UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[X]

                     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period Ended September 30, 2015


[  ]

               TRANSITION REPORT PURSUANT TO 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

(I.R.S. Employer

incorporation or organization)

            Identification No.)


398 Lemon Creek Dr. Suite A, Walnut CA 91789

(Address of principal executive offices)                                    (Zip Code)


(909) 598-0618

(Registrant s telephone number)


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


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 Exchange Act). Yes [  ] No [ X ]

APPLICABLE ONLY TO CORPORATE ISSUERS


Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

      Class

      Outstanding as of November 10, 2015

Common Stock, $0.001 par value

4,358,176 shares



1


TABLE OF CONTENTS


Heading

Page  


PART  I FINANCIAL INFORMATION


Item 1.

Financial Statements

3


Condensed Consolidated Balance Sheets September 30, 2015

  (unaudited) and December 31, 2014

4


Condensed Consolidated Statements of Operations three and nine

  months ended September 30, 2015 and 2014  (unaudited)

5


                    Condensed Consolidated Statements of Cash Flows nine months

  ended September 30, 2015 and 2014 (unaudited)

6


Notes to Condensed Consolidated Financial Statements

7


Item 2.

Management's Discussion and Analysis of Financial Condition and

11

  Results of Operations


Item 3.

Quantitative and Qualitative Disclosures About Market Risk

16


Item 4.

Controls and Procedures

16





PART II OTHER INFORMATION


Item 1.

Legal Proceedings

16


Item 1A.

Risk Factors

17


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

17


Item 3.

Defaults Upon Senior Securities

18


Item 4.

Mine Safety Disclosures

18


Item 5.

Other Information

18


Item 6.

Exhibits

18


Signatures

20




2


PART I FINANCIAL INFORMATION


Item 1.

Financial Statements


The accompanying condensed consolidated balance sheets of Sunvalley Solar, Inc. at September 30, 2015 and December 31, 2014, and the related condensed consolidated statements of operations for the three and nine month periods ended September 30, 2015 and 2014 and the related condensed consolidated statements of cash flows for the nine month periods ended September 30, 2015 and 2014 have been prepared by management in conformity with United States generally accepted accounting principles.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.  Operating results for the period ended September 30, 2015 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2015.


SUNVALLEY SOLAR, INC.

Condensed Consolidated Balance Sheets










 

ASSETS





September 30,


December 31,

 


 



2015


2014

 





(unaudited)




 

CURRENT ASSETS








Cash and cash equivalents


$

        828,370


$

        822,444


Resticted cash



          37,500



          25,000


Accounts receivable, net



     1,118,815



     2,167,580


Inventory



        786,985



     1,051,669


Costs in excess of billings on uncompleted contracts



        503,599



        318,734


Prepaid expenses and other current assets


 

        255,177


 

          16,002










 



Total current assets


 

     3,530,446


 

     4,401,429

 


 








 

PROPERTY AND EQUIPMENT, NET


 

          32,827


 

          26,957










 

OTHER ASSETS








Long-term accounts receivable, net



     2,531,668



     3,042,976


Other assets


 

            7,757


 

            3,870










 



Total other assets


 

     2,539,425


 

     3,046,846

 










 


 

TOTAL ASSETS


$

     6,102,698


$

     7,475,232

 


 




   




 

LIABILITIES AND STOCKHOLDERS' EQUITY










 

CURRENT LIABILITIES








Accounts payable and accrued expenses


$

     3,741,104


$

     4,740,648


Customer deposits



     1,878,492



     1,900,928


Accrued warranty



          86,614



          97,654


Advances from contractors



        103,389



        103,389


Current portion of long-term debt



          17,279



          16,774


Current portion of capital lease


 

            4,611


 

            4,017










 



Total current liabilities


 

     5,831,489


 

     6,863,410

 


 








 

LONG-TERM LIABILITIES








Capital leases



                   -



            3,537


Notes payable


 

                   -


 

          12,906










 



Total long-term liabilities


 

                   -


 

          16,443

 










 



TOTAL LIABILITIES


 

     5,831,489


 

     6,879,853

 


 








 

Contingent liabilities



-



-








STOCKHOLDERS' EQUITY



   













 


  Class A convertible preferred stock: $0.001 par value,








    1,000,000 shares authorized, 1,000,000 shares issued








    and outstanding, respectively



            1,000



            1,000


  Class B convertible preferred stock: $0.001 par value,








    2,000,000 shares authorized, 2,000,000 shares issued and








    outstanding, respectively



            2,000



                   -


Common stock, $0.001 par value, 150,000,000 shares








authorized, 4,357,849 and 4,357,849 shares








issued and outstanding, respectively



            4,358



            4,358


Additional paid-in capital



     6,233,666



     4,235,666


Stock subscription payable



    (1,621,919)



                   -


Accumulated deficit


 

    (4,347,896)


 

    (3,645,645)










 



Total Stockholders' Equity


 

        271,209


 

        595,379

 










 



TOTAL LIABILITIES AND







 



  STOCKHOLDERS' EQUITY


$

     6,102,698


$

     7,475,232

 


 








 

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


SUNVALLEY SOLAR, INC.

Condensed Consolidated Statements of Operations

(unaudited)


 


 














For the Three Months Ended


For the Nine Months Ended


 


September 30,


September 30,


 


2015


2014


2015


2014


 


 

 


 

 


 

 


 

 

REVENUES

$

          817,481


$

            882,160


$

       1,886,906


$

         901,788

COST OF SALES

 

          557,767


 

            513,767


 

       1,355,585


 

         523,602















GROSS PROFIT

 

          259,714


 

            368,393


 

          531,321


 

         378,186















OPERATING EXPENSES













Salaries and wages


          560,806



            128,283



          851,926



         357,544


Bad Debts


                    -



              49,620



                     -



           99,620


Professional fees


           53,374



              28,910



          148,527



         107,920


General and administrative


           74,970



            100,496



          231,899



         238,118




 

 


 

 


 

 


 

 


     Total Operating Expenses


          689,150



            307,309



       1,232,352



         803,202




 

 


 

 


 

 


 

 

INCOME (LOSS) FROM OPERATIONS


         (429,436)



              61,084



         (701,031)



        (425,016)




 

 


 

 


 

 


 

 

OTHER INCOME (EXPENSES)













Other income


                346



                1,035



                931



             1,764


Interest expense


               (549)



                 (976)



             (2,151)



            (3,760)




 

 


 

 


 

 


 

 


     Total other income (expenses)


               (203)



                    59



             (1,220)



            (1,996)




 

 


 

 


 

 


 

 

INCOME (LOSS) BEFORE TAXES

 

         (429,639)


 

              61,143


 

         (702,251)


 

        (427,012)
















Provision for income taxes

 

 -


 

 -


 

 -


 

 -















NET INCOME (LOSS)

$

         (429,639)


$

              61,143

   

$

         (702,251)


$

        (427,012)





   






   




BASIC INCOME (LOSS) PER SHARE

$

              (0.10)


$

                 0.01


$

              (0.16)


$

              (0.10)













DILUTED INCOME (LOSS) PER SHARE

$

              (0.10)


$

                 0.01


$

              (0.16)


$

              (0.10)













BASIC WEIGHTED AVERAGE NUMBER OF












COMMON SHARES OUTSTANDING

 

4,357,849


 

4,357,849


 

4,357,849


 

4,357,849















DILUTED WEIGHTED AVERAGE NUMBER OF












COMMON SHARES OUTSTANDING

 

4,357,849


 

4,405,349


 

4,357,849


 

4,357,849















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






SUNVALLEY SOLAR, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)



 


For the Nine Months Ended



 


September 30,



 


2015


2014



 





OPERATING ACTIVITIES:















Net loss


$

       (702,251)


$

       (427,012)


Adjustments to reconcile net loss to net cash








provided by operating activities:









Depreciation and amortization



          17,253



          17,271



Preferred shares issued for services



        378,081



                   -



Bad debt expense



                   -



        100,000


Changes in operating assets and liabilities:






   



Accounts receivable



     1,560,074



        384,998



Inventory



        264,684



    (1,326,035)



Prepaid expenses and other current assets



       (239,175)



         (74,625)



Restricted cash



         (12,500)



                   -



Costs in excess of billings on uncompleted contracts



       (184,865)



       (238,578)



Other assets



           (3,887)



                   -



Accounts payable and accrued expenses



       (999,544)



       (531,357)



Accrued warranty expenses



         (11,040)



             (375)



Customer deposits


 

         (22,436)


 

     2,264,602












Net Cash Provided by Operating Activities


 

          44,394


 

        168,889



 







INVESTING ACTIVITIES:


















Purchase of equipment



         (23,124)



                   -





 

 


 

 



Net Cash Used in Investing Activities


 

         (23,124)


 

                   -



 







FINANCING ACTIVITIES:

















Repayments of long term debt



         (12,401)



         (11,718)


Repayment of capital lease


 

           (2,943)


 

           (2,448)












Net Cash Used in Financing Activities


 

         (15,344)


 

         (14,166)



 







NET CHANGE IN CASH



            5,926



        154,723

CASH AT BEGINNING OF PERIOD


 

        822,444


 

        368,796










CASH AT END OF PERIOD


$

        828,370


$

        523,519



 







SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

















CASH PAID FOR:









Interest


$

              549


$

            3,760



Income taxes


$

                   -


$

                   -










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




6


SUNVALLEY SOLAR, INC.

 Notes to Condensed Consolidated Financial Statements

September 30, 2015 (unaudited) and December 31, 2014


NOTE 1 - CONDENSED FINANCIAL STATEMENTS


The accompanying consolidated financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at September 30, 2015, and for all periods presented herein, have been made.


Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2014 audited financial statements.  The results of operations for the periods ended September 30, 2015 and 2014 are not necessarily indicative of the operating results for the full years.


NOTE 2 - GOING CONCERN


The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.


In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.


The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


NOTE 3 SIGNIFICANT ACCOUNTING POLICIES


Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 period.  Actual results could differ from those estimates.


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.


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.




NOTE 3 SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


The Company s inventory consisted of the following at September 30, 2015 and December 31, 2014:


 

 September 30,    2015


December 31, 2014

Raw materials

$

250,778


$

912,272

Work in Progress


0



25,070

Finished goods


536,207



114,327

  Total Inventory

$

786,985


$

1,051,669



Loss Per Common Share

Basic net loss per common share is computed by dividing the net loss by the weighted average number of outstanding common shares (restricted and free trading) during the periods presented. Basic loss per share and diluted loss per share are the same amount because the impact of additional common shares that might have been issued under the Company s outstanding and exercisable stock options would be anti-dilutive. Dilutive instruments include 20,000,000 and 20,000,000 shares to be issued upon conversion of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock, respectively. Such potentially dilutive shares are excluded when the effect would be to reduce net loss per share. There were 40,000,000 such potentially anti-dilutive shares excluded as of September 30, 2015 as their effect would have been antidilutive. 


NOTE 4 - RESTRICTED CASH

 

In order to comply with the State of California's licensing requirement or contract bonds as of September 30, 2015 and December 31, 2014, the Company maintains a certificate of deposit in the amount of $50,000 and $25,000, respectively, with a financial institution.


NOTE 5 - PROPERTY AND EQUIPMENT

 

The following is a summary of property and equipment at September 30, 2015 and December 31, 2014:

 





September 30,








December 31,



 

2015

 

2014

 

Computer and equipment


95,017

 

 

$

75,268

 

Furniture

 

20,029

 

 

 

16,655

 

 

Software

 

2,368

 

 

 

2,368

 

 

Vehicles

 

86,339

 

 

 

86,339

 

 

Gross Property and Equipment

 

203,753

 

 

 

180,630

 

 

Less: accumulated depreciation

 

(170,926

)

 

 

(153,673

)

 

Net Property and Equipment

$

32,827

 

 

$

26,957

 

 

 

Depreciation expense for the nine months ended September 30, 2015 and 2014 was $17,253 and $17,269, respectively.


NOTE 6 COSTS IN EXCESS OF BILLINGS ON UNCOMPLETED CONTRACTS


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 on 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 September 30, 2015 and December 31, 2014, the Company has capitalized $503,599 and $318,734 of costs incurred in relation to installation projects.  





7


SUNVALLEY SOLAR, INC.

 Notes to Condensed Consolidated Financial Statements

September 30, 2015 (unaudited) and December 31, 2014


NOTE 7 CAPITAL LEASE


The Company leased equipment in September 2011 and such lease has been classified as a capital lease because it contained a beneficial buy-out option at the end of the lease.  The Company has 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.


As of September 30, 2015, the Company recognizes the current and long-term lease liability of $4,611 and $0, respectively. As of December 31, 2014, the Company has recorded the current and long-term lease liability of $4,017 and $3,537, respectively. Thus, the Company has $4,611 and $7,554 in remaining lease obligation as of September 30, 2015 and December 31, 2014, respectively.


NOTE 8 COMMON STOCK

 

Effective July 22, 2015, the Company s common stock was reverse split on a 1 share for 20 shares basis. The accompanying 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


NOTE 9 PREFERRED STOCK


As of September 30, 2015, 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 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 20 common share 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 30, 2015 and December 31, 2014, there were 1,000,000 shares of Class A Convertible Preferred Stock issued and outstanding.


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 convertible at 20 Series A Preferred shares for 1 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.


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 30, 2015 and December 31, 2014, there were 2,000,000 shares and -0- 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 $378,081 was recorded during the nine months ended September 30, 2015, and the remaining compensation expense related to the unvested portion of preferred stock was $1,621,919.



8


SUNVALLEY SOLAR, INC.

 Notes to Condensed Consolidated Financial Statements

September 30, 2015 (unaudited) and December 31, 2014


NOTE 10 COMMITMENTS AND CONTINGENCIES


We filed a contractual fraud case against one of our commercial installation customers, All Fortune Group LLC (All Fortune), during September 2013 for causes of action including breach of contract, common counts and fraudulent transfer. The relief claimed consists mainly of monetary damages and interest including punitive dames, costs of suits for no less than $1.2 million. As a result of the filing, All Fortune filed a lawsuit against us for causes of action including breach of contract, negligent misrepresentation, intentional misrepresentation and fraud. The relief claimed by All Fortune consists mainly of monetary damages including punitive damages, costs of suit and other recoverable fees and damages.  On November 19, 2013, the court ruled that Case NC059003-Sunvalley Solar, Inc v. All Fortune Group, LLC is related to Case KC066248-All Fortune Group, LLC v. Sunvalley; Case NC059003 is deemed the lead case and all future hearing dates will be heard in Long Beach Superior Court. Sunvalley filed a motion for right to attach order and writ of attachment pursuant to Code of Civil Procedure section 483.010 on November 27, 2013, which was granted on February 4, 2014. On July 29, 2015, both parties had a mediation but did not reach any settlement.  Sunvalley contracted Absolute Urethane to remodel All Fortune s roof in order to install the solar system. Per the roofing contract, Absolute Urethane shall furnish all labor, materials and equipment and perform all operations required as specified and the company provide a 15 year warranty for this roofing project. Since All Fortune brought the law suits against Sunvalley and Absolute Urethane at the same time, Absolute Urethane filed a cross-complaint against Sunvalley.  A settlement has been reached between Sunvalley and All Fortune.  See subsequent events for details.    


Sunvalley 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. Sunvalley  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 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, 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 October 29, 2015, the Court granted CEEG s motion to compel arbitration in China. However, Sunvalley will file an appeal to the Court to request the ruling of the CEEG case in the United States instead of China. Any potential loss arising from this claim has not been recorded as a liability as the probability of loss has been determined by the Company to be remote.


NOTE 11 SUBSEQUENT EVENTS


In accordance with ASC 855, Company management reviewed all material events through the date of this report and noted the material subsequent events as follows:


A settlement was reached between Sunvalley and All Fortune on October 7, 2015.  A money judgement is awarded in the amount of $874,689 to Sunvalley.  All Fortune will pay $380,000 within 20 days after All Fortune s receipt of Sunvalley s insurer payment of $215,000.  All Fortune agrees to pay Sunvalley the remaining balance owed of $494,689 in 30 monthly payments at $16,453 each and the 31st monthly payment of $1,100.


On October 29, 2015, the Court granted CEEG s motion to compel arbitration in China.  However, Sunvalley will file an appeal to the Court to request the ruling of the CEEG case in the United States instead of China.  





9


Item 2.   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 effect 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.


Company Overview and Plan of Operation


We are 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, 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

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.

Failed Sale

On February 11, 2015, we and our wholly owned subsidiary, Sunvalley Solar Tech, Inc., entered into an Agreement for Sale and Purchase of Sunvalley Solar Tech, Inc., pursuant to which we agreed to sell 100% of the stock ownership of Sunvalley Solar Tech, Inc. to Sungold Holdings, a Nevada limited liability company (the Buyer ).  The agreement provided that the subsidiary would be sold for Two Million Five Hundred Thousand Dollars ($2,500,000) plus five percent (5.0%) of all of Sunvalley Solar Tech, Inc. s gross sales during 2015 through 2018, which could have increased the sale price to a maximum of Four Million Five Hundred Thousand Dollars ($4,500,000). The Buyer was not able to obtain the necessary financing to complete the sale by the agreed upon closing date of March 20, 2015, so the agreement expired.


Reverse Stock Split

Effective July 22, 2015, the Company s common stock was reverse split on a 1 share for 20 shares basis. The accompanying financial statements reflect the reverse stock split on a retroactive basis.  Shares of the Company s issued and outstanding Class A Convertible Preferred Stock are now convertible to shares of the Company s common stock on a 20 Class A Convertible Preferred shares for 1 common shares basis.



10


Class B Convertible Preferred Stock


On July 23, 2015, the Company issued 2,000,000 shares of its Class B Convertible Preferred Stock 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.


Increase in Authorized Shares


In July 2015, the Company amended its Articles of Incorporation to increase the number of authorized common shares to 150,000,000 and preferred shares to 6,000,000.


Business Development Plan


The primary components of our growth strategy are as follows:


·

Developing and commercializing our patent solar technology. By deploying this new technology into our PV panels and solar system, we hope to get into solar system control management, enhance the value provided to our customers and increase our profitability

·

Promoting and enhancing our company s brand and reputation in solar 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 through acquisition or merging. 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.


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.


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.




11


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, add control and management capability with our patent and 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.


·

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.


·

Offer a low cost, high efficiency and networked 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, patent networked panel technology and other cutting edge technologies to further reduce the manufacturing cost and improve the panel efficiency and management capability.

 

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


Expected Changes in Number of Employees, Plant, and Equipment


We do not currently plan to purchase specific additional physical plant and significant equipment within the immediate future. We do not currently have specific plans to change the number of our employees during the next twelve months.





12


Results of Operations for the three months ended September 30, 2015 and 2014


During the three months ended September 30, 2015, we generated gross revenues of $817,481. Total cost of sales was $557,767, or 68.23% of gross revenues, resulting in gross profit of $259,714. Total operating expenses during the period were $689,150, and consisted of salary and wage expenses of $560,806, general and administrative expenses of $74,970, and professional fees of $53,374. We experienced interest expense of $549 and other income of $346. Our net loss for the three months ended September 30, 2015 was therefore $429,639, or $0.10 per share.


By comparison, during the three months ended September 30, 2014, we generated gross revenues of $882,160. Total cost of sales was $513,767, or 58.24% of gross revenues, resulting in gross profit of $368,393 Total operating expenses were $307,309, and consisted of salary and wage expenses of $128,283, general and administrative expenses of $100,496, bad debt expense of $49,620, and professional fees of $28,910. We experienced interest expense of $976 and other income of $1,035. Our net profit for the three months ended September 30, 2014 was therefore $61,143, or $0.01 per share.


Our gross revenues for during the three months ended September 30, 2015 decreased $64,679 from the gross revenues we generated in the three months ended September 30, 2014. Under the completed contract method of accounting, no profit or income is recorded before substantial completion of the work. The revenue for the projects which were in progress are therefore to be recognized after their completion. Due to the implementation periods for different size of projects, revenue fluctuations like the one experienced during this quarter are a normal occurrence for construction companies, including solar system integration companies.

 

We are currently working on eight major installation projects with contract prices totaling approximately $10 million. Out of these contracts, four contracts in the amount of approximately $4 million and two contracts in the amount of approximately $3 million are expected to be substantially completed by the fourth quarter of 2015 and first quarter of 2016, respectively. The rest of the projects in the amount of approximately $3 million are expected to be substantially completed by September 2016.

The significant increase in operating expenses of $381,841 in the third quarter of 2015 was mainly due to a $432,523 increase in salaries and wages expense which included $378,081 from the issuance of the Company s 2,000,000 shares of Class B Convertible Preferred Stock to certain officers, directors and/or employees on July 23, 2015, and an increase in professional fees of $24,464 which was  partially offset by a decrease in bad debt expense of $49,620 and a decrease in general and administration expense of $25,526.


Results of Operations for the nine months ended September 30, 2015 and 2014


During the nine months ended September 30, 2015, we generated gross revenues of $1,886,906. Total cost of sales was $1,355,585, or 71.84% of gross revenues, resulting in gross profit of $531,321. Total operating expenses during the period were $1,232,352, and consisted of salary and wage expenses of $851,926, general and administrative expenses of $231,900, and professional fees of $2,148,527. We experienced interest expense of $2,151 and other income of $931. Our net loss for the nine months ended September 30, 2015 was therefore $702,251, or $0.16 per share.


By comparison, during the nine months ended September 30, 2014, we generated gross revenues of $901,788. Total cost of sales was $523,602, or 58.06% of gross revenues, resulting in gross profit of $378,186. Total operating expenses were $803,202, and consisted of salary and wage expenses of $851,926, general and administrative expenses of $238,118, bad debt expense of $99,620 and professional fees of $107,920. We experienced interest expense of $3,760 and other income of $1,764. Our net loss for the nine months ended September 30, 2014 was therefore $427,012, or $0.10 per share.


Our gross revenues during the nine months ended September 30, 2015 increased significantly by $985,118. Under the completed contract method of accounting, no profit or income is recorded before substantial completion of the work. The revenue for the projects which were in progress are therefore to be recognized after their completion. Due to the implementation periods for different size of projects, revenue fluctuations like the one experienced during this quarter are a normal occurrence for construction companies, including solar system integration companies.


The increase in operating expenses in the first nine months of 2015 was mainly due to an increase of salary and wage expense of $494,382 which included $378,081 from the issuance of the Company s 2,000,000 shares of Class B Convertible Preferred Stock to certain officers, directors and/or employees on July 23, 2015,  andan increase in professional fees of $40,607 which was partially offset by a decrease in bad debt expense of $99,620 and a decrease of general and administration expense of $6,218.


Liquidity and Capital Resources


As of September 30, 2015, we had current assets in the amount of $3,530,446, consisting of cash in the amount of $828,370, accounts receivable of $1,118,815, inventory in the amount of $786,985, costs in excess of billings on uncompleted contracts of $503,599, prepaid expenses and other current assets of $255,177 and restricted cash of $37,500. As of September 30, 2015, we had current liabilities in the amount of $5,831,489. These consisted of accounts payable and accrued expenses in the amount of $3,741,104,



13


customer deposits of $1,878,492, accrued warranty of $86,614, advances from contractors of $103,389, the current portion of long term debt in the amount of $17,279, and the current portion of a capital lease in the amount of $4,611. Our working capital deficit as of September 30, 2015 was therefore $2,301,043.

 

As of September 30, 2015, our long-term liabilities were $-0-.


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 September 30, 2015, there were no off balance sheet arrangements.

 

Going Concern


We have experienced recurring losses from operations and we had an accumulated deficit of $4,347,896 as of September 30, 2015. 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.




14


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 3.   Quantitative and Qualitative Disclosures About Market Risk


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


Item 4.   Controls and Procedures


We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2015. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Zhijian (James) Zhang and our Chief Financial Officer, Mandy Chung. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2015, our disclosure controls and procedures are not effective. There have been no changes in our internal controls over financial reporting during the quarter ended September 30, 2015.


Management determined that the material weaknesses that resulted in controls being ineffective are primarily due to lack of resources and number of employees. Material weaknesses exist in the segregation of duties required for effective controls and various reconciliation and control procedures not regularly performed due to the lack of staff and resources.


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 Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


Limitations on the Effectiveness of Internal Controls


Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error.   Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.



PART II OTHER INFORMATION


Item 1.   Legal Proceedings


We filed a contractual fraud case against one of our commercial installation customers, All Fortune Group LLC (All Fortune), during September 2013 for causes of action including breach of contract, common counts and fraudulent transfer. The relief claimed consists mainly of monetary damages and interest including punitive dames, costs of suits for no less than $1.2 million. As a result of the filing, All Fortune filed a lawsuit against us for causes of action including breach of contract, negligent misrepresentation, intentional misrepresentation and fraud. The relief claimed by All Fortune consists mainly of monetary damages including punitive damages, costs of suit and other recoverable fees and damages.  On November 19, 2013, the court ruled that Case NC059003-Sunvalley Solar, Inc v. All Fortune Group, LLC is related to Case KC066248-All Fortune Group, LLC v. Sunvalley; Case NC059003 is deemed the lead case and all future hearing dates will be heard in Long Beach Superior Court. Sunvalley filed a motion for right to attach order and writ of attachment pursuant to Code of Civil Procedure section 483.010 on November 27, 2013, which was granted on February 4, 2014. On July 29, 2015, both parties had a mediation but did not reach any settlement.  Sunvalley contracted Absolute Urethane to remodel All Fortune s roof in order to install the solar system. Per the roofing contract, Absolute Urethane shall furnish all labor, materials and equipment and perform all operations required as specified and the company provide a 15 year warranty for this roofing project. Since All Fortune brought the law suits against Sunvalley and Absolute Urethane at the same time, Absolute Urethane filed a cross-complaint against Sunvalley.  A settlement was reached between Sunvalley and All Fortune on October 7, 2015.  A money judgement is awarded in the amount of $874,689 to Sunvalley.  All Fortune will pay $380,000 within 20 days after All Fortune s



15


receipt of Sunvalley s insurer payment of $215,000.  All Fortune agrees to pay Sunvalley the remaining balanced owed of $494,689 in 30 monthly payments at $16,453 each and the 31st monthly payment of $1,100.


Sunvalley 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 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 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 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 October 29, 2015, the Court granted CEEG s motion to compel arbitration in China.  However, Sunvalley will file an appeal to the Court to request the ruling of the CEEG case in the United States instead of China.  


Our agent for service of process in Nevada is Cane Clark Agency, LLC, 3273 East Warm Springs Rd., Las Vegas, NV 89120.


Item 1A.   Risk Factors

 

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


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds


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 President.  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.  The shares vested immediately.  The shares were issued under Section 4(2) of the Securities Act of 1933 as a transaction not involving any public offering.  


In July 2015, the Board of Directors approved the incentive issuance of 2,000,000 shares of the Company s Class B Convertible Preferred shares as an incentive to the following persons, in the following amounts:

Zhijian (James) Zhang

1,250,000 shares

Hangbo (Henry) Yu

   325,000 shares

Waiman Mandy Chung

     70,000 shares

Anyork Lee

     50,000 shares

Shirley Liao

     70,000 shares

William Hsien

     70,000 shares

Mehmet Cercioglu

     55,000 shares

Thomas L. Louie

     30,000 shares

Dan Shi

     20,000 shares

Fang Xu

     60,000 shares

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. 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.



16


This issuance was exempt from registration under Section 4(2) of the Securities Act of 1933 as a transaction by an issuer not involving any public offering.

The shares of Class B Convertible Preferred Stock vote together with the Company s Common shares, but shares of the Class B Convertible Preferred Stock have 10 votes per share.  The Class B Convertible Preferred Stock is convertible into shares of the Company s Common Stock at the conversion rate of one (1) Class B Convertible Preferred Share for ten (10) Common shares.

Item 3.   Defaults upon Senior Securities


None


Item 4.   Mine Safety Disclosures


Not applicable.


Item 5.   Other Information


None.





17


Item 6.   Exhibits


(a)

Exhibits:


Exhibit

Description

Number

3.1

Certificate of Amended and Restated Articles of Incorporation

(1)

3.2

Certificate of Designation for Class A Convertible Preferred Stock

(2)

3.3

Certificate of Designation for Class B Convertible Preferred Stock

(1)

3.4

Bylaws

(3)

10.1

Premises Lease dated as of December 1, 2014

(4)

10.2

Distribution Contract Tian Wei Solar Fils Co.

(5)

31.1           

Certification of the Chief Executive Officer pursuant to Rule 13a-14

            Filed Herein

of the Securities and Exchange Act of 1934, as amended, as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2           

Certification of the Chief Financial Officer pursuant to Rule 13a-14

            Filed Herein

of the Securities and Exchange Act of 1934, as amended, as adopted

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1           

Certification of the Chief Executive Officer pursuant to 18 U.S.C.

            Filed Herein

Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002.

32.2           

Certification of the Chief Financial Officer pursuant to 18 U.S.C.

            Filed Herein

Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley

Act of 2002.

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 Current Report on Form 8-K filed on July 24, 2015

(2)

Incorporated by reference to Current Report on Form 8-K filed on September 5, 2012

(3)

Incorporated by reference to Annual Report on Form 10-K filed on March 31, 2011

(4)

Incorporated by reference to Annual Report on Form 10-K filed on April 15, 2015

(5)

Incorporated by reference to Annual Report on Form 10-K/A filed on May 12, 2011


**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.





18


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Sunvalley Solar, Inc.


By: /s/ Zhijian (James) Zhang _____________________
 Zhijiang (James) Zhang
 President, Chief Executive Officer,
 and Director
 November 16, 2015




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

  Officer, Secretary, and Treasurer
 November 16, 2015



19

EXHIBIT 31.1


SECTION 302

CERTIFICATION OF CHIEF EXECUTIVE OFFICER


I, Zhijian (James) Zhang, certify that:


1.

I have reviewed this report on Form 10-Q of Sunvalley Solar, Inc.,


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, the results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:


(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)

designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)

evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)

disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and


5.

The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions):


(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and


(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting.



Date: November 16, 2015

By:_ /s/ Zhijian (James) Zhang _____________________________

Zhijian (James) Zhang, Chief Executive Officer




EXHIBIT 31.2


SECTION 302

CERTIFICATION OF CHIEF FINANCIAL OFFICER


I, Mandy Chung, certify that:


1.

I have reviewed this report on Form 10-Q of Sunvalley Solar, Inc.,


2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, the results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.

The registrant s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:


(a)

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)

designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


(c)

evaluated the effectiveness of the registrant s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)

disclosed in this report any change in the registrant s internal control over financial reporting that occurred during the registrant s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant s internal control over financial reporting; and


5.

The registrant s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant s auditors and the audit committee of the registrant s board of directors (or persons performing the equivalent functions):


(a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant s ability to record, process, summarize and report financial information; and


(b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant s internal control over financial reporting.



Date: November 16, 2015

By: /s/ Mandy Chung ____________________________

Mandy Chung, Chief Financial Officer




EXHIBIT 32.1


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Sunvalley Solar, Inc. (the Company ) on Form 10-Q for the period ending September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Zhijian (James) Zhang, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:


(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




/s/ Zhijian (James) Zhang _____________________________

Zhijian (James) Zhang Chief Executive Officer

November 16, 2015


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.  The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and are not being filed as part of the Form 10-Q or as a separate disclosure document.




EXHIBIT 32.2


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


In connection with the Quarterly Report of Sunvalley Solar, Inc. (the Company ) on Form 10-Q for the period ending September 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Mandy Chung, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:


(1)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.




/s/ Mandy Chung _____________________

Mandy Chung

Chief Financial Officer

November 16, 2015


A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.  The foregoing certifications are accompanying the Company's Form 10-Q solely pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code) and are not being filed as part of the Form 10-Q or as a separate disclosure document.