UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

oþ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~March 3031, ~~2014~~2015

o	Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period __________ to __________

Commission File Number: 001-36133

ForceField Energy Inc.

(Exact name of registrant as specified in its charter)

Nevada		20-8584329
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

245 Park Avenue, 39th Floor New York, New York		10167
(Address of principal executive offices)		(Zip Code)

212-672-1786

(~~Issuer~~Registrant’s telephone number, including area code)

~~Check~~Indicate by check mark whether the ~~issuer~~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 ~~issuer~~registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ 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). þ Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	o	Accelerated filer	o
Non-Accelerated filer	o	Smaller reporting company	þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

~~State~~There ~~the~~were ~~number~~19,211,949* of shares ~~outstanding~~ of ~~each of~~ the ~~issuer~~registrant’s ~~classes of~~ common stock, asoutstanding ~~of the latest practicable date: 18,107,408 common shares~~ as of ~~November~~June 141, ~~2014~~2015.

		Page
PART I – FINANCIAL INFORMATION
Item 1:	Financial Statements	3
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	11
Item 4:	Controls and Procedures	11
PART II – OTHER INFORMATION
Item 1:	Legal Proceedings	12
Item 1A:	Risk Factors	12
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3:	Defaults Upon Senior Securities	12
Item 4:	Mine Safety Disclosures	12
Item 5:	Other Information	12
Item 6:	Exhibits	13

*Includes 687,500 restricted shares that are being held as collateral against a $2.5 million promissory note maturing on April 17, 2016. In no event can these shares become free trading before this date. These shares are not considered issued and outstanding for financial statement purposes, and are therefore excluded from the weighted average share count

		Page
PART I – FINANCIAL INFORMATION

Item 1:	Financial Statements	3

Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 3:	Quantitative and Qualitative Disclosures About Market Risk	11

Item 4:	Controls and Procedures	11

PART II – OTHER INFORMATION

Item 1:	Legal Proceedings	12

Item 1A:	Risk Factors	12

Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	14

Item 3:	Defaults Upon Senior Securities	14

Item 4:	Mine Safety Disclosures	14

Item 5:	Other Information	15

Item 6:	Exhibits	15

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Our unaudited financial statements included in this Form 10-Q are as follows:

F-1	Consolidated Balance Sheets (Successor) as of ~~September~~March 3031, ~~2014~~2015 (Unaudited) and December 31, ~~2013~~2014
F-2	Interim Unaudited Consolidated Statements of Operations and Comprehensive ~~Income (~~Loss) for the Three Months Ended ~~September~~March 3031, ~~2014~~2015 ~~and the Period from April 26 through September 30, 2014~~ (Successor), ~~the Period from January 1 through April 25, 2014~~ and ~~for~~ the Three ~~and Nine~~ Months Ended ~~September~~March 3031, ~~2013~~2014 (Predecessor)
F-4	Unaudited Statements of Changes in Stockholders’ Equity for the Period from January 1, 2014 through April 25, 2014 (Predecessor) and for the Period from April 26 through September 30, 2013 (Successor)
F-3	Interim Unaudited Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2015 (Successor) and the Three Months Ended March 31, 2014 (Predecessor)
F-6	Interim Unaudited Consolidated Statements of Cash Flows for the Period from April 26 through September 30, 2014 (Successor), the Period from January 1 through April 25, 2014 and for the Nine Months Ended September 30, 2014 and 2013 (Predecessor)
F-4	Notes to Interim Unaudited Consolidated Financial Statements
F-7	Notes to Interim Unaudited Consolidated Financial Statements

FORCEFIELD ENERGY INC.

Consolidated Balance Sheets (Successor)

	Successor			Predecessor
	September 30,			December 31,
	2014			2013
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	511,156		$	339,011
Accounts receivable, net		2,202,461			2,955,758
Inventory, net		627,914			212,789
Prepaid expenses and other current assets		624,847			73,611
Deferred tax assets, net		13,804			91,654
Total current assets		3,980,182			3,672,823
Accounts receivable, net -- noncurrent		—			4,921
Property and equipment, net		34,637			11,636
Goodwill		3,860,054			—
Intangible assets, net		3,483,825			—
Deferred tax assets, net -- noncurrent		—			766,137
Other assets		110,964			—
Total assets		11,469,662			4,455,517
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable		1,026,316			713,824
Accrued liabilities		617,666			281,013
Loans payable		130,000			—
Convertible debentures, net — current		100,000			—
Purchase consideration payable — working capital adjustment		240,684			—
Senior, secured promissory notes, net of discount		979,594			—
Related party payable		—			—
Income taxes payable		28,887			9,018
Total current liabilities		3,123,147			1,003,855
Convertible debentures, net of loan discounts		2,501,557			—
Earnout liability		1,186,000			—
Mandatorily redeemable preferred stock		—			1,209,891
Deferred tax liabilities, net — noncurrent		377,334			—
Other noncurrent liabilities		45,355			—
Total liabilities		7,233,393			2,213,746
Commitments and contingencies		—			—
Equity:
ForceField Energy Inc. stockholders' equity:
Preferred stock, $0.001 par value. 12,500,000 shares authorized; zero shares issued and outstanding		—			—
Common stock, Class A, $0.001 par value. 1,500,000 shares authorized; 949,373 shares issued and outstanding as of December 31, 2013		—			949
Common stock, Class B, $0.001 par value. 500,000 shares authorized; 303,030 shares issued and outstanding as of December 31, 2013		—			303
Common stock, $0.001 par value. 37,500,000 shares authorized; 18,012,790 shares issued and 16,550,693 outstanding as of September 30, 2014		18,013			—
Common stock held in treasury, at cost, 1,462,097 shares held at September 30, 2014		(1,166,071	)		—
Additional paid-in capital		21,545,551			791,837
Accumulated earnings (deficit)		(16,230,032	)		1,448,682
Accumulated other comprehensive income		17,932			—
Total ForceField Energy Inc. stockholders' equity		4,185,393			2,241,771
Noncontrolling interests		50,876			—
Total equity		4,236,269			2,241,771
Total liabilities and equity	$	11,469,662		$	4,455,517

(Unaudited)

	March 31,			December 31,
	2015			2014

ASSETS
Current assets:
Cash and cash equivalents	$	1,504,646		$	771,206
Accounts receivable, net		3,310,417			4,519,589
Costs and estimated earnings in excess of billings on uncompleted contracts		618,763			652,007
Inventory, net		578,471			431,585
Prepaid expenses and other current assets		285,160			487,396
Total current assets		6,297,457			6,861,783
Accounts receivable, net — noncurrent		23,423			33,093
Property and equipment, net		160,259			167,831
Goodwill		5,394,647			12,388,431
Intangible assets, net		4,446,291			7,976,980
Other assets		104,061			185,902
Total assets	$	16,426,138		$	27,614,020

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	1,271,901		$	2,017,698
Accrued liabilities		1,295,537			1,517,258
Billings in excess of costs and estimated earnings on uncompleted contracts		95,743			1,045,687
Convertible debentures, net — current		1,360,000			50,000
Loans payable — current		142,304			142,644
Senior secured promissory notes, net — current		1,155,355			2,243,358
Related party payables		487,500			507,500
Income taxes payable		5,808			27,902
Total current liabilities		5,814,148			7,552,047
Convertible debentures, net of loan discounts		2,191,598			2,949,666
Loans payable		7,589			10,384
Senior secured promissory notes, net of loan discounts		2,012,141			1,998,479
Deferred tax liabilities, net — noncurrent		1,288,400			1,954,848
Contingent purchase consideration		641,000			3,326,000
Other noncurrent liabilities		492,712			492,712
Total liabilities		12,447,588			18,284,136

Commitments and contingencies		—			—

Equity:
ForceField Energy Inc. stockholders' equity:
Preferred stock, $0.001 par value. 12,500,000 shares authorized; zero shares issued and outstanding		—			—
Common stock, $0.001 par value. 37,500,000 shares authorized; 19,933,691 and 19,200,005 shares issued and 18,216,243 and 17,737,908 shares outstanding as of March 31, 2015 and December 31, 2014, respectively		19,934			19,200
Common stock held in treasury, at cost, 1,717,448 and 1,462,097 shares held at March 31, 2015 and December 31, 2014		(1,935,423	)		(1,166,071	)
Additional paid-in capital		31,488,614			27,132,299
Accumulated deficit		(25,605,845	)		(16,767,876	)
Accumulated other comprehensive income		11,270			12,573
Total ForceField Energy Inc. stockholders' equity		3,978,550			9,230,125
Noncontrolling interests		—			99,759
Total equity		3,978,550			9,329,884
Total liabilities and equity	$	16,426,138		$	27,614,020

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

F-1

FORCEFIELD ENERGY INC.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

	Successor			~~Predecessor~~	Predecessor
	Three Months Ended September 30,			Three Months Ended September 30,
	Three-Month Period Ended March 31,				Three-Month Period Ended March 31,
	2014			2013
	2015				2014
Sales	$	12,~~965~~852,~~705~~857		$	~~825,784~~$	1,300,775
Cost of goods sold		12,~~404~~106,~~318~~414			~~569,882~~	875,636
Gross margin		~~561~~746,~~387~~443			~~255,902~~	425,139
Operating expenses:
Depreciation and amortization		~~206~~344,~~501~~138			~~2,559~~	2,521
Selling and marketing		~~222~~167,~~633~~863			~~96,021~~	154,492
General and administrative		1,~~016~~436,~~012~~313			~~352,647~~	350,448
Professional fees		~~235~~256,~~109~~858			~~4,000~~	245
Total operating expenses		1,680,255			455,227
Impairment of goodwill and intangible assets		9,156,190				—
Loss from operations		(1,118,868	)		(199,325	)
Total operating expenses		11,361,362				507,706
Other income (expense):
Loss from operations		(10,614,919	)			(82,567	)
Interest expense, net		(115,685	)		1,130
Other income (expense)
Total other income (expense)		(115,685	)		1,130
Interest income (expense), net		(612,267	)			5,054
Loss before income taxes		(1,234,553	)		(198,195	)
Loss on settlement of debt		(733,414	)
Provision for income taxes (benefit)		(4,571	)		(120,578	)
Other gains (losses)		2,685,000				—
Net loss		(1,229,982	)		(77,617	)
Total other income		1,339,319				5,054
Less: Accretion of preferred stock		—			23,258
Loss before income taxes		(9,275,600	)			(77,513	)
Less: Net loss attributable to noncontrolling interests		(30,517	)		—
Provision for income taxes (benefit)		(431,244	)			1,775
Net loss attributable to ForceField Energy Inc. common stockholders	$	(1,199,465	)	$	(100,875	)
Net loss		(8,844,356	)			(79,288	)
Basic and diluted loss per share attributable to ForceField Energy Inc. common stockholders	$	(0.07	)	$	(0.08	)
Less: Accretion of preferred stock		—				24,197
Weighted-average number of common shares outstanding:
Less: Net loss attributable to noncontrolling interests		(6,387	)			—
Basic and diluted		16,255,493			1,252,403
Net loss attributable to ForceField Energy Inc. stockholders	$	(8,837,969	)		$	(103,485	)
Comprehensive loss:
Basic loss per common share attributable to ForceField Energy Inc. common stockholders:	$	(0.48	)		$	(0.08	)
Net loss	$	(1,229,982	)	$	(77,617	)
Diluted loss per common share attributable to ForceField Energy Inc. common stockholders:	$	(0.48	)		$	(0.08	)
Foreign currency translation adjustment		5,484			—
Weighted-average number of common shares outstanding:
Comprehensive loss		(1,224,498	)		(77,617	)
Basic and diluted		18,265,723				1,252,403
Comprehensive loss attributable to noncontrolling interests		(30,517	)		—
Comprehensive loss:
Comprehensive loss attributable to ForceField Energy Inc. common stockholders	$	(1,193,981	)	$	(77,617	)
Net loss	$	(8,844,356	)		$	(79,288	)
Foreign currency translation adjustment		(1,303	)			—
Comprehensive loss		(8,845,659	)			(79,288	)
Comprehensive loss attributable to noncontrolling interests		(6,387	)			—
Comprehensive loss attributable to ForceField Energy Inc. common stockholders	$	(8,839,272	)		$	(79,288	)

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

F-2

FORCEFIELD ENERGY INC.

Consolidated Statements of ~~Operations~~Cash ~~and Comprehensive Loss~~Flows

(Unaudited)

	Successor			~~Predecessor~~	Predecessor
	Period from April 26 through September 30			Period from January 1 through April 25			Nine Months Ended September 30,
	Three-Month Period Ended March 31,				Three-Month Period Ended March 31,
	2014			2014				2013
	2015				2014
Sales	$	2,958,646		$	1,604,369			$	3,925,587
Cash flows from operating activities:
Cost of goods sold		2,127,766			1,130,248				2,284,216
Net loss	$	(8,844,356	)		$	(79,288	)
Gross margin		830,880			474,121				1,641,371
Adjustments to reconcile net loss to cash used in operating activities:
Operating expenses:
Depreciation and amortization		344,138				2,521
Depreciation and amortization		252,656			3,334				7,637
Amortization of debt discount		277,377				—
Selling and marketing		342,734			193,148				376,849
Amortization of deferred financing costs		59,847				—
General and administrative		1,663,557			486,970				1,092,834
Recovery of doubtful accounts		(9,299	)			(17,188	)
Professional fees		548,341			37,317				23,865
Common stock issued for financing costs		116,659				—
Total operating expenses		2,807,288			720,769				1,501,185
Common stock issued in exchange for fees and services		12,880				—
Income (loss) from operations		(1,976,408	)		(246,648	)			140,186
Deferred taxes		(416,206	)			—
Other income (expense):
Impairment of goodwill and intangible assets		9,156,190				—
Interest expense, net		(177,060	)		2,182				3,456
Loss on settlement of debt		733,414				—
Total other income (expense)		(177,060	)		2,182				3,456
Unrealized gain on change in fair value of contingent consideration		(2,685,000	)			—
Income (loss) before income taxes		(2,153,468	)		(244,466	)			143,642
Changes in operating assets and liabilities:
Provision for income taxes (benefit)		(4,571	)		800				13,556
Accounts receivable		1,228,364				668,970
Net income (loss)		(2,148,897	)		(245,266	)			130,086
Costs and estimated earnings in excess of billings on uncompleted contracts		33,244				—
Less: Accretion of preferred stock		—			31,054				115,713
Inventory		(144,248	)			(56,691	)
Less: Net loss attributable to noncontrolling interests		(47,136	)		—				—
Prepaid expenses and other current assets		(76,991	)			(46,312	)
Net income (loss) attributable to ForceField Energy Inc. common stockholders	$	(2,101,761	)	$	(276,320	)		$	14,373
Other assets		(28,000	)			—
Basic and diluted earnings (loss) per share attributable to ForceField Energy Inc. common stockholders	$	(0.13	)	$	(0.22	)		$	0.01
Accounts payable		(729,542	)			(313,477	)
Weighted-average number of common shares outstanding:
Accrued liabilities		(138,011	)			(68,002	)
Basic and diluted		16,201,792			1,252,403				1,252,403
Billings in excess of costs and estimated earnings on uncompleted contracts		(764,117	)			—
Comprehensive loss:
Income taxes payable and other noncurrent liabilities		(21,294	)			(2,125	)
Net income (loss)	$	(2,148,897	)	$	(245,266	)		$	130,086
Net cash provided by (used in) operating activities		(1,894,951	)			88,408
Foreign currency translation adjustment		(2,366	)		—				—
Cash flows from investing activities:
Comprehensive income (loss)		(2,151,263	)		(245,266	)			130,086
Cash paid in divestment of business, net of cash acquired		(17,053	)			—
Comprehensive loss attributable to noncontrolling interests		(47,136	)		—				—
Purchase of fixed assets		(3,388	)			(1,673	)
Comprehensive income (loss) attributable to ForceField Energy Inc. common stockholders	$	(2,104,127	)	$	(245,266	)		$	130,086
Net cash used in investing activities		(20,441	)			(1,673	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		1,462,810				—
Proceeds from exercise of common stock purchase warrants, net of issuance costs		913,500				—
Proceeds from issuance of convertible debentures		400,000				—
Repayments of convertible debentures		(100,000	)			—
Repayments of loans payable		(3,135	)			—
Repayments of related party payables		(20,000	)			—
Net cash provided by financing activities		2,653,175				—
Effect of exchange rates on cash and cash equivalents		(4,343	)			—
Net increase in cash and cash equivalents		733,440				86,735
Cash and cash equivalents at beginning of period		771,206				339,011
Cash and cash equivalents at end of period	$	1,504,646			$	425,746
Supplemental disclosure of cash flow information:
Cash paid for interest	$	83,895			$	5
Cash paid for income taxes	$	61,344			$	4,140
Supplemental disclosure of non-cash investing and financing activities:
Accretion of preferred stock	$	—			$	24,197
Common stock issued for financing costs in connection with convertible debentures and promissory notes	$	32,150			$	—
Common stock issued to reduce promissory notes payable	$	1,000,000			$	—
Common stock issued to reduce accounts payable and other accrued liabilities	$	18,000			$	—
Discount for beneficial conversion features on convertible debentures	$	67,636			$	—
Reallocation of amounts prepaid towards the acquisition of a business to consideration for an intangible asset — licensing rights	$	279,500			$	—

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

F-3

FORCEFIELD ENERGY INC.

~~Statements~~Notes ofto ~~Changes~~Interim inUnaudited ~~Stockholders'~~Consolidated ~~Equity~~Financial Statements (~~Predecessor~~Unaudited)

~~(Unaudited)~~March 31, 2015

	Common Stock, Class A				Common Stock, Class B				Additional Paid-in		Retained			Total
	Shares		Value		Shares		Value		Capital		Earnings			Equity
Balance, December 31, 2013		949,373	$	949		303,030	$	303	$	791,837	$	1,448,682		$	2,241,771
Accretion of preferred stock		—		—		—		—		—		(31,054	)		(31,054	)
Net loss		—		—		—		—		—		(245,266	)		(245,266	)
Balance, April 25, 2014		949,373	$	949		303,030	$	303	$	791,837	$	1,172,362		$	1,965,451

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

F-4

FORCEFIELD ENERGY INC.

Consolidated Statement of Stockholders' Equity (Successor)

(Unaudited)

	Preferred Stock				Common Stock				Treasury			Additional Paid-in			Retained			Accumulated Other Comprehensive			Total Stockholders'			Noncontrolling			Total
	Shares		Value		Shares		Value		Stock			Capital			Earnings			Income			Equity			Interests			Equity
Balance, April 26, 2014		—	$	—		17,234,418	$	17,234	$	(1,166,071	)	$	17,709,543		$	(14,128,271	)	$	20,298		$	2,452,733		$	98,012		$	2,550,745
Net loss		—		—		—		—		—			—			(2,101,761	)		—			(2,101,761	)		(47,136	)		(2,148,897	)
Change in foreign currency translation		—		—		—		—		—			—			—			(2,366	)		(2,366	)		—			(2,366	)
Issuance of common stock in connection with sales made under private offerings		—		—		297,722		298		—			1,427,202			—			—			1,427,500			—			1,427,500
Cost of common stock issuances in connection with sales made under private offerings		—		—		—		—		—			(102,750	)		—			—			(102,750	)		—			(102,750	)
Issuance of common stock in connection with the exercise of common stock purchase warrants		—		—		87,500		87		—			349,913			—			—			350,000			—			350,000
Cost of common stock issuances in connection with the exercise of common stock purchase warrants		—		—		—		—		—			(35,000	)		—			—			(35,000	)		—			(35,000	)
Issuance of common stock in exchange for consulting, professional and other services		—		—		14,558		15		—			84,252			—			—			84,267			—			84,267
Issuance of common stock in lieu of cash for loans payable and other accrued obligations		—		—		44,063		44		—			206,206			—			—			206,250			—			206,250
Issuance of common stock in connection with entering into a letter of intent to acquire a business		—		—		25,000		25		—			136,975			—			—			137,000			—			137,000
Issuance of common stock in connection with the acquisition of a business		—		—		289,529		290		—			1,647,130			—			—			1,647,420			—			1,647,420
Issurance of common stock for acquisition costs		—		—		20,000		20		—			109,580			—			—			109,600			—			109,600
Recognition of beneficial conversion feature related to convertible debentures		—		—		—		—		—			12,500			—			—			12,500			—			12,500
Balance, September 30, 2014		—	$	—		18,012,790	$	18,013		(1,166,071	)	$	21,545,551		$	(16,230,032	)	$	17,932		$	4,185,393		$	50,876		$	4,236,269

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

F-5

FORCEFIELD ENERGY INC.

Consolidated Statements of Cash Flows

(Unaudited)

	Successor			Predecessor
	Period from April 26 through September 30			Period from January 1 through April 25			Nine Months Ended September 30,
	2014			2014			2013
Cash flows from operating activities of continuing operations:
Net income (loss)	$	(2,148,897	)	$	(245,266	)		$	130,086
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		252,656			3,334				7,637
Amortization of debt discount		59,171			—				—
Provision for recovery of doubtful accounts		3,774			(32,967	)			(125,845	)
Common stock issued for acquisition costs		109,600			—				—
Common stock issued in exchange for services		84,267			—				—
Changes in operating assets and liabilities:
Accounts receivable		(110,863	)		1,285,233				3,899,707
Inventory		(225,989	)		9,307				59,241
Prepaid expenses and other current assets		(21,713	)		(51,216	)			(28,252	)
Other assets		(10,254	)		—				—
Accounts payable		323,654			(487,915	)			(671,899	)
Accrued liabilities		255,721			(120,270	)			(539,907	)
Income taxes payable and other noncurrent liabilities		(4,438	)		(5,571	)			—
Net cash provided by (used in) operating activities		(1,433,311	)		354,669				2,730,768
Cash flows from investing activities:
Cash consideration for acquisition of business, net of cash acquired		(3,180,932	)		—				—
Notes receivable		(150,000	)		—				—
Purchase of fixed assets		(5,577	)		(2,768	)			(4,845	)
Net cash used in investing activities		(3,336,509	)		(2,768	)			(4,845	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		1,324,750			—				—
Proceeds from the exercise of common stock purchase warrants, net of issuance costs		315,000			—				—
Proceeds from the issuance of convertible debentures		500,000			—				—
Proceeds from loans payable		130,000			—				—
Proceeds from related party loans payable		75,000			—				—
Dividend and redemption payments on preferred stock		—			(283,000	)			(2,050,000	)
Net cash provided by (used in) financing activities		2,344,750			(283,000	)			(2,050,000	)
Effect of exchange rates on cash and cash equivalents		(1,537	)		—				—
Net increase (decrease) in cash and cash equivalents		(2,426,607	)		68,901				675,923
Cash and cash equivalents at beginning of period		2,937,763			339,011				216,729
Cash and cash equivalents at end of period	$	511,156		$	407,912			$	892,652
Supplemental disclosure of cash flow information:
Cash paid for interest	$	114,819		$	—			$	150
Cash paid for income taxes	$	4,716		$	—			$	351,069
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued related to acquisition of business	$	1,647,420		$	—			$	—
Common stock issued with letter of intent to acquire a business	$	137,000		$	—			$	—
Common stock issued to reduce loans payable and other accrued liabilities	$	206,250		$	—			$	—
Debt issued related to acquisition of business	$	1,000,000		$	—			$	—
Working capital adjustment payable related to acquisition of business	$	1,329,528		$	—			$	—
Contingent purchase consideration	$	1,186,000		$	—			$	—
Discount for beneficial conversion features on convertible debentures	$	12,500		$	—			$	—
Discount for fair value adjustment on promissory notes	$	34,981		$	—			$	—
Accretion of preferred stock	$	—		$	31,504			$	115,713

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

F-6

FORCEFIELD ENERGY INC.

Notes to Interim Unaudited Consolidated Financial Statements

September 30, 2014

(Expressed in United States dollars)

1.	NATURE OF OPERATIONS

ForceField Energy Inc. and its wholly-owned subsidiaries (“ForceField” or the “Company”) ~~collectively~~is ~~form~~a ancontractor ~~international organization~~ that ~~offers~~distributes ~~products~~ and ~~solutions~~installs ~~which promote improved energy efficiency and sustainable energy technology. ForceField is primarily a distributor and installer of~~ light emitting diode (“LED”) and ~~other~~traditional ~~energy efficient~~ lighting products. ~~Through~~for ~~its~~both ~~wholly-owned~~indoor ~~subsidiaries~~and ~~17th~~outdoor ~~Street~~commercial ~~ALD Management Corp (“American Lighting” or “ALD”), based in San Diego, California, ForceField Energy USA Inc~~applications. ~~which~~The ~~includes~~Company ~~the~~generates ~~assets~~revenue ~~of Catalyst~~by ~~LED’s~~selling ~~LLC~~commercial ~~(“FFE~~grade ~~USA”)~~lighting products and ~~ForceField~~its ~~Energy~~installation SAservices ~~(“FFE~~for ~~SA”),~~use ~~based~~ in ~~San~~both ~~Jose, Costa Rica, the Company has completed~~ commercial ~~lighting installations for varying organizations~~ and ~~facilities~~municipal ~~spanning numerous industries~~markets. ~~Furthermore,~~The ~~through~~marketing ~~its~~and ~~50.3%~~distribution ~~owned subsidiary TransPacific Energy, Inc. (“TPE”), based in Carlsbad, California, the Company is a licensee~~ of ~~renewable~~such ~~energy~~products ~~technology~~and ~~that~~services ~~utilizes~~occurs ~~modular~~primarily ~~recovery~~through ~~systems~~internal tosales ~~convert waste heat generated from manufacturing and other sources into clean electricity~~resources.

On March 5, 2015, the Company completed a sale of its 50.3% equity interest in TransPacific Energy, Inc. (“TPE”) back to certain current and former TPE shareholders. As a result of the transaction, the Company’s operations are now comprised of only one reportable segment for financial reporting purposes.

On May 1, 2015, the Company announced that it closed its offices in Costa Rica and Mexico and is in the process winding down operations at each of these locations.

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Acquisition~~Basis of ~~American Lighting~~Presentation

OnThe ~~April~~accompanying ~~25,~~unaudited ~~2014,~~consolidated financial statements of the Company ~~acquired~~have ~~American~~been ~~Lighting,~~prepared ain ~~leading~~accordance ~~energy-efficient,~~with ~~commercial~~accounting ~~lighting~~principles ~~specialist~~generally ~~based,~~accepted in ~~San~~the ~~Diego,~~United ~~California~~States (~~see~~“US ~~Note~~GAAP”) 6for –interim ~~Business~~financial ~~Combinations)~~information. All amounts are expressed in United States dollars. Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements include all of the adjustments which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes and other information included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three-month period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2015 or for any other future period.

Going Concern

These unaudited consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has generated significant operating losses which have been funded primarily from debt and equity financings. In addition, the Company is in default of, or past due on, certain payments related to principal and interest due on notes payable, vendor payables and other accrued liabilities. The Company is addressing its delinquencies on a case-by-case basis; however, it can offer no assurance that the cooperation it has received thus far will continue.

The continuing operations of the Company and the recoverability of the carrying value of assets is dependent upon the ability of the Company to obtain necessary financing to fund its working capital requirements, and upon future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

There can be no assurance that new capital will be available as necessary to meet the Company's working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in significant dilution in the equity interests of its current stockholders. Obtaining new debt capital, assuming such debt capital would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected and the Company may cease operations. These factors raise substantial doubt regarding its ability to continue as a going concern.

F-4

Predecessor and Successor Reporting

~~The~~On April 25, 2014, the Company acquired 17th Street ALD Management Corp (“ALD”), a leading commercial lighting specialist based in San Diego, California. The transaction was accounted for under ~~purchase~~the acquisition method of accounting., ~~ALD~~which isrequires ~~deemed~~that the ~~Predecessor~~assets purchased and ~~ForceField~~the isliabilities assumed all be reported in the ~~Successor~~acquirer's ~~for~~financial statements at their fair value, with any excess purchase price over the ~~purpose~~net ofassets ~~financial~~being ~~reporting~~reported ~~under~~as goodwill. The application of the ~~rules~~acquisition method of accounting represented a change in accounting basis. Accordingly, the ~~Securities~~financial statements and ~~Exchange~~certain ~~Commission~~note presentations separate the Company’s presentations into two distinct periods, the period before the consummation of the transaction (labeled “~~SEC~~Predecessor”). ~~The~~and ~~assets~~the ~~and~~period ~~liabilities~~after ofthat ~~ALD~~date ~~are~~(labeled ~~recorded~~“Successor”), atto ~~their~~indicate ~~respective~~the ~~fair~~application ~~values~~of asthe different basis of accounting between the ~~acquisition~~periods ~~date~~presented. ~~Fair~~For ~~value~~financial ~~adjustments~~reporting ~~related~~purposes, ALD was deemed to be the ~~transaction~~predecessor ~~have~~company ~~been~~and ~~reflected~~ForceField was deemed to be the successor company in accordance with the ~~books~~rules ofand ~~ForceField,~~regulations ~~resulting~~issued by the SEC. This change in ~~assets~~accounting ~~and~~basis ~~liabilities~~is ofrepresented in the ~~Company~~unaudited ~~being~~consolidated ~~recorded~~financial atstatements ~~fair~~by ~~value~~a atvertical ~~April~~black ~~25,~~line ~~2014.~~which ~~Therefore~~appears between the ~~Company’s~~columns ~~financial~~entitled ~~information~~"Predecessor" ~~prior~~and to"Successor" on the ~~transaction~~statements isand ~~not~~in ~~comparable~~the torelevant ~~its~~notes. ~~financial~~The ~~information~~black line signifies that the amounts shown for the periods prior to and subsequent to the ~~transaction~~acquisition may not be comparable.

AsThe apredecessor ~~result~~account ofbalances ~~the~~and ~~impact~~results of ~~pushdown~~operations ~~accounting,~~are ~~the~~effective ~~financial~~through ~~statements~~April ~~and~~30, ~~certain note presentations separate the Company’s presentations into two distinct periods~~2014, ~~the~~as ~~period before~~ the ~~consummation~~impact of ~~the~~transactions ~~transaction~~recorded ~~(labeled~~from ~~“Predecessor”)~~April ~~and~~26, ~~the~~2014 ~~period~~through ~~after~~April ~~that date (labeled “Successor”)~~30, to2014 ~~indicate~~was ~~the~~not ~~application of a different basis of accounting between the periods presented~~material.

~~Basis of Presentation and~~ Principles of Consolidation

~~The~~These ~~consolidated~~unaudited ~~financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in United States dollars. The~~ consolidated financial statements include the accounts of the Company; and its wholly-owned subsidiaries ~~SunSi Energies Hong Kong Limited, FFE USA, FFE SA, and American Lighting; and its 50~~.3% owned subsidiary TPE. Predecessor account balances and results of operations for the current year period are effective through April 30, 2014 as the impact of transactions recorded from April 26, 2014 through April 30, 2014 was not material. All intercompany accounts and transactions are eliminated in consolidation.

Management’s Representation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared by the Company without audit pursuant to the rules and regulations of the SEC. Certain information and disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted as allowed by such rules and regulations, and management believes that the disclosures are adequate to make the information presented not misleading. These consolidated financial statements include all of the adjustments, which in the opinion of management are necessary to a fair presentation of financial position and results of operations. All such adjustments are of a normal and recurring nature. Interim results are not necessarily indicative of results for a full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements at December 31, 2013 as presented in the Company’s Annual Report on Form 10-K filed on April 15, 2014 with the SEC and with the audited financial statements for American Lighting as of December 31, 2013 as presented in Exhibit 99.1 on the Company’s Form 8-K/A filed on July 11, 2014 with the Securities and Exchange Commission.

F-7

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The ~~Company~~most ~~continually~~significant ~~evaluates its~~ estimates, ~~including~~relate ~~but not limited~~ to ~~the~~revenue ~~allowance~~recognition, ~~for~~valuation ~~doubtful~~of accounts, ~~the~~receivable ~~useful lives~~ and ~~impairment~~inventories, ~~for~~purchase ~~property,~~price ~~plant~~allocation ~~and~~of ~~equipment~~acquired businesses, ~~goodwill~~impairment ~~and~~of ~~acquired~~long ~~intangible~~lived assets, ~~write-down~~and ingoodwill, ~~value~~valuation of ~~inventory~~financial ~~and~~instruments, ~~deferred~~ income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

Revenue ~~recognition~~Recognition

The Company recognizes revenue ~~from~~on ~~both~~the ~~direct~~percentage-of-completion ~~customer~~method, ~~sales~~measured ~~and~~by ~~rebates~~the ~~from~~percentage ~~utility~~of ~~companies~~total costs incurred to date against the estimated total costs for each contract. ~~Revenue~~ ~~from~~Contract costs include all direct ~~customer~~material ~~sales~~and islabor ~~recognized~~costs ~~once~~and ~~the~~those ~~Company~~indirect ~~has~~costs ~~established~~related ~~that~~to ~~(i)~~contract ~~there~~performance, issuch ~~evidence~~as ofindirect anlabor, ~~arrangement;~~supplies, ~~(ii)~~tools, ~~delivery~~repairs ~~has~~and ~~occurred~~depreciation costs. General and administrative costs are charged to expense as incurred. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. Changes in job performance, ~~obligation~~job isconditions ~~substantially~~and ~~complete;~~estimated ~~(iii)~~profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the ~~fee~~period in which the revisions are determined. Profit incentives are included in revenue when their realization is ~~fixed~~reasonably orassured. ~~determinable;~~An ~~and~~amount ~~(iv)~~equal ~~collection~~to contract costs attributable to claims is ~~probable,~~included ~~which~~in ~~typically~~revenue ~~occurs~~when atrealization ~~the~~is ~~completion~~probable ofand ~~each~~the ~~energy-efficient~~amount ~~lighting~~can ~~retrofit~~be reliably estimated.

~~Revenue from rebates from utilities is recognized upon the completion of each eligible energy~~F-efficient lighting retrofit. On eligible lighting retrofit projects, these rebates are simultaneously credited against the quoted sales price and assigned to the Company by the customer. The Company is responsible for the application of the rebate, and bears the risk of any loss from the verification and collection of the rebate. For the three and nine month periods ended September 30, 2014, revenue from rebates from utilities totaled $280,827 and $1,373,613, respectively, as compared to $291,053 and $1,628,643 during the corresponding periods in the prior year.5

~~Certain~~The ~~rebates~~asset, ~~from~~costs ~~utility~~and ~~companies~~estimated ~~are~~earnings ~~subject~~in toexcess ~~refund~~of ~~rights~~billings inon ~~the~~uncompleted ~~event~~contracts, ~~that~~represents ~~specified~~revenue ~~energy~~recognized ~~savings~~in ~~are~~excess ~~not~~of ~~met~~amounts billed. The ~~Company~~liability, ~~assesses~~billings ~~each~~in ~~retrofit~~excess ~~project~~of ~~subject~~costs toand ~~refund rights to determine if the~~ estimated ~~energy~~earnings ~~savings~~on ~~are~~uncompleted ~~likely~~contracts, torepresents bebillings ~~met.~~in Asexcess of ~~September~~revenue ~~30, 2014 and December 31, 2013, there were no retrofit projects subject to this refund right that were not expected to meet the specified energy savings~~recognized.

~~The~~Revenue ~~utilities~~from ~~providing~~rebates ~~the~~from ~~retrofit~~utilities ~~rebate,~~may atbe ~~their~~recognized ~~discretion,~~on ~~can~~eligible ~~audit~~energy-efficient ~~the~~lighting ~~Company's~~retrofit ~~customer~~projects. ~~installations~~These ~~prior~~rebates toare ~~payment.~~simultaneously ~~These~~credited ~~audits~~against ~~often~~the ~~result~~quoted incontract anprice ~~adjustment~~and assigned to the ~~rebate,~~Company ~~which~~by isthe ~~netted~~customer. ~~against~~The ~~revenues.~~Company Ais ~~reserve~~responsible for ~~adjustments~~the ~~was~~application ~~recorded~~of ~~based~~the ~~upon~~rebate, ~~current period sales~~ and bears the ~~Company’s~~risk ~~historical~~of ~~experience~~any ~~factor~~loss infrom ~~recording such rebate adjustments. For~~ the ~~three~~verification and ~~nine~~collection ~~month~~of ~~periods~~the ~~ended~~rebate. ~~September~~Revenue ~~30,~~from ~~2014, adjustments to~~ rebates from utilities totaled $3133,~~446~~811 ~~and~~for ~~$65,592,~~the ~~respectively,~~three asmonth ~~compared~~period toended ~~$6,779~~March ~~and $~~31,~~126~~ ~~during~~2015 ~~the~~compared ~~corresponding~~to ~~periods~~$333,651 infor the ~~prior~~same ~~year.~~three ~~These~~month ~~amounts~~period ~~are~~ended ~~netted~~March in31, ~~the Company’s accounts receivable and revenue~~2014.

~~Cash~~Certain rebates from utility companies are subject to refund rights in the event that specified energy savings are not met. The Company assesses each retrofit project subject to refund rights to determine if the estimated energy savings are likely to be met. As of March 31, 2015 and ~~cash~~December ~~equivalents~~31, 2014, there were no retrofit projects subject to this refund right that were not expected to meet the specified energy savings.

The ~~Company~~utilities ~~considers~~providing ~~all~~the ~~highly~~retrofit ~~liquid~~rebate, ~~investments~~at ~~with~~their adiscretion, ~~maturity~~can ofaudit ~~three months or less at~~ the ~~date~~Company's ofcustomer ~~purchase~~installations prior to ~~be cash equivalents~~payment. ~~Cash~~These ~~and~~audits ~~cash~~often ~~equivalents~~result ~~consist~~in ofan ~~cash~~adjustment onto ~~deposit~~the ~~with~~rebate, ~~banks~~which ~~and~~is ~~money~~netted ~~market~~against ~~funds,~~revenues. ~~the~~A ~~fair~~reserve ~~value~~for ofadjustments ~~which~~was ~~approximates~~recorded ~~cost.~~based ~~The~~upon ~~Company~~current ~~maintains~~period ~~its~~sales ~~cash~~and ~~balances~~the ~~with~~Company’s ahistorical ~~high-credit-quality~~experience ~~financial~~factor ~~institution.~~in Atrecording ~~times,~~ such ~~cash~~rebate ~~may~~adjustments. beDuring inthe ~~excess~~three ofmonth ~~the~~periods ~~Federal~~ended ~~Deposit~~March ~~Insurance~~31, ~~Corporation-insured~~2015 ~~limit~~and ofMarch ~~$250~~31,~~000.~~ ~~The~~2014 ~~Company~~the ~~has~~adjustments ~~not~~to ~~experienced~~rebates ~~any~~from ~~losses~~utilities intotaled ~~such accounts~~$5,608 and ~~management~~$12,028 ~~believes~~respectively. ~~the~~These ~~Company~~amounts isare ~~not~~netted ~~exposed~~in tothe ~~any~~Company’s ~~significant~~accounts ~~credit~~receivable ~~risk on its cash~~ and ~~cash equivalents~~revenue.

~~F-8~~Fair Value Measurements

~~Accounts~~The ~~receivable~~Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

~~Accounts~~● ~~receivable~~Level ~~balances~~1 ~~consist~~- ofQuoted ~~amounts~~prices ~~due~~in ~~from~~active ~~customers~~markets ~~and are recorded net of allowances~~ for ~~doubtful~~identical ~~accounts,~~assets aor ~~reserve for sales adjustments and deferred payment plan discounts~~liabilities.

~~For~~● ~~amounts~~Level ~~due~~2 ~~from direct customers, the Company has a non~~-~~interest-bearing~~ ~~payment~~Inputs ~~plan~~other ~~for~~than ~~accounts~~quoted ~~receivable~~prices ~~under~~included ~~which~~within ~~customers~~Level ~~make~~1 ~~installment~~that ~~payments~~are ofeither ~~equal~~directly ~~amounts~~or ~~over~~indirectly ~~predetermined terms, usually a two-year period~~observable. In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 310, Receivables, the Company estimates the present value of the payment plan for accounts receivable using imputed interest at the Company's borrowing rate at the end of the year (6.25% as of September 30, 2014 and December 31, 2013).

~~The~~● ~~Company's~~Level long-term receivables are considered financing receivables. The credit quality of these customers is evaluated on an ongoing basis and the allowance for doubtful accounts is adjusted for any changes in assessed risk. During the successor period of April 26, 2014 through September 30, 2014, the Company recorded an increase of $3~~,774~~ ~~in the provision and recorded $~~-0- inUnobservable ~~write~~inputs ~~offs.~~that ~~During~~are ~~the~~supported ~~predecessor~~by ~~period~~little ofor ~~January~~no 1,market ~~2014 through April 25~~activity, ~~2014~~therefore ~~and~~requiring ~~for~~an ~~the~~entity ~~nine~~to ~~months~~develop ~~ended~~its ~~September~~own ~~30,~~assumptions ~~2013,~~about the ~~Company~~assumptions ~~recorded~~that amarket ~~decrease~~participants ofwould ~~$32,967~~use ~~and $125,845, respectively and $-0-~~ in ~~write-offs for both periods~~pricing.

~~The~~Fair ~~difference between the present~~ value ~~and~~estimates ~~face~~discussed ~~value~~herein isare ~~recorded~~based asupon ~~unamortized~~certain ~~discounts,~~market ~~which~~assumptions ~~will~~and bepertinent ~~amortized~~information ~~over~~available ~~the~~to ~~term~~management as of ~~the~~March ~~payment~~31, ~~plan~~2015. The ~~allowance~~Company ~~for~~uses ~~discounts~~the onmarket ~~deferred~~approach ~~payment~~to ~~plan~~measure ~~accounts~~fair ~~receivable~~value ~~was~~for ~~$5,283~~its ~~and~~Level ~~$12,016~~1 asfinancial ofassets ~~September 30, 2014~~ and ~~December 31, 2013, respectively~~liabilities. The ~~Company~~market ~~recorded~~approach ~~$7,640~~uses ofprices ~~interest~~and ~~income~~other ~~from~~relevant ~~deferred~~information ~~payment~~generated ~~plan~~by ~~accounts~~market ~~receivable~~transactions ~~during~~involving ~~the~~identical ~~successor~~or ~~period~~comparable ofassets ~~April~~or ~~26,~~liabilities. ~~2014~~The ~~through~~respective ~~September~~carrying ~~30,~~value ~~2014.~~of ~~The~~certain ~~Company~~balance ~~recorded~~sheet ~~$4,217~~financial ofinstruments ~~interest~~approximates ~~income~~its ~~from~~fair ~~deferred~~value. ~~payment~~These ~~plan~~financial ~~accounts~~instruments ~~receivable~~include ~~during~~cash, ~~the~~trade ~~predecessor~~receivables, ~~period~~related ofparty ~~January~~payables, 1accounts payable, ~~2014~~accrued ~~through~~liabilities ~~April~~and ~~25,~~short-term ~~2014~~borrowings. ~~The~~Fair ~~Company~~values ~~recorded~~were ~~$3,593~~estimated ofto ~~interest~~approximate ~~income~~carrying ~~from~~values ~~deferred~~for ~~payment~~these ~~plan~~financial ~~accounts~~instruments ~~receivable~~since ~~during~~they ~~the~~are ~~nine~~short ~~month~~term ~~predecessor~~in ~~period~~nature ~~ended~~and ~~September~~they ~~30,~~are ~~2013~~receivable or payable on demand.

~~For~~The ~~rebate~~estimated ~~receivables~~fair ~~from~~value ~~utilities,~~of ~~the~~assets ~~Company~~and ~~typically~~liabilities isacquired ~~entitled~~in tobusiness ~~receive~~combinations aand ~~portion~~reporting ofunits ~~such~~and ~~amounts~~long-lived ~~upon~~assets ~~completion~~used ofin the ~~project,~~related ~~and~~asset ~~the~~impairment ~~remaining~~tests ~~portion~~utilize ~~after~~inputs ~~specified~~classified ~~conditions~~as ~~are~~Level ~~proven~~3 toin ~~have~~the ~~been~~fair ~~met~~value hierarchy.

~~Customer concentrations~~F-6

~~During~~The Company determines the ~~successor~~fair ~~period~~value of ~~April~~contingent ~~26,~~consideration ~~2014~~based ~~through~~on ~~September~~a ~~30,~~probability-weighted ~~2014,~~discounted ~~the~~cash ~~Company~~flow ~~had one customer that accounted for 16~~analysis.9% ofThe ~~revenues~~fair ~~and~~value ~~another~~remeasurement ~~that~~is ~~accounted~~based ~~for~~on ~~11.1%~~significant ofinputs ~~accounts~~not ~~receivable.~~observable ~~During~~in the ~~predecessor~~market ~~period~~and ofthus ~~January~~represents 1,a ~~2014~~Level ~~through~~3 ~~April~~measurement ~~25,~~as ~~2014,~~defined in the ~~Company~~fair ~~had~~value ~~one customer that accounted for 21~~hierarchy.6% ofIn ~~revenues~~each ~~and~~period, ~~another~~the ~~two~~Company ~~customers~~reassesses ~~that~~its ~~accounted~~current ~~for~~estimates ~~25.1%~~ of ~~accounts~~performance ~~receivable.~~relative ~~For~~to the ~~nine~~stated ~~month~~targets ~~predecessor~~and ~~period~~adjusts ~~ended~~the ~~September~~liability ~~30,~~to ~~2013,~~fair ~~the~~value. ~~Company~~Any ~~had~~such ~~one~~adjustments ~~customer~~are ~~that~~included ~~accounted~~as ~~for~~a ~~28.9%~~component of ~~revenues~~Other ~~and~~Income ~~two~~(Expense) ~~customers~~in ~~that~~the ~~accounted~~Consolidated ~~for~~Statements ~~33.1%~~ of ~~accounts~~Operations ~~receivable~~and Comprehensive Loss.

~~Inventory~~The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2015:

Inventory consists of finished goods and is stated at the lower of cost or market value. Cost is determined on a first-in, first-out ("FIFO") basis. Inventory is reviewed periodically for slow-moving and obsolete items. The Company believes that no reserve for obsolete inventory is necessary as of September 30, 2014 and December 31, 2013.

		Level 1				Level 2				Level 3
Earnout liability		$	—			$	—			$	641,000

~~Property~~The following table summarizes the change in the Company’s financial assets and ~~equipment~~liabilities measured at fair value as of March 31, 2015:

Property and equipment are stated at historical cost less accumulated depreciation. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is credited or charged to income. Maintenance and minor replacements are charged to expense as incurred. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets as follows:

	2015

Fair value, January 1, 2015	$	3,326,000
Fair value of contingent consideration issued during the period		—
Change in fair value		(2,685,000	)
Fair value, March 31, 2015	$	641,000

Computers and equipment	3 years
Furniture and fixtures	5 years
Leasehold improvements	Lesser of economic life or lease term

F-9

Impairment of long-lived assets

In accordance with ASC 360, Property, Plant, and Equipment, if indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through the undiscounted future operating cash flows. If impairment is indicated, the Company measures the amount of such impairment by comparing the carrying value of the asset to the undiscounted cash flows associated with the use of the asset. The Company has not recognized any impairment losses for the periods ended September 30, 2014 and December 31, 2013.

Goodwill and Intangible Assets

~~Under~~Goodwill ~~ASC~~represents ~~350,~~ the ~~Company~~future iseconomic ~~required~~benefit toarising ~~perform~~from another ~~annual~~assets ~~impairment~~acquired ~~test~~that ofcould ~~the~~not ~~Company’s~~be ~~goodwill~~individually identified and ~~indefinite-lived~~separately ~~intangibles~~recognized. ~~Annually~~The ongoodwill ~~each~~arising ~~December~~from ~~31, management assesses~~ the ~~composition of the~~ Company’s ~~assets~~acquisitions ~~and~~is ~~liabilities,~~attributable asto ~~well as~~ the ~~events~~value ~~that~~of ~~have occurred and~~ the ~~circumstances~~potential ~~that~~expanded ~~have~~market ~~changed~~opportunity ~~since~~with ~~the~~new ~~most~~customers. ~~recent~~Intangible ~~fair~~assets ~~value~~have ~~determination.~~either Ifan ~~events~~identifiable ~~occur~~ or ~~circumstances~~indefinite ~~change~~useful ~~that~~life. ~~would~~Intangible ~~more~~assets ~~likely~~with ~~than~~identifiable ~~not~~useful ~~reduce~~lives ~~the~~are ~~fair~~amortized ~~value~~on ofa ~~goodwill and indefinite~~straight-~~lived~~line ~~intangibles~~basis ~~below~~over their ~~carrying~~economic ~~amounts,~~or ~~they~~legal ~~will~~life, bewhichever ~~tested~~is ~~for impairment~~shorter. The Company’s ~~will~~amortizable ~~recognize~~intangible anassets ~~impairment~~consist ~~charge if the carrying value~~ of ~~the~~customer ~~asset~~relationships, ~~exceeds~~distribution ~~the~~and ~~fair~~licensing ~~value determination. The impairment test that the Company has selected historically consisted of a ten year discounted cash flow analysis including the determination of a terminal value~~agreements, ~~and~~non-compete ~~requires~~agreements ~~management to make various assumptions~~ and ~~estimates~~technology. ~~including~~Their ~~revenue~~useful ~~growth,~~lives ~~future~~range ~~profitability,~~from ~~peer~~0.5 ~~group~~to ~~comparisons,~~15 ~~and~~years. aThe ~~discount~~Company’s ~~rate~~indefinite-lived ~~which~~intangible ~~management~~assets ~~believes~~consist ~~are~~of ~~reasonable~~trade names.

~~The~~Goodwill and indefinite-lived assets are not amortized, but are subject to annual impairment ~~test~~testing ~~involves~~unless acircumstances ~~two-step~~dictate ~~approach~~more frequent assessments. ~~Under~~The ~~the~~Company ~~first~~performs ~~step,~~an annual impairment assessment for goodwill during the ~~Company~~fourth ~~determines~~quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of ~~each~~the ~~reporting~~asset ~~subsidiary~~may tobe ~~which~~less ~~goodwill~~than ~~has~~the ~~been~~carrying ~~assigned~~amount. ~~The~~Goodwill ~~Company~~impairment ~~then~~testing is a two-step process performed at the reporting unit level. Step one compares the fair value of ~~each~~the reporting ~~subsidiary~~unit to its carrying amount. The fair value, ~~including~~of ~~goodwill~~the reporting unit is determined by considering both the income approach and market approaches. The ~~Company~~fair ~~estimates~~values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of ~~each~~the reporting ~~subsidiary~~unit, bywhich ~~estimating~~are discounted to the present value ofusing discount factors that consider the ~~reporting~~timing ~~subsidiaries'~~and ~~future~~risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value ~~exceeds~~of the ~~carrying~~reporting ~~value,~~unit nois ~~impairment~~greater ~~loss~~than its carrying amount, there is ~~recognized~~no impairment. If the reporting unit’s carrying ~~value~~amount exceeds ~~the~~its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit isfrom ~~considered~~the ~~potentially~~fair ~~impaired~~value ~~and~~of the ~~second~~reporting unit as calculated in step one. In this step, the fair value of the reporting unit is ~~completed~~allocated to all of the reporting unit’s assets and liabilities in ~~order~~a tohypothetical ~~measure~~purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

Under the second step, the Company calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets, including any unrecognized intangible assets, of the reporting unit from the fair value of the reporting unit, as determined in the first step. The Company then compares the implied fair value of goodwill to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, the Company recognizes an impairment loss equal to the difference.F-7

~~Stock~~Determining ~~Purchase~~the ~~Warrants~~fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that the Company’s estimates and assumptions made for purposes of the goodwill impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause the Company to perform impairment test prior to scheduled annual impairment tests scheduled in the fourth quarter.

~~The~~Long-Lived Company has issued warrants to purchase shares of its common stock. Warrants have been accounted for as equity in accordance with FASB ASC 480, Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock, Distinguishing Liabilities from Equity.Assets

~~Income~~The ~~taxes~~Company evaluates the recoverability of its long-lived assets whenever events or changes in circumstances have indicated that an asset may not be recoverable. The long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. If the sum of the projected undiscounted cash flows is less than the carrying value of the assets, the assets are written down to the estimated fair value.

The Company accounts for income taxes under FASB ASC 740, “Accounting for Income Taxes”. Under FASB ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. FASB ASC 740-10-05, “Accounting for Uncertainty in Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. We assess the validity of our conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause us to change our judgment regarding the likelihood of a tax position’s sustainability under audit.

F-10

Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Fair value measurements

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.

Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement as follows:

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2014:

		Level 1				Level 2				Level 3
Earnout liability			—				—			$	1,186,000

The fair value of the earnout liability relates to the contingent consideration for the American Lighting acquisition and was estimated using a Monte-Carlo simulation model to determine the probabilities of reaching the revenue and EBITDA targets over the earnout periods. Key assumptions include American Lighting achieving annual revenues ranging from $7.9 million to $13.0 million and EBITDA ranging from $1.0 million to $2.2 million over the earnout period. The weighted average probabilities were discounted to present value using a discount rate of 20.9%.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

Recent accounting pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

F-11

3.	ACCOUNTS RECEIVABLE, NET

The following table ~~summarizes~~sets forth the ~~composition~~components of the Company’s accounts receivable, net at ~~September~~March 3031, ~~2014~~2015 and December 31, ~~2013~~2014:

	Successor		Predecessor
	March 31, 2015				December 31, 2014
	September 30, 2014		December 31, 2013
Accounts and contracts receivable	$	2,557,167			$	3,755,498
Accounts receivable	$	2,322,074	$	3,113,976
Retainage		853,048				894,892
Allowance for doubtful accounts		(~~119~~76,~~613)~~375	)	~~(153,297~~	)	(97,708	)
Net accounts receivable		2,202,461		2,960,679
Total accounts receivable, net		3,333,840				4,552,682
Less: Noncurrent portion of accounts receivable, net		(—)23,423	)	~~(4,921~~	)	(33,093	)
Current portion of accounts receivable, net	$	23,~~202~~310,~~461~~417	$	~~2,955,758~~	$	4,519,589

4Accounts receivable are customer obligations due under normal trade terms. ~~INVENTORY~~The Company performs periodic credit evaluations of its customers’ financial condition. The Company records an allowance for doubtful accounts based upon factors surrounding the credit risk of certain customers and specifically identified amounts that it believes to be uncollectible. During the three-month successor period ended March 31, 2015, the Company recorded a decrease of $9,299 to its provision for bad debts and recorded nil in write offs. During the three-month predecessor period ended March 31, 2014, the Company recorded a decrease of $17,188 to its provision for bad debts and recorded nil in write-offs.

The ~~following~~Company's ~~table~~long-term ~~summarizes~~receivables are considered financing receivables. The difference between the ~~composition~~present value and face value of these receivables is recorded as an unamortized discount which is amortized over the term of the payment plan. The Company’s ~~inventory~~recorded at$1,298 ~~September~~of 30interest income from deferred payment plan accounts receivable during the three-month successor period ended March 31, ~~2014~~2015, and ~~December~~$3,385 of interest income from deferred payment plan accounts receivable during the three-month predecessor period ended March 31, ~~2013:~~2014.

	Successor		Predecessor
	September 30, 2014		December 31, 2013
Work in process	$	209,895	$	19,006
Finished goods		418,019		193,783
Total	$	627,914	$	212,789

F-8

Customer concentrations

The Company had three customers that accounted for 46.1% of accounts receivable during the three-month successor period ended March 31, 2015, and one customer that accounted for 19.6% of accounts receivable during the three-month predecessor period ended March 31, 2014. Additionally, the Company had three customers that accounted for 54.7% of revenues during the three-month successor period ended March 31, 2015, and one customer that accounted for 25.1% of revenues during the three-month predecessor period ended March 31, 2014.

Geographic information

During the three-month successor period ended March 31, 2015, all of the Company’s sales were generated within the United States with the exception of $25,010 in sales that were produced in Costa Rica. During the three-month predecessor period ended March 31, 2014, all of the Company’s sales were generated within the United States.

4.	PREPAID EXPENSES AND OTHER CURRENT ASSETS

The following table sets forth the components of the Company’s prepaid expenses and other current assets at March 31, 2015 and December 31, 2014:

	March 31, 2015		December 31, 2014

Advance payments to employees and representatives	$	11,604	$	41,110
Advance payments to suppliers		—		47,946
Other prepaid expenses and current assets		77,976		55,310
Payments on letter of intent to acquire a business		—		279,500
Prepaid income taxes and other tax receivables		66,706		20,476
Prepaid insurance and surety bonds		128,874		43,054
Total	$	285,160	$	487,396

The economic benefit of all prepaid expense and other current asset balances are expected to be realized within a twelve-month period. Payments on a letter of intent to acquire a business represent payments of $142,500 made in cash and the issuance of $137,000 in restricted stock pursuant to the terms of a non-binding letter of intent signed on July 26, 2014 with Noveda Technologies Inc. (“Noveda”). On March 5, 2015, the Company reclassified these amounts as an amortizable intangible asset upon the simultaneous amendment of a licensing agreement and cancellation of a letter of intent with the acquisition target (see Note 7 – Goodwill and Intangible Assets, Net for additional information).

5.	PROPERTY AND EQUIPMENT

~~Property~~The following table sets forth the components of the Company’s property and equipment at ~~September~~March 3031, ~~2014~~2015 and December 31, ~~2013 were comprised of the following~~2014:

	Successor		Predecessor
	March 31, 2015									December 31, 2014
	September 30, 2014		December 31, 2013
	Cost				Accumulated Depreciation			Net Book Value		Cost		Accumulated Depreciation			Net Book Value
Computers and equipment	$	9951,~~984~~167	$	~~87,996~~	$	(12,873	)	$	38,334	$	48,767	$	(8,556	)	$	40,211
Furniture and fixtures		4522,~~970~~769		~~25,780~~		(3,657	)		19,112		22,584		(3,241	)		19,343
Leasehold improvements		4718,~~370~~471		~~46,685~~		(908	)		17,563		18,471		(638	)		17,833
Total property and equipment, gross		193,324		160,461
Vehicles		55,465				(8,656	)		46,809		55,465		(3,462	)		52,003
Less: Accumulated depreciation		(158,687)		(148,825	)
Construction in process		38,441				—			38,441		38,441		—			38,441
Total property and equipment, net	$	34,637	$	11,636
Total	$	186,313			$	(26,054	)	$	160,259	$	183,728	$	(15,897	)	$	167,831

~~The~~Property ~~Company~~and ~~recorded~~equipment ~~depreciation~~are ~~expense~~stated ofat ~~$5,767~~cost ~~during~~or ~~the~~at ~~successor~~fair ~~period~~value if acquired as part of ~~April~~a ~~26,~~business ~~2014~~combination. ~~through~~Depreciation ~~September~~is ~~30,~~computed ~~2014~~by the straight-line method and ~~$3,334~~is ~~during~~charged to operations over the ~~predecessor~~estimated ~~period~~useful lives of ~~January~~the 1,assets. ~~2014~~The ~~through~~Company ~~April~~recorded ~~25,~~depreciation ~~2014.~~expense ~~For~~of $11,125 during the ~~nine~~three month ~~predecessor~~successor period ended ~~September~~March 3031, ~~2013~~2015 and $2,521 during the ~~Company~~three ~~recorded~~month ~~depreciation~~predecessor ~~expense~~period ofended $7March 31,~~637~~ 2014.

Differences may arise in the amount of depreciation expense reported in the Company's operating results as compared to the corresponding change in accumulated depreciation due to foreign currency translation. These translation adjustments are reflected in accumulated other comprehensive income, a separate component of the Company's stockholders' equity.

F-129

6. BUSINESS ~~COMBINATIONS~~DIVESTITURE

~~Acquisition~~In February 2015, the Company’s board of ~~American~~directors ~~Lighting~~authorized the sale of its waste heat recovery (“Organic Rankine Cycle” or “ORC”) business due to its lack of operating performance and as part of a settlement of certain lawsuits filed by and against both TPE and the Company. On March 5, 2015, the Company completed such sale of its 50.3% equity interest in TPE back to certain current and former TPE shareholders. In exchange for its equity interest, ForceField received $50,000 in cash proceeds and the return of 255,351 shares of the Company’s common stock originally issued in May 2012 when it acquired the equity interest in TPE.

OnThe ~~April 25, 2014, the~~ Company ~~completed~~analyzed the ~~acquisition~~divestment of ~~American~~its ~~Lighting.~~ORC ~~Under~~business ~~the~~for ~~terms~~discontinued ofoperations ~~the~~reporting ~~stock~~consideration. ~~purchase~~ASC ~~agreement,~~205-20 ~~ForceField~~“Discontinued ~~paid~~Operations” ~~$2.5~~establishes ~~million~~that inthe ~~cash,~~disposal ~~issued~~of ~~$1.6~~a ~~million~~component of ~~its~~an ~~restricted common~~entity ~~stock~~or ~~and~~a ~~$1.0~~group ~~million~~of incomponents 5%of ~~senior~~an ~~secured~~entity ~~notes~~should inbe ~~exchange~~reported ~~for~~in ~~all~~discontinued ofoperations if the ~~outstanding~~disposal ~~equity~~represents ofa ~~ALD;~~strategic orshift ~~total~~that ~~agreed~~has ~~upon~~(or ~~purchase~~will ~~consideration~~have) ~~of $5.1~~a ~~million.~~major ~~The~~effect ~~289,529~~on ~~shares~~an ~~of ForceField~~entity’s ~~common~~operations ~~stock~~and ~~issued~~financial ~~are~~results. ~~subject~~As tothe annet ~~initial~~assets ~~twelve~~and ~~month~~operating ~~restrictive~~results ~~period~~for ~~and~~TPE ~~are~~were ~~then~~not ~~released~~material inat ~~equal~~the ~~monthly~~time ~~installments~~of ~~over~~the divestment, the ~~following~~Company ~~six~~determined ~~months~~that discontinued operations reporting was not applicable.

~~The~~Further, ~~sellers~~the ~~are~~Company ~~also~~further ~~entitled~~analyzed tothe ~~receive~~results ~~$1,329,528~~of inits ~~post-closing~~ORC ~~cash~~business ~~payments~~ for ~~the~~segment ~~excess~~reporting ~~working~~consideration. ~~capital,~~ASC as280 ~~defined~~“Segment byReporting” ~~the~~establishes ~~agreement~~that an operating segment is considered a reportable segment if: (i) it engages in business activities from which it may recognize revenues and generate expenses, onits ~~ALD’s~~operating ~~closing~~results ~~balance~~are ~~sheet.~~regularly ~~These~~reviewed ~~amounts~~by ~~were~~the ~~subject~~Company’s tochief ~~certain~~operating ~~adjustments~~decision maker, and ~~are~~discrete ~~payable~~financial ~~from~~information ~~time~~is toavailable; ~~time~~and ~~upon~~(ii) ~~collection~~it ofexceeds certain ~~accounts~~quantitative ~~receivables~~thresholds. ~~identified~~At asthe time of the ~~transaction~~divestment, ~~closing~~the ~~date.~~Company’s AsORC ofbusiness ~~September~~did ~~30,~~not ~~2014,~~exceed any of the ~~remaining~~prescribed ~~balance~~quantitative ofthresholds. As such, the ~~excess~~Company ~~working~~determined ~~capital~~that ~~obligation~~segment reporting was ~~$240,684~~not applicable.

~~Additionally,~~As ~~the~~a ~~former~~result ~~stockholders~~of ~~will~~the ~~have~~transaction, the ~~opportunity~~Company’s ~~for~~operations ~~contingent,~~are ~~earn-out~~now ~~payments~~comprised of uponly toone ~~$2.0~~reportable ~~million~~segment iffor ~~certain~~financial ~~revenue~~reporting ~~and~~purposes. ~~EBITDA~~The ~~thresholds~~operating ~~are~~results ~~achieved~~of ~~over~~the Company’s ORC business for the three-~~year~~month ~~post-closing~~successor period. ~~The~~ended ~~earn-out~~March ~~payments~~31, if2015 ~~made,~~are ~~shall~~summarized ~~be equally allocated between cash and restricted common stock.~~below:

Fair Value of Consideration Transferred and Recording of Assets Acquired

	Successor
	Three-Month Period Ended March 31,
	2015

Sales	$	—
Cost of goods sold		—
Gross margin		—
Operating expenses:
Depreciation and amortization		17,589
Selling and marketing		752
General and administrative		(2,816	)
Professional fees		4,340
Total operating expenses		19,865
Loss from operations		(19,865	)
Other income (expense)
Interest expense, net		8
Total other income		8
Loss before income taxes		(19,857	)
Income tax benefit		(7,006	)
Net loss	$	(12,851	)

~~The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including an amount for goodwill:~~F-10

Consideration:
Cash and cash equivalents	$	2,500,000
Common stock, 289,529 shares of ForceField common stock		1,647,420
Senior, secured promissory notes, net of discount of $34,981		965,019
Working capital adjustment payable to sellers		1,329,528
Contingent purchase consideration—earnout liability		1,186,000
Fair value of total consideration	$	7,627,967
Recognized amount of identifiable assets acquired and liabilities assumed:
Financial assets:
Cash and cash equivalents	$	407,912
Trade receivables		1,708,411
Inventory		203,483
Other current assets		126,195
Property and equipment		11,071
Deferred tax assets		54,874
Identifiable intangible assets:
Production backlog		108,000
Non-compete agreements		265,000
Trade name		1,385,000
Financial liabilities:
Accounts payable and accrued liabilities		(322,183	)
Total identifiable net assets		3,947,763
Goodwill		3,680,204
	$	7,627,967

No results of operations for the Company’s ORC segment were reported in the three-month period ended March 31, 2014 as those results pertain solely to ALD as the predecessor entity.

F-13

In determining the fair value of the promissory notes issued, the Company considered, among other factors, the market yields on debt securities depending on the time horizon and level of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $1.0 million promissory note and its related interest to be $965,019. As a result, the Company recorded a discount against the promissory notes of $34,981. The discount is being amortized using the effective interest method over the life of the notes. For the nine months ended September 30, 2014, the Company recorded $14,575 in interest expense related to the note discount. The remaining discount balance at September 30, 2014 was $20,406.

In determining the purchase price allocation, the Company considered, among other factors, how a market participant would likely use the acquired assets. The estimated fair value of intangible assets was based on the income approach. The income approach requires a projection of the cash flow that the asset is expected to generate in the future. The projected cash flow is discounted to its present value using a rate of return, or discount rate, which accounts for the time value of money and the degree of risk inherent in the asset. The expected future cash flow that is projected should include all of the economic benefits attributable to the asset, including the tax savings associated with the amortization of the intangible asset value over the tax life of the asset. The income approach may take the form of a “relief-from-royalty” methodology, a cost savings methodology, a “with and without” methodology, or excess earnings methodology, depending on the specific asset under consideration.

The “relief-from-royalty” method was used to value the trade names acquired from American Lighting. The “relief-from-royalty” method estimates the cost savings that accrue to the owner of an intangible asset that would otherwise be required to pay royalties or license fees on revenues earned through the use of the asset. The royalty rate used is based on an analysis of empirical, market-derived royalty rates for guideline intangible assets. Typically, revenue is projected over the expected remaining useful life of the intangible asset. The key assumptions in the prospective cash flows include a15% compound annual sales growth rate over the five years period subsequent to the acquisition. The royalty rate is then applied to estimate the royalty savings. The key assumptions used in valuing the existing trade names acquired were as follows: royalty rate of 2.0%, discount rate of 17.5%, and a tax rate of 40.0%. The trade names are expected to be used indefinitely and the value includes a terminal value, based on a long-term sustainable growth rate of 3.5%, of the after-tax royalty savings determined using a form of the Gordon Growth model.

The “with and without” method was used to value the non-compete agreement which will be amortized over three years.

Acquisition of Catalyst LED’s LLC

On February 2, 2014, the Company completed a purchase of assets for consideration of $200,000 in cash and 5,000 shares of ForceField common stock valued at $5.97 per share for a total of $29,850 in common stock from Idaho-based Catalyst LED’s LLC (“Catalyst”), a provider of customized LED lighting products and solutions, and an authorized vendor for a number of leading companies. In connection with acquisition of Catalyst’s assets, the Company also entered into an employment agreement with the owner of Catalyst, under which agreement, he may achieve commission payments if certain milestones are attained. The transaction was considered as an acquisition of a business and accordingly the acquisition method of accounting has been applied.

Fair Value of Consideration Transferred and Recording of Assets Acquired

The following table summarizes the acquisition date fair value of the consideration paid, identifiable assets acquired, and liabilities assumed including an amount for goodwill:

Consideration:
Cash and cash equivalents	$	200,000
Common stock, 5,000 shares of ForceField common stock		29,850
Fair value of total consideration	$	229,850
Recognized amount of identifiable assets acquired and liabilities assumed:
Identifiable intangible asset – non-compete agreement		50,000
Total identifiable net assets		50,000
Goodwill		179,850
		229,850

The “with and without” method was used to value the non-compete agreement which will be amortized over twenty-three months. Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the acquisition is attributable to the value of the potential expanded market opportunity with new customers. The goodwill is not expected to be deductible for tax purposes

F-14

7.	GOODWILL AND INTANGIBLE ASSETS, NET

The following table ~~summarizes~~sets forth the ~~composition~~changes in the carrying amount of the Company’s goodwill atfor ~~September~~the 30three-month period ended March 31, ~~2014~~2015:

	September 30, 2014
	2015
Goodwill – American Lighting	$	3,680,204
Balance, January 1	$	12,388,431
Goodwill – Catalyst LED’s		179,850
Impairment charge		(6,993,784	)
Total	$	3,860,054
Balance, March 31	$	5,394,647

~~The~~At ~~following~~March ~~table~~31, ~~summarizes~~2015, ~~the~~as ~~composition~~a result of deteriorating business conditions and significant delays associated with new business opportunities, the Company’s ~~intangible~~performed ~~assets~~the atimpairment ~~September~~test 30as prescribed by ASC 350 on the carrying value of its goodwill and recorded an impairment charge totaling $6,993,784; ~~2014:~~all of which was attributed to ESCO.

			September 30, 2014
	Amortization		Gross					Net
	Period		Carrying		Accumulated			Book
	(Years)		Amount		Amortization			Value
Intangible assets subject to amortization:
Production backlog		0.5	$	108,000		(90,000	)		18,000
Non-compete agreements		3.0		315,000		(47,917	)		267,083
Exclusive distribution rights		5.0		780,000	$	(325,000	)	$	455,000
Technology		15.0		1,583,000		(224,258	)		1,358,742
Subtotal				2,786,000		(687,175	)		2,098,825
Intangible assets not subject to amortization:
Trade names		—		1,385,000		—			1,385,000
Total			$	4,171,000	$	(687,175	)	$	3,483,825

Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, the Company determines fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, the Company relies on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, the Company’s risk relative to the overall market, the Company’s size and industry and other Company specific risks. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

OnDetermining ~~August 27, 2012,~~ the ~~Company~~fair ~~entered~~value ~~into~~of a ~~five~~reporting ~~year~~unit ~~distribution~~is ~~agreement~~judgmental ~~with Shanghai Lightsky Optoelectronics Technology Co., Ltd. (“Lightsky”) located~~ in ~~Shanghai,~~nature ~~China~~and ~~whereby~~requires ~~ForceField became~~ the ~~exclusive~~use ~~distributor~~ of ~~Lightsky~~significant ~~LED~~estimates ~~lighting~~and ~~products~~assumptions, inincluding ~~the~~revenue ~~United~~growth ~~States~~rates, ~~Canada~~strategic ~~and~~plans ~~Mexico. Lightsky is an established manufacturer~~ and ~~seller~~future ofmarket ~~numerous~~conditions, ~~patented~~among ~~LED lighting products in China and throughout Asia~~others. ~~ForceField~~There ~~issued~~can ~~150,000~~be ~~shares~~no ofassurance ~~its~~that ~~restricted common stock valued at $780,000, which represents~~ the ~~trading price of $5.20 per share of the~~ Company’s ~~common~~estimates ~~stock~~and onassumptions ~~the~~made ~~date of the transaction, as consideration~~ for ~~the~~purposes ~~rights. This amount is being amortized using the straight-line method over the five year expected life~~ of the ~~distribution~~goodwill ~~rights.~~impairment ~~The~~testing ~~shares~~will ~~were~~prove ~~restricted~~to ~~for~~be anaccurate ~~eighteen-month~~predictions ~~period from their date~~ of ~~issuance. In order to maintain its exclusivity and qualify for any automatic renewal periods beyond~~ the ~~five-year period, ForceField must achieve certain performance milestones~~future.

The ~~Company~~following ~~recorded~~table ~~amortization~~sets ~~expense~~forth ~~for~~the ~~intangible~~components ~~assets subject to amortization~~ of ~~$246,889 during~~ the ~~successor~~Company’s ~~period~~intangible ofassets ~~April~~at ~~26,~~March ~~2014 through September 30~~31, ~~2014. No amortization expense was recorded during the predecessor periods in 2014 and 2013.~~2015:

F-15

	Amortization Period (Years)		Cost		Accumulated Amortization and Impairment Charges			Net Book Value

Intangible assets subject to amortization:
Customer relationships		4.0		1,515,000		(1,313,000	)		202,000
Distribution and license rights		5.0		1,234,500		(419,570	)		814,930
Production backlog		0.5		132,333		(108,000	)		24,333
Non-compete agreements		3.0		265,000		(80,972	)		184,028
Subtotal				3,146,833		(1,921,542	)		1,225,291
Intangible assets not subject to amortization:
Trade names		—		4,244,000		(1,023,000	)		3,221,000
Total			$	7,390,833	$	(2,944,542	)	$	4,446,291

~~8. INCOME TAXES~~F-11

AsThe offollowing ~~September~~table ~~30,~~sets ~~2014,~~forth the ~~significant~~ components of ~~deferred~~the ~~tax~~Company’s ~~assets include temporary differences in~~ intangible assets, ~~bad~~at ~~debt~~December ~~allowance~~31, ~~and accrued vacation.~~2014:

As of September 30, 2014, the Company had federal, state and foreign net operating loss carryforwards aggregating approximately $10.6 million that are available to offset future liabilities for income taxes. The Company has generally established a valuation allowance against these carryforwards based on an assessment that it is more likely than not that these benefits will not be realized in future years. The federal and state net operating loss carryforwards expire at various dates through 2033.

	Amortization Period (Years)		Cost		Accumulated Amortization			Net Book Value

Intangible assets subject to amortization:
Customer relationships		4.0	$	1,515,000	$	(78,906	)	$	1,436,094
Distribution and license rights		5.0		955,000		(366,917	)		588,083
Production backlog		0.5		400,000		(229,666	)		170,334
Non-compete agreements		3.0		265,000		(58,889	)		206,111
Technology		15.0		1,583,000		(250,642	)		1,332,358
Subtotal				4,718,000		(985,020	)		3,732,980
Intangible assets not subject to amortization:
Trade names		—		4,244,000		—			4,244,000
Total			$	8,962,000	$	(985,020	)	$	7,976,980

The Company ~~remains~~recorded ~~subject~~amortization toexpense ~~examination~~for inintangible ~~federal,~~assets ~~state~~subject ~~and~~to ~~foreign~~amortization ~~jurisdictions~~of in$333,013 ~~which~~during the ~~Company~~three-month ~~conducts~~successor ~~its~~period ~~operations~~ended ~~and~~March ~~files~~31, ~~tax returns~~2015. ~~These~~No ~~tax~~amortization ~~years~~expense ~~range~~was ~~from~~recorded ~~2010~~during ~~through 2013. The Company believes that~~ the ~~results~~three-month ofpredecessor ~~current~~period orended ~~any~~March ~~prospective~~31, ~~audits will not have a material effect on its financial position or results of operations as adequate reserves have been provided to cover any potential exposures related to these ongoing audits~~2014.

~~The~~On March 5, 2015, the Company ~~has~~and ~~made~~Noveda ~~its~~agreed ~~assessment~~to ofamend the ~~level~~terms of ~~tax~~a ~~authority~~license ~~for~~agreement ~~each~~entered ~~tax~~into ~~position~~on ~~(including~~December ~~the~~1, ~~potential~~2014 ~~application~~which ofgranted ~~interest~~the ~~and~~Company ~~penalties)~~exclusive ~~based~~rights onover ~~the~~a ~~technical~~five ~~merits~~year period to sell, market and ~~has~~distribute ~~measured~~Noveda’s ~~the~~technology ~~unrecognized~~on ~~tax~~LED ~~benefits~~applications ~~associated~~in ~~with~~North America. During 2014, the ~~tax~~Company ~~positions.~~made Aspayments ofto ~~September~~Noveda 30of $142,500 ~~2014~~in cash and ~~December 31~~25,000 ~~2013~~shares of restricted common stock valued at $137,000 under the ~~Company~~provisions ~~had~~of ~~unrecognized~~a ~~tax~~non-binding ~~benefits~~letter of ~~$34,895~~intent ~~and~~entered ~~nil~~into by the Company to acquire Noveda. During 2015, ~~respectively~~by mutual agreement, ~~that~~the ~~mainly~~acquisition ~~related~~discussions towere ~~state~~discontinued and ~~city~~the ~~tax.~~$279,500 ~~The~~in ~~unrecognized~~consideration ~~tax~~was ~~benefit~~applied isas ~~recorded~~payment astowards, ~~non-current~~and ~~liabilities~~in ~~because~~full satisfaction of, the ~~related~~remaining ~~payment~~fees ispayable ~~not~~to ~~anticipated~~Noveda ~~within~~under ~~one~~the ~~year~~terms of the ~~balance~~license ~~sheet date~~agreement.

At March 31, 2015, the Company performed an interim impairment test for long-lived assets and determined that the carrying amount of certain intangible assets were not recoverable as its undiscounted cash flows were less than its carrying amount. The Company further determined that the fair value of the asset group was less than its carrying value and therefore impairment must be recorded. The Company used the discounted cash flow method under the income approach to determine the fair value of the asset group. The impairment amount was determined by allocating the shortfall of fair value as compared to the carrying amount to each long-lived asset in the asset group on a pro rata basis using the relative carrying amount of the assets, except the carrying amount of each asset cannot be reduced below its fair value. To determine the fair value of each long-lived asset, the Company used the relief from royalty method for its trade names and estimated the fair value for its customer relationships using the multi-period excess earnings method. As a result, the Company recorded impairment charges totaling $2,162,406 for these intangible assets; all of which was attributed to ESCO.

8.	RELATED PARTY PAYABLES

During 2014, the Company’s wholly-owned subsidiary, ESCO, received loan proceeds totaling $507,500 from its president and chief executive officer. All of these loans proceeds, with the exception of $32,500, were made prior to the Company’s acquisition of ESCO on October 17, 2014. These loans are unsecured, and were made for an undefined term and on an interest free basis.

On January 16, 2015, the Company repaid $20,000 towards the principal balance of these promissory notes. At March 31, 2015, the outstanding balance of these notes totaled $487,500.

F-12

DEBT

Convertible Debentures

The following table ~~summarizes~~sets forth the ~~composition~~components of the Company’s convertible debentures at ~~September~~March 3031, 2015 and December 31, 2014:

	September 30, 2014
	March 31, 2015			December 31, 2014
7% Convertible debentures	$	200,000		$	200,000
9% Convertible debentures		23,~~650~~610,000			3,210,000
Less: Loan discounts		(248,443	)
Loan discounts		(258,402	)		(410,334	)
Convertible debentures, net of loan discounts		2,601,557
Total convertible debentures, net		3,551,598			2,999,666
Less: Current portion of convertible debentures, net		~~100~~1,360,000			50,000
Noncurrent portion of convertible debentures, net	$	2,501,557
Noncurrent portion of convertible debentures net	$	2,191,598		$	2,949,666

~~On October 15, 2011, the Company completed the private placement of an unsecured convertible debenture in the amount of $100,000. The debenture carries an interest rate of 9% per annum payable semi~~F-~~annually in cash for a three year with a fixed conversion of $8.00 per share, or 12,500 of the Company's common stock.~~13

OnDuring ~~November~~the 16year ended December 31, ~~2012~~2014, the Company ~~completed~~privately ~~the~~placed ~~private~~a ~~placement~~series of an unsecured, convertible ~~debenture~~debentures inwith ~~the~~accredited ~~amount~~investors for gross proceeds of $50900,000 (of which $300,000 was raised during the predecessor period of January 1 through April 25, 2014). The ~~debenture~~debentures ~~carries~~carry an interest ~~rate~~rates ofranging between 7% and 9% per annum, payable semiannually in cash, for a three-year ~~term~~terms with a fixed conversion ~~price~~prices ofranging from $5.00 to $7.00 per share, ~~or 10,000 shares of the Company’s common stock~~ if converted within the first year of issuance or a fixed conversion ~~price~~prices ofranging from $6.00 ~~per~~to ~~share,~~$9.00 ~~or 8,333 shares of the Company’s common stock~~ if converted during the second or third year following issuance.

~~During~~On ~~the~~October ~~year ended December 31~~15, ~~2013~~2014, the Company ~~completed the private placement of seven unsecured~~converted, ~~convertible~~upon ~~debentures~~receiving ~~for~~formal ~~gross~~notice ~~proceeds~~from ~~of $1,750,000 with six different investors. These debentures carry an interest rate of 9% per annum, payable semiannually in cash, for~~ a ~~three-year term with a fixed conversion price of $5.00 per share~~noteholder, ~~or 350,000 shares of the Company’s common stock if converted within the first year of issuance or a fixed conversion price of~~ $~~6.00 per share~~50, or 291,667 shares of the Company’s common stock if converted during the second or third year following issuance. During the same year, the Company also completed the private placement of three unsecured, convertible debentures for gross proceeds of $150,000 ~~with three different investors. These debentures carry an interest rate of 7% per annum, payable semiannually~~ in ~~cash,~~note ~~for a three-year term with a fixed conversion price of $7.00 per share~~principal, orplus ~~21,429~~accrued ~~shares of the Company’s common stock if converted within the first year of issuance or a fixed conversion price of $9.00 per share~~interest, orinto 1610,~~667~~450 shares of ~~the~~restricted ~~Company’s~~ common stock ~~if converted during the second or third year following issuance~~.

On ~~January~~October 1331, 2014 ~~and February 11~~, ~~2014,~~ the Company ~~completed~~issued ~~the~~an ~~private placement of two~~ unsecured, convertible ~~debentures~~debenture for ~~gross proceeds of~~ $~~300~~610,000. ~~The~~to ~~first~~an ~~debenture~~accredited ~~totaled~~investor. ~~$50,000~~The ~~and~~debenture carries an interest rate of 79% per annum, ~~payable semiannually in cash,~~ for a ~~three~~seventeen-~~year~~month term with a fixed conversion price of $75.0050 per share~~, or 7,143 shares of the Company’s common stock if converted within the first year of issuance or a fixed conversion price of $9~~.00 ~~per share, or 5,556 shares of the Company’s common stock if converted during the second or third year following issuance.~~ The ~~second~~principal ~~debenture totaled $250,000~~ and ~~carries an~~ interest ~~rate~~are ~~of 9% per annum,~~ payable ~~semiannually~~ in ~~cash,~~twelve ~~for~~equal ainstallments ~~three-year~~commencing ~~term~~April ~~with~~30, ~~a fixed conversion price of $5~~2015.00 ~~per~~The ~~share,~~investor orreceived 5015,000 shares of the Company’s common stock ifvalued ~~converted~~at ~~within the first year of issuance or a fixed conversion price of~~ $~~6.00 per share~~95,100 ~~or 41,667~~as ~~shares~~consideration offor ~~the~~entering ~~Company’s~~into ~~common stock if converted during~~ the ~~second~~debenture ~~or third year following issuance~~agreement.

~~F-16~~At March 31, 2015, the underlying shares of the Company’s common stock related to these convertible debentures totaled 687,208 shares.

On ~~September~~January 2412, ~~2014~~2015, the Company ~~completed~~issued ~~the private placement of~~ an unsecured, convertible debenture infor ~~the~~$400,000 ~~amount~~to an accredited investor. The cost of this issuance was $~~500~~28,000. The debenture carries an interest rate of 9% per annum, payable semiannually in cash, for aan ~~three~~eighteen-~~year~~month term with a fixed conversion price of $65.0050 per share,. orThe 83investor received 5,~~333~~000 shares of the Company’s common stock ifvalued ~~converted~~at ~~within the first year of issuance or a fixed conversion price of~~ $~~8.00 per share~~32,150 oras ~~62,500~~consideration ~~shares~~for ofentering ~~the~~into ~~Company’s common stock if converted during~~ the ~~second~~debenture ~~or third year following issuance~~agreement.

~~Each~~All of the convertible debentures ~~issued~~were byanalyzed at the ~~Company~~time ~~were~~of ~~analyzed~~their issuance for beneficial conversion features. ~~For~~In ~~certain~~some ~~issuances~~instances, the Company concluded that a beneficial conversion feature ~~was present~~existed. ~~These~~The beneficial conversion features were measured using the commitment-date stock ~~prices~~price and ~~were~~aggregated ~~determined to aggregate~~ $~~333~~624,~~590~~140. This amount was recorded as a debt discount ~~to the principal value of the convertible debentures~~ and is being amortized onas ~~a straight-line basis against~~ interest expense over the ~~term~~terms of the related convertible debentures. The ~~unamortized~~ debt discount ~~related~~associated towith these beneficial conversion features ~~totaled~~amounted to $~~248~~258,~~443~~402 and $410,334 as of ~~September~~March 3031, ~~2014.~~2015 ~~The~~and ~~amortized~~December ~~amount~~31, ~~recorded~~2014, asrespectively. ~~interest~~The related amortization expense totaled $4462,~~596~~809 for the ~~five~~ three-month successor period ended ~~September~~March 3031, 2015. No such expense was recorded in the three-month predecessor period ended March 31, 2014.

~~The~~In ~~Company~~addition, ~~also~~the Company analyzed its convertible debentures for derivative accounting consideration and determined that derivative accounting was not applicable.

On April 30, 2015, the Company was required to pay $50,833 in principal, along with accrued interest of approximately $28,000, per the terms of a convertible note. The Company failed to make this payment. On May 13, 2015, the Company received a letter from the noteholder’s counsel alleging certain breaches and declaring the note to be in default. The interest rate on the convertible note increased from 9.0% to 22.0% per annum as a result of the default. The noteholder has made a demand for payment and is seeking to enforce all of its contractual, legal and equitable rights under the convertible note and related agreements. The original principal balance outstanding on the convertible note is $610,000 and is presented as a current liability on the Company’s Consolidated Balance Sheets. The note is unsecured. See “Note 12 — Subsequent Events” for additional information.

The Company is in default for failure to pay interest on four additional convertible notes with an aggregate principal balance of $700,000. The interest rate on these notes ranges between 7% and 9% per annum, and does not increase in the event of a default. The principal amounts on these notes are presented as current liabilities on the Company’s Consolidated Balance Sheets.

As a result of the defaults noted above, the Company accelerated the amortization of all deferred financing costs and beneficial conversion features associated with these convertible notes. The charge totaled $188,909 and was recorded to interest expense in the Company’s Consolidated Statements of Operations.

F-14

Senior, Secured Promissory Notes

~~On April 25, 2014, the Company issued promissory notes for an aggregate principal amount of $1,000,000 to the former stockholders of American Lighting in connection with its acquisition.~~ The ~~promissory~~following ~~notes~~table ~~carry~~sets anforth ~~interest rate of 5% per annum, payable at maturity, for a one year term and are secured by~~ the ~~assets~~components of ~~ALD. In determining~~ the ~~fair~~Company’s ~~value of the~~ promissory notes ~~issued,~~at ~~the~~March ~~Company considered~~31, ~~among~~2015 ~~other factors, the market yields on debt securities depending on the time horizon~~ and ~~level~~December of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $1.0 million promissory note and its related interest to be $96531,~~019.~~ As a result, the Company recorded a discount against the promissory notes of $34,981. The discount is being amortized using the effective interest method over the life of the notes. For the nine months ended September 30, 2014~~, the Company recorded $14,575 in interest expense related to the note discount. The remaining discount balance at September 30, 2014 was $20,406.~~:

	March 31, 2015			December 31, 2014

Promissory notes	$	3,230,355		$	4,330,355
Loan discounts		(62,859	)		(88,518	)
Total promissory notes, net		3,167,496			4,241,837
Less: Current portion of convertible debentures, net		1,155,355			2,243,358
Noncurrent portion of convertible debentures net	$	2,012,141		$	1,998,479

On April 25, 2014, the Company issued a series of promissory notes aggregating in $1,000,000 principal to the former stockholders of ALD in connection with its acquisition. The promissory notes carry an interest rate of 5% per annum, payable at maturity, for a one year term and are secured by the assets of ALD. In determining the fair value of the promissory notes issued, the Company considered, among other factors, the market yields on debt securities depending on the time horizon and level of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $1,000,000 promissory note and its related interest to be $965,019. As a result, the Company recorded a discount against the promissory notes of $34,981. The discount is being amortized using the effective interest method over the life of the notes. For the three-month period ended March 31, 2015, the Company recorded $11,998 in interest expense related to the note discount. No discount balance remained unamortized at March 31, 2015.

On April 24, 2015, the Company was informed by the counsel of the former ALD stockholders that the failure to pay all of the principal and accrued interest on the outstanding promissory notes would result in the declaration of default, and that absent full payment of the notes by the maturity date, the former stockholders would commence collection proceedings and seek to enforce all of their contractual, legal and equitable rights under the note and related agreements. The notes were not repaid at their maturity date and are currently in default. See “Note 12 — Subsequent Events” for additional information.

On October 13, 2014, the Company received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full by the Company on December 5, 2014. As consideration for loaning these proceeds to the Company, the investor was entitled to receive a $40,000 interest payment along with the principal at maturity. This loan was secured by 1,000,000 shares of the Company’s common stock owned by its former executive chairman. On December 26, 2014, the Company repaid all principal and accrued interest amounts associated with this promissory note.

On October 17, 2014, the Company issued two secured promissory notes to the former stockholder of ESCO in connection with its acquisition. The first note totaled $2,075,000, bears interest at 6.02% per annum and is due in April 17, 2016. The note is collateralized by 687,500 restricted shares of the Company’s common stock which under no circumstances can become free trading prior to its maturity date. In determining the fair value of the promissory notes issued, the Company considered, among other factors, the market yields on debt securities depending on the time horizon and level of perceived risk of the specific investment. The Company arrived at an estimated market rate of 9% and calculated the present value of the $2,075,000 promissory note and its related interest to be $1,989,539. As a result, the Company recorded a discount against the promissory notes of $85,461. The discount is being amortized using the effective interest method over the life of the notes. For the three-month period ended March 31, 2015, the Company recorded $13,661 in interest expense related to the note discount. The remaining discount balance at March 31, 2015 was $62,859.

The second note totaled $1,075,000 and was due on November 16, 2014 along with an interest payment of $45,000. At March 31, 2015, all but $155,355 of the principal balance was repaid. The note is collateralized by all of the assets of ESCO. On April 3, 2015, the Company entered into a note amendment and security interest termination agreement with the stockholder to amend and extend the original terms (see Note 12 – Subsequent Events for additional information).

On December 21, 2014, the Company received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full by the Company on March 5, 2015 and was secured by 1,000,000 shares of the Company’s common stock owned by its former executive chairman, Richard St Julien. As consideration for loaning these proceeds to the Company, the investor was entitled to receive a $50,000 interest payment along with the principal at maturity. On March 5, 2015, the Company paid $50,000 to satisfy the accrued interest due on the promissory note. On March 31, 2015, the Company issued 181,818 shares of its common stock along with an equal number of common stock purchase warrants in lieu of cash to satisfy the $1,000,000 principal payment owed to the noteholder. The stock purchase warrants have been accounted for as equity in accordance with ASC 480. Using the Black-Scholes model, the Company calculated a relative fair value of $369,779 for these stock purchase warrants; which was recorded as a loss on settlement of debt.

F-15

Loans Payable

On September 5, 2014, the Company received $130,000 from a third party in the form of a demand loan bearing interest at a rate of 9% per annum. The entire principal amount, plus accrued interest totaling $6,338, was outstanding at March 31, 2015.

~~Related~~The ~~Party~~remaining ~~Loans~~loans ~~Payable~~payable were made by two financial institutions and are due in aggregate monthly installments of $1,111 (including interest ranging from 2.25% through 4.00%). These loans are collateralized by ESCO’s transportation equipment. At March 31, 2015, the outstanding balances on these loans totaled $19,813; of which $12,304 is scheduled to be paid within the next twelve months.

~~On June~~ 10~~, 2014, ForceField’s Executive Chairman loaned the Company $75,000 for an undefined term on an interest free basis~~. ~~This loan was repaid with the issuance of 15,000 shares of the Company~~STOCKHOLDERS’s ~~common stock on July 30, 2014.~~EQUITY

10. MANDATORILY REDEEMABLE NON-CONVERTIBLE CUMMULATIVE PREFERRED STOCK

Prior to being acquired on April 25, 2014, American Lighting, the predecessor company, was authorized to issue 1,000,000 shares of mandatorily redeemable non-convertible cumulative preferred stock ("Preferred Stock"). In 2003, the Company issued 410,000 shares of its Preferred Stock, of which 294,480 had been redeemed as of December 31, 2013. The following are descriptions of rights and privileges of the Preferred Stock:

Dividend provisions

The holders of Preferred Stock were entitled to receive cumulative, preferential dividends on outstanding shares at a rate of 8%, compounded on a quarterly basis until declared and paid. Such dividends were payable in preference to any dividends for common stock declared by the ALD Board of Directors. When the preferred stock dividends were not declared or paid, the 8% preferential dividend was accreted and added to the value of the Preferred Stock. During the year ended December 31, 2013, the Company accreted and paid/declared dividends of $139,436 and $278,605, respectively.

Voting rights

Preferred Stock carried no voting rights, except the stockholders had the right to vote for each share on matters of amending the Certificate of Incorporation regarding Preferred Stock rights or the issuance of additional in-parity or senior shares.

F-17

Redemption feature

The terms of the Preferred Stock required that the Company redeem, and the holders of the outstanding Preferred Stock shall sell to the Company, outstanding Preferred Stock for an amount per share equal to the Preferred Stock stated value plus any unpaid cumulative dividends earned. In the event that the Company has "Net Cash Flow" (an amount calculated as 56.25% of the Company's net income, after provision for income taxes at an assumed annual rate of 43.84%, plus depreciation, plus amortization, plus any negative change in working capital, less any positive change in working capital, and less capital expenditures), mandatory redemption on a pro rata basis must be made annually, within 90 days of the Company's fiscal year end, until all of the shares of Preferred Stock issued and outstanding had been redeemed. During the year ended December 31, 2013, the Company redeemed shares with a total value of $1,944,582. Under the Preferred Stock terms, the redemption represented a liability of American Lighting. At December 31, 2013, the Company had recorded a liability of $1,209,891.

On April 25, 2014, concurrent with the closing of the ALD acquisition, all obligations related to the mandatorily redeemable non-convertible cumulative preferred stock were fully satisfied.

11. STOCKHOLDERS’ EQUITY

Preferred Stock

ForceField is authorized to issue 12,500,000 shares of preferred stock at a par value of $0.001. No shares of preferred stock were issued and outstanding as of either ~~September~~March 3031, ~~2014~~2015 or December 31, ~~2013~~2014.

Common Stock

ForceField is authorized to issue 37,500,000 shares of common stock at a par value of $0.001 and had 1819,~~012~~933,~~790~~691 shares of common stock issued and 1618,~~550~~216,~~693~~243 shares of common stock, net of shares held in treasury, outstanding as of ~~September~~March 3031, ~~2014~~2015.

Common Stock Held in Treasury at Cost

On ~~February~~March 195, ~~2014~~2015, the Company reacquired 1255,~~462,097~~351 shares of its common stock in the divestiture of the 6050.3% equity investment in ~~its~~TPE. ~~former~~The ~~China~~common ~~based~~stock ~~subsidiary,~~is ~~Wendeng~~held Hein ~~Xie~~treasury ~~Silicon~~by Cothe Company. At March 31, ~~Ltd.~~2015, ~~The~~a total of 1,717,448 shares of the Company’s common stock iswere held in treasury byat ~~the~~a ~~Company~~cost of $1,935,423.

Common Stock Issued in Private Placements

During the ~~nine~~ three-month period ended ~~September~~March 3031, ~~2014~~2015, the Company accepted subscription agreements from investors and issued ~~455~~298,~~500~~543 shares of its common stock along with an equal number of stock purchase warrants, ~~and issued an additional 104,000 shares of common stock from the exercise of stock purchase warrants~~ for gross proceeds totaling $21,~~668~~604,~~500~~510. The cost of these issuances was $~~226~~141,~~850~~700.

During the successor period of April 26, 2014 to December 31, 2014, the Company accepted subscription agreements from investors and issued 540,722 shares of its common stock along with an equal number of stock purchase warrants for gross proceeds of $2,692,500. The cost of these issuances was $220,750. Furthermore, during the period of January 1, 2014 to April 25, 2014, the Company accepted subscription agreements from investors and issued 167,778 shares of its common stock along with an equal number of stock purchase warrants for gross proceeds totaling $825,000. The cost of these issuances was $82,500. The cumulative number and value of these share issuances that occurred prior to the successor period commencing April 26, 2014 are reflected in the beginning balances of the Company’s Consolidated Statement of Stockholders' Equity (Successor) on Form 10-K for the year ended December 31, 2014.

Common Stock Issued in Exchange for Services

During the ~~nine~~ three-month period ended ~~September~~March 3031, ~~2014~~2015, the Company issued ~~525 shares of its common stock valued at $3~~2,~~166 for promotional activities and 11,~~000 shares of its common stock valued at $6512,~~340~~880 for investor relations services. Additionally, the Company issued 92,~~492~~808 shares of its common stock valued at $5418,000 to its three independent directors in accordance with their board compensation agreements. Lastly, the Company issued 5,000 shares of its common stock valued at $26,300 to an employee as compensation. Each of these share issuances were valued based upon the closing trading share price of the Company’s common stock on their respective dates of award.

F-16

Common Stock Issued in Lieu of Cash for Loans Payable and Other Accrued Obligations

On ~~July~~March 3031, ~~2014~~2015, the Company ~~issued~~agreed 30to exchange 181,~~000~~818 shares ofwith ~~its~~an ~~restricted~~equal number of common stock topurchase ~~its~~warrants ~~Executive Chairman~~ in lieu of cash to satisfy a ~~loan~~$1.0 ~~payable~~million ~~and~~promissory ~~accrued~~note ~~compensation~~payment ~~aggregating~~owed ~~$150,000~~to an investor. OnThe ~~September~~conversion ~~17,~~price ~~2014,~~granted to the investor for the share exchange was in accord with the terms offered under the Company’s ~~issued~~current ~~14,063~~equity ofprivate ~~its~~placement ~~restricted~~memorandum. The fair value of the common stock was $1,363,635. The stock purchase warrants have been accounted for as equity in ~~lieu~~accordance ofwith ~~cash~~ASC to480 ~~satisfy~~by ~~accrued~~using ~~interest~~the onBlack-Scholes model. The Company calculated a ~~convertible~~relative ~~debenture~~fair ~~totaling~~value of $56369,~~250~~779 ~~due~~for tothese ~~its~~stock ~~holder~~purchase warrants. The difference between the fair value of the equity and the settled liability totaled $733,414 and was recorded as a loss on settlement of debt.

Common Stock Issued ~~upon~~for ~~Entering~~Financing ~~a Letter of Intent to Acquire a Business~~Costs

On ~~July~~January 289, ~~2014~~2015, the Company issued 2517,~~000~~416 shares of its ~~restricted~~ common stock valued at $56.4844 per share, or $~~137~~112,~~000~~159, ~~upon~~to ~~entering~~extend ~~into~~the terms of a ~~non-binding~~promissory ~~letter~~note ofand ~~intent~~other purchase obligations due to ~~acquire~~the former stockholder and certain employees of ESCO. Additionally, on March 31, 2015, the ~~business~~ Company issued 601 shares of anits ~~undisclosed~~common ~~third~~stock ~~party~~valued at $7.49, or $4,500, in connection with the placement of a convertible promissory note with an accredited investor.

Common Stock Issued in the Acquisition of a Business

On April 2, 2014, the Company issued 5,000 shares of its restricted common stock valued at $5.97 per share, or $29,850, in connection with the February 2014 acquisition of the assets of Catalyst. On April 25, 2014, the Company issued 289,529 shares of its restricted common stock valued at $5.69 per share, or $1,647,420, in connection with the April 2014 acquisition of the stock of American Lighting.

F-18

Common Stock Issued for Acquisition Costs

On July 28, 2014, the Company issued 20,000 non-refundable shares of its restricted common stock valued at $5.48 per share, or $109,600, for acquisition costs upon entering into a letter of intent to acquire the business of ESCO Energy Services Company.

Stock Purchase Warrants

The following table reflects all outstanding and exercisable warrants at ~~September~~March 3031, ~~2014.~~2015: ~~All stock warrants are exercisable for a period of one year from the date of issuance.~~

	Number of Warrants Outstanding			Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Balance, April 25, 2014		912,778		$	4.18		0.63
Balance, January 1, 2015		796,000		$	4.73		0.57
Warrants issued		~~287~~480,~~722~~361		$	45.9642		—
Warrants exercised		(87225,500	)	$	—		—
Warrants expired		~~(50,000~~—	)	$	—		—
Balance September 30, 2014		1,063,000		$	4.45		0.44
Balance March 31, 2015		1,050,861		$	5.19		0.68

All stock warrants are exercisable for a period of one year from the date of issuance. The remaining contractual life of the warrants outstanding as of ~~September~~March 3031, ~~2014~~2015 ranges from 0.0302 to 1.0 years.

During the ~~nine~~three-month ~~months~~successor period ended ~~September~~March 3031, ~~2014~~2015, the Company issued 87225,500 shares of its common stock for gross proceeds totaling $~~350~~1,015,000 following the exercise of an equal amount of stock purchase warrants. The cost of these issuances was $35101,~~000~~500.

12During the successor period of April 26, 2014 to December 31, 2014, the Company issued 543,750 shares of its common stock for gross proceeds totaling $2,175,000 following the exercise of an equal amount of stock purchase warrants. ~~COMMITMENTS~~The ~~AND~~cost ~~CONTINGENCIES~~of these issuances was $217,500. Furthermore, during the predecessor period of January 1, 2014 through April 25, 2014, the Company issued 16,500 shares of its common stock for gross proceeds totaling $66,000 following the exercise of an equal amount of stock purchase warrants. The cost of these issuances was $6,600. The cumulative number and value of these share issuances that occurred prior to the successor period commencing April 26, 2014 are reflected in the beginning balances of the Company’s Consolidated Statement of Stockholders' Equity (Successor) on Form 10-K for the year ended December 31, 2014.

~~On April 28, 2014, TransPacific Energy Inc~~11., ~~Karen~~COMMITMENTS ~~Kahn,~~AND Alexander Goldberg, John Howard, Audrey Boston, Anne Howard, ACME Energy, Inc., and Samuel Sami (collectively, the “Plaintiffs”) filed a lawsuit against ForceField Energy, Inc. The lawsuit is captioned TransPacific Energy, Inc. et al. v. ForceField Energy, Inc., Case No. 37-2014-00013110-CU-BC-CTL (Cal. Super. Ct. filed April 28, 2014) and is pending before the Superior Court of the State of California for the County of San Diego.CONTINGENCIES

~~The~~TransPacific lawsuit was filed after the parties had reached tentative agreement to resolve all matters in dispute and while the parties were in the process of negotiating a binding term sheet to document same. Plaintiffs claim various breaches by ForceField of the Share Exchange Agreement dated May 10, 2012 between ForceField, ACME Energy, Inc., Apela Holdings, and ABH Holdings, which lawsuit seeks unspecified damages in excess of $25,000. ForceField disputes all of these allegations by Plaintiffs, contends they lack basis in fact and law, intends to vigorously defend against them, and is asserting its own claims against in the appropriate venue. ForceField has recently moved to compel the entire case to arbitration pursuant to the arbitration clause in the Share Exchange Agreement. That motion is current set for hearing in March 2015.Litigation

On ~~July~~April 1428, 2014, ~~ForceField,~~TransPacific ~~pursuant~~Energy toInc., ~~the~~Karen ~~arbitration~~Kahn, ~~clause~~Alexander inGoldberg, ~~the~~John ~~Share Exchange Agreement~~Howard, ~~commenced~~Audrey ~~an arbitration suit against TPE~~Boston, Anne Howard, ~~Samuel Sami~~(“Howard”), ~~and~~ ACME Energy, Inc. (~~collectively~~“Acme”), ~~the~~and Samuel Sami (“~~Respondents~~Sami”) ~~before~~(collectively, the ~~American~~“Plaintiffs”) ~~Arbitration~~filed ~~Association~~suit inagainst ~~New~~ForceField ~~York~~Energy, ~~City~~Inc. ~~ForceField~~ ~~asserts~~in ~~claims~~the ~~for~~Superior ~~breach~~Court of the ~~Share~~State ~~Exchange Agreement, breach~~ of ~~fiduciary~~California ~~duty,~~for ~~intentional~~the ~~interference~~County ~~with~~of ~~contractual~~San ~~relations~~Diego, ~~fraudulent~~in ~~inducement,~~a ~~and~~case ~~breach~~styled ofTransPacific ~~implied covenant~~Energy, ~~for~~Inc. ~~Respondents’~~et ~~conduct~~al. ~~denying~~v. ForceField’s ~~contractual right to make equity investments in TPE~~Energy, ~~diluting ForceField’s ownership in TPE~~Inc., ~~and~~Case ~~otherwise~~No. ~~harming~~37-2014-00013110-CU-BC-CTL ~~the~~(Cal. ~~value~~Super. ~~of ForceField’s investments in TPE~~Ct. ~~Respondents~~ filed aApril ~~challenge~~28, to2014) (the ~~arbitrators’ jurisdiction, which ForceField plans to oppose~~“Lawsuit”). ~~Respondents~~In ~~also~~the ~~filed~~Lawsuit, ~~counterclaims~~Plaintiffs ~~that~~claimed ~~are~~various ~~similar~~breaches inby ~~substance~~ForceField toof the ~~claims~~share ~~they~~exchange ~~assert~~agreement indated ~~the~~May ~~San~~10, ~~Diego~~2012 ~~lawsuit.~~between ~~Again~~ForceField, ~~ForceField~~Acme, ~~disputes~~Apela ~~the~~Holdings, ~~Respondents’ allegations~~ and ~~plans~~ABH toHoldings, ~~vigorously~~and ~~defend~~sought ~~against~~unspecified ~~them. ForceField~~damages ~~anticipates that this arbitration suit will proceed~~ in ~~the~~excess ~~near~~of ~~term~~$25,000. ~~although~~ForceField ~~arbitrators~~filed ~~have~~a ~~yet~~motion to becompel ~~selected~~the ~~and~~Lawsuit noto ~~schedule has been entered~~arbitration.

~~No amounts have been accrued on the financial statements for any loss contingency because the Company deems the claims to be without merit and the amounts involved indeterminable.~~ F-17

On July 14, 2014, ForceField commenced an arbitration proceeding against TPE, Howard, Sami, and Acme (collectively, the “Respondents”) before the American Arbitration Association in New York City styled ForceField Energy, Inc. v. TransPacific Energy, Inc., et al v. ForceField Energy, Inc., et al, AAA Case No. 01-14-0000-9289 (the “Arbitration”). In the Arbitration, ForceField asserted various claims for breach of the share exchange agreement, which materially harmed the value of ForceField’s investments in TPE. Respondents filed counterclaims in the Arbitration similar in substance to the claims they asserted in the Lawsuit.

On March 5, 2015, the parties entered into a written settlement agreement (“Agreement”) that resolved all claims and counterclaims asserted in both the Lawsuit and the Arbitration. Pursuant to the Agreement, both the Lawsuit and the Arbitration have each been dismissed with prejudice.

Class Action and Derivative Action

On April 17, 2015, a lawsuit (the “Class Action”) against the Company and its officers, Messrs. St-Julien (who as indicated below in “Note 12 – Subsequent Events,” resigned as Chairman and from all other positions he held with the Company), Natan and Williams (Mr. Natan and Mr. Williams are collectively referred to as the “Individual Defendants”), and certain other third parties, was filed in the United States District Court, Southern District of New York.

Since the filing of the Class Action, additional complaints have been filed seeking class status on behalf of all persons who purchased the Company’s securities between September 16, 2013 and April 15, 2015 (the “Period”). The Class Action alleges violations by the Company and the other persons named therein of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Class Action seeks an unspecified amount of damages.

On May 15, 2015, a lawsuit (the “Derivative Action”) Civil Action No. CV-15-2782 against the Company’s officers, directors and former director Messrs. St-Julien, Natan, Williams, Kebir Ratnani, Adrian Auman, and David Vanderhorst (Messrs. Ratnani, Auman and Vanderhorst are collectively referred to as the “Director Defendants”) was filed by Neil J. Brown, derivatively and on behalf of ForceField Energy, Inc. in the United States District Court, for the Eastern District of New York. The Derivative Action seeks unspecified damages against these individuals for breaches of their fiduciary duties and unjust enrichment.

Although the ultimate outcome of the Class Action and Derivative Action cannot be determined with certainty, the Company believes that the allegations stated in the Class Action and Derivative Action are without merit against the Company, Individual Defendants and Director Defendants, and the Company, Individual Defendants and Director Defendants intend to defend themselves vigorously against all allegations set forth in the Class Action and Derivative Action.

Consulting Services

ForceField has entered into various engagement agreements for advisory and consulting services on a non-exclusive basis to obtain equity capital. In the event that the Company completes a financing from a funding source provided by one of the consultants, then such consultant will receive a finders or referral fee at closing ranging from five percent (5%) to ten percent (10%) of the amount received by the Company. The terms and condition of financing are subject to Company approval.

12.	SUBSEQUENT EVENTS

In addition to the events discussed in “Note 11 – Commitments and Contingencies” above under TransPacific Energy Litigation and Class Action and Derivative Action, the following events occurred subsequent to March 31, 2015.

F-18

On April 3, 2015, the Company entered into a note amendment and security interest termination agreement with Mitchell Barack, the former stockholder and current chief executive officer of ESCO. Under the terms of the agreement, Mr. Barack agreed to release the lien he held against ESCO’s assets and to defer the remaining $200,355 in principal and interest amounts currently owed to him and remaining $325,000 due to the employees of ESCO until June 30, 2015.

On April 19, 2015, Richard St-Julien, the Company’s founder and majority shareholder, voluntarily resigned as the Company’s executive chairman of the board of directors, and from all other positions that he held with the Company. On the same date, the Company’s independent board of directors appointed David Natan, the Company’s chief executive officer to the dual role of chairman and CEO, as well as corporate secretary. Additionally, the independent board of directors promoted Jason Williams, the Company’s chief financial officer to the dual role of CFO and executive vice president as well as assistant secretary.

On April 20, 2015, the NASDAQ Capital Market (“Nasdaq”) halted trading of the Company’s common stock; and on April 21, 2015, the SEC ordered that pursuant to Section 12(k) of the Securities Exchange Act of 1934, as amended, trading in the shares of the Company’s common stock was suspended for the period from 9:30 a.m. EDT on April 21, 2015 through 11:59 p.m. EDT, on May 4, 2015 pursuant to an order of suspension of trading issued by the SEC and captioned In the Matter of ForceField Energy Inc. (File No. 500-1).

On April 21, 2015, the Company received a subpoena from the staff of the SEC for the production of certain documents and information pursuant to a formal order of investigation.

Pursuant to a letter dated April 24, 2015, legal counsel to the former ALD stockholders (the “ALD Sellers”) informed the Company that the failure to pay all principal and accrued interest on the notes by April 27, 2015 (the “Maturity Date”), would result in the declaration of default under the terms of the promissory notes and related agreements, and that absent full payment of the promissory notes by the Maturity Date, the ALD Sellers would commence collection proceedings and seek to enforce all of the ALD Sellers’ contractual, legal and equitable rights under the promissory notes and related agreements. The promissory notes accrued interest at the rate of 5% per annum and the principal amount and all interest. The $1,050,000 due under the promissory notes was not paid on the Maturity Date. The notes are guaranteed by the Company and secured by substantially all of the assets of ALD.

On April 30, 2015, the Company notified Nasdaq that it was voluntarily terminating the listing of its shares of common stock on the Nasdaq Capital Market due to a number of uncertainties related to the Company’s current and future available cash, cash flow and operations. On May 11, 2015, the Company filed a Form 25 with the SEC to withdraw the listing and registration of its common stock from the Nasdaq Capital Market.

On April 30, 2015, the Company was required to pay $50,833 in principal, along with accrued interest of approximately $28,000, per the terms of a convertible note. The Company failed to make this payment. On May 13, 2015, the Company received a letter from the noteholder’s counsel alleging certain breaches and declaring the note to be in default. The interest rate on the convertible note increased from 9% to 22% per annum as a result of the default. The noteholder has commenced collection proceedings and is seeking to enforce all of its contractual, legal and equitable rights under the convertible note and related agreements. The original principal balance outstanding on the convertible note is $610,000. The note is unsecured.

On May 1, 2015, the Company announced that it closed its offices in Costa Rica and Mexico. The Company estimates that it will incur approximately $35,000 to $50,000 in aggregated exit costs associated with the orderly wind down of operations at these locations.

On May 11, 2015, the Company’s common stock commenced trading on the OTC Market Group’s “Grey Market”.

From April 1, 2015 through April 15, 2015, the Company accepted subscription agreements from investors and issued 59,091 shares of its common stock with an equal number of stock purchase warrants, and issued an additional 5,000 shares of common stock from the exercise of stock purchase warrants for gross proceeds totaling $350,000. The cost of these issuances was $35,000. The Company has not received any subscription agreements since April 15, 2015.

F-19

13. SEGMENT INFORMATION

The Company’s operations are comprised of three reportable segments for financial reporting purposes. The LED segment includes the operations of ForceField USA Inc., ForceField Energy SA and 17th Street ALD Management Corp., all of which are also reporting units. Collectively, these businesses sell, distribute and install energy efficient, commercial lighting products. The ORC segment includes the operations of TransPacific Energy, Inc., which is also a reporting unit. The company designs and installs proprietary modular Organic Rankine Cycle units utilizing patented multiple refrigerant mixtures to maximize heat recovery and convert waste heat directly from industrial processes, solar and geothermal, biomass converting it into electrical energy. The Corporate segment includes the operations, all of which are administrative or executive, of ForceField Energy Inc. and SunSi Energies Hong Kong Limited.

The Company utilized several criteria, including (i) the Company’s organizational structure, (ii) the manner in which the Company’s operations are managed, (iii) the criteria used by the Company’s Chief Executive Officer, the Chief Operating Decision Maker (CODM), to evaluate segment performance and (iv) the availability of separate financial information, as a basis to identify its operating segments.

The Company’s CODM reviews financial information presented on a consolidated basis, accompanied by disaggregated information by segment for purpose of evaluating financial performance.

Segment Results

The following table sets forth operations by segment during the three month successor period ended September 30, 2014:

	LED			ORC			Corporate			Consolidated
Sales	$	1,965,705		$	—		$	—		$	1,965,705
Cost of goods sold		1,404,318			—			—			1,404,318
Gross margin		561,387			—			—			561,387
Operating expenses:
Depreciation and amortization		179,230			26,383			888			206,501
Selling and marketing		221,675			958			—			222,633
General and administrative		446,331			1,395			568,286			1,016,012
Professional fees		9,034			32,692			193,383			235,109
Total operating expenses		856,270			61,428			762,557			1,680,255
Loss from operations		(294,883	)		(61,428	)		(762,557	)		(1,118,868	)
Other income (expense):
Interest expense, net		2,105			23			(117,813	)		(115,685	)
Total other income (expense)		2,105			23			(117,813	)		(115,685	)
Loss from operations before income taxes		(292,778	)		(61,405	)		(880,370	)		(1,234,553	)
Provision for income taxes (benefit)		(4,571	)		—			—			(4,571	)
Net loss	$	(288,207	)	$	(61,405	)	$	(880,370	)	$	(1,229,982	)

F-20

The following table sets forth operations by segment during the successor period of April 26, 2014 through September 30, 2014:

	LED			ORC			Corporate			Consolidated
Sales	$	2,958,646		$	—		$	—		$	2,958,646
Cost of goods sold		2,127,766			—			—			2,127,766
Gross margin		830,880			—			—			830,880
Operating expenses:
Depreciation and amortization		207,279			43,972			1,405			252,656
Selling and marketing		341,776			958			—			342,734
General and administrative		740,569			13,280			909,708			1,663,557
Professional fees		10,315			36,690			501,336			548,341
Total operating expenses		1,299,939			94,900			1,412,449			2,807,288
Loss from operations		(469,059	)		(94,900	)		(1,412,449	)		(1,976,408	)
Other income (expense):
Interest expense, net		7,805			54			(184,919	)		(177,060	)
Total other income (expense)		7,805			54			(184,919	)		(177,060	)
Loss from operations before income taxes		(461,254	)		(94,846	)		(1,597,368	)		(2,153,468	)
Provision for income taxes (benefit)		(4,571	)		—			—			(4,571	)
Net loss	$	(456,683	)	$	(94,846	)	$	(1,597,368	)	$	(2,148,897	)

Operating segments do not sell products to each other, and accordingly, there is no inter-segment revenue to be reported. All operations reported in the predecessor periods are attributable to the Company’s LED segment.

F-21

Total Assets

The following table sets forth the total assets by segment at September 30, 2014 and December 31, 2013:

	LED		ORC		Corporate		Consolidated
Total assets:
2014	$	8,907,739	$	1,676,737	$	885,186	$	11,469,662
2013	$	4,455,517	$	—	$	—	$	4,455,517

Goodwill, Intangible and Long-Lived Assets

The following table sets forth the carrying amount of goodwill and intangible and long-lived assets by segment at September 30, 2014 and December 31, 2013:

	LED		ORC		Corporate		Consolidated
Intangible assets:
2014	$	2,125,083	$	1,358,742	$	—	$	3,483,825
2013	$	—	$	—	$	—	$	—
Goodwill by segment
2014	$	3,860,054	$	—	$	—	$	3,860,054
2013	$	—	$	—	$	—	$	—
Property, plant and equipment:
2014	$	16,965	$	—	$	17,672	$	34,637
2013	$	11,636	$	—	$	—	$	11,636

Customer Concentration and Credit Risk

During the three month successor period ended September 30, 2014, the LED segment had two customers that accounted for 24.8% and 11.0%, respectively, of revenues. During the successor period of April 26, 2014 through September 30, 2014, the LED segment had one customer that accounted for 16.9% of revenues and another that accounted for 12.3% of accounts receivable. During the predecessor period of January 1, 2014 through April 25, 2014, the LED segment had one customer that accounted for 21.6% of revenues and another two customers that accounted for 25.1% of accounts receivable. For the nine month predecessor period ended September 30, 2013, the LED segment had one customer that accounted for 28.9% of revenues and two customers that accounted for 33.1% of accounts receivable.

During the successor period of April 26, 2014 through September 30, 2014, the ORC segment had one customer that accounted for 100% of accounts receivable. The ORC segment did not record any sales during the successor period of April 26, 2014 through September 30, 2014. Furthermore, no customer sales or customer account balances were included within the predecessor periods’ results.

F-22

Geographic Information

During the successor period of April 26, 2014 through September 30, 2014, all of the Company’s sales were generated within the United States with the exception of $29,303 in sales produced in Costa Rica. During the predecessor period of January 1, 2014 through April 25, 2014, all of the Company’s sales were made within the United States. For the three and nine month predecessor periods ended September 30, 2013, all of the Company’s sales were made within the United States.

14. SUBSEQUENT EVENTS

On October 17, 2014 (the “Closing”), the Company entered into a Stock Purchase Agreement (the “Purchase Agreement”) with ESCO Energy Services Company, a Massachusetts corporation (“ESCO”) and Mitchell Barack (the “Seller”) the holder of all of ESCO’s outstanding common stock (the “ESCO Outstanding Equity”). Pursuant to the Purchase Agreement, the Company acquired (the “Acquisition”) all the ESCO Outstanding Equity from the Seller for an aggregate purchase price of $7.5 million consisting of the following:

● A cash payment of $1,000,000 to the Seller;

● The issuance of 366,845 shares (the “Share Consideration”), of the Company’s restricted common stock (the “Common Stock”) to the Seller and 87,700 restricted shares of Common Stock to certain employees of ESCO (the “Employee Shares”) valued at $2.5 million;

● The issuance to the Seller of two secured promissory notes of the Company (the “Seller Notes”) consisting of: a $2.075 million note bearing interest at 6.02% per annum due in April 2016, and a $1.075 million note due on November 16, 2014. In addition, as part of the transaction, the Company recorded a liability to the ESCO employees that received Employee Shares, in the aggregate amount of $850,000 (of which $425,000 is payable upon the maturity of the $2.075 million note, and the remaining $425,000 is payable upon the maturity of the $1.075 million note).

The $2.075 million note is secured by 687,500 shares of restricted Common Stock, pursuant to a Stock Pledge Agreement between the Company and the Seller (the “Pledge Agreement”), and the $1.075 million note is secured by all of the assets of ESCO. $425,000 is payable upon the maturity of the $2.075 million note, and the remaining $425,000 is payable upon the maturity of the $1.075 million note. All of the Sellers Notes and payments due to the ESCO employees may be repaid before maturity without the Company incurring any prepayment penalty. Concurrent with the Closing, the Company paid approximately $1.5 million in cash to retire all of the bank debt on ESCO’s balance sheet.

Pursuant to the Purchase Agreement, the Seller will have the opportunity to earn up to $5.0 million in additional purchase consideration (the “Earnout Payments”) upon the achievement by ESCO of certain agreed upon post-closing operating EBITDA performance milestones ranging from $2.0-$3.0 million calculated on a trailing twelve-month basis. The Earnout Payments, if any, are payable in 50% in cash and 50% in shares of restricted Common Stock (the “Earnout Shares”). Accordingly, if the maximum Earnout Payment is earned, then the Seller will be entitled to receive a cash payment of $2.5 million and that number of shares of restricted Common Stock having a market value of $2.5 million.

In connection with the issuance of the Share Consideration, the Seller entered into a Lock-Up Agreement (the “Lockup Agreement”), pursuant to which the Seller agreed not to sell or transfer any of the Share Consideration for a period of 12 months following the Closing (the “Lock Up Period”). After the Lock-Up Period, the Seller agreed not to sell or transfer more than 16 2/3% of any of the Share Consideration per month for a period of 6 months. With respect to any Earnout Shares issued, the Seller agreed not to sell or transfer any Earnout Shares for a period of 6 months after the issuance of such Earnout Shares.

As an additional inducement for the Seller to enter into the Purchase Agreement, Endeavor Enterprises LLC Ltda. (“Endeavor”), which is owned by the Company’s Executive Chairman, agreed to place 800,000 shares of restricted Common Stock he owned into an escrow account (the “Escrow Shares”). In the event that on the one year anniversary of the Closing, the weighted-average closing price per share of the Common Stock as quoted on NASDAQ for the thirty (30) trading days prior to and including October 16, 2015 (the “Share Value”), is less than $5.75 per share (the “Minimum Value”); then the escrow agent shall transfer to the ESCO employees and the Seller that number of Escrow Shares determined by taking the difference between the Minimum Value and the Share Value and multiplying that number times the number of shares that each ESCO employee and the Seller received at Closing and then dividing that number by the Share Value.

On October 13, 2014 the Company received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a Secured Promissory Note (“Promissory Note”). The Promissory Note is due and payable in full by the Company on December 5, 2014. As consideration for loaning these proceeds to the Company, the investor will receive a $40,000 fee payable along with the principal on the December 5, 2014 maturity date. This loan is secured by 1,000,000 common restricted shares of the Company’s stock owned by its Executive Chairman.

On November 4, 2014, the Company received $610,000 in loan proceeds from an accredited investor pursuant to the terms of an unsecured, convertible promissory note. The note carries an interest rate of 9% per annum for a seventeen (17) month term with a fixed conversion price of $5.50 per share, or 110,909 shares of the Company’s common stock. The principal and interest are payable in twelve (12) equal installments commencing April 30, 2015. As consideration for loaning these proceeds to the Company, the investor received 15,000 shares of the Company’s restricted common stock.

From October 1, 2014 through November 18, 2014, the Company accepted subscription agreements from investors and issued 202,000 shares of its common stock with an equal number of stock purchase warrants, and issued an additional 181,250 shares of common stock from the exercise of stock purchase warrants for gross proceeds totaling $1,735,000. The cost of these issuances was $165,000.

F-23

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”). These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the PSLRA, and are included in this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Some of the factors that could cause results or events to differ materially from current expectations include, but are not limited to: the impact of the Securities & Exchange Commission (the “SEC”) subpoena and investigation, the arrest of our former chairman, and the class action and derivative lawsuits may have on our current and future business and on financing initiatives, general economic, market or business conditions; general stock market performance; an increasingly competitive business environment; changing regulatory conditions or requirements; ~~changing alternative energy technologies;~~ our ability to generate revenues from ~~ORC units and~~ LED lighting sales; entering into definitive agreements or contracts on LED trials currently in process, obtaining financing for ~~ORC and~~ LED installations; the acceptance of the lighting market to LED technology; raising sufficient ~~capital to fund our acquisition strategy as well as raising sufficient~~ working capital for operations; the price of electricity in various jurisdictions ~~worldwide;~~in the ~~market~~United ~~acceptance of the ORC technology~~States; the ~~profitability~~resolution of ~~ALD~~matters ~~and~~between ~~ESCO; and our ability to integrate~~ the ~~ALD~~Company and ~~ESCO~~its ~~acquisitions in the Company~~creditors. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Additional information concerning our business, including other factors that could materially affect our financial results, is included herein and in our other filings with the ~~Securities and Exchange Commission~~SEC.

~~LED LIGHTING~~ OVERVIEW

We are a contractor that distributes and installs light emitting diode (“LED”) ~~Lighting~~and ~~Distribution~~traditional lighting products for both indoor and outdoor commercial applications. We believe that our services offer a significant opportunity for savings through improved energy efficiency and reduced maintenance costs. We generate revenue by selling commercial grade lighting products and our installation services for use in both commercial and municipal markets. The marketing and distribution of such products and services occurs primarily through internal sales resources at our wholly-owned subsidiaries, ForceField Energy USA Inc., which includes the assets of Catalyst LED’s LLC; 17th Street ALD Management Corp; and ESCO Energy Services Company. Our target customers include federal, state and local governments; commercial and industrial facilities; educational, hospitality and institutional organizations; hospitals and healthcare providers; utility companies; and new construction projects.

In On ~~the~~March ~~United~~5, ~~States~~2015, we ~~are~~completed ~~marketing~~the ~~LED~~sale ~~products~~of ~~through~~ our ~~wholly-owned~~50.3% ~~subsidiary~~equity ~~FFE~~interest ~~USA,~~in ~~which~~TransPacific ~~was~~Energy, ~~incorporated~~Inc. in(“TPE”) ~~2012~~back ~~and~~to ~~through~~certain ~~ALD~~current ~~which~~and ~~was~~former ~~acquired~~TPE ~~in April 2014~~shareholders. InAs ~~March 2013 we formed~~ a ~~subsidiary~~result inof ~~Costa~~the ~~Rica~~transaction, ~~FFE SA; and in October 2013 we opened an office in Costa Rica to expand~~ our ~~presence~~operations inare ~~the~~now ~~region~~comprised ~~to be able to benefit from significant opportunities we believe exist there. Throughout the rest~~ of ~~the~~only ~~world,~~one wereportable ~~are~~segment ~~marketing~~for ~~our~~financial ~~products~~reporting ~~as “ForceField”~~purposes.

~~Prior~~On toMay ~~the~~1, ~~acquisition~~2015, ~~of ALD~~ we ~~focused~~announced ~~the~~that ~~majority~~we ofclosed our ~~LED~~offices ~~marketing efforts~~ in ~~the~~Costa ~~United~~Rica ~~States~~ and inMexico ~~territories in Latin America~~ and ~~other~~are ~~parts~~winding ofdown ~~the~~all ~~world~~operations ~~where~~at ~~the~~each ~~cost per kilowatt hour~~ of ~~electricity~~those ~~is high, and in which the opportunity to generate significant energy savings by changing from traditional lighting to LED lighting, is the most compelling~~locations.

In order to accelerate the growth of our LED business, we have undertaken the following initiatives in 2014.

On February 2, 2014, we purchased the assets cash of Idaho-based Catalyst, a provider of customized LED lighting products and solutions, and an authorized vendor for a number of leading companies.

On April 25, 2014 we acquired American Lighting. Based in San Diego, California, American Lighting is a leading energy-efficient, commercial lighting specialist with over 20,000 installed customers and standing relationships with many major California utilities. ALD reported audited revenues of approximately $7.1 million in 2013 from the sales, distribution and installation of energy efficient lighting projects.

ALD has performed over 2,500 lighting installations over the past 3 years. Projects include a variety of project types including: schools, prisons, stadiums, large aerospace factories, 20 story office buildings, military bases, premier 4-Star hotels, casinos, parking garages, shopping malls, tilt-up warehouse buildings, government buildings, small retail shops, car dealerships, auto repair shops, lifeguard stands on the beach, libraries, etc. Over the years ALD has also done work outside of California in NV, OR, WA, AZ. We expect to continue to do work outside of California.

Currently in our LED segment we have active bids in the United States, Latin America and the Caribbean in excess of $100 million. Included in the $100 million in active bids is one discrete bid amounting to $95.0 million. There can be no assurances that we will win this $95.0 million dollar bid, of if awarded the bid, that we can obtain financing to fulfill this order.

We do not have enough operating history at ALD or at our previous LED business to correlate the amount of bid activity that will result in signed orders and that will generate revenue. The realization of revenue from such prospective customers or projects will be dependent on the successful completion of initial trials, consummation of definitive agreements, delivery of LED products by our LED supplier, and the ability of both the Company and the end-users to obtain financing on reasonable terms. We believe we will be successful in obtaining some of these prospective clients or projects and generating significant revenue over a multi-year period, however there can be no assurances.

On October 17, 2014 we acquired all of outstanding equity of ESCO Energy Services (see Note 14 – Subsequent Events).

ORC OVERVIEW

We have a 50.3% equity interest in TransPacific Energy (“TPE”). TPE is a renewable energy technology corporation located in California and Nevada that designs and installs proprietary modular Organic Rankine Cycle (“ORC”) units utilizing up to nine different proprietary refrigerant mixtures (which it has patented) to maximize heat recovery and convert that waste heat directly into electrical energy. Furthermore, the ORC units help to address greenhouse emissions and have qualified for various government and state subsidies available in the United States.

TPE’s technology converts waste heat into clean electricity using multi-component water- based fluids that are environmentally sound, non-toxic and non-flammable. In contrast, the typical ORC fluids such as pentane, isobutene, butane, propane and ammonia instead of water-based fluids. Potential applications for TPE’s technology include any process that generates waste heat or flue gas (such as industrial smokestacks, landfills, geothermal, solar and garbage incinerators) or utilize warm ocean waters. Additionally, TPE’s technology can be utilized as an alternative to cooling towers and steam condensers, and use heat released to efficiently generate electricity with air cooled or water cooled condensers.

Currently TPE has one completed ORC unit that has been purchased by an US based aerospace company that is awaiting deployment and initial testing at the aerospace company’s facilities. The timing of when this will occur is currently indeterminable. The commercialization of TPE’s technology has taken significantly longer than anticipated. Currently there are no active bids for new ORC units nor do we expect to generate any revenue from ORC units for the foreseeable future. We believe that there are ORC projects in the United States and internationally where we can install and implement our ORC technology and generate revenue, however, there can be no assurances we will be successful in determining whether TPE technology is commercially viable or in obtaining such agreements, or that we will be able to raise funding for the manufacture of new ORC units.

RESULTS OF OPERATIONS

The following table sets forth our results of operations ~~during~~for the three-month ~~months~~periods ended ~~September~~March 3031, ~~2014~~2015 and ~~2013~~2014:

	Successor			~~Predecessor~~	Predecessor
	Three Months Ended September 30,			Three Months Ended September 30,
	Three-Month Period Ended March 31,				Three-Month Period Ended March 31,
	2014			2013
	2015				2014
Sales	$	12,~~965~~852,~~705~~857		$	~~825,784~~$	1,300,775
Cost of goods sold		12,~~404~~106,~~318~~414			~~569,882~~	875,636
Gross margin		~~561~~746,~~387~~443			~~255,902~~	425,139
Operating expenses:
Depreciation and amortization		~~206~~344,~~501~~138			~~2,559~~	2,521
Selling and marketing		~~222~~167,~~633~~863			~~96,021~~	154,492
General and administrative		1,~~016~~436,~~012~~313			~~352,647~~	350,448
Professional fees		~~235~~256,~~109~~858			~~4,000~~	245
Total operating expenses		1,680,255			455,227
Impairment of goodwill and intangible assets		9,156,190				—
Loss from operations		(1,118,868	)		(199,325	)
Total operating expenses		11,361,362				507,706
Other income (expense):
Loss from operations		(10,614,919	)			(82,567	)
Interest expense, net		(115,685	)		1,130
Other income (expense)
Total other income (expense)		(115,685	)		1,130
Interest income (expense), net		(612,267	)			5,054
Loss before income taxes		(1,234,553	)		(198,195	)
Loss on settlement of debt		(733,414	)
Provision for income taxes (benefit)		(4,571	)		(120,578	)
Other gains (losses)		2,685,000				—
Net loss		(1,229,982	)		(77,617	)
Total other income		1,339,319				5,054
Less: Accretion of preferred stock		—			23,258
Loss before income taxes		(9,275,600	)			(77,513	)
Less: Net loss attributable to noncontrolling interests		(30,517	)		—
Provision for income taxes (benefit)		(431,244	)			1,775
Net loss attributable to ForceField Energy Inc. common stockholders	$	(1,199,465	)	$	(100,875	)
Net loss		(8,844,356	)			(79,288	)
Less: Accretion of preferred stock		—				24,197
Less: Net loss attributable to noncontrolling interests		(6,387	)			—
Net loss attributable to ForceField Energy Inc. stockholders	$	(8,837,969	)		$	(103,485	)

Going Concern

Our unaudited consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have generated significant operating losses which have been funded primarily from debt and equity financings. In addition, we are in default of, or past due on, certain payments related to principal and interest due on notes payable, vendor payables and other accrued liabilities. We are addressing our delinquencies on a case-by-case basis; however, we can offer no assurance that the cooperation we have received thus far will continue.

The continuing operations of our Company and the recoverability of the carrying value of assets is dependent upon our ability to obtain necessary financing to fund our working capital requirements, and upon future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

There can be no assurance that new capital will be available as necessary to meet our working capital requirements or, if the capital is available, that it will be on terms acceptable to us. The issuances of additional equity securities by us may result in significant dilution in the equity interests of our current stockholders. Obtaining new debt capital, assuming such debt capital would be available, will increase our liabilities and future cash commitments. If we are unable to obtain financing in the amounts and on terms deemed acceptable, our business and future success may be adversely affected and we may cease operations. These factors raise substantial doubt regarding our ability to continue as a going concern.

The following table sets forth our results of operations during the nine months ended September 30, 2014 and 2013:

	Successor			Predecessor
	Period from April 26 through September 30			Period from April 1 through April 25			Nine Months Ended September 30,
	2014			2014			2013
Sales	$	2,958,646		$	1,604,369			$	3,925,587
Cost of goods sold		2,127,766			1,130,248				2,284,216
Gross margin		830,880			474,121				1,641,371
Operating expenses:
Depreciation and amortization		252,656			3,334				7,637
Selling and marketing		342,734			193,148				376,849
General and administrative		1,663,557			486,970				1,092,834
Professional fees		548,341			37,317				23,865
Total operating expenses		2,807,288			720,769				1,501,185
Income Loss from operations		(1,976,408	)		(246,648	)			140,186
Other income (expense):
Interest expense, net		(177,060	)		2,182				3,456
Total other income (expense)		(177,060	)		2,182				3,456
Income Loss before income taxes		(2,153,468	)		(244,466	)			143,642
Provision for income taxes (benefit)		(4,571	)		800				13,556
Net income Loss		(2,148,897	)		(245,266	)			130,086
Less: Accretion of preferred stock		—			31,054				115,713
Less: Net loss attributable to noncontrolling interests		(47,136	)		—				—
Net income Loss attributable to ForceField Energy Inc. common stockholders	$	(2,101,761	)	$	(276,320	)		$	14,373

Predecessor and Successor Reporting

On April 25, 2014, ~~the~~we ~~Company~~acquired ~~completed~~17th ~~the~~Street ~~acquisition~~ALD ofManagement ~~American~~Corp ~~Lighting.~~(“ALD”), ~~Based~~a leading commercial lighting specialist based in San Diego, California,. ~~American~~The ~~Lighting~~transaction iswas aaccounted ~~leading~~for ~~energy-efficient,~~under ~~commercial~~the ~~lighting~~acquisition ~~specialist~~method ~~with~~of ~~over 20~~accounting,~~000~~ ~~installed~~which ~~customers~~requires that the assets purchased and ~~standing~~the ~~relationships~~liabilities ~~with~~assumed ~~many~~all ~~major~~be orreported ~~California~~in ~~utilities.~~our Atfinancial ~~the~~statements ~~time~~at wetheir ~~acquired~~fair ~~ALD~~value, itwith ~~was~~any ~~significantly~~excess ~~larger~~purchase ~~than~~price ~~our~~over ~~operations.~~the ~~The~~net ~~ALD~~assets ~~transaction~~being ~~was~~reported ~~accounted~~as ~~for~~goodwill. ~~under~~The application of the acquisition method of accounting represented a change in accounting basis to us. ~~Under~~Accordingly, our financial statements and certain note presentations separate our presentations into two distinct periods, the ~~acquisition~~period ~~method~~before the consummation of the transaction (labeled “Predecessor”) and the period after that date (labeled “Successor”), to indicate the application of the different basis of accounting between the periods presented. For financial reporting purposes, ALD was ~~treated~~deemed asto be the ~~accounting~~predecessor ~~acquirer~~company and ~~ForceField~~we ~~was~~were ~~treated~~deemed asto be the ~~acquired~~successor company ~~for~~in accordance with the rules and regulations issued by the SEC. This change in accounting basis is represented in our unaudited consolidated financial ~~reporting~~statements ~~purposes~~by a vertical black line which appears between the columns entitled "Predecessor" and "Successor" on the statements and in the relevant notes. The black line signifies that the amounts shown for the periods prior to and subsequent to the acquisition may not be comparable.

~~Due~~The topredecessor ~~the~~account ~~impact~~balances ~~of predecessor~~ and ~~successor~~results ~~reporting, the Company's financial statements have been separated into two distinct periods, the period before the consummation~~ of ~~the~~operations ~~ALD~~are ~~transaction~~effective onthrough April 2530, 2014 ~~(labeled “Predecessor”) and the period after that date (labeled “Successor”)~~, toas ~~indicate~~ the ~~application~~impact of ~~different~~transactions ~~basis~~recorded ~~of accounting between the periods presented. Consequently, all of the historic results of operations of the Company prior to the acquisition of ALD have been excluded~~ from ~~all predecessor results of operations for both the three and nine month periods ended September 30, 2013. Also all Company results of operations for 2014 prior to~~ April 26, 2014 ~~have~~through ~~been~~April ~~excluded from the successor results of operations for the three and nine months periods ended September~~ 30, 2014~~. As~~ awas result the comparison of operating results and segment reporting, and any analysis of variances for the and three and nine month periods ended September 30, 2014 compared to September 30, 2013 in this MD&A section may not ~~be not considered meaningful or indicative, in certain circumstances of future operating performance~~material.

Segment Results

The following table sets forth operations by segment during the three month successor period ended September 30, 2014:

	LED			ORC			Corporate			Consolidated
Sales	$	1,965,705		$	—		$	—		$	1,965,705
Cost of goods sold		1,404,318			—			—			1,404,318
Gross margin		561,387			—			—			561,387
Operating expenses:
Depreciation and amortization		179,230			26,383			888			206,501
Selling and marketing		221,675			958			—			222,633
General and administrative		446,331			1,395			568,286			1,016,012
Professional fees		9,034			32,692			193,383			235,109
Total operating expenses		856,270			61,428			762,557			1,680,255
Loss from operations		(294,883	)		(61,428	)		(762,557	)		(1,118,868	)
Other income (expense):
Interest expense, net		2,105			23			(117,813	)		(115,685	)
Total other income (expense)		2,105			23			(117,813	)		(115,685	)
Loss from operations before income taxes		(292,778	)		(61,405	)		(880,370	)		(1,234,553	)
Provision for income taxes (benefit)		(4,571	)		—			—			(4,571	)
Net loss	$	(288,207	)	$	(61,405	)	$	(880,370	)	$	(1,229,982	)

The following table sets forth operations by segment during the successor period of April 26, 2014 through September 30, 2014:

	LED			ORC			Corporate			Consolidated
Sales	$	2,958,646		$	—		$	—		$	2,958,646
Cost of goods sold		2,127,766			—			—			2,127,766
Gross margin		830,880			—			—			830,880
Operating expenses:
Depreciation and amortization		207,279			43,972			1,405			252,656
Selling and marketing		341,776			958			—			342,734
General and administrative		740,569			13,280			909,708			1,663,557
Professional fees		10,315			36,690			501,336			548,341
Total operating expenses		1,299,939			94,900			1,412,449			2,807,288
Loss from operations		(469,059	)		(94,900	)		(1,412,449	)		(1,976,408	)
Other income (expense):
Interest expense, net		7,805			54			(184,919	)		(177,060	)
Total other income (expense)		7,805			54			(184,919	)		(177,060	)
Loss from operations before income taxes		(461,254	)		(94,846	)		(1,597,368	)		(2,153,468	)
Provision for income taxes (benefit)		(4,571	)		—			—			(4,571	)
Net loss	$	(456,683	)	$	(94,846	)	$	(1,597,368	)	$	(2,148,897	)

Revenue

Revenue for the three-month ~~months~~successor period ended ~~September~~March 3031, ~~2014~~2015 was $12,~~965~~852,~~705~~857, an increase of $1,~~139~~552,~~921~~082, or ~~138~~119.03%, as compared to $~~825~~1,~~784~~300,775 in the corresponding predecessor period of the prior year. ~~Revenue~~The ~~for~~increase ~~the~~in ~~nine~~revenue ~~months~~over ~~ended~~the ~~September~~prior ~~30,~~year ~~2014~~period ~~were~~is ~~$4,563,015,~~primarily anattributable ~~increase~~to the inclusion of $~~637~~1,~~428~~502,065 orin ~~16.2%~~revenue asfrom ~~compared~~our toESCO ~~$3,925,587~~subsidiary; inwhich ~~the~~was ~~corresponding~~acquired ~~period~~in ofOctober ~~the prior year~~2014.

7Revenue is derived from distribution, sale and installation of LED and conventional lighting products. Our revenue is subject to fluctuation on both a quarterly and annual basis and is impacted by the timing of significant contracts and utility rebate programs. Historically, we have realized a greater percentage of revenue in the latter half of the calendar year. The majority of our revenues are derived from within the United States, and we expect that market to continue to be our principal source of revenue. However, we also generate a portion of our revenue from customers outside of the United States. Substantially all of our revenue is denominated in United States dollars.

Our revenue in both the 2014 and 2013 periods was generated entirely by our LED segment. Revenue is derived primarily from distribution, sale and installation of lighting products. These products include LED lighting lamps, fixtures and other conventional lighting products. Our LED segment revenue is subject to fluctuation, on both quarterly and annual basis, and is impacted by the timing of significant contracts and utility rebate programs. Historically, we have realized a greater percentage of revenue from this segment in the latter half of the year. As such, we anticipate increased levels of sales through the remainder of the current year.

Our results do not reflect any revenue from the waste heat recovery business of our ORC segment. The commercialization of this technology is taking longer than we had anticipated. As a result, we do not expect to realize any revenue from our ORC segment through the remainder of this year.

Gross Margin

Gross margin is calculated by subtracting cost of sales from revenue. Gross margin percentage is calculated by dividing gross margins by revenue. Our gross margin has been and will continue to be affected by a variety of factors, including ~~the average sales prices of our products,~~ product mix, our ability to reduce installation costs and fluctuations in the cost of ~~our~~ purchased products and components.

Gross margin for three-month ~~months~~successor ~~ended September 30, 2014 was $561,387, or 28.6% of revenue as compared to gross margin $255,902, or 31.0% of revenue in the corresponding~~ period ~~of the prior year. Gross margin for nine months~~ ended ~~September~~March 3031, ~~2014~~2015 was $1746,~~305~~443,~~001,~~ or 2826.62% of revenue, as compared to gross margin $1425,~~641~~139,~~371,~~ or 4132.87% of revenue, in the corresponding predecessor period of the prior year. Our gross margin in the current year ~~periods~~period reflects the impact of our product mix and downward adjustments to revenue from rebates from utilities. We expect that our gross margin percentages will improve as our sales levels increase and our product mix changes; ~~through the remainder of 2014~~however, ~~although~~we ~~there~~ can beoffer no ~~assurances~~assurance.

Selling and Marketing Expenses

Selling and marketing expenses for the three-month ~~months~~successor period ended ~~September~~March 3031, ~~2014~~2015 were $~~222~~167,~~633~~863, or 115.39% of revenues, as compared to $96154,~~021~~492, or 11.69% of revenues ~~in the corresponding period of the prior year. Selling and marketing expenses for the nine months ended September 30~~, ~~2014 were $535,882, or 11.7% of revenues, as compared to $376,849, or 9.6% of revenues~~ in the corresponding predecessor period of the prior year. The increase in selling and marketing expenses over the prior year ~~periods~~period is largely attributable to the inclusion of ForceField’s current year operating results. These expenses consist primarily of sales commissions, advertising and marketing costs, travel and various other business development expenses. We expect that selling and marketing expenses, as a percentage of revenues, will decrease as revenue levels increase; however, we can offer no assurance.

General and Administrative Expenses

General and administrative expenses (“G&A”) for the three-month ~~months~~successor period ended ~~September~~March 3031, ~~2014~~2015 were $1,~~016~~436,~~012~~313, or 5150.73% of revenues, as compared to $~~352~~350,~~647~~448, or 4226.79% of revenues, in the corresponding predecessor period of the prior year. ~~General~~The increase in general and administrative expenses ~~(“G&A”)~~over ~~for~~ the ~~nine~~prior ~~months~~year ~~ended~~period ~~September~~is ~~30,~~largely ~~2014~~attributable ~~were $2,150,527, or 47.1% of revenues, as compared~~ to ~~$1,092,834, or 27.8% in~~ the ~~corresponding~~inclusion ~~period~~ of ~~the~~ForceField’s ~~prior~~current year operating results. The primary components of our G&A expenses include salaries and benefits, facility ~~costs~~ and maintenance costs, investor relations activities, ~~various~~ public company expenses and various other administrative and office expenses; a substantial portion of which are fixed. ~~The increase in general and administrative expenses over the prior year periods is largely attributable to the inclusion of ForceField’s current year operating results.~~ We expect to leverage these costs in the future and believe that our G&A expenses, as a percentage of revenue, will decrease in future periods; however, we can offer no assurance.

Professional Fees

Professional fees for the three-month ~~months~~successor period ended ~~September~~March 3031, ~~2014~~2015 were $~~235~~256,~~109~~858, or 129.0% of revenue, as compared to $4245,~~000,~~ or 0.50% in the corresponding predecessor period of the prior year. ~~Professional~~The ~~fees~~increase ~~for~~in ~~the~~professional ~~nine~~fees ~~months~~over ~~ended~~the ~~September~~prior ~~30,~~year ~~2014~~period ~~were~~is ~~$585,658,~~largely orattributable ~~12.8%~~to ofthe ~~revenue,~~inclusion asForceField’s ~~compared~~current toyear ~~$23,865,~~operating ~~or 0~~results. 6%The inprofessional ~~the~~fees ~~corresponding~~in ~~period of~~ the ~~prior~~current year. Inperiod ~~2014,~~are welargely ~~have~~made ~~recorded~~up ~~accounting and legal fees~~ of ~~$130,039~~accounting ~~relating to the acquisition of American Lighting~~ and legal fees ofincurred ~~$223,055~~in ~~pertaining~~connection ~~to the matter~~ with ~~TransPacific~~require ~~described~~financial ~~in “Item 1. Legal Proceedings” below. These professional fees~~reporting, intax ~~addition~~compliance ~~to professional services rendered for recurring regulatory~~ and ~~compliance~~general ~~actions,~~corporate ~~are the primary drivers for the increases over the prior year periods~~matters.

8Impairment of Goodwill and Other Long-Lived Assets

Goodwill represents the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from our acquisitions is attributable to the value of the potential expanded market opportunity with new customers. Intangible assets have either an identifiable or indefinite useful life. Intangible assets with identifiable useful lives are amortized on a straight-line basis over their economic or legal life, whichever is shorter.

Goodwill and indefinite-lived assets are not amortized, but are subject to annual impairment testing unless circumstances dictate more frequent assessments. We perform an annual impairment assessment for goodwill during the fourth quarter of each year and more frequently whenever events or changes in circumstances indicate that the fair value of the asset may be less than the carrying amount. Goodwill impairment testing is a two-step process performed at the reporting unit level. Step one compares the fair value of the reporting unit to its carrying amount. The fair value of the reporting unit is determined by considering both the income approach and market approaches. The fair values calculated under the income approach and market approaches are weighted based on circumstances surrounding the reporting unit. Under the income approach, we determine fair value based on estimated future cash flows of the reporting unit, which are discounted to the present value using discount factors that consider the timing and risk of cash flows. For the discount rate, we rely on the capital asset pricing model approach, which includes an assessment of the risk-free interest rate, the rate of return from publicly traded stocks, our risk relative to the overall market, our size and industry and other risks specific to us. Other significant assumptions used in the income approach include the terminal value, growth rates, future capital expenditures and changes in future working capital requirements. The market approaches use key multiples from guideline businesses that are comparable and are traded on a public market. If the fair value of the reporting unit is greater than its carrying amount, there is no impairment. If the reporting unit’s carrying amount exceeds its fair value, then the second step must be completed to measure the amount of impairment, if any. Step two calculates the implied fair value of goodwill by deducting the fair value of all tangible and intangible net assets of the reporting unit from the fair value of the reporting unit as calculated in step one. In this step, the fair value of the reporting unit is allocated to all of the reporting unit’s assets and liabilities in a hypothetical purchase price allocation as if the reporting unit had been acquired on that date. If the carrying amount of goodwill exceeds the implied fair value of goodwill, an impairment loss is recognized in an amount equal to the excess.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, strategic plans and future market conditions, among others. There can be no assurance that our estimates and assumptions made for purposes of the goodwill and long-lived asset impairment testing will prove to be accurate predictions of the future. Changes in assumptions and estimates could cause us to perform impairment test prior to scheduled annual impairment tests scheduled in the fourth quarter.

Due to deteriorating business conditions and significant delays associated with new business opportunities, we assessed the acquired goodwill associated with our related business units for impairment as of March 31, 2015. Based on the discounted cash flows model utilizing estimated future earnings and cash flows, the fair value of the reporting units was less than the carrying value of the acquired goodwill. Our evaluation of goodwill resulted in a total impairment charge of $9,156,190; all of which was attributed to ESCO.

Interest Expense, net

Interest expense for the three-month successor period ended March 31, 2015 was $612,267 compared to interest income of $5,057 in the corresponding predecessor period of the prior year. The increase in interest expense is attributable to the inclusion of interest incurred on convertible and promissory notes issued by ForceField that were not included in the prior year period as those results pertain solely to ALD as the predecessor entity

Loss on Settlement of Debt

On March 31, 2015, we agreed to exchange 181,818 shares with an equal number of common stock purchase warrants in lieu of cash to satisfy a $1.0 million promissory note payment owed to an investor. The conversion price granted to the investor for the share exchange were in accord with the terms offered under our equity private placement memorandum. The fair value of the common stock was $1,363,635. The stock purchase warrants were accounted for as equity in accordance with ASC 480 by using the Black-Scholes model. We calculated a relative fair value of $369,779 for these stock purchase warrants. The difference between the fair value of the equity and the settled liability totaled $733,414 and was recorded as a loss on settlement of debt.

Other Gains and Losses

We determine the fair value of contingent consideration based on a probability-weighted discounted cash flow analysis. The fair value re-measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined in the fair value hierarchy. In each period, we reassess our current estimates of performance relative to the stated targets and adjusts the liability to fair value. Any such adjustments are included as a component of Other Income (Expense) in the Consolidated Statements of Operations and Comprehensive Loss. At March 31, 2015, we recorded of a gain of $2,685,000 due to the reduction in fair value of the contingent consideration recorded in relation to our acquisition of ESCO from $2,685,000 to $0.

Provision for Income Taxes

We recorded an income tax benefit of $4431,~~571~~244 ~~and $3,771, respectively,~~ for the three-month ~~and~~successor ~~nine~~period ~~months~~ ended ~~September~~March 3031, ~~2014~~2015, as compared to an income tax ~~benefit~~provision of $~~120~~1,~~578~~775 ~~and an income tax expense of $13,556, respectively,~~ in the corresponding ~~periods~~predecessor period of the prior year.

As of ~~September~~March 3031, ~~2014~~2015, we had federal, state and foreign net operating loss carryforwards aggregating to approximately $10.63 million that are available to offset future liabilities for income taxes. We have generally established a valuation allowance against these carryforwards based on an assessment that it is more likely than not that these benefits will not be realized in future years. The federal and state net operating loss carryforwards expire at various dates through ~~2033~~2034. ~~Going forward we expect our ALD subsidiary to be profitable and that our NOL’s will be available to offset ALD’s federal income tax liability.~~

Net Earnings (Loss) Attributable to Stockholders

During the three -month successor period ~~end~~ended ~~September~~March 3031, ~~2014~~2015, we incurred a net loss attributable to ForceField stockholders of $18,~~199~~837,~~465~~969or or $(0.0748) per basic and fully diluted share. During the ~~same~~corresponding ~~three month~~ predecessor period ~~ended~~of ~~September~~the ~~30,~~prior ~~2013~~year, we incurred a net loss attributable to ForceField stockholders of $~~100~~103,~~875~~485 or $(0.08) per basic and fully diluted share.

~~During~~The ~~the~~weighted ~~successor~~average ~~period~~number of ~~April 26, 2014 through September 30, 2014, we incurred a net loss attributable to ForceField stockholders of $2,101,761or $(0.13) per~~ basic and fully diluted ~~share.~~shares ~~During~~outstanding for the ~~predecessor~~three month successor period ofended ~~January~~March 131, ~~2014~~2015 ~~through~~was ~~April 25~~18, ~~2014~~265,723 wecompared ~~incurred a net loss attributable~~ to ~~ForceField stockholders of $276~~1,~~320 or $(0.22) per basic and fully diluted share. The aggregate of these two current year periods compare to net income attributable to ForceField stockholders of $14~~252,~~373,~~403 ~~or $0.01 per~~ basic and fully diluted ~~share,~~shares ~~realized~~for ~~during~~ the ~~nine~~corresponding ~~month~~ predecessor period ~~ended~~of ~~September~~the ~~30,~~prior ~~2013~~year.

The weighted average number of basic and fully diluted shares outstanding for the three month successor ended September 30, 2014 was 16,255,493 compared to 1,252,403 basic and fully diluted shares for the same three month period ended September 30, 2013.

The weighted average number of basic and fully diluted shares outstanding for the successor period of April 26, 2014 through September 30, 2014 was 16,201,792, while the weighted average number of basic and fully diluted shares outstanding for the predecessor period of January 1, 2014 through April 25, 2014 and for the nine month period ended September 30, 2013 was 1,252,403. There are no dilutive equivalents included in our calculation of fully diluted shares.

On February 19, 2014, we reacquired 1,462,097 shares of our common stock in the divestiture of our 60% equity investment in our former China based subsidiary, Wendeng He Xie Silicon Co., Ltd. The common stock is held by the Company in treasury.

LIQUIDITY AND CAPITAL RESOURCES

At ~~September~~March 3031, ~~2014~~2015, we had cash on hand of $~~511~~1,~~156~~504,646 compared to $~~339~~771,~~011~~206 at December 31, ~~2013~~2014. ~~For~~We believe that we have adequate resources on hand to sustain our operations for the ~~nine~~next three to six months. For the three-month period ended ~~September~~March 3031, ~~2014~~2015, we realized negative cash flows from ~~operations~~our operating activities of $1,~~078~~894,~~642~~951. WeAt ~~believe~~March ~~that~~31, 2015, we ~~have~~had ~~adequate~~a ~~resources~~working oncapital ~~hand~~balance of $483,309, compared to ~~sustain~~a working capital deficit of $690,264 at December 31, 2014. The increase in our ~~operations~~working ~~for~~capital ~~the~~balance ~~next~~is ~~three~~largely attributable to ~~six~~the ~~months~~conversion of $1.0 million in principal value, plus accrued interest, on a promissory note payable into 181,812 shares of the Company’s common stock and equal number of stock purchase warrants.

Our ability to continue to meet our obligations in the ordinary course of business is contingent upon our capability of establishing and sustaining profitable operations~~, both accretively through the acquisition of new businesses or technologies and organically~~. It is further contingent upon our ability to raise new capital through debt or equity financing transactions. Proceeds generated from private placements of our common stock and convertible debentures with accredited investors have effectively been the sole source of funding for our operations. During the ~~nine~~three-month ~~months~~period ended ~~September~~March 3031, ~~2014~~2015, we raised $3,~~052~~019,~~500~~510 in new capital gross proceeds through these offerings. In addition to such private offerings to accredited investors, we intend to pursue financing alternatives through institutional and asset-based lenders. ~~We believe that we will be able to secure sufficient capital to sustain our operations over the next twelve months; however~~However, we can offer no assurance that such financings will be available to us on acceptable terms, if at all, or that such transactions will not be dilutive to our current shareholders. See “Item 1A. – Risk Factors” below for additional information.

Net cash used in operating activities was $1,894,951 for the three-month successor period ended March 31, 2015, as compared to net cash provided by operating activities of $88,408 for three-month predecessor period ended March 31, 2014. The material increase in net cash used is largely attributable to our current year net loss of $8,844,356, as compared to a net loss of $79,288 during the same period for 2014. Additionally, we experienced a significant decrease in our net operating assets and liabilities during the three months ended March 31, 2015 which created a cash use of $640,595, as compared to a cash benefit realized from these same net account balances of $182,363 in the current year period. The decrease was primarily driven by the conversion of billings in excess of costs and estimated earnings into revenue and substantial payments made against accounts payable and other accrued liabilities, offset in part by strong collections of accounts receivable balances.

Net cash used in investing activities for the three-month successor period ended March 31, 2015 was $20,441, as compared to net cash used of $1,673 in the corresponding predecessor period of the prior year. The primary reason for the increase over the prior year period is the divestment of our ORC heat waste recovery business at TPE. We received $50,000 in cash consideration, along with the return of 255,351 shares of our common stock, in exchange for our 50.3% equity interest in TPE. On the date of the transaction, TPE had an aggregate cash balance of $67,054. These balances were included in our Consolidated Balance Sheets at December 31, 2014.

Net cash provided by financing activities was $2,653,175 for the three-month successor period ended March 31, 2015, as compared to no cash provided by or used in financing activities during the corresponding predecessor period in the prior year. During the three months ended March 31, 2015, we received $2,376,310 in net proceeds from the issuance of our common stock in connection with private placement offerings and stock purchase warrant exercises. Additionally, we received gross proceeds of $400,000 from convertible debentures. These were offset in part by the repayment of $100,000 in principal on a convertible debenture and $20,000 in principal on a related party promissory note.

Equity Financings

During the successor period of April 26, 2014 to December 31, 2014, we accepted subscription agreements from investors and issued 540,722 shares of our common stock along with an equal number of stock purchase warrants for gross proceeds of $2,692,500. The cost of these issuances was $220,750. Furthermore, during the period of January 1, 2014 to April 25, 2014, we accepted subscription agreements from investors and issued 167,778 shares of our common stock along with an equal number of stock purchase warrants for gross proceeds totaling $825,000. The cost of these issuances was $82,500.

During the three-month period ended March 31, 2015, we accepted subscription agreements from investors and issued 298,543 shares of our common stock along with an equal number of stock purchase warrants for gross proceeds totaling $2,619,500. The cost of these issuances was $243,200.

We have not received any investment proceeds from new equity issuances since April 15, 2015.

Debt Financings

During the year ended December 31, 2014, we privately placed a series of unsecured, convertible debentures with accredited investors for gross proceeds of $900,000 (of which $300,000 was raised during the predecessor period of January 1 through April 25, 2014). The debentures carry interest rates ranging between 7% and 9% per annum, payable semiannually in cash, for a three-year terms with fixed conversion prices ranging from $5.00 to $7.00 per share if converted within the first year of issuance or fixed conversion prices ranging from $6.00 to $9.00 if converted during the second or third year following issuance.

On April 25, 2014, we issued a series of promissory notes aggregating in $1,000,000 principal to the former stockholders of ALD in connection with the acquisition. The promissory notes carry an interest rate of 5% per annum, payable at maturity, for a one year term and are secured by the assets of ALD.

On October 13, 2014, we received $1,000,000 in loan proceeds from an accredited investor pursuant to the terms of a secured promissory note. The promissory note was due and payable in full by us on December 5, 2014. As consideration for loaning these proceeds to us, the investor was entitled to receive a $40,000 interest payment along with the principal at maturity. This loan was secured by 1,000,000 shares of our common stock owned by our former executive chairman. On December 26, 2014, we repaid all principal and accrued interest amounts associated with this promissory note.

AtOn ~~September~~October 3017, 2014, we ~~had~~issued ~~working~~two ~~capital~~secured ofpromissory ~~$956,625,~~notes ~~compared~~ to ~~working~~the ~~capital~~former stockholder of ESCO in connection with the acquisition. The first note totaled $2,~~668~~075,~~968~~000, bears interest at ~~December~~6.02% 31per annum and is due in April 17, ~~2013~~2016. The ~~decrease~~note inis collateralized by 687,500 restricted shares of our ~~working~~common ~~capital~~stock ~~balance~~which isunder ~~largely~~no ~~attributable~~circumstances can become free trading prior to ~~the~~its ~~increase~~maturity ofdate. ~~trade~~The ~~payables~~second note totaled $1,075,000 and ~~other~~was ~~current~~due ~~liabilities~~on November 16, in2014 ~~addition~~along towith ~~short-term~~an ~~indebtedness~~interest payment of $45,000. ~~arising~~At ~~from~~December 31, 2014, all but $255,355 of the ~~acquisition~~principal balance was repaid. The note is collateralized by all of ~~American~~the ~~Lighting~~assets of ESCO. On April 3, 2015, we entered into a note amendment and security interest termination agreement with the stockholder to amend and extend the original terms.

~~Net~~On ~~cash~~October ~~used in operating activities was $1~~31,~~078,642~~ ~~for the nine months ended September 30,~~ 2014, aswe ~~compared~~issued toan ~~net~~unsecured, ~~cash~~convertible ~~provided~~debenture byfor ~~operating activities of~~ $2610,~~730,768~~000 ~~for~~to ~~nine~~an ~~months~~accredited ~~ended September 30, 2013~~investor. The ~~material~~debenture ~~increase~~carries inan ~~net~~interest ~~cash~~rate ~~used~~of is9% ~~largely~~per ~~attributable~~annum tofor ~~our~~a ~~current~~seventeen-month ~~year~~term ~~net~~with ~~loss of $2,394,163, as compared to~~ a ~~net~~fixed ~~profit~~conversion price of $~~130,086~~5.50 ~~during~~per ~~the same period for 2013~~share. ~~Additionally,~~The weprincipal ~~experienced~~and ainterest ~~significant~~are ~~decrease~~payable in ~~our~~twelve ~~net~~equal ~~operating~~installments ~~assets~~commencing ~~and~~April ~~liabilities during the nine months ended September~~ 30, ~~2013~~2015. ~~which~~The ~~created~~investor areceived ~~cash benefit of $2~~15,~~718,890,~~000 asshares ~~compared to a cash benefits realized from these same net operating balances~~ of ~~$862,801~~our incommon ~~the~~stock ~~current~~valued ~~year~~at ~~period. The decrease was primarily driven by substantial collections of accounts receivable totaling~~ $395,~~899,707~~100 ~~in the prior year period,~~ as ~~compared~~consideration tofor ~~$1,201,485~~entering ~~during~~into the ~~nine~~debenture ~~months ended September 30, 2014~~agreement.

~~Net~~On ~~cash~~December ~~used~~21, 2014, we received $1,000,000 in ~~investing~~loan ~~activities~~proceeds ~~for~~from an accredited investor pursuant to the ~~nine~~terms ~~months~~of ~~ended~~a ~~September~~secured ~~30,~~promissory ~~2014~~note. The promissory note was ~~$3,339,277,~~due asand ~~compared~~payable toin $4full by us on March 5,~~845~~ in2015 ~~the~~and ~~corresponding~~is ~~period~~secured by 1,000,000 shares of ~~the~~our ~~prior~~common ~~year.~~stock ~~The~~owned ~~primary~~by ~~reason~~our former executive chairman. As consideration for ~~the~~loaning ~~increase~~these ~~over~~proceeds to us, the ~~prior~~investor ~~year~~was ~~period~~entitled isto ~~the~~receive ~~cash~~a ~~consideration~~$50,000 ~~paid~~interest inpayment ~~the~~along ~~acquisition~~with ofthe ~~American~~principal ~~Lighting~~at maturity. WeOn March 5, 2015, we paid $250,~~500,~~000 atto the ~~time~~noteholder ofto settle the ~~transaction’s~~interest ~~closing,~~due ~~offset~~on bythe ~~$407,912~~note. inOn ~~cash~~March ~~received.~~31, ~~Additionally~~2015, we ~~have~~issued ~~paid $1~~181,~~088,844~~818 ~~towards~~shares ~~excess~~of ~~working~~our ~~capital~~common ~~consideration~~stock ~~due~~along with an equal number of common stock purchase warrants in lieu of cash to satisfy the ~~former~~$1,000,000 ~~stockholders~~principal ofpayment ~~American~~owed ~~Lighting~~to the noteholder.

~~Net~~On ~~cash~~January ~~provided~~12, ~~by financing activities was $2~~2015,~~061,750~~ ~~for~~we ~~the~~issued ~~nine~~an ~~months ended September 30~~unsecured, ~~2014,~~convertible asdebenture ~~compared~~for to $2400,~~050,~~000 ~~used~~to inan ~~financing~~accredited ~~activities~~investor. ~~during~~The ~~the~~cost ~~corresponding~~of ~~period~~this inissuance ~~the~~was ~~prior year~~$28,000. ~~During~~ ~~the~~The ~~nine~~debenture ~~months~~carries ~~ended~~an ~~September~~interest ~~30,~~rate ~~2014,~~of we9% ~~received~~per $1annum,~~639,750~~ inpayable ~~net~~semiannually ~~proceeds~~in ~~from~~cash, ~~the~~for ~~issuance~~an ofeighteen-month ~~our~~term ~~common stock in connection~~ with ~~private~~a ~~placement~~fixed ~~offerings~~conversion ~~and~~price ~~stock~~of ~~purchase~~$5.50 ~~warrant~~per ~~exercises~~share. ~~Additionally,~~The weinvestor received ~~gross proceeds of $705~~5,000 ~~from~~shares ~~convertible~~of ~~debentures~~our ~~and~~common ~~demand~~stock ~~loans~~valued ~~payable.~~at ~~In the prior year period~~$32,150 weas ~~paid~~consideration ~~$2,050,000~~ for ~~redemption~~entering ~~payments~~into on the ~~predecessor’s~~debenture ~~preferred stock~~agreement.

~~During~~We ~~the~~have ~~year~~not ~~ended~~received ~~December~~any ~~31,~~additional ~~2013, we completed the private placement of seven unsecured, convertible debentures for gross~~ proceeds offrom ~~$1,750,000~~new ~~with~~debt ~~six~~issuances ~~different~~since ~~investors.~~April ~~These debentures carry an interest rate of 9% per annum~~15, ~~payable semiannually in cash, for a three-year term with a fixed conversion price of $5~~2015.00 per share, or 350,000 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $6.00 per share, or 291,667 shares of our common stock if converted during the second or third year following issuance. During the same year, we also completed the private placement of three unsecured, convertible debentures for gross proceeds of $150,000 with three different investors. These debentures carry an interest rate of 7% per annum, payable semiannually in cash, for a three-year term with a fixed conversion price of $7.00 per share, or 21,429 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $9.00 per share, or 16,667 shares of our common stock if converted during the second or third year following issuance.

OnEvents ~~January 13, 2014 and February 11, 2014, we completed the private placement~~ of two unsecured, convertible debentures for gross proceeds of $300,000. The first debenture totaled $50,000 and carries an interest rate of 7% per annum, payable semiannually in cash, for a three-year term with a fixed conversion price of $7.00 per share, or 7,143 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $9.00 per share, or 5,556 shares of our common stock if converted during the second or third year following issuance. The second debenture totaled $250,000 and carries an interest rate of 9% per annum, payable semiannually in cash, for a three-year term with a fixed conversion price of $5.00 per share, or 50,000 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $6.00 per share, or 41,667 shares of our common stock if converted during the second or third year following issuance.Default

Pursuant to a letter dated April 24, 2015, legal counsel to the former ALD stockholders (the “ALD Sellers”) informed us that the failure to pay all principal and accrued interest on certain promissory notes by April 27, 2015 (the “Maturity Date”), would result in the declaration of default under the terms of the promissory notes and related agreements, and that absent full payment of the promissory notes by the Maturity Date, the ALD Sellers would commence collection proceedings and seek to enforce all of the ALD Sellers’ contractual, legal and equitable rights under the promissory notes and related agreements. The promissory notes accrued interest at the rate of 5% per annum and the principal amount and all interest. The $1,050,000 due under the promissory notes was not paid on the Maturity Date. These notes are guaranteed by us and secured by substantially all of the assets of ALD.

On April 30, 2015, we were required to pay $50,833 in principal, along with accrued interest of approximately $28,000, per the terms of a convertible note. We failed to make this payment. On May 13, 2015, we received a letter from the noteholder’s counsel alleging certain breaches and declaring the note to be in default. The interest rate on the convertible note increased from 9.0% to 22.0% per annum as a result of the default. The noteholder has made a demand for payment and is seeking to enforce all of its contractual, legal and equitable rights under the convertible note and related agreements. The original principal balance on the convertible note is $610,000 and remains outstanding. The note is unsecured.

Furthermore, we are in default for failure to pay interest on four additional convertible notes with an aggregate principal balance of $700,000. The interest rate on these notes ranges between 7% and 9% per annum, and does not increase in the event of a default. These notes are unsecured.

On April 25, 2014, we issued promissory notes for an aggregate principal amount of $1,000,000 to the former stockholders of American Lighting in connection with its acquisition. The promissory notes carry an interest rate of 5% per annum, payable at maturity, for a one year term and are secured by the assets of ALD.

On June 10, 2014, our Executive Chairman loaned us $75,000 for an undefined term on an interest free basis. In lieu of accepting cash, he converted $75,000 loan payable and an additional $75,000 in unpaid compensation into 30,000 shares of our restricted common stock on July 30, 2014. The transaction was approved by our Board of Directors.

On September 5, 2014, we received $130,000 from a third party in the form of a demand loan bearing interest at a rate of 9% per annum and payable at maturity.

On September 24, 2014, we completed the private placement of an unsecured, convertible debenture in the amount of $500,000. The debenture carries an interest rate of 9% per annum, payable semiannually in cash, for a three-year term with a fixed conversion price of $6.00 per share, or 83,333 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $8.00 per share, or 62,500 shares of our common stock if converted during the second or third year following issuance.

CRITICAL ACCOUNTING POLICIES

WeThere ~~prepare~~were ~~our~~no ~~consolidated~~material ~~financial~~changes ~~statements~~to inour ~~accordance~~critical ~~with~~ accounting ~~principles~~policies ~~generally~~disclosed ~~accepted~~ in the ~~U.S.~~Management’s ~~The~~Discussion ~~preparation of these financial statements requires the use of estimates~~ and ~~assumptions~~Analysis ~~that~~section ~~affect the reported amounts~~ of ~~assets~~our ~~and~~Annual ~~liabilities~~Report ~~and~~on ~~the~~Form ~~disclosure~~10-K offor ~~contingent assets and liabilities at~~ the ~~date~~year ofended ~~the~~December ~~financial~~31, ~~statements and the reported amount of revenues and expenses during the reporting period~~2014. ~~Our~~See ~~management~~“Note ~~periodically~~2 ~~evaluates~~– ~~the~~Summary ~~estimates~~of ~~and~~Significant ~~judgments~~Accounting ~~made.~~Policies” ~~Management bases its estimates and judgments on historical experience and on various factors that are believed~~ to beour ~~reasonable~~Unaudited ~~under~~Consolidated ~~the~~Financial ~~circumstances.~~Statements ~~Actual~~for ~~results~~recent ~~may~~accounting ~~differ from these estimates as a result of different assumptions or conditions~~pronouncements.

~~See~~Management’s ~~“Note~~discussion 2and –analysis ~~Summary~~of our financial condition and results of ~~Significant~~operations ~~Accounting~~are ~~Policies”~~based upon our consolidated financial statements, which have been prepared in ~~for~~accordance awith ~~summary~~accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. On an on-going basis, we evaluate our ~~significant~~estimates, ~~accounting~~including ~~policies~~those related to revenue recognition, valuation of accounts receivable and inventories, purchase price allocation of acquired businesses, impairment of long lived assets and goodwill, valuation of financial instruments, income taxes, and contingencies. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

OFF BALANCE SHEET ARRANGEMENTS

As of ~~September~~March 3031, ~~2014~~2015, there were no off balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A smaller reporting company is not required to provide the information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our chief executive officer and chief financial officer, the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report pursuant to Rule 13a-15(b) and 15d-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~On April 28, 2014,~~ TransPacific Energy Inc., Karen Kahn, Alexander Goldberg, John Howard, Audrey Boston, Anne Howard, ACME Energy, Inc., and Samuel Sami (collectively, the “Plaintiffs”) filed a lawsuit against ForceField Energy, Inc. The lawsuit is captioned TransPacific Energy, Inc. et al. v. ForceField Energy, Inc., Case No. 37-2014-00013110-CU-BC-CTL (Cal. Super. Ct. filed April 28, 2014) and is pending before the Superior Court of the State of California for the County of San Diego.Litigation

~~The~~On ~~lawsuit~~April ~~was~~28, ~~filed~~2014, ~~after~~TransPacific ~~the~~Energy ~~parties~~Inc., ~~had~~Karen ~~reached~~Kahn, ~~tentative~~Alexander ~~agreement~~Goldberg, toJohn ~~resolve~~Howard, ~~all~~Audrey ~~matters~~Boston, inAnne ~~dispute~~Howard ~~and~~(“Howard”), ~~while~~ACME ~~the~~Energy, ~~parties~~Inc. ~~were~~(“Acme”), inand ~~the~~Samuel ~~process~~Sami of(“Sami”) ~~negotiating~~(collectively, athe ~~binding~~“Plaintiffs”) ~~term~~filed ~~sheet~~suit toagainst ~~document~~ForceField ~~same~~Energy, Inc. ~~Plaintiffs~~in ~~claim~~the ~~various~~Superior ~~breaches~~Court byof ~~ForceField~~the State of ~~the~~California ~~Share~~for ~~Exchange~~the ~~Agreement~~County ~~dated~~of ~~May~~San 10Diego, ~~2012~~in ~~between~~a ~~ForceField,~~case ~~ACME~~styled TransPacific Energy, Inc., ~~Apela~~et ~~Holdings,~~al. ~~and~~v. ~~ABH~~ForceField ~~Holdings~~Energy, ~~which~~Inc., ~~lawsuit~~Case ~~seeks~~No. ~~unspecified~~37-2014-00013110-CU-BC-CTL ~~damages~~(Cal. inSuper. ~~excess~~Ct. offiled ~~$25~~April 28,~~000~~ 2014) (the “Lawsuit”). ~~ForceField~~In ~~disputes~~the ~~all~~Lawsuit, ofPlaintiffs ~~these~~claimed ~~allegations~~various breaches by ~~Plaintiffs,~~ForceField ~~contends~~of ~~they~~the ~~lack~~Share ~~basis~~Exchange inAgreement ~~fact~~dated ~~and~~May ~~law~~10, ~~intends~~2012 tobetween ~~vigorously~~ForceField, ~~defend~~Acme, ~~against~~Apela ~~them~~Holdings, and isABH ~~asserting~~Holdings, ~~its~~and ~~own~~sought ~~claims~~unspecified ~~against~~damages in ~~the~~excess ~~appropriate~~of ~~venue~~$25,000. ForceField ~~has~~filed ~~recently~~a ~~moved~~motion to compel the ~~entire~~Lawsuit ~~case~~ to arbitration ~~pursuant to the arbitration clause in the Share Exchange Agreement~~. ~~That motion is current set for hearing in March 2015.~~

On July 14, 2014, ForceField, ~~pursuant to the arbitration clause in the Share Exchange Agreement,~~ commenced an arbitration ~~suit~~proceeding against TPE, Anne Howard, Samuel Sami, and ACME Energy, Inc. (collectively, the “Respondents”) before the American Arbitration Association in New York City~~. ForceField~~ ~~asserts~~styled ~~claims~~ForceField ~~for~~Energy, ~~breach~~Inc. ofv. ~~the~~TransPacific ~~Share Exchange Agreement~~Energy, ~~breach of fiduciary duty~~Inc., ~~intentional~~et ~~interference~~al ~~with~~v. ~~contractual~~ForceField ~~relations~~Energy, ~~fraudulent inducement~~Inc., ~~and~~et ~~breach of implied covenant~~al, ~~for~~AAA ~~Respondents’~~Case ~~conduct~~No. ~~denying~~01-14-0000-9289 ~~ForceField’s~~(the ~~contractual~~“Arbitration”). In ~~right~~the toArbitration, ~~make~~ForceField ~~equity~~asserted ~~investments~~various inclaims ~~TPE,~~for ~~diluting~~breach ~~ForceField’s~~of ~~ownership~~the inShare ~~TPE~~Exchange Agreement, ~~and~~which ~~otherwise~~materially ~~harming~~harmed the value of ForceField’s investments in TPE. Respondents filed acounterclaims ~~challenge~~in to the ~~arbitrators’~~Arbitration ~~jurisdiction, which ForceField plans to oppose. Respondents also filed counterclaims that are~~ similar in substance to the claims they ~~assert~~asserted in the ~~San Diego lawsuit~~Lawsuit. Again, ForceField disputes the Respondents’ allegations and plans to vigorously defend against them. ForceField anticipates that this arbitration suit will proceed in the near term although arbitrators have yet to be selected and no schedule has been entered.

On March 5, 2015, the parties entered into a written settlement agreement that resolved all claims and counterclaims asserted in the Lawsuit and the Arbitration. Pursuant to the Agreement, both the Lawsuit and the Arbitration have each been dismissed with prejudice.

Class Action and Derivative Action

On April 17, 2015 a lawsuit (the “Class Action”) against the Company and its officers, Messrs. St-Julien who as indicated above, resigned as chairman and from all other positions he held with the Company), Natan and Williams (Mr. Natan and Mr. Williams are collectively referred to as the “Individual Defendants”), and certain other third parties, was filed in the United States District Court, Southern District of New York.

The Class Action, filed by one individual that had purchased 650 shares, appears to seek class status on behalf of all persons who purchased the Company’s securities between September 16, 2013 and April 15, 2015 (the “Period”) and alleges violations by the Company and the other persons named therein of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder. The Class Action seeks an unspecified amount of damages.

On May 15, 2015, a lawsuit (the “Derivative Action”) Civil Action No. CV-15-2782 against the Company’s officers, directors and former director Messrs. St-Julien, Natan, Williams, Kebir Ratnani, Adrian Auman, and David Vanderhorst was filed by Neil J. Brown, derivatively and on behalf of ForceField Energy, Inc. in the United States District Court, for the Eastern District of New York. The Derivative Action seeks unspecified damages against these individuals for breaches of their fiduciary duties and unjust enrichment.

Although the ultimate outcome of this matter cannot be determined with certainty, the Company believes that the allegations stated in the Class Action are without merit against the Company and the Individual Defendants, and the Individual Defendants and the Company intend to defend themselves vigorously against all allegations set forth in the Class Action.

ITEM 1A. RISK FACTORS

~~Information~~The onfollowing risk factors ~~can~~update bethe ~~found~~Risk Factors disclosed in “Part I, Item 1A. ~~Risk~~of ~~Factors” in~~ our Annual Report on Form 10-K for the year ended December 31, ~~2013,~~2014 filed with the Securities and Exchange Commission on April 15, ~~2014~~2015 (the “Annual Report”). ~~There~~Except ~~were~~as set forth below, there have been no material changes ~~during~~to the ~~period~~risks ofdescribed ~~this~~in ~~report~~the ~~from~~Annual ~~such risk factors~~Report.

Our common stock is no longer listed on The Nasdaq Capital Market and quotations for our common stock may not be readily available as it is currently quoted on The OTC Market Group’s “Grey Market.”

Since May 11, 2015, our common stock has been quoted on The OTC Market Group’s “Grey Market”. Because our common stock is no longer listed on The Nasdaq Capital Market, it is difficult to obtain price quotes for our common stock. Price quotes for our common stock may be available through FINRA’s OTC Reporting Facility as an “other over-the-counter” security. Until such time, if ever, as our common stock is taken off the OTC Market Group’s “Grey Market”, it will be difficult for investors to obtain readily available price quotes for our common stock. This in turn will adversely affect the liquidity, trading market and price of our common stock and our ability to raise new capital.

Our common stock may be subject to very limited liquidity.

Our common stock will remain on the OTC Market Group’s “Grey Market” for the foreseeable future which may adversely affect liquidity and the market price of our common stock. Many over-the-counter stocks trade less frequently and in smaller volumes than securities traded on a national securities exchange such as the Nasdaq Market, which would likely have a material adverse effect on the liquidity of our common stock. There may be a limited market for our stock, trading in our stock may become more difficult and our share price could decrease even further. In addition, the trading of our common stock on over-the-counter markets will materially adversely affect our access to the capital markets and our ability to raise capital through alternative financing sources on terms acceptable to us or at all. Securities that trade over-the-counter are no longer eligible for margin loans, and a company trading over-the-counter cannot avail itself of federal preemption of state securities or “blue sky” laws, which adds substantial compliance costs to securities issuances, including those pursuant to employee option plans, stock purchase plans and private or public offerings of securities. There may also be other negative implications, including the potential loss of confidence by suppliers, customers and employees.

The application of the “penny stock” rules could adversely affect the market price of our common stock and increase your transaction costs to sell those shares.

As long as the trading price of our common stock is below $5.00 per share, the open-market trading of our common stock will be subject to the “penny stock” rules. The penny stock rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1 million or annual income exceeding $200,000 or $300,000 together with their spouses). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity of our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.

We are in default in payment of approximately $1.05 million due under promissory notes issued to the ALD Sellers in connection with the acquisition of ALD and there is no assurance or certainty of resolution.

In connection with the acquisition of ALD, we issued to the ALD Sellers approximately $1 million aggregate principal amount of promissory notes. The principal amount and accrued interest on the notes, were due and payable on April 27, 2015 (a total of approximately $1.05 million). The Company failed to make the payment when due. The Company’s obligations to the ALD Sellers under the notes are secured by substantially all of the assets of ALD. Pursuant to a letter dated April 24, 2015, the Company received a notice of default from the ALD Sellers’ representative demanding payment and providing notice that they intended to exercise any and all remedies available to them under the notes. If we are not able to secure a resolution to the default, under the terms of the notes, the ALD Sellers are entitled to, among other things, take possession of the ALD assets securing the notes. The loss of the ALD assets would have a material adverse effect on our liquidity, financial condition and results of operations, and could cause us to become bankrupt or insolvent. Since all of our assets are subject to liquidation by the creditors, liquidation could result in no assets being left for the shareholders after the creditors receive their required payment. As such, any failure to secure a resolution or an acceleration of our indebtedness will restrict our ability to operate as a going concern.

If a court were to find in favor of the claimants in any of the class or derivative actions, or if such actions continue for an extended period of time, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are subject to various litigation matters relating to our common stock. Plaintiffs in certain of these actions raise allegations of violations of the federal securities laws and breaches of fiduciary duty, among other claims. Should a court find in favor of the plaintiffs on such claims in any of the current litigation matters, the Company may be required to pay substantial damages to the plaintiffs. Moreover, if the various lawsuits continue for an extended period of time, we may be required to pay substantial legal fees and related costs. Were either or both of such things to happen, to the extent the Company does not have sufficient cash to satisfy such obligations, the Company would need to sell assets, issue additional equity securities or take steps to restructure its balance sheet and capital structure. As part of this process, a filing under Chapter 11 could become necessary, if the Company is unable to sell assets or issue equity securities on commercially reasonable terms, or at all. Accordingly, given the inherent uncertainties of litigation, we have concluded that these matters raise substantial doubt about the Company’s ability to continue as a going concern.

If we are not able to improve our current cash position and improve our liquidity by raising additional capital or generating sufficient revenue to pay our debt obligations and fund our operating expenses, we may become insolvent and be unable to continue our business.

If we are unable to raise sufficient funds from additional borrowing or capital raising or generate sufficient revenues to meet our debt obligations and fund our operating expenses, we may be unable to pay our suppliers and vendors and otherwise be unable to fund our operations leaving us unable to continue our business as a going concern and may cause us to be insolvent and force us to seek protection from creditors. These matters raise substantial doubt about our ability to continue as a going concern.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the three months ended ~~September~~March 3031, ~~2014~~2015, we accepted subscription agreements from investors and correspondingly sold ~~255~~298,~~500~~543 shares of our common stock pursuant to our current private placement offering, and received $1,~~277~~604,500 in gross proceeds. The proceeds, net of commissions, were $1,~~189~~462,~~750~~800. In connection with the private placement, we issued warrants to purchase ~~255~~298,~~500~~543 shares of our common stock at an average exercise price of $5.0037 per share for a term of one year.

Additionally, during the three months ended ~~September~~March 3031, ~~2014~~2015, we sold 87225,500 shares of our common stock pursuant to the exercise of stock purchase warrants, and received $~~350~~1,015,000 in gross proceeds. The proceeds, net of commissions, were $~~315~~913,~~000~~500.

Lastly, during the three months ended ~~September~~March 3031, ~~2014~~2015, we sold one unsecured, convertible debenture in the amount of $~~500~~400,000. The debenture carries an interest rate of 9.0% per annum, payable semiannually in cash, for aan ~~three~~eighteen-~~year~~month term with a fixed conversion price of $65.0050 per share~~, or 83,333 shares of our common stock if converted within the first year of issuance or a fixed conversion price of $8~~.00 ~~per share, or 62,500 shares of our common stock if converted during the second or third year following issuance.~~ The proceeds, net of commissions, were $~~475~~372,000.

The offer and sale of these securities was exempt from registration under the Securities Act of 1933 pursuant to Rule 506 of Regulation D.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number		Description of Exhibit
4.1		Secured Promissory Note dated October 13, 2014.
31.1		Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase

1215

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the ~~registrant~~Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	FORCEFIELD ENERGY INC.
November 19, 2014	By:	/s/ David Natan
June 18, 2015	By:	/s/ David Natan
		David Natan
		Chief Executive Officer

November 19, 2014	By:	/s/ Jason Williams
June 18, 2015	By:	/s/ Jason Williams
		Jason Williams
		Chief Accounting and Financial Officer

Filing Compare · ForceField Energy Inc.