UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act

of 1934 for the Fiscal Year Ended December 31, ~~2015~~2016


[ ]	Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _________ to ________

Commission File Number: 333-150692

Sunvalley Solar, Inc.

(Exact name of registrant as specified in its charter)


Nevada		20-8415633
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

398 Lemon Creek Drive, Suite A, Walnut, California 91789 (Address of principal executive offices) (Zip code)

(909) 598-0618 (Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Act: Not Applicable
None (Title of each class)	N/A (Name of Exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

None

(Title of class)

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

Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes [ ] No [X]

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

Yes [ X ] 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).

Yes [X ] No [ X]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ] (Do not check if a smaller reporting company)

Smaller reporting company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes [ ] No [ X ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Approximately $1973,~~003,054~~877 as of June 30, ~~2015~~2016, using an average of bid and asked prices of $0.~~231~~1215 per share.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date of 4 24,~~358~~557,~~176~~394 as of April 513, ~~2016~~2017.

TABLE OF CONTENTS

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Page No.

PART I

Item 1.

Business

Item 2.

Properties

Item 3.

Legal Proceedings

9 Item 4.

Mine Safety Disclosures

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters

and Issuer Purchases of Equity Securities

Item 6.

Selected Financial Data

Item 7.

Management's Discussion and Analysis of Financial Condition and

Results of Operations

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting

and Financial Disclosure

Item 9A.

Controls and Procedures

Item 9B.

Other Information

PART III

Item 10.

Directors, Executive Officers and Corporate Governance

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and

Management and Related Stockholder Matters

Item 13.

Certain Relationships and Related Transactions, and Director

Independence

Item 14.

Principal Accounting Fees and Services

PART IV

Item 15.

Exhibits, Financial Statement Schedules

PART I

Item 1. Business

Sunvalley Solar, Inc. (the “Company”’ “we”, “our”) is a California-based solar power technology and system integration company founded in January of 2007. We are focused on developing our expertise and proprietary technology to install residential, commercial and governmental solar power systems. We offer turnkey solar system solutions for owners, builders and architecture firms that include designing, building, operating, monitoring and maintaining solar power systems. Our customers range from small private residences to large commercial solar power users. We have the necessary licenses and expertise to design and install large scale solar power systems. We hold a C-46 Solar License from CBCL (California Board of Contractor License). Some of the large scale commercial solar power systems that we have designed and installed include large office buildings, farming and manufacturing facilities and warehouses. Our proprietary technologies in solar installation provide our customers with a high quality, low cost and flexible solar power system solutions.

We are working to develop as an end-to-end solar energy solution provider by providing system solution, post-sale service, customer technical support, solar system design and field installation.

Operating ~~Subsidiary~~Subsidiaries

In December 2014 we formed a wholly-owned subsidiary known as Sunvalley Solar Tech, Inc., a California corporation. Effective December 31, 2014, we transferred substantially all of our assets and liabilities to our wholly-owned subsidiary. We now conduct our operations through our wholly-owned subsidiary, Sunvalley Solar Tech, Inc.

Effective May 15, 2016 we entered into a Securities Purchase Agreement with the shareholders of Rayco Energy, Inc. which was renamed as Sunvalley Solar Energy, Inc. effective August 9, 2016 (“Rayco”). Rayco is a northern California company specializing in providing cost-saving and efficient energy solutions, including LED lighting, Solar Thermal and Solar Electricity, to local communities and business units. Under the Agreement, we acquired 100% of Rayco’s issued and outstanding shares of capital stock in exchange for seventy five thousand and five hundred (75,500) our Series B Preferred Shares. Our Series B Preferred shares are convertible to common stock on a 10 for 1 basis. In addition, we agreed to pay an additional $350,000 in cash to the shareholders Rayco, conditioned upon the 2016 net profit from the operation of Rayco, as a wholly-owned subsidiary of Sunvalley, being in excess of $10,000 (the “Condition”). We also agreed to invest no less than $350,000 working capital into Rayco after closing for its current projects and working capital. To evidence the unpaid balance of the purchase price, we shall issue to Rayco’s shareholders 6% subordinated promissory notes in the aggregate amount $350,000, payable only upon Rayco’s 2016 net operating profit being in excess of $10,000. Interest and principal are payable monthly under the notes on first day of each month commencing May 1, 2017. Prepayments may be made at any time as the Company’s cash flow allows, as determined by the Sunvalley’s Board of Directors. In the event that the Condition is not met, such notes shall be deemed null and void.

Principal Products and Services

Our philosophy is to “provide solar electricity directly from the sun in a technology innovation-centric and cost effective way”. Since inception, we have concentrated on serving the solar power needs of residential and commercial customers tied to the electric power grid. Our business plans are focused in three specific areas:

- Solar Systems Design and Installation
- Solar Technology Research and Development
- Solar Equipment Manufacturing and Distribution

- LED Design and Installation
- LED Research and Development
- LED Manufacturing and Distribution

Our Solar Technology Research and Development business is in the development stage and has not yet generated revenue.

The scope of our solar systems design and installation business includes:

- Designing solar systems for commercial, residential, governmental and non-profit customers
- Installing solar power systems and related constructional systems for solar power end users
- Providing technical support and service to solar power end users
- Providing system performance monitoring services to solar power end users
- Providing government permit/incentives application services to solar power end users

Since our founding in 2007, we have focused on solar system design and installation. Installation is our core business, and it also provides the company with a platform for solar product supply, new technology development, and other lines of business. Our gross revenues to date have come mostly from the solar systems installation business. Our installation business is focused primarily in California.

We are one of a few companies in California that has the permit and expertise to install large commercial solar systems (over 250K watts). Design and installation of a solar power system, especially a large commercial solar power system, requires proper licenses, design capabilities in electrical systems and solar systems, and constructional (ground or roof) implementation ability, as well as experienced project management and an understanding of industry regulations. In addition, the ability to procure proper solar equipment is critical to large commercial solar system projects.

We have obtained a C-46 Solar License from CBCL (California Board of Contractor License). We have been focusing on developing our expertise and proprietary technology to install large commercial and governmental solar power systems since 2010. We are also able to procure the necessary equipment and supplies through our distribution partnerships. Some of large scale commercial solar power systems that we has designed and installed include large office buildings, farming and manufacturing facilities, warehouses and hotels.

Our installation business ~~generated all of our revenues in 2014 and 2015, and it~~ remains a significant component of our total revenue structure. Our development efforts in this area focus on the installation of large commercial and governmental solar power systems, as well as residential solar power systems. Our customers in this line of business run the gamut from small private residences to large commercial solar power projects.

Our current systems installation resources, which consist of two installation worker teams, one engineer/design team, and certain installation equipment, provide us with the capacity to install solar systems totaling over 4.0 million watts on an annual basis.

One problem with photovoltaics is that the amount of electrical energy generated by each one of the PV panels in a distributed plurality or array of PV panels depends on uncertain environmental factors (e.g., weather) which can cause undesirable fluctuations in the voltage of the power grid (voltage fluctuations unfavorably affect the deliverability of grid loads and overall manageability of the power grid). For example, the electrical production of a plurality of PV panels under moving clouds can change from very little to very large amounts in a short time period, which change will correspondingly cause a voltage fluctuation in the associated power grid. The identified voltage fluctuation problem is exacerbated by the uncertainty of draws on the electrical energy within the power grid, for instance, whenever high power consumption by households accessing the grid coincides with low power production from the PV panels or whenever low power consumption coincides with high power production. Accordingly, there is a need for systems and methods of converting solar energy into electrical energy without resulting in unfavorable voltage fluctuations in the power grid.

fluctuation problem is exacerbated by the uncertainty of draws on the electrical energy within the power grid, for instance, whenever high power consumption by households accessing the grid coincides with low power production from the PV panels or whenever low power consumption coincides with high power production. Accordingly, there is a need for systems and methods of converting solar energy into electrical energy without resulting in unfavorable voltage fluctuations in the power grid.

One attempt to reduce voltage fluctuations in the power grid is embodied by the advanced metering infrastructure (AMI) employed by the Sacramento Municipal Utility District (SMUD) in California. The AMI is a control system that predicts draws on the grid based on historical electricity consumption and power generation. With reference to photovoltaics, the AMI is suited for reducing the exacerbating effects of uncertain energy draws on the grid but the AMI does nothing to combat the environmental and other uncertainties associated with photovoltaic production of electrical energy. Accordingly, a need remains for systems and methods of converting solar energy into electrical energy without resulting in unfavorable voltage fluctuations in the power grid.

Another attempt to reduce voltage fluctuations in the power grid caused by photovoltaic production of electrical energy is numerical simulation. Numerical simulation uses historical data to predict electrical energy inputs to the power grid (electrical energy sources may include a plurality or array of PV panels). While better than nothing, this approach cannot accurately account for environmental and other uncertainties associated with photovoltaic production of electrical energy.

In view of the foregoing, we set a target finding systems and methods producing electricity without the need for high capacity or long batteries and without resulting in unfavorable voltage fluctuations in the power grid.

To meet this objective, we designed a system of networked PV panels, wherein each panel is coupled to a small capacity battery capable of storing electricity produced by the panels, wherein each battery is configured to randomly and isolated (relative to other batteries coupled to the other panels) discharge its stored electricity into the power grid at a time before the battery reaches its capacity. Within said system, the randomized and delayed discharge of electricity may reduce voltage fluctuations when compared with other systems since (1) each panel only isolated contributes a small amount of electricity relative to the inherent electricity load of the grid so that the associated voltage fluctuation may be nominal or otherwise easy to manage, (2) the delayed discharge provides an opportunity for data to be collected so that the delayed discharge provides an opportunity for data to be collected so that the load of the power grid can be managed for the associated influx of electricity (like, e.g., in a feed-forward controlled system), and (3) the randomized discharge of electricity disrupts weather effects (e.g., the sudden drop in electricity generation of a solar panel may not be displayed by all affected solar panels simultaneously so that the system can accommodate and adapt to the change more easily).

randomly and isolated (relative to other batteries coupled to the other panels) discharge its stored electricity into the power grid at a time before the battery reaches its capacity. Within said system, the randomized and delayed discharge of electricity may reduce voltage fluctuations when compared with other systems since (1) each panel only isolated contributes a small amount of electricity relative to the inherent electricity load of the grid so that the associated voltage fluctuation may be nominal or otherwise easy to manage, (2) the delayed discharge provides an opportunity for data to be collected so that the delayed discharge provides an opportunity for data to be collected so that the load of the power grid can be managed for the associated influx of electricity (like, e.g., in a feed-forward controlled system), and (3) the randomized discharge of electricity disrupts weather effects (e.g., the sudden drop in electricity generation of a solar panel may not be displayed by all affected solar panels simultaneously so that the system can accommodate and adapt to the change more easily).

Panels/Batteries within the system may communicate (i.e., be networked) with each other or a controller wirelessly or with wires to accomplish the isolated and delayed discharge, including the communication of energy production information

To meet this objective, the networked PV panel system may be distributed pluralities of solar panels, wherein each plurality of solar panels is coupled to a small capacity battery capable of storing electricity produced by the plurality of panels, wherein each battery is configured to randomly and isolated (relative to the other distributed pluralities of panels) discharge its stored electricity into the power grid at a time before the battery reaches its capacity (preferably every approximately zero to thirty minutes). Said distributed pluralities of panels and their respective batteries within the system may communicate (i.e., be networked) with each other or a controller wirelessly or with wires to accomplish the isolated and delayed discharge, including the communication of energy production information.

Through this technology, it is able to address the undesirable fluctuations in the voltage of the power grid due to uncertain environmental impact to solar system. Commercializing this technology into mass production will involve cooperation and approval from utility company. In addition, the networked PV panel concept will also need to demonstrate that panels using the technology will have a productive life-span and a tolerance to environmental conditions such as humidity, temperature, wind load that are sufficient for the panels to be used in real life ~~application. Accordingly, there is no guarantee that we will be able to commercially produce and market solar panels using our new networked PV panel system technology.~~

application. Accordingly, there is no guarantee that we will be able to commercially produce and market solar panels using our new networked PV panel system technology.

We have not yet generated revenues from our new technology. With additional capital, however, we hope to commercialize our R&D outputs to our PV panels and installation applications. By combining our research and development capability with our existing installation business and planned panel manufacturing operation, we hope to establish a vertically integrated entity that can grow to become a premier supplier of solar panels in the United States.

Besides the new technology of Networked PV Panel System, our research and development (“R&D”) team is also involving some other topics in solar field.

The main points of focus for our R&D operation are as follows:

- Keeping and developing a small but strong R&D team in San Diego
- Collaborating with universities in the U.S. and panel manufacturers in China
- Effectively use resources from research institutes and universities in China
- Developing new solar technology and parts, focusing on application technologies

Our key current R&D topics include:

- Developing new coating technology to increase the efficiency of PV panel

- Develop solar PV application technology to reduce system level cost and increase installation flexibility – Develop new networked PV panel

- Commercializing our new advanced solar technology.

Solar Equipment Manufacturing and Distribution

In recent years, we have built good relationships with some large solar panel and solar inverter producers. Our partnerships with these manufacturers in the solar power industry have allowed us to broaden our customer base and to provide our customers with more cost competitive and complete solar system solutions with multiple selective options on PV panels and inverters. In 2009 and 2010, our solar equipment distribution business grew to constitute the majority of our revenues. Since 2011, due to the dynamic market price of solar equipment, our distribution business decreased to a small portion of distribution to our revenue.

On the other side, although we have not yet generated revenue from the manufacture of our own solar panels, our R&D team is working on new technology which is able to increase the efficiency of solar panel. With proper funding, the new technology could be commercialized and implemented in solar panel manufacture starting from OEM manufactured panels from reputable solar panel manufacturers in China. The manufactured solar panels would use our brand name with new technology. We would be responsible for quality control, certification applying, marketing, technical support and services in the United States. Our unique technology, if successfully commercialized and brought to market, would provide the solar panel market with a higher efficiency, lower cost unit than competing panels currently on the market. Our ability to provide after-sale services such as system maintenance, technical support, training, etc. for its customers could add another selling point for promotion of the new panel.

Competition and Market Overview

The solar power industry is at an early stage of its growth and is highly fragmented with many smaller companies. The prospect for long-term worldwide demand for solar power has attracted many new solar panel manufacturers, as well as a multitude of design/integration companies in our market segment, with no single competitor gaining market dominance. We expect the manufacturing segment of the industry to consolidate as more solar panel manufacturing capacity comes online. We also expect there to be consolidation in the design/integration segment of the industry based mostly on branding, development of new technology and business process improvements.

The prospect for long-term worldwide demand for solar power has attracted many new solar panel manufacturers, as well as a multitude of design/integration companies in our market segment, with no single competitor gaining market dominance. We expect the manufacturing segment of the industry to consolidate as more solar panel manufacturing capacity comes online. We also expect there to be consolidation in the design/integration segment of the industry based mostly on branding, development of new technology and business process improvements.

Distribution Methods and Marketing

The most important part in a solar power system is the solar panel (PV module). Photovoltaic (PV) devices generate electricity directly from sunlight via an electric process that occurs naturally in certain types of materials. Groups of PV cells are configured into modules and arrays, which can be used to power any number of electrical loads. Crystalline silicon - the same material commonly used by the semiconductor industry -is the material used in a large portion of all PV modules today. PV modules generate direct current (DC) electricity. For residential use, the current is then fed through an inverter to produce alternating current (AC) electricity that can be used to power home appliances.

The majority of PV systems today are installed for homes and businesses that remain connected to the electric grid. Consumers use their grid-connected PV system to supply some of the power they need and use utility-generated power when their power usage exceeds the PV system output (e.g., at night). When the owner of a grid connected PV system uses less power than their PV system creates, they can sell the electricity back to their local utility, watch their meter spinning backwards, and receive a credit on their electric bill - a process referred as net metering. The electric grid thus serves as a “storage device” for PV-generated power.

The initial market focus for our commercial installation business has been the Chinese-American and broader Asian-American community of Southern California, with special emphasis on the Asian-American commercial market. We have been able to attract the attention of news media serving this market segment. Several newspapers (Chinese Daily News and World Journal), TV stations (Phoenix Satellite Television and DongSen Satellite Television), and local radio stations (AM1300), have had special reports on our company. These reports have generated positive reactions from readers, viewers, and listeners and have driven customer traffic to our office.

local radio stations (AM1300), have had special reports on our company. These reports have generated positive reactions from readers, viewers, and listeners and have driven customer traffic to our office.

We plan to continue to pursue our media-based marketing and sales strategy in Southern California. In addition, we are working very closely with our solar panel suppliers and inverter supplier to bid on larger power plants, including government contracts.

Principal Suppliers

We currently purchase solar panels primarily from three manufacturers, Canadian Solar, JS Solar and Hanwha SolarOne. We maintain good relationships with all of our suppliers, and especially with our primary and important suppliers. In addition, we are continuously adding new alternative suppliers to our supplier list. Due to the standardization of solar and LED equipment, all materials we purchase from our suppliers are available from other sources and suppliers.

Our revenues currently derive from solar system design and installation, LED design and installation, as well as solar equipment distribution. In order to expand our installation business to states other than California, we will be required to comply with local license requirements by acquiring a local installer or by hiring locally-licensed contractors to serve as officers. For our solar equipment distribution business, no local licensures are required in California or other states.

As a result of continuing global development at all levels of solar equipment manufacturing, including in the area of raw materials supply, in 2009 and 2010, the risk of disruption in the supply of necessary raw materials for solar panels has been greatly reduced since 2011. In addition, we have established solid relationships with several large solar equipment suppliers, allowing us to access multiple sources. For the immediate future, we therefore believe that raw materials for our products will continue to be readily available.

raw materials supply, in 2009 and 2010, the risk of disruption in the supply of necessary raw materials for solar panels has been greatly reduced since 2011. In addition, we have established solid relationships with several large solar equipment suppliers, allowing us to access multiple sources. For the immediate future, we therefore believe that raw materials for our products will continue to be readily available.

Currently, we believe that the market for solar power in China is not yet mature enough, while, the European market is overcrowded. As a result, we believe that Chinese manufacturers are looking for business opportunities in the United States. As an established technology and system integration company, Sunvalley maintains a unique position to act as the bridge between Chinese manufacturers. The partnership with these manufacturers in the solar power industry allows Sunvalley to provide its customers with a cost competitive, complete solar system solution with multiple selective options on PV panels and inverters.

Intellectual Property

Our patent “Networked Solar Panels and Related Methods,” was issued on February 24, 2015. This patent will last 20 years from the effective date of the original application, which was August 4, 2011.


Patent No	US 8,958,924 B2
Title	Networked Solar Panels and Related Methods
Patent Date	Feb. 17, 2015
Application Type	Utility under 35 USC 111(a)

Personnel

We have 1132 employees, 723 of whom are full-time employees. Our current internal departments include the Administration Department, the Engineering Department, the Sales/Marketing Department and the New Technology Development Department. We are lead by a management team that includes a group of scientists, research/development engineers, a professional marketing/sales team, and an experienced supply chain management team. In addition, our team includes solar power system design engineers, solar power system installation engineers, electrical system design engineers and construction engineers.

electrical system design engineers and construction engineers.

Government Regulation

The market for solar energy systems is heavily influenced by foreign, federal, state and local government regulations and policies concerning the electric utility industry, as well as policies adopted by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. For example, there currently exist metering caps in certain jurisdictions, which limit the aggregate amount of power that may be sold by solar power generators into the electric grid. These regulations and policies have been modified in the past and may be modified in the future in ways that could deter purchases of solar energy systems and investment in the research and development of solar energy technology. For example, without a mandated regulatory exception for solar energy systems, utility customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility grid. Such fees could increase the cost to our customers of using solar energy systems and make them less desirable, thereby harming our business, operating results and financial condition. Changes in net metering policies could also deter the purchase and use of solar energy systems. In addition, electricity generated by solar energy systems competes primarily with expensive peak hour electricity rates rather than with the less expensive average price of electricity. Modifications to the peak hour pricing policies of utilities, such as to a flat rate, would require solar energy systems to achieve lower prices in order to compete with the price of electricity.

The importation of some of the products we sell is subject to tariffs, duties and quotas imposed by the United States. In addition, other restrictions on the importation of our products are periodically considered by the United States Congress, and may again be considered to protect against “Asian” deflation. No assurances can be given that tariffs or duties on such goods may not be raised, resulting in higher costs to us or that import quotas with respect to such goods will not be lowered. Deliveries of products from our foreign suppliers could be restricted or delayed by the imposition of lower quotas or increased tariffs. We may be unable to obtain similar quality products at equally favorable prices from domestic suppliers or from other foreign suppliers whose quotas have not been exceeded by the supply of goods to existing customers.

Item 2. Properties

We lease approximately 2,193 square feet of office space in the Walnut Tech Business Center located at 398 Lemon Creek Drive, Suite A, Walnut, CA 91789 for $3,180 per month. Our lease was renewed until December 31, 2018. The annual rent is $38,158, which is payable monthly at the rate of $3,180 per month. In addition, there is a fee for monthly expenses and taxes of $263 per month. The property is sufficient for our current business size.

Item 3. Legal Proceedings

WeThe Company filed a contractual fraud case against one of ~~our~~its commercial installation customers, All Fortune Group, LLC (“All Fortune”), during September 2013 for causes of action ~~including~~such as breach of contract, common counts and fraudulent transfer. The ~~relief~~reliefs claimed ~~consists~~by the Company mainly ofare monetary damages and interest including punitive dames, costs of suits for no less than $1.2 million. As a result of the filing by the Company, All Fortune filed a lawsuit against usthe Company for causes of action ~~including~~which are breach of contract, negligent misrepresentation, intentional misrepresentation and fraud in All Fortune’s complaint. The ~~relief~~reliefs claimed by All Fortune ~~consists~~are mainly of monetary damages including punitive damages, costs of suit and other recoverable fees and damages. On ~~November~~A ~~19,~~settlement ~~2013,~~was ~~the~~reached ~~court~~between ~~ruled~~the ~~that~~Company ~~Case~~and ~~NC059003-Sunvalley Solar, Inc v.~~ All Fortune ~~Group,~~on ~~LLC~~October is7, ~~related~~2015. toA ~~Case~~money ~~KC066248-All~~judgement ~~Fortune~~in ~~Group,~~the ~~LLC~~amount v.of ~~Sunvalley;~~$874,689 ~~Case~~to ~~NC059003 is deemed~~ the ~~lead~~Company. ~~case~~All ~~and~~Fortune ~~all~~will ~~future~~pay ~~hearing~~$380,000 ~~dates~~within ~~will~~20 bedays ~~heard~~after inAll ~~Long~~Fortune’s ~~Beach~~receipt ~~Superior~~of ~~Court.~~the ~~Sunvalley~~Company’s ~~filed~~insurer apayment ~~motion~~ for ~~right~~$215,000. toAll ~~attach~~Fortune ~~order~~agrees ~~and~~to ~~writ~~pay ofthe ~~attachment~~Company ~~pursuant~~the toremaining ~~Code~~balance owed of ~~Civil~~$494,689 ~~Procedure~~in ~~section~~30 ~~483.010~~monthly onpayments ~~November~~at 27$16,453 ~~2013,~~and ~~which~~the ~~was~~31st ~~granted~~monthly onpayment ~~February~~of 4$1, ~~2014~~100. OnThe ~~July~~Company ~~29,~~recorded ~~2015~~$874,689 ~~both~~as ~~parties~~collection ~~had~~of abad ~~mediation~~debt ~~but~~in ~~did~~the ~~not~~operating ~~reach~~expenses ~~any settlement. Sunvalley contracted Absolute Urethane to remodel All Fortune’s roof~~ in ~~order~~the to4th ~~install~~quarter of 2015.

~~the~~Sunvalley ~~solar~~filed ~~system.~~a ~~Per~~complaint ~~the~~on ~~roofing~~February ~~contract~~21, ~~Absolute~~2014 ~~Urethane~~against ~~shall~~John ~~furnish~~Chiang ~~all~~for ~~labor,~~two ~~materials~~causes ~~and~~of ~~equipment~~action ~~and~~which ~~perform~~are ~~all~~breach ~~operations~~of ~~required~~contract ~~as specified~~ and ~~the~~common ~~company provide a 15 year warranty for this roofing project~~counts. ~~Since~~The ~~All~~reliefs ~~Fortune~~prayed ~~brought~~by ~~the~~Sunvalley ~~law~~are ~~suits~~monetary ~~against~~damages ~~Sunvalley~~ and ~~Absolute~~interests ~~Urethane~~including atattorneys’ ~~the~~fees ~~same~~and ~~time,~~costs ~~Absolute~~of ~~Urethane~~suits ~~filed~~for ano ~~cross-complaint~~less ~~against~~than ~~Sunvalley~~$26,504. A ~~settlement~~Chiang ~~was~~filed ~~reached~~an ~~between~~answer ~~Sunvalley~~to ~~and~~complaint ~~All Fortune~~ on ~~October~~March 731, ~~2015~~2014. A ~~money~~This ~~judgement~~case iswas ~~awarded~~consolidated inwith ~~the~~Sunvalley ~~amount~~v. ofAll ~~$874~~Fourtune,~~689~~ toet ~~Sunvalley~~al. ~~All~~, ~~Fortune~~which ~~will~~was ~~pay~~later ~~$380,000~~consolidated ~~within~~with 20case ~~days after~~ All Fortune’s ~~receipt~~v. ofSunvalley. Sunvalley’s ~~insurer payment of $215,000~~v. ~~All~~ ~~Fortune~~John ~~agrees~~Chiang towas ~~pay~~dismissed ~~Sunvalley~~on ~~the~~December ~~remaining balanced owed of $494~~18,~~689~~ in2015 30due ~~monthly~~to ~~payments~~dismissal atof ~~$16,453~~leading ~~each~~case ~~and~~All ~~the~~Fortune ~~31st~~v. ~~monthly payment of $1,100~~Sunvalley.

~~Sunvalley~~The Company filed a lawsuit against China Electric Equipment Group Corporation (CEEG) on January 17, 2013 for breach of contract, intentional and negligent misrepresentation and violation of California business & professions code. ~~and~~The Company requested CEEG to compensate the damages and economic losses in the amount of no less than $2,000,000.

CEEG (Shanghai) Solar Science & Technology Co., LTD., (parent of CEEG), here collectively called as CEEG, filed a lawsuit in USA against ~~Sunvalley~~the Company on September 18, 2015 to enforce the Foreign Arbitration Award issued by the Shanghai International Economic and Trade Arbitration Commission (SIETAC) in favor of CEEG and against ~~Sunvalley~~the Company, on December 10, 2013. CEEG requested damages of $1,000,000 representing the principal amount awarded to CEEG under the Arbitral Award in China plus interest, currency exchange loss and other professional fees in the amount approximately $450,000. On February 5, 2016, the Central District Court of California granted CEEG’s motion to confirm the Foreign Arbitration Award against Sunvalley. Sunvalley’s attorney is filing an appeal on this case.

OnThe ~~October~~Company 29filed a contractual dispute case against one of its suppliers, ~~2015~~Baoding Tianwei Solarfilms So. Ltd on September 20, ~~the~~2013 ~~Court~~for ~~granted~~causes ~~CEEG’s~~of ~~motion~~action towhich ~~compel~~are ~~arbitration~~breach inof ~~China. However~~contract, ~~Sunvalley~~breach ~~will~~of ~~file~~implied anwarranty ~~appeal~~of tomerchantability, ~~the~~breach ~~Court~~of toimplied ~~request~~warranty ~~the~~of ~~ruling~~fitness for a particular purpose and negligence. The reliefs prayed by Sunvalley are monetary damages and interests including punitive damages, costs of ~~the~~suits, ~~CEEG~~as ~~case~~well as other and further relief court deems just and proper. The damage sought is no less than $8 million dollars. Baoding Tianwei Baobian Electric Co. is added in ~~the~~as ~~United~~a ~~States~~codefendant ~~instead~~and ofis ~~China~~undergoing Hague Convention service. On ~~February~~March 59, ~~2016~~2017, Sunvalley Solar voluntarily dismissed the ~~Central~~complaint ~~District~~against ~~Court~~Baoding ofTianwei ~~California~~Baobian ~~granted~~Electric ~~CEEG’s~~Co., ~~motion~~Ltd. toSunvalley ~~confirm~~has been preparing the ~~Foreign~~default ~~Arbitration~~judgement ~~Award~~package against ~~Sunvalley~~Boading Tianwei Solarfilms So. ~~Sunvalley’s~~ ~~attorney~~Ltd. isThe ~~filing~~package will be submitted with the ~~appeal~~court on ~~this~~or ~~case~~before April 20, 2017.

Our agent for service of process in Nevada is Joe Laxague, Esq., 1 East Liberty, Suite 600, Reno, NV 89501.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Market Information

Our common stock is quoted under the symbol “SSOL” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the electronic market operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. Consequently, market makers that once quoted our shares on the OTC Markets system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTC Markets system..

The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTC Markets quotation system. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ended December 31, 2016


Quarter Ended	High $	Low $
December 31, 2016	$0.185	$0.04
September 30, 2016	$0.22	$0.066
June 30, 2016	$0.15	$0.057
March 31, 2016	$0.11	$0.03

Fiscal Year Ended December 31, 2015


Quarter Ended	High $	Low $
December 31, 2015	$0.06	$0.0176
September 30, 2015	$0.35	$0.021
June 30, 2015	$0.36	$0.182
March 31, 2015	$0.44	$0.18

~~Fiscal~~On ~~Year~~April ~~Ended~~14, ~~December 31~~2017, ~~2014~~the last sales price per share of our common stock was $0.055.

Quarter Ended	High $	Low $
December 31, 2014	$0.38	$0.20
September 30, 2014	$0.40	$0.30
June 30, 2014	$0.68	$0.25
March 31, 2014	$0.60	$0.20

On March 30, 2015, the last sales price per share of our common stock was $0.06.

Penny Stock

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.

These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities.

Holders of Our Common Stock

As of April 513, ~~2016~~2017, we had 425,~~358~~263,176 shares of our common stock issued and outstanding, held by ~~fifty~~sixty-~~seven~~two (5762) shareholders of record.

shareholders of record.

Dividends

There are no restrictions in our articles of incorporation or bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

1. we would not be able to pay our debts as they become due in the usual course of business, or;

2. our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future.

Item 6. Selected Financial Data

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

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements

Certain statements, 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.” 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. 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. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

Business Development Plan

The primary components of our growth strategy are as follows:

•

Developing and commercializing our proprietary solar technologies including our coating and focusing technologies, networked PV panel system. By deploying these new technologies into our PV panels and solar installation business, we hope to enhance the value provided to our customers and increase our profitability.

•

Promoting and enhancing our company’s brand and reputation in solar and LED design and integration and expanding our installation business.

•

Developing a PV panel manufacturing capability to provide high efficiency and low cost solar panels to US market. This will complement our installation business and provide an implementation platform for our R&D.

Expansion of Installation Business

We are planning to expand our installation business. We will continue to execute our marketing and sales strategy in Southern California and, with additional capital, will be able to expand our business to cover Northern California, Arizona or other states. The planned expansion is expected to occur through acquiring smaller installation companies in these regions and/or through the establishment of subsidiaries in these states and boost our installation profits. Our current intention is to establish two new offices located in Northern California or other states and in San Diego. The estimated start-up cost for each new branch would be approximately $500,000.

If we are able to expand our installation business, it will assist us in gaining favorable terms from OEM international manufacturers of our planned solar panel manufacturing operation. In addition, an expanded installation business would allow us to accelerate the introduction of our new technologies and solar parts and would generate additional revenue to fund initial investment in our planned Distributed Power Plant business and to further fund our investments in R&D.

Prior to initiating our planned OEM manufacturing of Sunvalley-branded solar panels, we will need to commercialize our advanced panel technology through the design, fabrication, and characterization of a prototype solar cell. The total expense for planned commercialization of our research and development will be approximately ~~$500,000.~~

$500,000.

Commercialization of Research and Development

Our Patent “Networked Solar Panels and Related Methods” was issued on February 24, 2015. We will need to commercialize this advanced technology through the design, fabrication, and characterization of prototype solar components and system cell. The total expense for planned commercialization of our research and development will be approximately $2,000,000. Through this technology, it is able to address the undesirable fluctuations in the voltage of the power grid due to uncertain environmental impact to solar system. Commercializing this technology into mass production will involve cooperation and approval from utility companies. In addition, the networked PV panel concept will also need to demonstrate that panels using the technology will have a productive life-span and a tolerance to environmental conditions such as humidity, temperature, wind load that are sufficient for the panels to be used in real life application. Accordingly, there is no guarantee that we will be able to commercially produce and market solar panels using our new networked PV panel system technology.

Initiate OEM Manufacturing of Solar Panels

By leveraging our solar panel installation business and R&D, we plan to procure OEM solar panels from selected Chinese manufacturers and to market them in the U.S. under our brand name. We will be responsible for R&D, quality control, customer service, sales and marketing activities, as well as panel certification in U.S.

The estimated OEM panel cost is less than $0.50 per watt. As a reference, currently, the lowest panel price is around $0.70 per watt (Mono-crystalline, Polycrystalline). We can use our own sales and installation platform to showcase the new panels and drive sales of the new panels in the U.S market. Meanwhile, we will continue our R&D effort on panel coating and other advanced technologies and apply the results to its panel manufacturing business. The goal will be to further improve the efficiency, lower the cost of solar panels with our proprietary technologies, and to grow our market share.

Our marketing strategy for its planned OEM solar panels is as follows:

•

Set-up a platform to showcase our innovative solar panel technologies and make Sunvalley solar panels a household name.

Unlike other merchandise, solar panel is very unique in that it requires very high level of quality assurance and customer satisfaction. Providing satisfactory customer service and technical support is absolutely vital in solar panel sales. As the first step, we will strive to make its brand a household name. The Sunvalley solar panel will be used by our installation business as well as several other installation companies which have partnerships with us. We do not currently have partnerships with other solar installation companies, but we plan to pursue them after introducing the panels to the market through our own installation business. A marketing campaign aimed at other solar installation companies will help to achieve this goal. We will use our own installation business as the platform to showcase the product quality and build up consumer awareness of its brand.

customer satisfaction. Providing satisfactory customer service and technical support is absolutely vital in solar panel sales. As the first step, we will strive to make its brand a household name. The Sunvalley solar panel will be used by our installation business as well as several other installation companies which have partnerships with us. We do not currently have partnerships with other solar installation companies, but we plan to pursue them after introducing the panels to the market through our own installation business. A marketing campaign aimed at other solar installation companies will help to achieve this goal. We will use our own installation business as the platform to showcase the product quality and build up consumer awareness of its brand.

•

Penetrate into the main stream distribution network

By leveraging early successes and customer trust earned from our initial installations, we plan to penetrate into the mainstream distribution network with our OEM solar panels.

•

Further sale activities

Once our brand name solar panels become well known, our sales team will begin an aggressive marketing campaign to connect the individual sales points (distributors and venders) to form a distribution network. The marketing campaigns will also include attending trade shows, advertising in the media (TV commercials and newspaper advertisement) and designating local representatives to boost the market share and brand awareness.

to connect the individual sales points (distributors and venders) to form a distribution network. The marketing campaigns will also include attending trade shows, advertising in the media (TV commercials and newspaper advertisement) and designating local representatives to boost the market share and brand awareness.

•

Offer a low cost, high efficiency solar panel derived from advanced research

To boost our solar panel market share, our R&D team will work with our OEM partner to apply selective coating technique and other cutting edge technologies to further reduce the manufacturing cost and improve the panel efficiency.

The total capital required to initiate our planned panel manufacturing business would be approximately $2,000,000 which can be categorized into three parts:

•

Registration and Certification of OEM panels with our brand – $300,000, including UL certification fees, CEC registration fees, and lab testing fees.

•

Initial Inventory – $1,500,000. We will need to keep 4-5 containers of PV panels in the warehouse in order to support sales of 5~10M watts per year, which means we will need to have over $1,000,000 in inventory for PV panels only. An additional $300,000 in inventory would be needed in order to keep the requisite amount of inverters and racking and panel cleaning systems. In addition, we anticipate providing variable payment terms to different customers based on their creditworthiness; this will add additional cash flow pressure.

•

OEM Management costs – $200,000

We are among the few companies in California that has the permit and expertise to install large-scale commercial and/or government solar power systems, together with roof constructional design and building interior/exterior electrical designs. We believe additional advantages are provided by our experience in filing solar power system permit applications and rebate applications and our expertise gained through our experience with governments and utility companies.

Results of Operations for the Years Ended December 31, ~~2015~~2016 and ~~2014~~2015

During the year ended December 31, ~~2015~~2016, we generated gross revenues of $58,~~788~~492,~~177~~844. Total cost of sales was $46,~~268~~792,~~743~~823, resulting in gross profit of $1,~~519~~700,~~434~~121. Total operating expenses were $12,~~322~~823,~~360~~805, consisting entirely of selling, general and administrative expenses. We experienced interest expense of $22,417 and other expenses of $1,303. We also recorded a gain of $104,000 on write-down of contingent consideration, and a benefit for income taxes of $44,286. Our net loss for the year ended December 31, 2016 was therefore $999,118.

By comparison, during the year ended December 31, 2015, we generated gross revenues of $5,788,177. Total cost of sales was $4,268,743, resulting in gross profit of $1,519,434. Total operating expenses were $1,322,360, consisting entirely of selling, general and administrative expenses. We experienced interest expense of $1,358 and other income of $801,438. Our net income for the year ended December 31, 2015 was therefore $195,811.

ByOur ~~comparison~~gross revenues, ~~during~~as well as our cost of sales and operating expenses increased significantly in 2016 compared to 2015. One of the ~~year~~reasons ~~ended~~for ~~December~~such ~~31,~~increases ~~2014,~~was wedue ~~generated~~to the acquisition of Rayco which had gross ~~revenues~~revenue of $31,~~317~~204,~~039.~~913, ~~Total~~ cost of sales ~~was~~of $21,~~682~~007,~~399,~~304 ~~resulting~~and inoperating ~~gross~~expenses ~~profit~~ of $~~634~~305,~~640~~760 in 2016. In ~~Total~~addition, ~~operating~~the ~~expenses~~Company ~~were~~had approximately $1~~,916,511,~~.5 ~~consisting~~million ~~entirely~~more ofsales ~~selling,~~in ~~general~~2016 ~~and~~compared ~~administrative~~to ~~expenses~~2015. Our Wegross ~~experienced~~profit ~~interest~~margin ~~expense~~decreased offrom ~~$4,670,~~26% ~~other~~in ~~income~~2015 ofto ~~$1,713,~~20% ~~and~~in a2016 ~~gain~~was onmainly ~~sale~~due ofto ~~equipment~~Rayco ofhaving ~~$500.~~smaller ~~Our~~customer ~~net~~projects ~~loss~~with ~~for~~lower ~~the~~gross ~~year~~profit ~~ended~~margin ~~December~~compared ~~31,~~to ~~2014~~large-scale ~~was~~customer ~~therefore~~commercial ~~$1,284,328~~projects. In addition, we hired more installers in 2016 which

Our revenues increased $2,471,138 in 2015 as compared to 2014. Our gross profit increased significantly due to a lower cost of sales. The reason for the lower cost of sales is that contracts we completed in 2015 were a few larger scale commercial projects, and we implemented these projects by using internal resources to design and manage these projects, but sub-contracting field construction work to some local companies and workers to reduce construction cost. During 2015, our expenses for salary and wages increased by approximately $298,723 and we had $882,191 as salary compensation related to preferred stock issued during 2015. Our selling, general, and administrative expenses increased approximately $103,316. We had collection of bad debt of $874,689 in 2015, while we had bad debt expense of $1,003,052 in 2014 mainly due to most of the written-off accounts receivable from All Fortune Group, LLC, which were considered as collectible after the lawsuit between Sunvalley and All Fortune was settled on October 7, 2015 (refer to Item 3. Legal Proceedings). 12

Weincreased ~~are~~our ~~currently~~costs ~~working~~of onsales. ~~three~~Our ~~major~~operating ~~installation~~expenses ~~projects~~increased ~~with~~$1,195,685 ~~contract~~on ~~prices~~top ~~totaling~~of ~~approximately~~Rayco’s operating expenses of $~~5.8~~305,760 ~~million.~~in 2016 compared to 2015. One of ~~these~~the ~~contracts~~reason iswas ~~expected~~the collection of All Fortune’s recovery of bad debt expense of $874,689 recorded in 2015 to bereduce ~~substantially~~its ~~completed~~operating expenses by such amount (refer to Item 3. Legal Proceedings). Other reasons for the ~~second~~increased ~~quarter~~operating ofexpenses ~~2016~~were for salary and ~~the~~wages ~~other~~increased ~~two~~by ~~contracts~~approximately ~~are~~$235,618 ~~expected~~in 2016 as a result of salary compensation related to ~~complete~~preferred bystock ~~the~~issued ~~end~~during July 2015, telemarketing expense increased of ~~third~~$33,642 ~~quarter~~and insurance expense increased of ~~2016~~$38,677.

Liquidity and Capital Resources

As of December 31, ~~2015~~2016, we had current assets in the amount of $34,~~420~~873,~~401~~813, consisting of cash and cash equivalents in the amount of $1,~~209~~563,~~198~~781, accounts receivable of $13,~~997~~062,~~935~~923, inventory in the amount of $~~103~~95,~~346~~461, costs in excess of billings on uncompleted contracts of $5837,~~235~~790, prepaid expenses and other current assets of $1476,~~187~~358, and restricted cash of $37,500. As of December 31, ~~2015~~2016, we had current liabilities in the amount of $45,~~794~~246,~~470~~413. These consisted of accounts payable and accrued expenses in the amount of $45,~~478~~048,~~157~~447, customer deposits of $7513,~~654~~396, ~~accrued warranty of $133,733,~~ advances from contractors of $103,389, and ~~the~~notes ~~current~~payable, ~~portion~~net of adiscount, ~~capital lease~~ in the amount of $381,~~537~~181. Our working capital deficit as of December 31, ~~2015~~2016 was therefore $1372,~~374,069~~600.

Our accounts payable and accrued expenses as of December 31, ~~2015~~2016 consisted of the following:

Accounts Payable	$3,~~796~~945,~~852~~956
Credit Card payable	$73204,~~425~~627
Accrued vacation	$5676,~~853~~641
Other accrued expense	$~~283~~640,~~995~~025
Payroll liabilities	$~~216~~58,~~272~~784
Sales tax payable	$50122,~~760~~414
Total	$45,~~478~~048,~~157~~447

As of December 31, ~~2015~~2016, we had no long term liabilities.

In order to move forward with our business development plan set forth above, we will require additional financing in the approximate amount of $4,500,000, to be allocated as follows:

Initiate OEM Manufacturing

$ 2,000,000

R&D Commercialization Costs

$ 500,000

Expansion of Installation Business (3 new branches)

$ 1,500,000

Additional working capital and general corporate

$ 500,000

Total capital needs

$ 4,500,000

We will require substantial additional financing in the approximate amount of $4,500,000 in order to execute our business expansion and development plans and we may require additional financing in order to sustain substantial future business operations for an extended period of time. We currently do not have any firm arrangements for financing and we may not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible.

We are currently seeking additional financing. If we are unable to obtain the necessary capital to pursue our strategic plan, we may have to reduce the planned future growth of our operations.

Off Balance Sheet Arrangements

As of December 31, ~~2015~~2016, there were no off balance sheet arrangements.

Going Concern

We have experienced recurring losses from operations and had an accumulated deficit of $34,~~449~~448,~~834~~952 as of December 31, ~~2015~~2016. To date, we have not been able to produce sufficient sales to become cash flow positive and profitable on a consistent basis. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our costs of operations and/or upon obtaining additional financing. For these reasons, our auditor has raised substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We do not believe that any accounting policies currently fit this definition.

Accounts Receivable

The Company’s trade accounts receivable consist primarily of accounts due from wholesale customers, and accounts due from installation customers, with the most significant amounts arising from installation contracts. Trade receivables are due within 30 days on wholesale contracts, while receivables on installation contracts are due in installments over terms ranging from five to seven years. The Company performs periodic credit evaluations of its customers’ respective financial conditions and does not require collateral. Credit losses have consistently been within management’s expectations. An allowance for doubtful accounts is recorded when it is probable that all or a portion of a trade receivables balance will not be collected.

Long-Lived Assets

Long-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.

impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary.Goodwill

The purchase price of an acquired company is allocated between intangible assets and the net tangible assets of the acquired business with the residual of the purchase price recorded as goodwill. All identifiable goodwill as of December 31, 2016, is attributable to the purchase of Rayco Energy, Inc. The Company does not amortize goodwill.

In January 2017, the Financial Accounting Standards Board ("FASB") issued authoritative guidance that simplifies the assessment of goodwill for impairment when the estimated fair value of a reporting unit is less than its carrying value by eliminating the requirement to determine the fair value of goodwill. Under the new guidance, the amount of goodwill impairment will be determined by the amount the carrying value of the reporting unit exceeds its fair value. The new guidance is effective for the Company beginning January 1, 2020, with early adoption permitted. The Company adopted this new guidance in the fourth quarter of 2016.

Product Warranties

The Company warrants its products for various periods against defects in material or installation workmanship. The manufacturers of the solar panels and the inverters provide a warranty period of generally 25 years and l0 years, respectively. The Company will assist its customers in the event that the manufacturers’ warranty needs to be used to replace a defective solar panel or inverter. The Company provides for a 10-year warranty on the installation of a system and all equipment and incidental supplies other than solar panels and inverters that are recovered under the manufacturers’ warranty. Maintenance services such as cleaning the solar panels and checking the systems are offered to customers twice a year without a separate service charge.

Revenue Recognition

The completion of a solar installation project ranges from six to eighteen months; therefore, the Company recognizes revenue from a system installation under the completed contract method of accounting. Revenue from system installations and sales of solar panels is recognized when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales price is fixed or determinable and (4) collection of the related receivable is reasonably assured. The Company defines its services as having been substantially completed upon the installed systems are ready for City’s Building Department’s final inspection. Wholesale revenues are recognized pursuant to the same criteria; however, with wholesale arrangements the Company defines its delivery as having been completed at such time the customer takes possession of the Company’s product.

Rayco’s revenue consists of solar and LED installation projects, both to commercial and residential customers. Revenues from fixed-price and cost-plus contracts are recognized on the percentage of completion method, whereby revenues on long-term contracts are recorded on the basis of the Company’s estimates of the percentage of completion of contracts based on the ratio of the actual cost incurred to total estimated costs. This cost-to-cost method is used because management considers it to be the best available measure of progress on these contracts. Revenues from cost-plus-fee contracts are recognized on the basis of costs incurred during the period plus the fee earned, measured on the cost-to-cost method.

Stock-based Compensation

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value.

Recently Issued Accounting Pronouncements

Our management has considered all recent accounting pronouncements issued since the last audit of our financial statements. Our management believes that these recent pronouncements will not have a material effect on our financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements Required by Article 8 of Regulation S-X:

Audited Financial Statements:

[ssol10kvedgar8002.jpg]

SUNVALLEY SOLAR, INC.

REPORT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM

AND

CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended

December 31, 2015 and 2014

TABLE OF CONTENTS

Report of Independent Registered Public Accounting Firm

F-3

Balance Sheets

F-4 to F-5

Statements of Operations

F-6

Statement of Stockholders’ Equity

F-7

Statements of Cash Flows

F-8

Notes to Financial Statements

F-9 to F-18

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of

Sunvalley Solar, Inc.

We have audited the accompanying consolidated balance sheets of Sunvalley Solar, Inc. (“the Company”) as of December 31, ~~2015~~2016 and ~~2014~~2015, and the related consolidated statements of ~~income~~operations, comprehensive loss, stockholders’ ~~equity~~deficit, and cash flows for each of the years in the two year period ended December 31, ~~2015~~2016. These ~~consolidated~~ financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sunvalley Solar, Inc. as of December 31, ~~2015~~2016 and ~~2014~~2015, and the results of its operations and its cash flows for each of the years in the two year period ended December 31, ~~2015~~2016, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has ansuffered net losses and has accumulated ~~deficit~~a ofsignificant ~~$3,449,834,~~deficit. ~~which~~These ~~raises~~factors raise substantial doubt about its ability to continue as a going concern. Management’s plans ~~concerning~~in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT

April 1217, ~~2016~~2017

SUNVALLEY SOLAR, INC.
Consolidated Balance Sheets
			December 31,		December 31,
			2015		2014
			2016		2015
ASSETS
CURRENT ASSETS
	Cash and cash equivalents		$	1,~~209~~563,~~198~~781	$	~~822~~1,~~444~~209,198
	Restricted cash			37,500		2537,~~000~~500
	Accounts receivable, net			13,~~997~~062,~~935~~923		21,~~167~~997,~~580~~935
	Inventory, net			103,346		1,051,669
	Inventory			95,461		103,346
	Costs in excess of billings on uncompleted contracts			5837,~~235~~790		~~318~~58,~~734~~235
	Prepaid expenses and other current assets			1476,~~187~~358		1614,~~002~~187
		Total current assets		34,~~420~~873,~~401~~813		43,~~401~~420,~~429~~401
PROPERTY AND EQUIPMENT, NET				2762,~~948~~751		2627,~~957~~948
OTHER ASSETS
	Long-term accounts receivable, net			31,~~011~~414,~~745~~589		3,~~042~~011,~~976~~745
	Other assets			7,757		3,870
	Intangible assets, net			539,536		-
		Total other assets		3,019,502		3,046,846
	Goodwill			218,076		-
		TOTAL ASSETS	$	6,467,851	$	7,475,232
	Other assets			7,220		7,757
		Total other assets		2,178,421		3,019,502
		TOTAL ASSETS	$	7,113,985	$	6,467,851
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	4,~~478~~885,~~157~~326	$	4,~~740~~478,~~648~~157
	Customer deposits			7513,~~654~~396		175,~~900,928~~654
	Accrued warranty			~~133~~163,~~733~~121		97133,~~654~~733
	Advances from contractors			103,389		103,389
	Current portion of long-term debt			-		16,774
	Capital leases payable			-		3,537
	Current portion of capital lease			3,537		4,017
	Notes payable, net of discounts			81,181		-
		Total current liabilities		45,~~794~~246,~~470~~413		64,~~863~~794,~~410~~470
LONG-TERM LIABILITIES
	Capital leases			-		3,537
	Notes payable			-		12,906
		Total long-term liabilities		-		16,443
		TOTAL LIABILITIES		4,794,470		6,879,853
STOCKHOLDERS' EQUITY
	Class A convertible preferred stock, $0.001 par value,
	Preferred stock, $0.001 par value, 1,000,000 Class A shares authorized,
	1,000,000 shares authorized, 1,000,000 shares
	120,000 and 1,000,000 shares issued and outstanding, respectively			120		1,000
	issued and outstanding			1,000		1,000
	Preferred stock, $0.001 par value, 2,000,000 Class B shares authorized,
	Class B convertible preferred stock, $0.001 par value,
	130,000 and 2,000,000 shares issued and outstanding, respectively			130		2,000
	2,000,000 shares authorized, 2,000,000 and -0- shares
	Common stock, $0.001 par value, 150,000,000 shares authorized,
	issued and outstanding, respectively			2,000		-
	23,857,176 and 4,357,849 shares issued and outstanding, respectively			23,858		4,358
	Common stock, $0.001 par value, 150,000,000 shares
	Additional paid-in capital			6,292,416		5,115,857
	authorized, 4,357,849 shares issued and oustanding			4,358		4,358
	Accumulated deficit			(4,448,952)		(3,449,834)
	Additional paid-in capital			5,115,857		4,235,666
		Total Stockholders' Equity		1,867,572		1,673,381
	Accumulated deficit			(3,449,834)		(3,645,645)
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	7,113,985	$	6,467,851
		Total Stockholders' Equity		1,673,318		595,379
		TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	6,467,851	$	7,475,232
The accompanying notes are an integral part of these consolidated financial statements.
F-5

SUNVALLEY SOLAR, INC.
Consolidated Statements of Operations
		For the Years Ended
		December 31,
		2015		2014
		2016		2015
REVENUES		$	58,~~788~~492,~~177~~944	$	35,~~317~~788,~~039~~177
COST OF SALES			46,~~268~~792,~~743~~823		24,~~682~~268,~~399~~743
GROSS PROFIT			1,~~519~~700,~~434~~121		~~634~~1,~~640~~519,434
OPERATING EXPENSES
	Selling, general and administrative expenses		1,322,360		1,916,511
	Selling, general and administrative		2,823,805		1,322,360
	Total Operating Expenses		12,~~322~~823,~~360~~805		1,~~916~~322,~~511~~360
INCOME (LOSS) FROM OPERATIONS			~~197~~(1,~~074~~123,684)		(1197,~~281,871)~~074
OTHER INCOME (EXPENSES)
	Gain on sale of equipment		-		500
	Gain on write-down of contingent consideration		104,000		-
	Interest income		1,438		1,713
	Other income and expenses		(1,303)		1,438
	Interest expense		(222,~~701~~417)		(42,~~670~~701)
	Total other income (expenses)		(180,~~263)~~280		(21,~~457~~263)
INCOME (LOSS) BEFORE TAXES			~~195~~(1,~~811~~043,404)		(1195,~~284,328)~~811
	Provision for income taxes		-		-
	Provision (benefit) for income taxes		(44,286)		-
NET INCOME (LOSS)		$	~~195~~(999,~~811~~118)	$	(1195,~~284,328)~~811
BASIC AND DILUTED INCOME (LOSS) PER SHARE		$	0.04	$	(0.29)
BASIC INCOME (LOSS) PER SHARE		$	(0.08)	$	0.04
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER
DILUTED INCOME (LOSS) PER SHARE		$	(0.08)	$	0.01
	OF COMMON SHARES OUTSTANDING		4,357,849		4,357,849
BASIC WEIGHTED AVERAGE NUMBER
	OF COMMON SHARES OUTSTANDING		12,493,760		4,357,849
DILUTED WEIGHTED AVERAGE NUMBER
	OF COMMON SHARES OUTSTANDING		12,493,760		24,407,849
The accompanying notes are an integral part of these consolidated financial statements.
F-6

SUNVALLEY SOLAR, INC.
Consolidated Statement of Stockholders' Equity
	Class A Convertible			Class B Convertible						Additional
				Class B Convertible						Additional
	Preferred Stock			Preferred Stock			Common Stock			Paid-in		Accumulated
	Class A Preferred Stock			Preferred Stock			Common Stock			Paid-in		Accumulated
	Shares	Amount		Shares	Amount		Shares	Amount		Capital		Deficit		Total
Balance at December 31, 2013	950,000		950	-		-	4,357,849		4,358		4,234,881		(2,361,317)		1,878,872
Balance at December 31, 2014	1,000,000	$	1,000	-	$	-	4,357,894	$	4,358	$	4,235,666	$	(3,645,645)	$	595,379
Issuance of Class A convertible
preferred stock for services	50,000		50	-		-	-		-		785		-		835
Net loss for the year ended December 31, 2014	-		-	-		-	-		-		-		(1,284,328)		(1,284,328)
Balance at December 31, 2014	1,000,000		1,000	-		-	4,357,849		4,358		4,235,666		(3,645,645)		595,379
Issuance of Class B convertible
preferred stock for services	-		-	2,000,000		2,000	-		-		880,191		-		882,191
Net income for the year ended December 31, 2015	-		-	-		-	-		-		-		195,811		195,811
Net income for the year ended December 31, 2014	-		-	-		-	-		-		-		195,811		195,811
Balance at December 31, 2015	1,000,000	$	1,000	2,000,000	$	2,000	4,357,~~849~~894	$	4,358	$	5,115,857	$	(3,449,834)	$	1,673,381
Conversion of Class A convertible
preferred stock to common stock	(880,000)		(880)	-		-	44,000		44		836		-		-
Conversion of Class B convertible
preferred stock to common stock	-		-	(1,945,500)		(1,946)	19,455,500		19,456		(17,510)		-		-
Issuance of Class B convertible preferred
stock in business combination	-		-	75,500		76	-		-		75,424		-		75,500
Vesting of Class B convertible
preferred stock issued for services	-		-	-		-	-		-		1,117,809		-		1,117,809
Net loss for the year ended December 31, 2016	-		-	-		-	-		-		-		(999,118)		(999,118)
Balance at December 31, 2016	120,000	$	120	130,000	$	130	23,857,394	$	23,858	$	6,292,416	$	(4,448,952)	$	1,867,572
The accompanying notes are an integral part of these consolidated financial statements.
F-7

SUNVALLEY SOLAR, INC.
Consolidated Statements of Cash Flows
			For the Years Ended
			December 31,
			2015		2014
			2016		2015
CASH FLOWS FROM OPERATING ACTIVITIES:
OPERATING ACTIVITIES:
	Net income (loss)		$	~~195~~(999,~~811~~118)	$	(1195,~~284,328)~~811
	Adjustments to reconcile net income (loss) to net cash
	provided by operating activities:
		Depreciation and amortization		2288,~~783~~770		22,~~914~~783
		Gain on sale of equipment		-		(500)
		Preferred stock issued for services		1,117,812		882,191
		Preferred stock issued for services		882,191		835
		Bad debt expense		-		(874,689)
		Bad debt expense		(874,689)		1,003,052
		Loss on disposal of equipment		415		-
		Gain on write-down of contingent consideration		(104,000)		-
		Amortization of debt discounts		10,485		-
	Changes in operating assets and liabilities:
		Restricted cash		~~(12,500)~~-		-(12,500)
		Accounts receivable		1636,~~075,565~~962		~~696~~1,~~773~~075,565
		Inventory		~~948~~44,~~323~~555		~~(693~~948,~~107)~~323
		Prepaid expenses and other assets		1(62,~~815~~171)		-1,815
		Other assets		(3,887)		(43,~~739~~887)
		Costs in excess of billings on uncompleted contracts		~~260~~20,~~499~~445		~~(289~~260,~~038)~~499
		Accounts payable and accrued expenses		(~~226~~277,~~412~~161)		~~998~~(226,~~778~~412)
		Customer deposits		(162,~~825,274~~258)		-(1,825,274)
		Net Cash Provided by Operating Activities		~~444~~418,~~225~~623		~~450~~444,~~640~~225
CASH FLOWS FROM INVESTING ACTIVITIES:
INVESTING ACTIVITIES:
	Sale of equipment			-		500
	Proceeds from disposal ofproperty and equipment			595		-
	Purchases of equipment			(23,774)		-
	Purchases of property and equipment			(36,718)		(23,774)
		Net Cash Provided By (Used in) Investing Activities		(23,774)		500
	Cash acquired in business combination			23,711		-
CASH FLOWS FROM FINANCING ACTIVITIES:
		Net Cash Provided By Investing Activities		(12,412)		(23,774)
	Repayments of long term debt			(29,680)		(15,743)
FINANCING ACTIVITIES:
	Repayments of capital lease			(4,017)		(3,342)
	Proceeds from long term debt			150,000		-
		Net Cash Used in Financing Activities		(33,697)		(19,085)
	Repayments of long term debt			(198,091)		(29,680)
NET CHANGE IN CASH				386,754		432,055
	Repayment of capital lease			(3,537)		(4,017)
CASH AT BEGINNING OF YEAR				822,444		368,796
		Net Cash (Used in) Financing Activities		(51,628)		(33,697)
CASH AT END OF YEAR			$	1,209,198	$	800,851
NET CHANGE IN CASH				354,583		386,754
CASH AT BEGINNING OF YEAR				1,209,198		822,444
CASH AT END OF YEAR			$	1,563,781	$	1,209,198
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
	CASH PAID FOR:
		Interest	$	2,513	$	42,~~670~~513
		Income taxes	$	-	$	-
	NON-CASH INVESTING AND FINANCING ACTIVITIES:
		Common stock and notes payable issued in business combination	$	1,020,063	$	-
		Original issuance discounts on notes payable	$	14,514	$	-
The accompanying notes are an integral part of these consolidated financial statements.
F-8

F-7

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, ~~2015~~2016 and ~~2014~~2015

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

Organization

Sunvalley Solar, Inc. (the Company) was incorporated on August 16, 2007 under the laws of the State of Nevada as Western Ridge Minerals, Inc., Sunvalley Solar Inc. (the "Subsidiary"), formerly known as West Coast Solar Technologies Corporation, a California corporation, was incorporated on January 30, 2007.

On ~~June~~May 2415, ~~2010~~2016, ~~in accordance with~~ the ~~Exchange~~Company ~~Agreement~~entered ~~dated~~into ~~June~~a ~~24,~~share ~~2010,~~exchange ~~Western~~agreement ~~Ridge~~with ~~Minerals~~to ~~acquired~~purchase ~~all~~100 percent of the issued and outstanding ~~shares~~common stock of ~~the~~Rayco ~~Sunvalley~~Energy, Inc. which ~~resulted~~was inrenamed as Sunvalley ~~becoming~~Solar aEnergy, ~~wholly-owned subsidiary~~Inc. In ~~exchange~~effective ~~for~~August ~~all~~9, of2016. ~~the~~(“Rayco”), ~~issued~~a ~~and~~San ~~outstanding~~Francisco ~~shares~~Bay ofArea-based ~~Sunvalley,~~energy ~~the~~service ~~shareholders~~company offocused ~~the~~on ~~Sunvalley~~energy ~~received~~efficiency, asolar ~~total~~power, ofand ~~960~~building modernization,~~082~~ ~~shares~~in ofexchange ~~Western~~for ~~Ridge~~75,500 ~~Mineral’s~~shares ~~common~~of ~~stock,~~Series ~~which~~B ~~represented~~Preferred ~~approximately~~Stock. ~~60%~~In ofaddition, the Company’s ~~outstanding~~agrees ~~common~~to ~~stock~~pay ~~following~~an ~~the~~additional ~~acquisition.~~$350,000 ~~There~~in ~~were~~cash ~~2,098,543~~to ~~shares~~shareholders of ~~the~~Rayco, ~~Company’s~~conditioned ~~common~~upon ~~stock~~the ~~outstanding~~2016 ~~before~~net ~~giving~~profit ~~effect~~from to the ~~stock~~operation ~~issuances~~of Rayco being in excess of $10,000 (“the ~~acquisition~~Condition”). To ~~and~~evidence the ~~cancellation~~contingent unpaid balance of 1the purchase price,~~458,488~~ ~~shares~~the byCompany ~~Mr.~~executed ~~Marco~~6 ~~Bastidas~~percent ~~and~~subordinated ~~certain~~promissory ~~other~~notes ~~shareholders~~with ~~resulted~~Rayco’s shareholders in ~~there~~the ~~being~~aggregate 1amount $350,~~600~~000,~~137~~ ~~shares~~payable ~~outstanding~~only ~~post~~upon ~~acquisition.~~Rayco’s As2016 anet ~~result,~~operating ~~the~~profit ~~shareholders~~being in excess of ~~the~~$10,000 ~~Subsidiary~~with ~~became~~interest ~~the~~and ~~controlling~~principal ~~shareholders~~payable monthly on first day of ~~the~~each ~~combined~~month ~~entity.~~commencing May 1, 2017. In ~~connection~~the ~~with~~event that the ~~acquisition,~~Condition ~~$400,000~~is ~~was~~not ~~contributed~~met, tosuch ~~the~~notes ~~Company~~will ~~from~~be adeemed ~~Company~~null ~~shareholder~~and void.

Accordingly, the transaction is accounted for as a recapitalization with the Subsidiary deemed to be the accounting acquirer and the Company the legal acquirer in the reverse acquisition. Consequently, the assets and liabilities and the historical operations of the Subsidiary prior to the Merger are reflected in the financial statements and are recorded at the historical cost basis of the Subsidiary. Following the Acquisition the Company’s fiscal year-end has been changed from March 31 to December 31.

On August 10, 2012 the Company effected an 1 to 500 reverse stock split accordingly all the share amounts were restated to reflect the reverse stock split on a retro-active basis.

On August 29, 2012, the Company’s shareholders and board of directors approved an amendment to the Articles of Incorporation to decrease the total authorized common stock from 7,500,000,000 shares to 90,000,000 shares.

Description of Business

The Company markets, sells, designs and installs solar panels for residential and commercial customers. The Company’s primary market is in the state of California, however the Company may sell anywhere in the United States.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

Going Concern

As reflected in the accompanying financial statements, the Company has experienced recurring losses from operations through December 31, ~~2015~~2016 and has a working capital deficit of $372,600 and an accumulated deficit of $34,~~449~~448,~~834~~952 as of December 31, ~~2015~~2016. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Management plans to raise additional operating capital through a private placement of the Company’s common stock. Management believes that with sufficient working capital the Company can produce sufficient sales to become cash flow positive and profitable which will allow it to continue as a going concern. There is no assurance that the Company will be successful in its plans.

F-8

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, 2015 and 2014

Accounting Method

The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31, year-end.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

The preparation of the financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant estimates made in preparing the financial statements include the allowance for doubtful accounts, accrued warranty, convertible debt derivative liabilities and discount expenses. To the extent there are material differences between estimates and the actual results, future results of operations will be affected.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Operating Segments

The Company operates inas one operating segment.

Principles of Consolidation

The consolidated financial statements include the Company’s wholly owned subsidiaries. Intercompany balances and transactions have been eliminated.

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased. The Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits. The Company has not experienced any losses related to this concentration of risk. As of December 31, ~~2015~~2016 and ~~2014~~2015, the Company had $~~959~~1,~~198~~425,746 and $~~572~~959,~~444~~198, respectively, in cash in bank deposits that exceeded the $250,000 federally insured limits.

Accounts Receivable

		December 31, 2015		December 31, 2014
		December 31, 2016		December 31, 2015
Current portion	$	-3,120,718	$	311,~~600~~997,935
Long-term portion		391,~~195~~459,589		13,~~139~~050,~~705~~940
Total allowance for doubtful accounts	$	39,195	$	1,171,305
Allowance for doubtful accounts		(102,795)		(39,195)
Total accounts receivable, net	$	4,477,512	$	5,009,680

Inventory

Inventory is stated at the lower of cost or net realizable value. Cost is determined on an average cost basis; and the inventory is comprised of raw materials and finished goods. Raw materials consist of fittings and other components necessary to assemble the Company’s finished goods. Finished goods consist of solar panels ready for installation and delivery to customers.

At each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence. This evaluation includes an analysis of sales levels by product type. Among other factors, the Company considers current product configurations, historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory.

F-9

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, ~~2015~~2016 and ~~2014~~2015

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

product configurations, historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory. Provisions are made to reduce excess or obsolete inventories to their estimated net realizable values. Once established, write-downs are considered permanent adjustments to the cost basis of the excess or obsolete inventory.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable assets. Management evaluates useful lives regularly in order to determine recoverability taking into consideration current technological conditions.

Maintenance and repairs are charged to expense as incurred; additions and betterments are capitalized. Upon retirement or sale, the cost and related accumulated depreciation of the disposed assets are removed, and any resulting gain or loss is recorded. Fully depreciated assets are not removed from the accounts until physical disposition. The estimated useful lives are as follows:


Classification		Useful life
Automobile		5 years
Furniture		7 years
Software		3 years
Office equipment		5 years
Machinery		5 to 7 years

Long-Lived Assets

Based on this analysis, the Company believes that no impairment of the carrying value on its long-lived assets existed at December 31, ~~2015~~2016 and ~~2014~~2015.

Intangible Assets

Intangible assets are stated at cost and are amortized on a straight line basis, at the following rates:


Classification		Useful life
Customer list		5 years
Assembled workforce		5 years

Goodwill

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Goodwill (Continued)

The Company performs an impairment assessment of goodwill annually as of December 31, or more frequently if triggering events occur, based on the estimated fair value of the related reporting unit or intangible asset. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. There was no impairment to goodwill in 2016.

Customer Deposits

Customer deposits represent advance payments received for installation projects. Typically the Company will receive five percent of a contract total at the commencement of the installation project. These amounts are recorded as liabilities until such time that the Company has performed the majority of its contractually agreed-upon work, at which time the deposits are recognized as revenue in accordance with the Company’s revenue recognition policy.

Product Warranties

~~F-10~~The Company records a provision for the installation warranty, an expense included in cost of sales, based on management's best estimate of the probable cost to be incurred in honoring its warranty commitment. The Company's accrued warranty provision was $163,121 and $133,733 at December 31, 2016 and 2015, respectively.

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, 2015 and 2014

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company records a provision for the installation warranty, an expense included in cost of sales, based on management's best estimate of the probable cost to be incurred in honoring its warranty commitment. The Company's accrued warranty provision was $133,733 and $97,654 at December 31, 2015 and 2014, respectively.

Revenue Recognition

Cost of Sales

Cost of sales is comprised primarily of the cost of purchased product, as well as direct labor, inbound freight costs and other material costs required to complete products and installation projects. For installation projects, the direct labor costs are recorded as work-in-progress inventory and other installation project costs incurred by the Company are recorded as costs in excess of billings on uncompleted contracts before the project’s revenue is recognized. When the Company uses contractors for installation projects, if the contractor provides progress billings to the Company, then those costs will be recorded as work-in-progress inventory. However, if the contractor doesn’t provide progress billings to the Company, then the Company will record the costs to cost of sales once the contractor bills the Company.

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

are recorded as costs in excess of billings on uncompleted contracts before the project’s revenue is recognized. When the Company uses contractors for installation projects, if the contractor provides progress billings to the Company, then those costs will be recorded as work-in-progress inventory. However, if the contractor doesn’t provide progress billings to the Company, then the Company will record the costs to cost of sales once the contractor bills the Company.

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Costs in Excess of Billings on Uncompleted Contracts

Costs in excess of billings represent unbilled amounts earned and reimbursable under contracts. These amounts become billable according to the contract terms, which usually consider the passage of time, achievement of milestones or completion of the project. Generally, such unbilled amounts will be billed and collected over the next twelve months. Based on our historical experience, we generally consider the collection risk related to these amounts to be low. When events or conditions indicate that the amounts outstanding may become uncollectible, an allowance is estimated and recorded.

The Company is currently involved in certain major short-term solar panel installation projects. The Company is accounting for revenue and expenses associated with these contracts under the completed contract method of accounting in accordance with ASC 605. Under ASC 605, income is recognized when the contracts are completed or substantially completed and billings and others costs are accumulated on the balance sheet. Under the completed contract method, no profit or income is recorded before substantial completion of the work.

As of December 31, 2016 and December 31, 2015, the Company has capitalized $37,790 and $58,235 of costs incurred in relation to installation projects.

Advertising Expenses

Advertising expenses are expensed as incurred. Total advertising expenses amounted to $336,~~013~~655 and $13,~~688~~013 for the years ended December 31, ~~2015~~2016 and ~~2014~~2015, respectively.

Research and Development

Research and development costs are expensed as incurred and amounted to ~~approximately~~ $-0- and $-0- for the years ended December 31, ~~2015~~2016 and ~~2014~~2015, respectively. These costs are included in selling, general and administrative expenses in the accompanying statements of operations.

Income Taxes

The Company applies the asset and liability method of accounting for income taxes. The asset and liability method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years. Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.

The Company recognizes and measures any uncertain tax positions using a “more-likely-than-not” approach. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

F-11

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, ~~2015~~2016 and ~~2014~~2015

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

management, it is more likely than not that some portion or all of the deferred tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Basic and Diluted Earnings (Loss) per Common Share

Basic earnings (loss) per common share is computed by dividing the net earnings by the weighted average number of outstanding common shares (restricted and free trading) during the periods presented. Basic earnings (loss) per share are equal to diluted earnings (loss) per share due to the impact of additional common shares that could be issued upon conversion of issued and outstanding convertible preferred stock would be anti-dilutive. Dilutive instruments include 206,000~~,000~~ shares to be issued upon conversion of Series A Convertible Preferred Stock and 201,~~000~~300,000 shares to be issued upon conversion of Series B Convertible Preferred Stock. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were 401,~~000~~306,000 such potentially anti-dilutive shares excluded as of December 31, ~~2015~~2016 as their effect would have been antidilutive.

Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1 – Quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and

Level 3 – Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing.

Stock-based Compensation

The Company recognizes compensation expense for stock-based awards expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value.

Reclassification of Financial Statement Accounts

Certain balances in previously issued financial statements have been reclassified to be consistent with the current period presentation.

Recent Accounting Pronouncements

Management has considered all recent accounting pronouncements issued since the last audit of the financial statements. The Company’s management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.

NOTE 3 – BUSINESS ~~RESTRICTED CASH~~COMBINATION

InOn ~~order~~May to15, ~~comply~~2016, the Company entered into a share exchange agreement with to purchase 100 percent of the ~~State~~issued and outstanding common stock of ~~California's~~Rayco ~~licensing~~Energy, ~~requirement~~Inc. or(“Rayco”), ~~contract~~a ~~bonds~~San asFrancisco ofBay ~~December~~Area-based 31energy service company focused on energy efficiency, ~~2015~~solar power, and ~~2014~~building modernization, in exchange for 75,500 shares of Series B Preferred Stock. In addition, the Company ~~maintains~~agrees ato ~~certificate~~pay ofan ~~deposit~~additional $350,000 in cash to shareholders of Rayco, conditioned upon the ~~amount~~2016 net profit from the operation of Rayco being in excess of $3710,~~500~~000 ~~and~~(“the Condition”). To evidence the contingent unpaid balance of the purchase price, the Company executed 6 percent subordinated promissory notes with Rayco’s shareholders in the aggregate amount $25350,000, ~~respectively~~payable only upon Rayco’s 2016 net operating profit being in excess of $10,000 with ainterest ~~financial~~and ~~institution~~principal payable monthly on first day of each month commencing May 1, 2017. As of December 31, 2016 the Condition had not been met, and as such the note was deemed null and void.

~~F-12~~The results of operations related to this acquisition have been included in our financial statement since the acquisition date. During the period from acquisition through December 31, 2016, our net sales of the products acquired from Rayco Energy, Inc. were $1,204,913.

~~SUNVALLEY SOLAR~~In addition to consolidating the financial statements of the Company and subsidiary, ~~INC~~certain intangible assets were identified and recognized, based upon the excess of purchase price to the net assets of the acquired subsidiary. The total purchase price for the business combination was allocated as follows:

Notes to Consolidated Financial Statements



Consideration paid:
Liabilities assumed	$	840,563
Contingent liability issued		104,000
Preferred stock issued		75,500
Total	$	1,020,063

December 31, 2015 and 2014



Consideration received:
Cash	$	23,711
Accounts receivable		104,794
Inventories		36,670
Other current assets		3,350
Property and equipment, net		18,462
Identified intangible assets (customer list and assembled workforce)		615,000
Goodwill		218,076
Total	$	1,020,063

~~NOTE~~The ~~4 –~~company ~~INVENTORY~~added a wholly-owned subsidiary named Sunvalley Solar Service, Inc. during 2016 which business is mainly for solar system maintenance and services. No business activities were incurred for this company as of December 31, 2016.

~~The~~NOTE ~~Company’s~~4 – ~~inventory~~RESTRICTED ~~consisted of the following at December 31, 2015 and December 31, 2014:~~CASH

		December 31, 2015		December 31, 2014
Raw materials	$	-	$	912,272
Work in progress		-		25,070
Finished goods		103,346		114,327
Total inventory	$	103,346	$	1,051,669

In order to comply with the State of California's licensing requirement or contract bonds as of December 31, 2016 and 2015 the Company maintains a certificate of deposit in the amount of $37,500 and $37,500, respectively, with a financial institution.

~~The~~NOTE ~~Company’s~~5 – ~~reserve for excess and obsolete inventory amounted to $-0- and $-0- as of December 31, 2015 and 2014.~~INVENTORY

~~NOTE~~The 5Company’s –inventory ~~COSTS~~consisted INof ~~EXCESS~~the OFfollowing ~~BILLINGS~~at ONDecember ~~UNCOMPLETED~~31, ~~CONTRACTS~~2016 and December 31, 2015:

The Company is currently involved in certain major short-term solar panel installation projects. The Company is accounting for revenue and expenses associated with these contracts under the completed contract method of accounting. The Company recognizes revenue when the contracts are completed or substantially completed and billings and others costs are accumulated on the balance sheet. Under the completed contract method, no profit or income is recorded before completion of substantial completion of the work.


		December 31, 2016		December 31, 2015
Raw materials	$	-	$	-
Work in progress		-		-
Finished goods		95,461		103,346
Total inventory	$	95,461	$	103,346

AsThe ofCompany’s ~~December~~reserve ~~31,~~for ~~2015~~excess and ~~December~~obsolete ~~31,~~inventory ~~2014,~~amounted ~~the~~to ~~Company has capitalized~~ $~~58,235~~-0- and $~~318,734~~-0- as of ~~costs~~December ~~incurred~~31, in2016 ~~relation~~and ~~to installation projects~~2015.

NOTE 6 – ~~PROPERTY~~COSTS ~~AND~~IN ~~EQUIPMENT~~EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS

The ~~following~~Company is acurrently ~~summary~~involved in certain major short-term solar panel installation projects. The Company is accounting for revenue and expenses associated with these contracts under the completed contract and percentage of ~~property~~completion methods of accounting. The Company recognizes revenue when the contracts are completed or substantially completed and ~~equipment~~billings atand ~~December~~others 31costs are accumulated on the balance sheet. Under the completed contract method, ~~2015~~no ~~and~~profit ~~2014:~~or income is recorded before completion of substantial completion of the work.

		December 31, 2015		December 31, 2014
Computer and equipment	$	95,667	$	75,268
Furniture		20,029		16,655
Software		2,368		2,368
Vehicles		86,340		86,339
Total property and equipment		204,404		180,630
Less: accumulated depreciation		(176,456)		(153,673)
Property and equipment, net		27,948		26,957

As of December 31, 2016 and December 31, 2015, the Company has capitalized $37,790 and $58,235 of costs incurred in relation to installation projects.

~~Depreciation~~NOTE ~~expense~~7 ~~for~~– ~~the~~PROPERTY ~~years~~AND ~~ended December 31, 2015 and 2014 was $22,783 and $22,912, respectively.~~EQUIPMENT

~~NOTE~~The 7following ~~– ADVANCES~~is ~~FROM~~a ~~CONTRACTORS~~summary of property and equipment at December 31, 2016 and 2015:

On August 14, 2012 the Company entered into a funding agreement with a contractor to receive funding to complete various projects. During the year ended December 31, 2012, the Company received advances under said funding agreement of $247,175. The advances bear no interest and are due on demand. The outstanding balance of the advances at December 31, 2015 and 2014, was $103,389 and $103,389, respectively.


		December 31, 2016		December 31, 2015
Computer and equipment	$	91,300	$	95,667
Furniture		21,171		20,029
Software		22,368		2,368
Vehicles		118,840		86,340
Total property and equipment		253,679		204,404
Less: accumulated depreciation		(190,928)		(176,456)
Property and equipment, net	$	62,751	$	27,948

~~NOTE~~Depreciation 8expense –for ~~EQUIPMENT~~the ~~LEASE~~years ended December 31, 2016 and 2015 was $15,200 and $22,783, respectively.

InNOTE ~~September~~8 ~~2011,~~– ~~the~~INTANGIBLE ~~Company~~ASSETS ~~entered~~AND a lease-to-own purchase agreement. The Company evaluated the lease at the time of purchase and determined that the agreement contained a beneficial by-out option wherein the Company has the option to buy the equipment for $1 at the end of the lease term. The Company has classified the lease as a GOODWILL

~~F-13~~Intangible assets consist of goodwill and of the unamortized portion of identified intangible assets (customer list and assembled workforce) recorded in connection with the business combination with Rayco Energy, Inc. The following table presents the detail of intangible assets for the periods presented:

SUNVALLEY SOLAR, INC.


		December 31, 2016		December 31, 2015
Identified intangible assets	$	615,000	$	-
Goodwill		218,076		-
Accumulated amortization		(77,464)		-
Total intangible assets and goodwill		755,612		-

Weighted average remaining life		4.37 years		-

~~Notes~~Amortization expense on definite-lived intangible assets (excluding goodwill) included as a charge to ~~Consolidated~~income ~~Financial~~was ~~Statements~~$77,464 and $-0- for the years ended December 31, 2016 and 2015, respectively.

~~December~~NOTE ~~31,~~9 ~~2015~~– ADVANCES ~~and~~FROM ~~2014~~CONTRACTORS

~~capital~~On ~~lease. The~~August ~~Company~~14, ~~used~~2012 the ~~discounted~~Company ~~value~~entered ofinto ~~future~~a ~~payments~~funding asagreement with a contractor to receive funding to complete various projects. During the ~~fair~~year ~~value~~ended December 31, 2012, the Company received advances under said funding agreement of ~~this~~$247,175. ~~asset~~The advances bear no interest and ~~has~~are ~~recorded~~due ~~the~~on ~~discounted~~demand. ~~value~~The outstanding balance of the ~~remaining~~advances ~~payments~~at asDecember a31, ~~liability~~2016 and 2015, was $103,389 and $103,389, respectively.

~~Capital~~NOTE ~~leases~~10 ~~payable~~– ~~outstanding~~EQUIPMENT ~~as of December 31, 2015 and 2014 consisted of the following:~~LEASE

		December 31, 2015		December 31, 2014
Forklift lease	$	3,537	$	7,554
Total equipment leases	$	3,537	$	7,554

In September 2011, the Company entered a lease-to-own purchase agreement. The Company evaluated the lease at the time of purchase and determined that the agreement contained a beneficial by-out option wherein the Company has the option to buy the equipment for $1 at the end of the lease term. The Company has classified the lease as a capital lease. The Company used the discounted value of future payments as the fair value of this asset and has recorded the discounted value of the remaining payments as a liability.

~~NOTE~~Capital 9leases –payable ~~NOTES~~outstanding ~~PAYABLE~~as of December 31, 2016 and 2015 consisted of the following:

Notes payable outstanding as of December 31, 2015 and 2014 consisted of the following:


		December 31, 2016		December 31, 2015
Forklift lease	$	-	$	3,537
Total equipment leases	$	-	$	3,537

		December 31, 2015		December 31, 2014
Notes payable (1)
Current portion	$	-	$	16,774
Long-term portion		-		12,906
Total notes payable	$	-	$	29,680

NOTE 11 – NOTES PAYABLE

Notes payable outstanding as of December 31, 2016 and 2015 consisted of the following:


		December 31, 2016		December 31, 2015
Notes payable (1)
Current portion	$	-	$	-
Long-term portion		81,181		-
Total notes payable	$	81,181	$	-

(1)

Arrangement with a bank having a maximum borrowing of $100,000; is collateralized by all business assets. Any principal amounts outstanding accrue interest at the bank's variable index rate (currently 6.07 percent as of December 31, ~~2015~~2016). The remaining loan balance of $1476,~~456~~266 was paid off in full on August 15, 2016 through the execution of a new note payable under the same terms with a face value of $150,000 and an original issuance discount of $14,514 which matures on May 25, 2017. As of December 131, ~~2015~~2016, the principal remaining on the note is $85,210 with a remaining discount of $4,029.

NOTE 1012 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue up to 6,000,000 shares of $0.001 par value preferred stock; 1,000,000 shares of which are designated as Class A Convertible Preferred Stock, and 2,000,000 shares of which are designated as Class B Convertible Preferred Stock. The remaining 3,000,000 shares of preferred stock authorized remain undesignated.

Class A Convertible Preferred Stock

Holders of Class A Convertible Preferred Stock are entitled to vote together with the holders of the Company’s common stock on all matters submitted to shareholders at a rate of one hundred (100) votes for each share held. Holders of Class A Convertible Preferred Stock are also entitled, at their option, to convert their shares into shares of the Company’s common stock on a 200.5 common ~~share~~shares for 1 preferred share basis. The Class A Convertible Preferred shares were valued at the trading price of the common shares into which they are convertible. As of ~~September~~December 3031, ~~2015~~2016 and December 31, ~~2014~~2015, there were 120,000 and 1,000,000 shares of Class A Convertible Preferred Stock issued and outstanding, respectively.

During the year ended December 31, ~~2014~~2016, ~~the~~holders ~~Board~~ of ~~Directors approved the incentive issuance of 50,000 shares of the Company’s~~ Class A Convertible Preferred ~~shares~~stock ~~convertible~~elected atto 20convert ~~Series~~880,000 ~~A Preferred~~ shares ~~for~~into 144,000 ~~common share (previously 1 preferred share for 1 pre-split common share) as an incentive. The issuance of such preferred~~ shares ~~was valued as stock-based compensation~~ of ~~$835 based on the fair market value of the Company’s~~ common stock ~~on the date of issuance~~.

NOTE 10 – STOCKHOLDERS’ EQUITY (CONTINUED)

Preferred Stock (Continued)

Class B Convertible Preferred Stock

The holders of the Class B Convertible Preferred Stock have no dividend rights, have the right to convert each Class B share into 10 post-split common shares and have the right to 10 votes per Class B Convertible Preferred share for all matters submitted to the holders of the Company’s common stock. As of ~~September~~December 3031, ~~2015~~2016 and December 31, ~~2014~~2015, there were 2130,000~~,000~~ shares and ~~-0-~~2,000,000 shares of Class B Convertible Preferred Stock issued and outstanding, respectively.

On July 23, 2015, the Company issued 2,000,000 shares of Class B Convertible Preferred Stock, to certain officers, directors and/or employees for services valued at $2,000,000, the value of which was based on the trading price of the common stock into which each share of preferred stock is convertible. The issuance of such preferred shares was valued as a stock subscription payable of $2,000,000 which is being amortized ratably over the vesting period to compensation expenses based on the fair market value of the Company’s preferred shares on the date of issuance. ~~Compensation expense of $882,191 was recorded during the nine months ended December 31, 2015, and the remaining compensation expense related to the unvested portion of preferred stock was $1,117,809.~~

Common Stock

Effective July 22, 2015, the Company’s common stock was reverse split on a 1 share for 20 shares basis. The accompanying consolidated financial statements reflect the reverse stock split on a retroactive basis. The Company also increased the number of authorized common shares from 4,500,000 to 150,000,000 and preferred shares from 1,000,000 to 6,000,000. No shares of common stock were issued during the years ended December 31, 2015 and 2014.

NOTE 11 – INCOME TAXES

The Company determines whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components:

		December 31, 2015		December 31, 2014
Deferred tax asset:
Net operating loss carryforwards	$	(1,172,943)	$	(1,239,519)
Valuation allowance		1,172,943		1,239,519
Net deferred tax asset	$	-	$	-

F-15

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, ~~2015~~2016 and ~~2014~~2015

~~NOTE~~Compensation 11expense ~~– INCOME~~of ~~TAXES~~$1,117,812 ~~(CONTINUED)~~and $880,191 was recorded during the years ended December 31, 2016 and 2015, respectively.

NOTE 12 – STOCKHOLDERS’ EQUITY (CONTINUED)

Class B Convertible Preferred Stock (Continued)

On May 15, 2016, the Company issued 75,500 shares of Series B Preferred Shares, valued at $75,500 to the owners of Rayco Energy, Inc. (‘Rayco”) as consideration toward the purchase of its wholly-owned subsidiary, Rayco Energy, Inc.

During the year ended December 31, 2016, holders of Class B Convertible Preferred stock elected to convert 19,455,500 shares into 1,945,000 shares of common stock.

Common Stock

NOTE 13 – INCOME TAXES

Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company’s net deferred tax assets consist of the following components:


		December 31, 2016		December 31, 2015
Deferred tax asset:
Net operating loss carryforwards	$	(1,314,939)	$	(1,172,943)
Valuation allowance		1,314,939		1,172,943
Net deferred tax asset	$	-	$	-

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income statutory tax rates to pretax income (loss) from continuing operations as follows:

		December 31, 2015		December 31, 2014
		December 31, 2016		December 31, 2015
Tax benefit at statutory rates	$	66(339,~~576~~700)	$	~~(436~~66,~~670)~~576
Change in valuation allowance		(66339,~~576~~700)		~~436~~(66,~~670~~576)
Net provision for income taxes	$	-	$	-

The Company has accumulated net operating loss carryovers of approximately $1,~~172~~314,~~943~~393 as of December 31, ~~2015~~2016 which are available to reduce future taxable income. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes may be subject to annual limitations. A change in ownership may limit the utilization of the net operating loss carry forwards in future years. The tax losses begin to expire in 2033. The fiscal years ~~2015~~2016 and ~~2014~~2015 remain open to examination by federal tax authorities and other tax jurisdictions.

~~NOTE~~SUNVALLEY 12SOLAR, ~~– CONCENTRATIONS OF RISK~~INC.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

NOTE 14 – CONCENTRATIONS OF RISK

Supplier Concentrations

The Company purchases solar panels from ~~three and~~ two manufacturers during the years ended December 31, ~~2015~~2016 and ~~2014~~2015, respectively. For the years ended December 31, ~~2015~~2016 and ~~2014~~2015, these vendors accounted for approximately 5459 percent and 6354 percent, respectively, of total inventory purchases.

Customer Concentrations

For the years ended December 31, ~~2015~~2016 and ~~2014~~2015, ~~four~~two and ~~two~~four customers, respectively, represented more than 10 percent of the Company’s sales. This translates to approximately 93 and 99 percent of the Company's annual net revenues for the years ended December 31, 2016 and 2015.

NOTE 1315 – COMMITMENTS AND CONTINGENCIES

Leases

~~The~~At December 31, ~~Company~~2016, ~~leases~~minimum anannual ~~office~~commitments, ~~under~~which ando ~~operating~~not ~~lease~~include ~~that~~common ~~expires~~are onmaintenance ~~December~~charges ~~31,~~or ~~2018. Total~~real ~~rent~~estate ~~expense~~taxes ~~amounted~~which toare ~~$44,961~~also ~~and~~required ~~$36,929~~contractual ~~for~~obligation ~~the~~under ~~fiscal~~our ~~years~~operating ~~ended~~leases, ~~December~~under ~~31,~~non-cancelable ~~2015~~leases ~~and~~were ~~2014,~~as ~~respectively.~~follows:

At December 31, 2015, minimum annual commitments, which do not include common are maintenance charges or real estate taxes which are also required contractual obligation under our operating leases, under non-cancelable leases were as follows:


		Capital Leases		Operating Leases		Totals
2017	$	-	$	61,009	$	61,009
2018		-		57,533		57,533
2019		-		1,908		1,908
2020		-		1,908		1,908
2021		-		1,749		1,749
Thereafter		-		-		-
Total minimum lease payments	$	-	$	124,107	$	124,107
Less: amount representing interest		-
Net minimum lease payments on capital leases	$	-

		Capital Leases		Operating Leases		Totals
2016	$	3,815	$	38,254	$	42,069
2017		-		39,401		39,401
2018		-		40,482		40,482
Thereafter		-		-		-
Total minimum lease payments		3,815		$ 118,137		$ 121,952
Less: amount representing interest		(278)
Net minimum lease payments on capital leases		$ 3,537

Total rent expense amounted to $54,904 and $44,961 for the fiscal years ended December 31, 2016 and 2015, respectively.

NOTE 13 – COMMITMENTS AND CONTINGENCIES (CONTINUED)

Legal Proceedings

The Company filed a contractual fraud case against one of its commercial installation customers, All Fortune Group, LLC (“All Fortune”), during September 2013 for causes of action such as breach of contract, common counts and fraudulent transfer. The reliefs claimed by the Company mainly are monetary damages and interest including punitive dames, costs of suits for no less than 1.2 million. As a result of the filing by the Company, All Fortune filed a lawsuit against the Company for causes of action which are breach of contract, negligent misrepresentation, intentional misrepresentation and fraud in All Fortune’s ~~compliant~~complaint. The reliefs claimed by All Fortune are mainly monetary damages including punitive damages, costs of suit and other recoverable fees and damages. A settlement was reached between the Company and All Fortune on October 7, 2015. A money judgement in the amount of $874,689 to the Company. All Fortune will pay $380,000 within 20 days after All Fortune’s receipt of the Company’s insurer payment for $215,000. All Fortune agrees to pay the Company the remaining balance owed of $494,689 in 30 monthly payments at $16,453 and the 31st monthly payment of $1,100. The Company recorded $874,689 as collection of bad debt in the operating expenses in the 4th quarter of 2015.

~~$494,689~~Sunvalley infiled 30a ~~monthly~~complaint ~~payments~~on atFebruary ~~$16~~21,~~453~~ ~~and~~2014 ~~the~~against ~~31st~~John ~~monthly~~Chiang ~~payment~~for two causes of ~~$1,100~~action which are breach of contract and common counts. The ~~Company~~reliefs ~~recorded~~prayed by Sunvalley are monetary damages and interests including attorneys’ fees and costs of suits for no less than $~~874~~26,~~689~~504. asChiang ~~collection~~filed ofan ~~bad~~answer ~~debt~~to incomplaint ~~the~~on ~~operating~~March ~~expenses~~31, in2014. ~~the~~This ~~4th~~case ~~quarter~~was ofconsolidated ~~2015~~with Sunvalley v. All Fourtune, et al., which was later consolidated with case All

SUNVALLEY SOLAR, INC.

Notes to Consolidated Financial Statements

December 31, 2016 and 2015

Fortune v. Sunvalley. Sunvalley v. John Chiang was dismissed on December 18, 2015 due to dismissal of leading case All Fortune v. Sunvalley.

The Company filed a lawsuit against China Electric Equipment Group Corporation (CEEG) on January 17, 2013 for breach of contract, intentional and negligent misrepresentation and violation of California business & professions code. The Company requested CEEG to compensate the damages and economic losses in the amount of no less than $2,000,000.

CEEG (Shanghai) Solar Science & Technology Co., LTD., (parent of CEEG), here collectively called as CEEG, filed a lawsuit in USA against the Company on September 18, 2015 to enforce the Foreign Arbitration Award issued by the Shanghai International Economic and Trade Arbitration Commission (SIETAC) in favor of CEEG and against the Company, on December 10, 2013. CEEG requested damages of $1,000,000 representing the principal amount awarded to CEEG under the Arbitral Award in China plus interest, currency exchange loss and other professional fees in the amount approximately $450,000. On February 5, 2016, the Central District Court of California granted CEEG’s motion to confirm the Foreign Arbitration Award against Sunvalley. Sunvalley’s attorney is filing an appeal on this case.

~~NOTE~~The 14Company –filed ~~SUBSEQUENT~~a ~~EVENTS~~contractual dispute case against one of its suppliers, Baoding Tianwei Solarfilms So. Ltd on September 20, 2013 for causes of action which are breach of contract, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose and negligence. The reliefs prayed by Sunvalley are monetary damages and interests including punitive damages, costs of suits, as well as other and further relief court deems just and proper. The damage sought is no less than $8 million dollars. Baoding Tianwei Baobian Electric Co. is added in as a codefendant and is undergoing Hague Convention service. On March 9, 2017, Sunvalley Solar voluntarily dismissed the complaint against Baoding Tianwei Baobian Electric Co., Ltd. Sunvalley has been preparing the default judgement package against Boading Tianwei Solarfilms So. Ltd. The package will be submitted with the court on or before April 20, 2017.

In ~~accordance~~connection with ~~ASC~~the ~~855~~purchase of Rayco Enterprises, Inc., the Company ~~management~~agreed ~~reviewed~~to ~~all~~pay ~~material~~$350,000 ~~events~~as ~~through~~part of the ~~date~~purchase price. The Company issued a Note Payable for $350,000, bearing interest at 6%. The Note is contingent upon the operations of ~~this~~Rayco ~~report~~netting a profit in excess of $10,000 for the period May 16, 2016 through December 31, 2016. If the condition is met, the note and ~~there~~interest are nopayable ~~material~~monthly ~~subsequent~~on ~~events~~the tofirst ~~report.~~day of each month

~~F-17~~NOTE 16 – SUBSEQUENT EVENTS

Subsequent to December 31, 2016, the Company issued 500,000 shares of Series A Preferred Stock, 30,000 shares of Series B Preferred Stock, and 700,000 shares of common stock to various individuals for services provided.

Subsequent to December 31, 2016, the Company had conversions of preferred A into common stock. There were 120,000 shares of Preferred A stock converted into 6,000 shares of common stock.

Subsequent to December 31, 2016, the Company had conversion of preferred B into common stock. There were 70,000 shares of Preferred B stock converted into 700,000 shares of common stock. In accordance with ASC 855, Company management reviewed all material events through the date of this report and there are no material subsequent events to report.

Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure

No events occurred requiring disclosure under Item 307 and 308 of Regulation S-K during the fiscal year ending December 31, ~~2015~~2016.

Item 9A. Controls and Procedures

As required by Rule 13a-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal year ended December 31, ~~2015~~2016. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our company’s reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Based upon that evaluation, including our Chief Executive Officer and Chief Financial Officer, we have concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this annual report.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934). Management has assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2015~~2016 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. As a result of this assessment, management concluded that, as of December 31, ~~2015~~2016, our internal control over financial reporting was not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

We plan to take steps to enhance and improve the design of our internal control over financial reporting. During the period covered by this annual report on Form 10-K, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we hope to implement the following changes during our fiscal year ending December 31, ~~2016~~2017: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out in (i) and (ii) are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

165

Item 9B. Other Information

None

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The following information sets forth the names, ages, and positions of our current directors and executive officers as of March 30, 2016.

Name

Age

Office(s) held

Zhijian James Zhang

President, CEO, Director

Mandy Chung

Chief Financial Officer, Secretary, Treasurer

Hangbo (Henry) Yu

Chief Technology Officer

Shirley Liao

Director of Administration

William Hsien

CEO & Director of Sunvalley Solar Tech, Inc.

~~Robert~~Mehmet ~~Dyskant~~Cercioglu

8933

~~Director~~General Manager, Sunvalley Solar Tech, Inc.

Ricky Chu

General Manager, Sunvalley Solar Energy, Inc.

Set forth below is a brief description of the background and business experience of each of our current executive officers and directors.

Zhijian (James) Zhang – Dr. Zhang is our President, CEO, and a member of our board of directors. He has held these positions since January of 2007. Dr. Zhang graduated from Tsinghua University with a Ph.D. in opto-electronics. He has over 15 years of experience in opto-electronics and the semiconductor industry. From 2006 to 2008, he held the position of senior manager at Motorola, a leading telecommunication equipment provider. From 2004 to 2006, he held the position of Director at ZTE San Diego, also a leading telecommunication equipment provider.

Dr. Zhang has a strong reputation as an executive in the opto-electronics/semiconductor industry, including the solar energy field. Dr. Zhang has quality leadership experience in business operations, especially in product and program development, product development procedures, and milestone setting and enforcement, and R&D team building.

Mandy Chung – Ms. Chung is our Chief Financial Officer, Secretary, and Treasurer. She has held these positions since August of 2008. Ms. Chung co-founded Chung & Chung Accountancy Corporation, CPAs (CCAC) in 2004 and she is licensed as a Certified Public Accountant in California. Ms. Chung is one of the partners in CCAC and she provides audit, review, compilation, consulting, tax services and financial planning to various clients. Ms. Chung has been working for CCAC for more than the past ten years since its establishment.

Ms. Chung graduated from Texas A&M University (College Station) with a Master’s degree in Finance and a Bachelor’s degree in Accounting. Ms. Chung has over 15 years of public accounting experience in providing auditing, accounting, business consulting and tax services to a wide range of industries. She has extensive experience in performing reviews and audits for various organizations, including publicly reporting companies. In addition, Ms. Chung helped the former founder of Dietrich Coffee to prepare a ten-year business and financial plan to establish a new series of coffee stores. Ms. Chung also conducted various incurred costs audits for MGM Mirage, Los Angeles County Metropolitan Transportation Authority and Caltrans. On a daily basis, Ms. Chung is responsible for the accounting operations and record keeping of Sunvalley Solar Inc. Her duties include customer deposits and check payments recording, accounts receivable, accounts payable and inventory recording, customers’ credit evaluation, employees hiring and termination issues, sales tax filing, payroll tax filing, monthly bank ~~reconciliation, preparing financial statements, performing preparation for annual audit, quarterly review and income~~

176

reconciliation, preparing financial statements, performing preparation for annual audit, quarterly review and income tax return filing. Approximately 50% of Ms.Chung’s time is used to perform her job as the CFO of Sunvalley Solar Inc.

Hangbo (Henry) Yu – Mr. Yu is our General Manager and a member of our Board of Directors. He has served in these positions since January of 2007 and was the founder of our business. From 2004 through 2006, Mr. Yu was the General Manager and a board member of International Transportation Corp., Canada. He graduated from Beijing University of Aeronautics and Astronautics with a Bachelor’s degree in Structure Design. He has run several startup companies in China and Canada, respectively. Over the past 12 months, Mr. Yu has been working to establish relationships with major solar power equipment manufacturers in China. Mr. Yu is an experienced business and operations manager. He has over 20 years of experience in import-export, logistics, international transportation, solar business operation and solar power system project planning and field managing.

Shirley Liao – Mrs. Liao is our Director of Administration. She has served Sunvalley Solar, Inc. in this position since January of 2007. She graduated from Guangxi University in Art and Financial Management. Before moving to the United States, Shirley Liao worked in an international trading company (Audio & Video Company of Guangxi) as an executive management member. While working there, Mrs. Liao acquired experience in international trade as well as general sales management. From 1997 through 1998, she worked at Trust Bank as a Loan Officer. She has also worked at Coldwell Banker George Realty since 2000 as a real estate broker. Through the real estate sales business, she established good relationships with local societies, business owners, banks, builders and government agencies. Her excellent market and sales experiences as well as connections to customers bring an exceptional value to the company. Currently, Mrs. Liao does not spend working hours at Coldwell Banker George Realty. She is a full time employee devoting forty hours per week to Sunvalley Solar, Inc.

William Hsien – Mr. Hsien graduated from University of California Berkeley with Bachelor of Art in Architecture. He has worked in design and construction over 15 years. With the architectural and design-build construction background, Mr. Hsien is able to run a very efficient design and construction team at Sunvalley Solar Inc. Providing turn-key solution and project management in the solar industry. Ever since taking over the operation at Sunvalley Solar Tech Inc., he was able to build a more efficient team and meet company financial projection in 2015.

Mr. Hsien is in charge for the engineering department and construction at Sunvalley over the past 8 years, with the in-house engineering design team, and construction crew, Sunvalley is famous for fast turnaround time and quality craftsmanship and installation of the solar system.

~~Robert~~Mehmet ~~Dyskant,~~Cercioglu ~~age~~– ~~89,~~Mr ~~retired~~Cercioglu ~~from~~currently ~~the~~serves ~~Dyskant~~as ~~Company,~~General aManager ~~company~~of inSunvalley ~~which~~Solar heTech ~~was~~Inc. ~~the~~Mehmet ~~Chief~~is ~~Executive~~a ~~Officer~~proven ~~and~~expert ~~owner~~in ~~for~~the ~~over~~solar 20industry ~~years. The~~with ~~Dyskant~~experience ~~Company~~working ~~was~~on ~~involved~~some inof the ~~import,~~largest ~~export~~Commercial and ~~wholesale~~Ag ~~business~~projects in California. ~~Prior~~ toHis ~~establishing~~core ~~the~~skills ~~Dyskant~~include ~~Company,~~solar ~~Mr.~~PV ~~Dyskant~~project ~~served~~development, asproject afinance, ~~senior~~Net ~~sales~~Energy ~~manager~~Metering inAggregation, asystem ~~precious~~design, ~~jewelry~~interconnection, ~~business~~utility ~~for~~policies ~~over~~and 10market ~~years~~strategies.

Mehmet has been with Sunvalley Solar since 2010 when he was hired as Sales Engineer to manage the sales and marketing of commercial grid-tied solar power systems. Transitioning into the role of General Manager in 2016, Mehmet has led the company’s expansion in new markets and development of a number of new service offerings. Mehmet has more than 8-years of solar photovoltaic operations and business development experience.

Mehmet holds a MS in Electrical Engineering from Kocaeli University and General Business Studies degree from University of California Los Angeles (UCLA).

Ricky Chu – Mr. Chu is the General Manager of Sunvalley Solar Energy, Inc.

Ricky Chu leads the Nor Cal operations specializing in solar and led lighting projects. Mr. Chu's experience working with homeowners associations [HOA] and non-profit entities has allowed for Sunvalley to become a market leader in the HOA industry. Mr. Chu currently works with prospective communities on how to accurately size their energy projects for current and future usage. As a pioneer in integrating demand-charge measures with solar pv, Sunvalley

currently has the ability to design & engineer the fastest payback energy projects in the multi-family and commercial market.

Over the last 8 years, Mr. Chu has designed and implemented solar and demand reduction projects on many of Nor Cal's largest multi-family developments. Mr. Chu holds a BA in International Relations from University California-Davis. In his free time, he enjoys spending time outdoors in the California sun.

Term of Office

Our Directors are appointed for a one year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.

Family Relationships

There are no family relationships between or among the directors, executive officers or persons nominated or chosen by the Company to become directors or executive officers other than Shirley Liao and Hangbo (Henry) Yu who are wife and husband.

Involvement in Certain Legal Proceedings

To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Committees of the Board

We do not currently have a compensation committee, executive committee, or stock plan committee.

Audit Committee

We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. Our Board of Directors, which performs the functions of an audit committee, does not have a member who would qualify as an “audit committee financial expert” within the definition of Item 407(d)(5)(ii) of Regulation S-K. Mandy Chung, our CFO, Secretary, and Treasurer, attends all meetings of the Board of Directors, including those meetings at which the board is performing those functions which would generally be performed by an audit committee. Mrs. Chung is licensed as a Certified Public Accountant in California. Mrs. Chung has over 15 years of public accounting experience in providing auditing, accounting, business consulting and tax services to a wide range of industries. She has extensive experience in performing reviews and audits for various organizations including publicly reporting companies. She also had prior audit experience in the filing process for a start-up company that filed with the SEC to become a publicly reporting company. We believe that Mrs. Chung’s accounting expertise and audit experience allows her to provide satisfactory counsel to the Board and that, at our current size and stage of development, the addition of a special audit committee financial expert to the Board is not necessary.

Certified Public Accountant in California. Mrs. Chung has over 15 years of public accounting experience in providing auditing, accounting, business consulting and tax services to a wide range of industries. She has extensive experience in performing reviews and audits for various organizations including publicly reporting companies. She also had prior audit experience in the filing process for a start-up company that filed with the SEC to become a publicly reporting company. We believe that Mrs. Chung’s accounting expertise and audit experience allows her to provide satisfactory counsel to the Board and that, at our current size and stage of development, the addition of a special audit committee financial expert to the Board is not necessary.

Nomination Committee

Our Board of Directors does not maintain a nominating committee. As a result, no written charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating committee.

When evaluating director nominees, our directors consider the following factors:

-The appropriate size of our Board of Directors;

-Our needs with respect to the particular talents and experience of our directors;

-The knowledge, skills and experience of nominees, including experience in finance, administration or

public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;

already possessed by other members of the Board;

-Experience in political affairs;

-Experience with accounting rules and practices; and

-The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided

by new Board members.

Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Board will also consider candidates with appropriate non-business backgrounds.

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not typically consider shareholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our best interests.

Code of Ethics

As of December 31, 2015, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

Item 11. Executive Compensation

Compensation Discussion and Analysis

We presently do not have employment or compensation agreements with any of our named executive officers and have not established any overall system of executive compensation or any fixed policies regarding compensation of executive officers. Currently, our executive officers receive fixed cash compensation as set forth below.

Summary Compensation Table

The table below summarizes all compensation awarded to, earned by, or paid to our former or current executive officers for the fiscal years ended December 31, ~~2015~~2016 and ~~2014~~2015.

SUMMARY COMPENSATION TABLE
Name and principal position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Zhijian (James) Zhang, President, CEO, and Director	~~2015~~2016 ~~2014~~2015	~~115~~117,~~939~~600 ~~106~~115,~~800~~939	~~29,400~~ -0- 29,400	698,630 551,370 ~~835~~	-0- -0-	-0- -0-	-0- -0-	-0- -0-	~~696~~816,~~709~~230 ~~107~~696,~~635~~709
Mandy Chung, CFO, Secretary, and Treasurer	~~2015~~2016 ~~2014~~2015	5354,~~769~~000 5253,~~500~~769	~~9,720~~ -0- 9,720	39,123 30,877 ~~-0-~~	-0- -0-	-0- -0-	-0- -0-	-0- -0-	9493,~~366~~123 5294,~~500~~336
Hangbo (Henry) Yu, General Manager and Director	~~2015~~2016 ~~2014~~2015	~~113~~108,~~631~~000 ~~100~~113,~~800~~631	~~15,000~~ -0- 15,000	181,644 143,356 ~~-0-~~	-0- -0-	-0- -0-	-0- -0-	-0- -0-	~~271~~289,~~987~~644 ~~100~~271,~~800~~987
William Hsien, CEO and Director of Sunvalley Solar Tech, Inc.	~~2015~~2016 ~~2014~~2015	~~110~~120,~~469~~000 84110,~~700~~469	~~24,000~~ -0- 24,000	39,123 30,877 ~~-0-~~	-0- -0-	-0- -0-	-0- -0-	-0- -0-	~~165~~159,~~346~~123 84165,~~700~~346
Shirley Liao, Director of Administration	~~2015~~2016 ~~2014~~2015	7375,~~500~~000 6773,~~600~~500	~~11,250~~ -0- 11,250	39,123 30,877 ~~-0-~~	-0- -0-	-0- -0-	-0- -0-	-0- -0-	~~115~~114,~~627~~123 67115,~~600~~627
Mehmet Cercioglu, General Manager, Sunvalley Solar Tech, Inc.	2016 2015	96,000 174,985	-0- -0-	30,740 19,200	-0- -0-	-0- -0-	-0- -0-	-0- -0-	126,760 194,185
Ricky Chu, General Manager, Sunvalley Solar Energy, Inc.	2016 2015	44,000 -0-	$7,093 -0-		-0- -0-	-0- -0-	-0- -0-	-0- -0-	51,093 -0-

Narrative Disclosure to the Summary Compensation Table

Currently, our executive officers receive fixed cash compensation as set forth in the Summary Compensation Table. We presently do not have employment or compensation agreements with any of our named executive officers and have not established any overall system of executive compensation or any fixed policies regarding compensation of executive officers.

On ~~July~~March 2317, ~~2015~~2017, we issued ~~2,000,000~~ shares of Class B Convertible Preferred Stock to certain officers, directors, and others in exchange for services valued at $2,000,000. The holders of the Class B Preferred Stock have no dividend rights, have the right to convert each Class B share into 10 common ~~shares,~~ and ~~have~~preferred ~~the~~stock ~~right~~ to 10certain ~~votes~~executive ~~per~~officers ~~Class B share for all matters submitted to the holders of the Company’s common stock. These shares were issued~~ as ~~incentive~~additional compensation ~~for~~as services rendered or to be rendered by certain officers, directors, and key employees of the Company, and the issuance to each individual is governed by a Restricted Stock Award Agreement. Under the relevant award agreements, the shares issued are subject to forfeiture in event of the recipient’s resignation or dismissal within (1) year of issuance. Prior to vesting, the shares issued may not be transferred or encumbered.follows:

During the year ended December 31, 2014, the Board of Directors approved the incentive issuance of 50,000 shares of the Company’s Class A Convertible Preferred shares as an incentive to the Company’s CEO, Zhijian (James) Zhang. The issuance of such preferred shares was valued as stock-based compensation of $835 based on the fair market value of the Company’s common stock on October 10, 2014.


Executive Officer Name	Share Class	Number of Shares	Vesting period
Zhijian (James) Zhang	Class A Preferred	500,000	No Restricted Period
Hangbo (Henry) Yu	Common	200,000	One Year
Waiman Mandy Chung	Common	120,000	One Year
Shirley Liao	Common	60,000	One Year
William Hsien	Common	150,000	One Year
Tahir Cercioglu	Common	100,000	One Year
Ricky Chu	Common	70,000	One Year

During the one-year vesting period, the common stock awarded may not be sold, transferred, or encumbered, and is subject to forfeiture in the event the executive terminates their relationship with the company.

On July 23, 2015, we issued 2,000,000 shares of Class B Convertible Preferred Stock to certain officers, directors, and others in exchange for services valued at $2,000,000. The holders of the Class B Preferred Stock have no dividend rights, have the right to convert each Class B share into 10 common shares, and have the right to 10 votes per Class B share for all matters submitted to the holders of the Company’s common stock. These shares were issued as incentive compensation for services rendered or to be rendered by certain officers, directors, and key employees of the Company, and the issuance to each individual is governed by a Restricted Stock Award Agreement. These shares vested under the relevant award agreements on July 23, 2016.

Stock Option Grants

We have not granted any stock options to the executive officers or directors since our inception.

Outstanding Equity Awards at Fiscal Year-End

The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, ~~2015~~2016.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS						STOCK AWARDS
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number Of Shares or Shares of Stock That Have Not Vested (#)	Market Value of Shares or Shares of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested (#)
Zhijian (James) Zhang, President, CEO, and Director	-	-	-	-	-	1,250,000	$0	-	-
Mandy Chung, CFO, Secretary, and Treasurer	-	-	-	-	-	70,000	$0	-	-
Hangbo (Henry) Yu, General Manager and Director	-	-	-	-	-	325,000	$0	-	-
William Hsien, CEO, Sunvalley Solar Tech, Inc.	-	-	-	-	-	70,000	$0	-	-
Shirley Liao, Director of Administration	-	-	-	-	-	70,000	$0	-	-


OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
OPTION AWARDS						STOCK AWARDS
Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Number of Securities Underlying Unexercised Options (#) Unexercisable	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number Of Shares or Shares of Stock That Have Not Vested (#)	Market Value of Shares or Shares of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Shares or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Shares or Other Rights That Have Not Vested (#)
Zhijian (James) Zhang, President, CEO, and Director	-	-	-	-	-	-	-	-	-
Mandy Chung, CFO, Secretary, and Treasurer	-	-	-	-	-	-	-	-	-
Hangbo (Henry) Yu, General Manager and Director	-	-	-	-	-	-	-	-	-
William Hsien, CEO, Sunvalley Solar Tech, Inc.	-	-	-	-	-	-	-	-	-
Shirley Liao, Director of Administration	-	-	-	-	-	-	-	-	-

Director Compensation

The table below summarizes all compensation of our directors for our last completed fiscal year.

DIRECTOR COMPENSATION
Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Zhijian (James) Zhang	-	-	-	-	-	-	-
Hangbo (Henry) Yu	-	-	-	-	-	-	-
Robert Dyskant	1,200	-	-0	-	-	-	1,200


DIRECTOR COMPENSATION
Name	Fees Earned or Paid in Cash ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Non-Qualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Zhijian (James) Zhang	-	-	-	-	-	-	-
Hangbo (Henry) Yu	-	-	-	-	-	-	-
Robert Dyskant, former director	-	-	-	-	-	-	-

Narrative Disclosure to the Director Compensation Table

We provided compensation to directors for their service as directors listed as above in ~~2015~~2016.

Employment Agreements with Current Management

We do not currently have any employment agreements in place with any of our executive officers.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth the beneficial ownership of our capital stock by each executive officer and director, by each person known by us to beneficially own more than 5% of any class of stock and by the executive officers and directors as a group. Percentage figures for beneficial ownership of common stock are based upon: (i) 424,~~358~~557,~~176~~394 shares of common stock outstanding; (ii) 1500,000~~,000~~ shares of Class A Convertible Preferred Stock outstanding, which are convertible to a total of 50500,000 of common stock; and (iii) 290,000~~,000~~ shares of Series B Convertible Preferred Stock outstanding, which are convertible to 20900,000~~,000~~ shares of common stock. Total common stock on a fully diluted basis is therefore 2426,~~408~~663,176 shares. Percentage figures for voting power of common stock are based upon: (i) 425,~~358~~263,176 shares of common stock outstanding with one vote per share; (ii) 1500,000~~,000~~ shares of Class A Convertible Preferred Stock outstanding, with 100 votes per share; and (iii) 290,000~~,000~~ shares of Series B Convertible Preferred Stock outstanding, with 10 votes per share. Total shareholder voting power is therefore ~~124~~76,~~358~~163,176 votes.

Common Stock
Name and address of beneficial owner (1)		Amount of beneficial ownership		Percent of beneficial ownership		Percent of voting power
Current Executive Officers & Directors:
Zhijian (James) Zhang 12161 Salix Way San Diego CA 92129		12,~~524~~798,~~508~~507(2)		5148.3100%		3681.5980%
Hangbo (Henry) Yu 3309 S. Gauntlet Dr. West Covina, CA 91792		3,~~268~~468,356~~(3)~~		13.3901%		214.9255%
Robert Dyskant 339 Calver Park Beaumont Park CA 9223		0		0%		0%
Shirley Liao 3309 S Gauntlet Dr. West Covina, CA 91792		764,398		2.87%		1.00%
Shirley Liao 3309 S Gauntlet Dr. West Covina, CA 91792		704,398(4)		2.89%		5.69%
Mandy Chung 1059 Moreno Way Placentia, CA 92870		862,960		3.24%		1.13%
Mandy Chung 1059 Moreno Way Placentia, CA 92870		706,690(5)		2.90%		10.21%
William Hsien 2430 Hawkwood Dr. Chino Hills, CA 91709		853,500		3.20%		1.12%
William Hsien 2430 Hawkwood Dr. Chino Hills, CA 91709		703,500(6)		2.88%		6.19%
Mehmet Cercioglu 606 N. Daisy Ave. Pasadena, CA 91107		653,500		2.45		0.86%
Total of All Current Directors and Officers:	17,803,952		73.37%		80.60%
Ricky Chu 1280 Carmel Terrace Los Altos, CA 94024		725,000		2.72		0.95%
Other > 5% Beneficial Owners:
Total of All Current Directors and Officers:		20,126,221		75.49%		91.41%
Mehmet Cercioglu 123 S. Figueroa St. Los Angeles, CA 90012	553,500(7)		2.27%		6.07%
Other > 5% Beneficial Owners:
Anyork Lee 1050 Yorba Linda Blvd. Placentia, CA 92870	508,067(8)		2.08%		8.45%
None

(1)	As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.
(2)	Includes 812,~~008 shares of common stock; 330~~298,~~000~~507 shares of ~~Class A Convertible Preferred Stock, which are convertible into 16,500 shares of~~ common stock and ~~vote 100:1; and 1~~500,~~250,~~000 shares of Class BA Convertible Preferred Stock, which are convertible tointo ~~12,~~500,000 shares of common stock and vote 10100:1.
(3)	Includes 6,356 shares of common stock; 240,000 shares of Class A Convertible Preferred Stock, which are convertible into 12,000 shares of common stock and vote 100:1; and 325,000 shares of Class B Convertible Preferred Stock, which are convertible to 3,250,000 shares of common stock and vote 10:1.
Class A Convertible Preferred Stock
(4)	Includes 898 shares of common stock; 70,000 shares of Class A Convertible Preferred Stock, which are convertible into 3,500 shares of common stock and vote 100:1; and 70,000 shares of Class B Convertible Preferred Stock, which are convertible into 700,000 shares of common stock and vote 10:1.
Name and address of beneficial owner		Amount of beneficial ownership	Percent of beneficial ownership
(5)	Includes 690 shares of common stock; 120,000 shares of Class A Convertible Preferred Stock, which are convertible into 6,000 shares of common stock and vote 100:1; and 700,000 shares of Class B Convertible Preferred Stock, which are convertible into 700,000 shares of common stock and vote 10:1.
Zhijian (James) Zhang 12161 Salix Way San Diego CA 92129		500,000	100%
(6)	Consists of 70,000 shares of Class A Convertible Preferred Stock, which are convertible to 3,500 shares of common stock and vote 100:1; and 70,000 shares of Class B Convertible Preferred Stock, which are convertible to 700,000 shares of common stock and vote 10:1.
Total of All Current Directors and Officers:		500,000	100%
(7)	Consists of 70,000 shares of Class A Convertible Preferred Stock, which are convertible to 3,500 shares of common stock and vote 100:1; and 55,000 shares of Class B Convertible Preferred Stock, which are convertible to 550,000 shares of common stock and vote 10:1.
Other > 5% Beneficial Owners:
(8)	Consists of 3,067 shares of common stock; 100,000 shares of Class A Convertible Preferred Stock, which are convertible to 5,000 shares of common stock and vote 100:1; and 50,000 shares of Class B Convertible Preferred Stock, which are convertible to 500,000 shares of common stock and vote 10:1.
None

Class A Convertible Preferred Stock
Class B Convertible Preferred Stock
Name and address of beneficial owner	Amount of beneficial ownership	~~Amount~~Percent of beneficial ownership		~~Percent of beneficial ownership~~
Zhijian (James) Zhang 12161 Salix Way San Diego CA 92129		330,000		33%
Total of All Current Directors and Officers:	0	0%
Hangbo (Henry) Yu 3309 S. Gauntlet Dr. West Covina, CA 91792		240,000		24%
Other > 5% Beneficial Owners:
Robert Dyskant 339 Calver Park Beaumont Park CA 9223		0		0%
Gordon Jones 1393 N. Bennett Cir. Farmington, UT 84025	30,000	33.33%
Shirley Liao 3309 S Gauntlet Dr. West Covina, CA 91792		70,000		7%
Fang Xu 11239 Vandeman Way San Diego, CA 92131	60,000	66.67%
Mandy Chung 1059 Moreno Way Placentia, CA 92870		120,000		12%
William Hsien 2430 Hawkwood Dr. Chino Hills, CA 91709		70,000		7%
Total of All Current Directors and Officers:	830,000		83%
Other > 5% Beneficial Owners:
Anyork Lee 1050 Yorba Linda Blvd. Placentia, CA 92870	100,000		10%

Class B Convertible Preferred Stock
Name and address of beneficial owner		Amount of beneficial ownership		Percent of beneficial ownership
Zhijian (James) Zhang 12161 Salix Way San Diego CA 92129		1,250,000		62.50%
Hangbo (Henry) Yu 3309 S. Gauntlet Dr. West Covina, CA 91792		325,000		16.25%
Robert Dyskant 339 Calver Park Beaumont Park CA 9223		0		0%
Shirley Liao 3309 S Gauntlet Dr. West Covina, CA 91792		70,000		3.50%
Mandy Chung 1059 Moreno Way Placentia, CA 92870		70,000		3.50%
William Hsien 2430 Hawkwood Dr. Chino Hills, CA 91709		70,000		3.50%
Total of All Current Directors and Officers:	1,785,000		89.25%
Other > 5% Beneficial Owners:
None.

Except as set forth below, none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation or in any presently proposed transaction which, in either case, has or will materially affect us:

On October 10, 2014, the Board of Directors of the Company approved conditional common stock repurchases from certain officers, directors and/or employees of the Company named below at $8 per common share:


Name	Number of Shares		Cash Repurchase Price
Zhijian Zhang	46,200	$	369,600
Hangbo Yu	41,200	$	329,600
Waiman Mandy Chung	6,250	$	50,000
Shirley Liao	5,000	$	40,000
Anyork Lee	1,900	$	15,200
Thomas L Louie	1,250	$	10,000
Dan Shi	2,556	$	20,448

The Company’s repurchase of the shares described above is conditioned upon the following events: (a) the completion of an acquisition of, or merger with, another company that is approved by the Company’s Board of Directors (the “Future Business Transaction”); and (b) the completion by the Company of at least $900,000 in funding on terms which will have been approved by the Company’s Board of Directors.

The Company has or will enter into a Stock Purchase Agreement with each selling shareholder consistent with the terms described above. Payments for these shares will be made within two (2) months after the Future Business Transaction is completed and the funding has been received in the Company’s bank account, provided that the Future Business Transaction and the funding is received by the Company on or before September 1, 2015. If the Future Business Transaction is not completed and the transaction funding is not in the Company’s account on or before September 1st, 2015, the stock buyback may be terminated by Board of Directors, in its sole discretion, and the common stock shares will not be purchased from the employees named above.

The stock repurchase transactions are at a per share price which is substantially higher than the existing market price for the Company’s shares of common stock. The transactions are intended to provide an incentive to the Company’s executives and key employees for their loyalty and long term employment. None of the conditions discussed above have been met through the current filing date.

During the year ended December 31, 2014, the Board of Directors approved the incentive issuance of 50,000 shares of the Company’s Class A Convertible Preferred shares as an incentive. The issuance of such preferred shares was valued as stock-based compensation of $835 based on the fair market value of the Company’s common stock on October 10, 2014.

On July 23, 2015, the Company issued 2,000,000 shares of Class B Convertible Preferred Stock, to certain officers, directors and/or employees for services valued at $2,000,000, the value of which was based on the trading price of the common stock into which each share of preferred stock is convertible. The issuance of such preferred shares was valued as a stock subscription payable of $2,000,000 which is being amortized ratably over the vesting period to compensation expenses based on the fair market value of the Company’s preferred shares on the date of issuance. Compensation expense of $882,191 was recorded during the period ended December 31, 2015, and the remaining compensation expense related to the unvested portion of preferred stock was $1,117,~~809~~812.

Effective March 17, 2017, the Company issued 500,000 shares of Class A Convertible Preferred Stock, 30,000 shares of Class B Convertible Preferred Stock, and 700,000 shares of common stock as compensation to certain officers, directors, and employees for services rendered. The issuances to executive officers are summarized under Item 11, above. The common stock issued is subject to a one-year vesting period.

Director Independence

We are not a “listed issuer” within the meaning of Item 407 of Regulation S-K and there are no applicable listing standards for determining the independence of our directors. Applying the definition of independence set forth in Rule 4200(a)(15) of The Nasdaq Stock Market, Inc., we do not believe that we currently have any independent directors~~, other than Robert Dyskant~~.

Item 14. Principal Accountant Fees and Services

The following table presents the aggregate fees billed for each of the last two fiscal years by the Company’s independent registered public accounting firm, Sadler, Gibb & Associates, LLC, in connection with the audit of the Company’s consolidated financial statements and other professional services rendered.

Year Ended:	Audit Services	Audit Related Fees	Tax Fees	Other Fees
December 31, 2016	$85,900	$-0-	$-0-	$-0-
December 31, 2015	$35,000	$-0-	$-0-	$-0-
December 31, 2014	$35,000	$-0-	$-0-	$-0-

Audit fees represent the professional services rendered for the audit of the Company’s annual consolidated financial statements and the review of the Company’s consolidated financial statements included in quarterly reports, along with services normally provided by the accounting firm in connection with statutory and regulatory filings or other engagements. Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements that are not reported under audit fees.

Tax fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services provided by the accounting firm, other than the services reported for the other categories.

PART IV

Item 15. Exhibits, Financial Statements Schedules

(a) Financial Statements and Schedules

The following financial statements and schedules listed below are included in this Form 10-K.

Financial Statements (See Item 8)


(b)	Exhibits

Exhibit Number	Description
3.1	Amended and Restated Articles of Incorporation (5)
3.2	Certificate of Designation for Class A Convertible Preferred Stock(4)
3.3	Certificate of Designation for Class B Convertible Preferred Stock(5)
3.4	Bylaws (1)
10.1	Premises Lease dated December 1, 2014(3)
10.2	Distribution Contract – TianWei SolarFilms Co. (2)
10.3	Securities Purchase Agreement for Rayco Energy, Inc.(6)
31.1*	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of 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**	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 formatted in Extensible Business Reporting Language (XBRL).
	101.INS	XBRL Instance Document
	101.PRE	XBRL Taxonomy Extension Presentation Linkbase
	101.LAB	XBRL Taxonomy Extension Label Linkbase
	101.DEF	XBRL Taxonomy Extension Definition Linkbase
	101.CAL	XBRL Taxonomy Extension Calculation Linkbase
	101.SCH	XBRL Taxonomy Extension Schema

(1)	Incorporated by reference to Annual Report on Form 10-K filed on March 31, 2011.
(2)	Incorporated by reference to Annual Report on Form 10-K/A filed on May 12, 2011.
(3)	Incorporated by reference to Annual Report on Form 10-K filed April 15, 2015.
(4)	Incorporated by reference to Current Report on Form 8-K filed on September 5, 2012.
(5)	Incorporated by reference to Current Report on Form 8-K filed July 24, 2015
(5) (6)	Incorporated by reference to Current Report on Form 8-K filed July 24, 2015 Incorporated by reference to Quarterly Report on Form 10-Q filed May 23, 2016.
**	Provided herewith

**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

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

Sunvalley Solar, Inc.

By: /s/ Zhijiang (James) Zhang Zhijiang (James) Zhang President, Chief Executive Officer, and Director April 1317, ~~2016~~ 2017

In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

By: /s/ Zhijiang (James) Zhang Zhijiang (James) Zhang President, Chief Executive Officer, and Director April 1317, ~~2016~~2017

By: /s/ Mandy Chung Mandy Chung Chief Financial Officer, Principal Accounting

Officer, Secretary, and Treasurer April 1317, ~~2016~~2017

By: /s/ Hangbo (Henry) Yu

Hangbo (Henry) Yu

General Manager, Director April 1317, ~~2016~~2017

~~By: Robert Dyskant~~10

Robert Dyskant

Director April 13, 2016

Filing Compare · SUNVALLEY SOLAR, INC.