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Note 8 - Project Assets

12 Months Ended

Dec. 31, 2014

Project Assets

As of December 31, 2014, project assets mainly consist of the SEF development across U.S.A., UK, Japan and the PRC, with the amount of $48,520, $14,000, $12,826 and $19,849 respectively.

Project assets consist of the following:

	December 31, 2014
Under development-Company as project owner	$	75,346
Held for sale		-
Total project assets held for development and sales		75,346
Under development-Company expected to be project owner upon the completion of construction*		19,849
Total project assets		95,195
Current, net of impairment loss	$	73,930
Noncurrent	$	21,265

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

See Note 2 (j) for the above classification of project assets..

Included in the project assets under development-Company as project owner as at December 31,2014 were an amount of $23,943 and $17,864 respectively in respect of certain projects in Hawaii (see below) and Mountain Creek in New Jersey (see Note11)

Solar Hub Utilities, LLC and Calwaii, LLC

On April 27, 2012, the Company made a secured loan of $1,000 to Solar Hub Utilities, LLC (“Solar Hub”), to be used by Solar Hub for pre-development costs, and the Company recorded the amount as notes receivable. On June 8, 2012, the Company agreed to advance Solar Hub up to $9,000 under a new $9,000 secured promissory note, secured by the project assets, which refinanced the original $1,000 advance and bore a 6% annual interest rate. Repayment in full of all outstanding amounts was due on December 31, 2012 but, in March 2013, was extended to a new maturity date of July 1, 2014 and the interest was changed to 10% per annum. As of December 31, 2013, the outstanding balance of the note receivable from Solar Hub was $8,450.

In May 2014, the Company entered into an agreement with Solar Hub and Hawaiian Power, LLC (“HPL”) pursuant to which the Company and HPL formed Calwaii Power Holdings, LLC (“Calwaii”). The Company and HPL each received a 50% membership interest in Calwaii.

In May, 2014, Solar Hub entered into an agreement with Calwaii pursuant to which Solar Hub transferred to Calwaii its payment obligations under the notes payable due to the Company and HPL, respectively, as well as its ownership in all of its solar projects.

When the Company received a 50% membership interest in Calwaii in May 2014, Calwaii did not have enough equity at risk to finance its activities without additional subordinated financial support and the Company determined this joint venture was a VIE. Because all rights and obligations are equally absorbed by both parties to Calwaii, the Company determined that it was not the primary beneficiary of Calwaii and, therefore, accounted for this entity under the equity method, and the Company’s $1,376 investment was recorded as an investment in the member units of the investee at cost.

On September 15, 2014, the Company entered into a purchase agreement with HPL to purchase HPL’s 50% membership interest in Calwaii, and an 89% general partnership interest in Solar Hub in exchange for a consideration of $4,783 consisting of $500 cash, $3,300 worth of the Company’s Common Stock, and contingent consideration valued at $983 which is accounted for as a derivative liability (see Note 12). As a result of the transaction in May 2014 in which Solar Hub transferred all of its payment obligations and ownership in all of its solar projects to Calwaii, Solar Hub did not hold any assets or liabilities as of September 15, 2014, date of the aforementioned acquisition. As of September 15, 2014, Calwaii’s total assets and liabilities only included land rights and pre-contract costs related to the solar projects. Additionally, Calwaii had not entered into any power generation contracts with any utilities companies. Management concluded that the acquisition of 100% managing member interest in Calwaii did not meet the definition of a business combination as the primary inputs (the solar plants, which had yet to be constructed) were not available as of the date of acquisition. The Company has accordingly accounted for the transaction as an asset acquisition. The net assets acquired were recognized at the Company’s cost to acquire the net assets of $15,605. The cost to acquire the net assets included the Company’s $9,448 of note receivable, including accrued interest, from Calwaii, the Company’s $1,376 worth of previously held equity interest in Calwaii, and the Company’s $4,783 of consideration transferred to HPL on September 15, 2014. The net assets acquired were located in Hawaii.

Pursuant to a sales agreement dated September 18, 2014, the Company agreed to sell four out of the forty-three PV solar systems of Calwaii’s project upon their completion of construction at a consideration of $5,850. The Company accounted for this sales transaction using the full accrual 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, 2014 as certain closing conditions, including but not limited to grid connection specified in the sales agreement, had not been met.

As of December 31, 2014, the project asset costs recorded and included in project held for development for these forty-three PV solar systems under the Calwaii’s projects amounted to $23,943.