1,178		1,137		1,302
	$	190,510	$	91,642	$	42,629

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Net sales by geographic location are as follows:

Location (a)	2015		2014		2013
China	$	56,745	$	76,426	$	—
United Kingdom	50,345		—		—
Australia	35,418		—		—
United States	29,925		14,690		25,347
Greece	8,720		526		13,854
Japan	6,626		—		—
Italy	1,395		—		3,428
Germany	1,336		—		—
	$	190,510	$	91,642	$	42,629

(a) Sales are attributed to countries based on location of customer.

Geographic information, which is based upon physical location, for long-lived assets was as follows:

Location	2015		2014
China	$	68,831	$	46,872
Greece	59,385		68,708
United States	34,522		11,630
Italy	10,048		—
Japan	11,464		493
UK	1,499		—
Australia	331		—
Germany	84		—
	$	186,164	$	127,703

32. Related Party Transactions

In June 2013, LDK forgave $2,600 in indebtedness to provide an injection of capital to SGT to keep their shareholder capital from going negative and triggering liquidity accounting under Italian statutory law. Additionally, the Company deconsolidated net liabilities owned by SGT to LDK of $2,000. This portion of the deconsolidation was treated as debt forgiveness and a capital transaction recorded as an increase to additional paid in capital. Refer to Note 4 for further details of the SGT deconsolidation.

In 2015, the total fund raised from individual investors through Solar Energy amounted to $145,568, of which $11,524 was settled by the coupons issued by the Group to individual investors without cash inflow and the amount of $129,830 had been received by the Group from Solar Energy as of December 31, 2015 and Solar Energy charged $1,052 as commission fee to the Group at 1% of the fund principal. The Group recorded the cash received from Solar Energy of $129,830 in the line item of “Proceeds from loans on solarbao platform through Solar Energy” in the consolidated statements of cash flow. As of December 31, 2015 and December 31, 2014, the Group had other receivable (gross) of $3,162 and nil from Solar Energy respectively for the fund received from the individual investors on behalf of the Group by Solar Energy net of its commission fee and made an allowance for doubtful debts of $1,615 and nil respectively based on the recoverable amount of the receivable from Solar Energy.

In 2015, the total fund redeemed to individual investors through Solar Energy amounted to $19,237 which had been fully repaid by the Group to Solar Energy as of December 31, 2015 and was recorded in the line item of “Repayments of loans on solarbao platform directly or through Solar Energy” under financing activities in the consolidated statements of cash flow. From June 2015 onwards, the Group has made repayment of borrowings to individual investors directly while Solar Energy continues to collect the funds from individual investors and settle with the Group regularly.

In connection with the launch of the Underlying PV Products as discussed in Note 18—Borrowings, the Group issued to Jiangxi LDK Solar Hi-Tech Co., Ltd. (“LDK Jiangxi”) and Suzhou Liuxin Industry Ltd. (“Liuxin”) coupons with total face value of $779 and $582 respectively during the year ended December 31, 2015. Both LDK Jiangxi and Liuxin are related parties of the Group. LDK Jiangxi is a wholly owned subsidiary of LDK Solar Co., Ltd. (“LDK”), principle shareholder of the Company. Liuxin is wholly owned by Mr. Peng’s father. These coupons are freely transferable among holders but could not be redeemed in cash. When the holder subscribe the on-line products through the on-line platform of Solar Energy, the holders could redeem the coupons and reduce the original purchase price for the on-line products by the face value of the coupons. In 2015, the Group received full payment of $582 from Liuxin for the face value of the coupons issued. For the coupons of $779 issued to LDK Jiangxi, they were applied to offset the outstanding accounts payables of $779 to LDK Jiangxi under mutual agreement between the Group and LDK Jiangxi. As of December 31, 2015, all coupons issued to these related parties had been redeemed through the on-line platform.

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In 2015, the Group paid commission fee of $3,000 to SUPERMERCY Limited (“SUPERMERCY”) in respect of certain funds raised by the Group through the issuance of the Company’s common stock. Pursuant to a client introducing agreement entered with SUPERMERCY on September 10, 2014, the Group agreed to pay SUPERMERCY commission at 3% of funds successfully raised by the Group that had been resulted from the services rendered by SUPERMERCY. The commission fee was recognized as a deduction of the funds raised and from additional paid in capital within the stockholders’ equity. The Group paid commission fee of $450 to SUPERMERCY on January 14, 2016 for the funds of $15,000 raised from Brilliant King and Poseidon (See Note 23—Stockholders’ Equity) at 3% in December 2015 which has been recognized as a deduction of the funds raised and from additional paid in capital within the stockholders’ equity.

As of December 31, 2015 and 2014, the Group owed to LDK Group of $42 and $nil, respectively, as LDK made salary payment to certain employees on behalf of the Group.

During the year ended December 31, 2015, the Group made advance payments of $310 to Mr. Peng for which a full provision has been recorded by the Company as of December 31, 2015.

On March 30, 2015, the Group entered into a share purchase agreement (the “LDK Share Purchase Agreement”) with LDK Group. Pursuant to the LDK Share Purchase Agreement, the Group agreed to purchase from LDK Group three LDK’s subsidiaries incorporated in Italy and California respectively which hold three solar PV plants in total, at a cash consideration of US$2,390. The Group will also assume certain indebtedness contemplated in the LDK Share Purchase Agreement up to a maximum amount to be agreed upon among the Group and the LDK Group prior to the closing date of the transaction. The transaction is subject to several closing conditions including completion of satisfactory due diligence. In connection with the acquisition, the Group paid $2,000 as deposits for the acquisition, such prepaid deposits were subsequently agreed by both parties to offset against certain payable balances due to LDK Group, on September 30, 2015. This acquisition has not been consummated as of the date of issuance of these financial statements.

As of December 31, 2015 and 2014, the Group had accounts payable to LDK Group of $5,128 and $34,150, respectively. The accounts payable balances as at December 31, 2015 were primarily related to purchases of solar cells for solar development projects. The solar cells purchased from LDK Group for the years ended 2015, 2014 and 2013 amounted to $11,712, $5,755 and nil respectively. The Group also consigned LDK Group to process solar cells to solar panels for its on-line platform business in 2015. The processing fee charged by LDK Group amounted to $4,000 and nil for the years ended 2015 and 2014. The accounts payable balances as at December 31, 2014 were primarily related to an amount that are subject to settlement arrangement with LDK Group. On December 30, 2014, the Group entered into a Settlement and Mutual Release (“Settlement Agreement”) with LDK Group, pursuant to which LDK Group agreed to discharge the Group from all actions, claims, demands, damages, obligations, liabilities, controversies and executions arising out of the Group’s net payables of $28,775 to LDK Group, in exchange for an aggregate settlement amount of $11,000. Under the Settlement Agreement, the Group agreed to pay the settlement amount of $11,000 by installments in accordance with a predetermined schedule and LDK Group has the right to cancel the agreed settlement if any installment payment is delayed for more than 30 days. The agreed payment schedule for the settlement amount of $11,000 is $380 on or before December 31, 2014, $2,000 on or before January 31, 2015, $1,620 on or before March 30, 2015, $2,000 on or before June 30, 2015, $1,000 on or before July 31, 2015, $2,000 on or before September 30, 2015 and $2,000 on or before December 31, 2015 (“Last Payment Obligation”). As the settlement amount will only be fully paid by December 31, 2015 in accordance with the Settlement Agreement, the Group did not derecognize the waived liability of $17,775, being the difference between the amounts of $28,775 that were subject to the settlement and the agreed settlement amount of $11,000, from its consolidated balance sheet as of December 31, 2014. As of September 30, 2015, the Group had made installment payments on schedule and had paid $9,000 in total to LDK Group in accordance with the Settlement Agreement. On September 30, 2015, the Group entered into a supplemental agreement with LDK Group pursuant to which LDK Group agrees the Group to apply the prepayment of $2,000 made to LDK Group under the LDK Share Purchase Agreement to satisfy the Group’s Last Payment Obligation under Settlement Agreement. This agreement does not affect the validity of the LDK Share Purchase Agreement and LDK Group and the Group agrees to postpone the dates of performance under the LDK Share Purchase Agreement. The Group derecognized the waived liabilities of $17,775 from its condensed consolidated balance sheet as of September 30, 2015 in accordance with the Settlement Agreement and the supplemental agreement since the Group had fully paid the settlement amount of $11,000. As LDK Group is the Group’s principal shareholder, this waived liabilities of $17,775 was accounted for as a capital transaction by increasing additional paid in capital as of December 31, 2015.

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33. Subsequent Events

(a) Acquisition of Dingding Yiwei

On September 1, 2015, the Group agreed to acquire 60% equity interests in Beijing Dingding Yiwei New Energy Technology Development Co., Ltd. (“Dingding Yiwei”), a company established in China, at a cash consideration of RMB 30 million ($4,720), subject to certain closing conditions set forth in the share purchase agreement entered between the Group and the shareholders of Dindding Yiwei. The acquisition was consummated on January 7, 2016 upon completion of all closing conditions including the settlement of all consideration in cash. Dingding Yiwei is engaging in the car rental business through its on-line platform in China.

(b) Restructuring of liabilities

On March 15, 2016, the Company entered into a settlement agreement (“Settlement Agreement”) with Sinsin Europe Solar Asset Limited Partnership and Sinsin Solar Capital Limited Partnership (collectively, the “Sinsin Group”) which are the previous equity owners of Sinsin, to extend its payment obligation of $46,038 (EUR42,396) originally scheduled for settlement in 2016. Pursuant to revised payment schedule under the Settlement Agreement, the Company is required to settle EUR3,283 before April 15, 2016 with the remaining EUR 39,113 to be settled on or before November 30, 2017 with an interest rate of 6% per annum. The revised payment schedule is subject to the conditions that 1) 26.57 MW PV plants previously acquired from Sinsin Group are pledged back to Sinsin Group; and 2) all electricity revenue amounts of these pledged 26.57 MW PV plants are used to repay the outstanding debts of EUR 39,113 due to Sinsin Group with all bank accounts of Sinsin put under the custodian of Sinsin Group. As of the date of issuance of these consolidated financial statements, the Company has paid the EUR3,283 and pledged the PV plants of 26.57 MW to Sinsin Group as required under the Settlement Agreement.

(c) Project assets financing

On March 28, 2016, the Group entered into a sales and leaseback arrangement with China Kangfu International Leasing Co., Ltd. (“Kangfu Leasing”), an independent third party. Pursuant to the sales and leasing back arrangement, the Group agreed to sell Kangfu Leasing the gird-connected Xinte PV plant, previously acquired from TBEA Xinjiang Sunoasis Co., Ltd. (“TBEA Sunoasis”) in December 2014 and pledged to TBEA Sunoasis to secure the amount payable to TBEA Sunoasis, at a consideration of RMB140 million and immediately lease back the plant from Kangfu Leasing at an interest rate of 6.125% per annum for a 10-year period. Pursuant to the arrangement, the title of Xinte PV plant would be transferred to the Group by the end of the lease term at a nominal fee of RMB10,000. The Group, TBEA Sunoasis and Kangfu Leasing also entered into a tri-party agreement pursuant to which TBEA Sunoasis agreed to release the pledge of Xinte PV plant and the Group agreed to use the RMB140 million for settling the payable due to TBEA Sunoasis, which amounted to $26,311 as at December 31, 2015 and was due for payment in 2016. As of the date of issuance of these consolidated financial statements, the Group had paid TBEA Sunoasis RMB140 million received from Kangfu Leasing pursuant to the tri-party agreement.

(d) Private placements

On May 10, 2016, certain shareholders and management members entered into share purchase agreements with the Group and agreed to purchase 75.99 million shares of common stock of the Company at an aggregate consideration of $57.68 million. The transactions are subject to certain closing conditions. As of the date of issuance of these consolidated financial statements, the share purchase transactions have not been closed.

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(e) Contractual agreements

On March 17, 2016, the Group through its wholly owned subsidiary, Yanhua Netwrok Technology (Shanghai) Co., Ltd. (“Yanhua Network”), entered into a series of contractual agreements with Shanghai Meiju Network Technology Co., Ltd. (“Meiju”) and its sole shareholder, Shanghai Youying E-commerce Co., Ltd. (“Youying”). The contractual arrangements include Exclusive Business Cooperation Agreement, Exclusive Call Option Agreement, Proxy Voting Agreement, and Equity Interest Pledge Agreement. Youying was incorporated in the PRC on June 12, 2015 by Mr. Min Xiahou and Ms. Amy Jing Liu (collectively, “Equity Holders”), the deputy chairman of the Company’s board of directors and former chief financial controller, respectively.

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