Quarterly Report (10-q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

Commission File No. 333-193058

PRINCIPAL SOLAR, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-3096175
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

211 N. Ervay, Suite 300 Dallas, Texas 75201

(Address of principal executive offices)

(855) 774-7799

(Registrant’s telephone number, including area code)

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 ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 ☑ 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 ☐ Smaller reporting company ☑

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

The number of shares outstanding of the registrant’s common stock as of August 14, 2015 was 5,604,181.

TABLE OF CONTENTS

Introductory Comment		1

Forward-Looking Statements		1

PART I – FINANCIAL INFORMATION

Item 1	Financial Statements	2

Item 2	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	18

Item 3	Quantitative And Qualitative Disclosures About Market Risk	22

Item 4	Controls And Procedures	22

PART II – OTHER INFORMATION

Item 1	Legal Proceedings	24

Item 2	Unregistered Sales Of Equity Securities And Use Of Proceeds	24

Item 6	Exhibits	24

SIGNATURES		25

Exhibit Index		26

INTRODUCTORY COMMENT

In this Quarterly Report on Form 10-Q, the terms "we," "us," "our," "Company," “PSWW”, “PSI”, and “Principal Solar” refer to Principal Solar, Inc., a Delaware corporation, and its subsidiaries.

FORWARD-LOOKING STATEMENTS

When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends which may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Such statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements for various reasons, including those identified under Risk Factors included in our Annual Report on Form 10-K filed on March 17, 2015, and Form 10-Q filed May 13, 2015. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made. Except as required under federal securities laws and the rules and regulations of the United States Securities and Exchange Commission, the Company does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions, or otherwise.

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PART I

ITEM 1 - FINANCIAL STATEMENTS

PRINCIPAL SOLAR, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2015			2014
ASSETS

Current Assets
Cash and equivalents	$	48,409		$	104,328
Accounts receivable		197,354			105,143
Deposits		70,000			250,000
Prepaid assets		31,696			49,831
Total current assets		347,459			509,302

Other Assets
Solar arrays at cost, net		6,412,714			6,563,704
Construction in progress		5,269,337			912,445
Restricted cash		116,378			103,094
Total other assets		11,798,429			7,579,243

Total assets	$	12,145,888		$	8,088,545

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Liabilities arising from reverse merger	$	1,003,839		$	1,003,839
Compensation payable		1,474,948			1,076,448
Accounts payable		1,286,244			293,239
Current portion of acquisition note payable, net of discount		249,816			249,816
Interest payable		161,280			81,748
Note payable for insurance premiums		2,824			33,250
Convertible notes payable		50,000			-
Convertible notes payable, related parties		630,000			630,000
Convertible debenture, net of discount		833,334			-
Mandatorily redeemable Series A preferred stock; $.01 par value, $4.00 stated value, 500,000 shares designated and 250,000 shares outstanding at June 30, 2015		1,018,333			-
Accrued expenses and other liabilities		589,970			15,881
Derivative liability on warrants		306,451			-
Total current liabilities		7,607,039			3,384,221

Other Liabilities
Acquisition note payable, net of discount		4,288,436			4,403,163
Total liabilities		11,895,475			7,787,384

Commitments and Contingencies

Stockholders' Equity
Preferred stock: $0.01 par value; 100,000,000 shares authorized; 500,000 designated as Series A and 250,000 shares outstanding at June 30, 2015		-			-
Common stock: $0.01 par value, 300,000,000 shares authorized, 5,604,181 and 5,311,817 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		56,042			53,118
Additional paid-in capital		12,115,772			9,897,412
Accumulated deficit		(12,778,647	)		(10,482,079	)
Deficit attributable to common stockholders		(606,833	)		(531,550	)
Noncontrolling interest in subsidiary		857,246			832,711
Total stockholders' equity		250,413			301,161

Total liabilities and stockholders' equity	$	12,145,888		$	8,088,545

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

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PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014

Revenues
Power generation	$	287,813		$	283,316		$	471,888		$	500,606
Total revenues		287,813			283,316			471,888			500,606

Cost of revenues
Depreciation		75,495			72,258			150,990			155,373
Direct operating costs		51,776			74,761			104,003			126,749
Total cost of revenues		127,271			147,019			254,993			282,122

Gross profit		160,542			136,297			216,895			218,484

General and administrative expenses		1,414,148			563,597			2,323,526			999,588
Operating loss		(1,253,606	)		(427,300	)		(2,106,631	)		(781,104	)
Other (income) expense
Interest expense		772,944			111,338			1,106,418			221,600
Gain on derivative liability warrants		(962,764	)		(7,011	)		(943,549	)		(1,160	)
Total other (income) expense		(189,820	)		104,327			162,869			220,440

Loss before provision for income taxes		(1,063,786	)		(531,627	)		(2,269,500	)		(1,001,544	)
Provision for state income taxes		1,300			-			2,533			300

Net loss		(1,065,086	)		(531,627	)		(2,272,033	)		(1,001,844	)
Income attributable to noncontrolling interest in subsidiary		(18,052	)		(9,752	)		(24,535	)		(20,422	)
Net loss before preferred stock accretion and dividends		(1,083,138	)		(541,379	)		(2,296,568	)		(1,022,266	)

Redeemable Series A preferred stock accretion and dividends		(184,896	)		-			(184,896	)		-
Net loss attributable to common stockholders	$	(1,268,034	)	$	(541,379	)	$	(2,481,464	)	$	(1,022,266	)

Net loss per share - basic and diluted	$	(0.23	)	$	(0.11	)	$	(0.45	)	$	(0.21	)

Weighted average shares outstanding - basic and diluted		5,604,181			4,857,178			5,523,369			4,824,543

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

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PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(Unaudited)

									Additional						Principal			Non-
	Preferred Stock				Common Stock				Paid-in			Accumulated			Solar, Inc.			Controlling
	Shares		Amount		Shares		Amount		Capital			Deficit			Total			Interest		Total
																-					-
December 31, 2014		-	$	-		5,311,817	$	53,118	$	9,897,412		$	(10,482,079	)	$	(531,549	)	$	832,711	$	301,162

Fractional shares issued in reverse stock split		-		-		25		-		-			-			-			-		-

Common stock issued for cash		-		-		279,839		2,799		1,676,201			-			1,679,000			-		1,679,000
																-					-
Series A Preferred stock and warrants issued for cash		-		-		-		-		(10,293	)		-			(10,293	)		-		(10,293	)
																-					-
Stock-based employee compensation expense		-		-		-		-		423,910			-			423,910			-		423,910

Stock-based advisor compensation		-		-		12,500		125		146,875			-			147,000			-		147,000

Preferred stock dividends										(18,333	)					(18,333	)				(18,333	)
Net income (loss)		-		-		-		-		-			(2,296,568	)		(2,296,568	)		24,535		(2,272,033	)
June 30, 2015		-	$	-		5,604,181	$	56,042	$	12,115,772		$	(12,778,647	)	$	(606,833	)	$	857,246	$	250,413

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

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PRINCIPAL SOLAR, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2015			2014

OPERATING ACTIVITIES
Net loss	$	(2,272,033	)	$	(1,001,844	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		150,990			155,373
Stock-based employee compensation expense		423,910			35,474
Stock-based advisor compensation expense		109,500			23,882
Stock-based advisor compensation capitalized		37,500			-
(Gain) loss on derivative liability on warrants		(943,549	)		(1,160	)
Amortization of debt discounts		843,516			10,181
Option to acquire noncontrolling interest		-			46,010
Change in operating assets and liabilities:
Accounts receivable		(92,211	)		(83,599	)
Deposits		(70,000	)		(500,000	)
Prepaid assets		18,135			7,500
Liabilities arising from reverse merger		-			24,936
Compensation payable		398,500			44,215
Accounts payable		368,397			209,597
Interest payable		79,532			(1,156	)
Accrued expenses and other liabilities		574,089			21,154

Net cash used in operating activities		(373,724	)		(1,009,437	)

INVESTING ACTIVITIES
Construction in progress		(3,482,284	)		-
		(3,482,284	)		-

FINANCING ACTIVITIES
Proceeds from convertible debenture payable		1,250,000			-
Payments on acquisition note payable		(124,908	)		(111,029	)
Proceeds from sale of common stock		1,679,000			660,000
Proceeds from sale of Series A Preferred stock		989,707			-
Proceeds from convertible notes payable		50,000			-
Proceeds from convertible note payable, related party		-			500,000
Payments on note payable for insurance premiums		(30,426	)		(7,888	)
Change in restricted cash		(13,284	)		(68,477	)

Net cash provided by financing activities		3,800,089			972,606

Decrease in cash and equivalents		(55,919	)		(36,831	)

Cash and equivalents, beginning of period		104,328			122,533

Cash and equivalents, end of period	$	48,409		$	85,702

Supplemental Disclosures
Interest paid	$	183,370		$	187,639

Income taxes paid	$	-		$	-

Non-Cash Transactions:
Discount on convertible debenture recorded as a derivative liability		1,250,000			-
Deposit applied to construction in progress		250,000			-
Construction in progress in accounts payable		624,608			-
Allocation of Series A Preferred proceeds to warrants		156,270			-
Accretion of Series A Preferred to fair value		166,563			-
Preferred stock dividends		18,333			-
Issuance for stock subscription receivable		-			60,000

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

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PRINCIPAL SOLAR, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - OVERVIEW

Basis of Presentation

The unaudited consolidated financial statements and related notes of have been prepared pursuant to Article 8-03 of the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") have been omitted. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments and information (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included.

The year-end balance sheet was derived from the Company’s audited financial statements. The accompanying unaudited consolidated financial statements and related notes should be read in conjunction with the Company’s audited financial statements included in its 2014 Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of the results to be expected for the full year.

Going Concern

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As of June 30, 2015, the Company has an accumulated deficit of approximately $12.8 million, and the Company has had cumulative negative cash flows from operations since inception. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing, likely through the continued sale of its equity and equity-linked securities, to meet its obligations and pay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should the Company be unable to continue as a going concern.

Concentration

Historically, approximately 96% of our consolidated power generation revenue arose from our Powerhouse One solar installation under an index-priced power purchase agreement ("PPA") having a fixed premium of $0.12 per kilowatt-hour over the GSA-1 scheduled rate (currently approximately $0.10 per kWh) through 2021, and a market rate based upon the then current GSA-1 scheduled rate for the remaining 10 years of the initial 20 year term ending in 2031. The buyer and counterparty of the PPA is Fayetteville Public Utility of Lincoln County Tennessee. A similar percentage of the accounts receivable also stems from this single relationship.

Reverse Stock Split

On May 5, 2015, the Company's Board of Directors and stockholders representing a majority of the shares outstanding on that date voted to effect a 1:4 reverse stock split (the "May 2015 Reverse"). Unless otherwise stated or the context would require otherwise, all share amounts disclosed throughout these financial statements retroactively take into account the May 2015 Reverse, and all resulting fractional share amounts have been rounded to the nearest whole share. On May 6, 2015, the Company amended its Certificate of Incorporation with the State of Delaware reflecting the May 2015 Reverse.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Recent Accounting Pronouncements

In February 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-02 Consolidation (Topic 810) Amendments to the Consolidation Analysis, which affects the following areas of the consolidation analysis: limited partnerships and similar entities, evaluation of fees paid to a decision maker or service provider as a variable interest and in determination of the primary beneficiary, effect of related parties on the primary beneficiary determination and for certain investment funds. ASU No. 2015-02 is effective for fiscal years beginning after December 15, 2015, and for interim periods beginning after December 31, 2017. We are evaluating the impact of this standard on our consolidated financial position, results of operations and cash flows.

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In April 2015, FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30)" entitled "Simplifying the Presentation of Debt Issuance Costs". Effective for financial statements issued for fiscal years beginning after December 15, 2015, the statement provides that debt issuance costs are reflected as a discount to the debt on the Balance Sheet and amortized as additional interest expense over the life of the debt. While we have incurred such debt issuance costs in the past, such amounts have not been material, and we do not expect the adoption of this standard to have a material impact on our consolidated financial position, results of operations and cash flows.

Principles of Consolidation

The Company consolidates the financial position, results of operations, and cash flows of all majority-owned subsidiaries. The consolidated financial statements include the accounts of the Company (including the dba Principal Solar Institute) and its subsidiaries SunGen Mill 77, LLC; SunGen Step Guys, LLC; and Powerhouse One, LLC. Significant intercompany accounts and transactions have been eliminated in consolidation.

Fair Value

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 on the measurement date. We believe the carrying values of our current assets and current liabilities approximate their fair values, and the carrying value of our notes payable approximate their estimated fair value for debts with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.

All related party transactions are evaluated by our officers and/or Board of Directors who take into account various factors, including their fiduciary duty to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; and the terms the Company could receive from an unrelated third party. Despite this review, related party transactions may not be recorded at fair value.

We do not engage in hedging activities, but do have a derivative instrument treated as a liability whose value is measured on a recurring basis (see "Fair Value Instruments" and "Derivative Liability on Warrants" included herein).

Fair Value Instruments

On March 2, 2015, the Company entered into a convertible loan agreement with Alpha Capital Anstalt ("Alpha") (See NOTE 6 - NOTES PAYABLE, Convertible Debentures). In connection with the loan, the Company granted Alpha complex warrants with certain "down round" protection. As such, they are treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink® and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time will all impact the value of these warrants. The Company re-values these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results.

(See NOTE 8 - DERIVATIVE LIABILITY ON WARRANTS).

Use of Estimates

The preparation of our financial statements in accordance with GAAP requires us to, on an ongoing basis, make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for our conclusions. Actual results may differ from these estimates under different assumptions or conditions. Such differences could have a material impact on our future financial position, results of operations, and cash flows.

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Cash and Equivalents

We consider cash, deposits, and short-term investments with original maturities of three months or less as cash and equivalents. Our deposits are maintained primarily in two financial institutions and, at times, may exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.

Restricted Cash

As part of the June 2013 financing with Bridge Bank, National Association (see "Acquisition Note Payable" herein), the Company agreed to maintain in a restricted cash account all proceeds, less debt service and approved expenses, generated by our Powerhouse One subsidiary. Such account provides a minimum of $82,050 replacement reserve ("module reserve") on solar panels found to be defective and potentially not covered under the 25-year manufacturer's warranty. Funds in excess of the module reserve may be accessed by the Company whenever the debt service coverage ratio is greater than or equal to 1.1:1.0.

Accounts Receivable

Accounts receivable are stated at amounts management expects to collect from outstanding balances. Management provides for probable uncollectible amounts through a charge to earnings and a credit to a valuation allowance based on its assessment of individual accounts. No allowance has been recorded in the accompanying financial statements.

Solar Arrays

Solar arrays are stated at historical cost, net of accumulated depreciation. Depreciation is computed using the straight-line method over the remaining estimated useful lives of the assets. The estimated useful lives of solar arrays are 25 years from the date first placed in service. Accumulated depreciation was $647,885 and $496,894 at June 30, 2015 and December 31, 2014, respectively. During the construction period, all costs and expenses related to the development and construction of a project, excluding administrative expenses, are recorded as construction in process.

In each case where a solar array is installed on property subject to a real estate lease, the Company is obligated to remove such installation at the end of the lease terms. As the expected termination dates including renewal periods are decades off (2041-2084); there is little experience uninstalling solar arrays anywhere in the world; costs are expected to be minimal; and the scrap value of the materials is expected to exceed the cost of removal, such removal costs have not been separately accounted for.

Long-Lived Assets

The recoverability of the carrying value of long-lived assets is assessed when an indicator of impairment has been identified.

For purposes of recognition and measurement of an impairment loss, a long-lived asset or group of assets is combined with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

For long-lived assets, when impairment indicators are present, the Company compares undiscounted future cash flows, including the eventual disposition of the asset group at market value, to the asset group’s carrying value to determine if the asset group is recoverable. If undiscounted cash flows are less than carrying value, the excess of carrying value over fair value is expensed in the period in which it is estimated to have occurred.

Power Purchase Agreement

The Company evaluated the PPA with reference to Accounting Standards Codification ("ASC") 805-20-25-10 entitled "Identifiable Intangible Assets" and determined that, while it is not separable from other assets, it does meet the contractual-legal criteria for separate recognition. Further evaluation with reference to ASC 840-10-15-6 entitled "Arrangements that qualify as Leases" concluded the PPA is not a lease, and reference to ASC 805-20-25-10 entitled "Identifiable Intangible Assets" concluded the PPA has no separately recordable value.

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Revenue Recognition

Power generation revenue is recognized as delivered to the purchaser based upon electrical meters affixed to the solar array and measuring kilowatt-hours produced. Our current power generation operations do not generate renewable energy credits, performance-based incentives, or similar credits to the benefit of the Company.

Income Taxes

Income taxes are recorded under the asset and liability method under which deferred tax assets and liabilities are determined based on the differences between the financial statement and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

We account for uncertain income tax positions in accordance with FASB ASC 740 entitled "Income Taxes". Interest costs and penalties related to income taxes are classified as interest expense and general and administrative costs, respectively, in our consolidated financial statements. Income tax returns are subject to a three-year statute of limitations during which they are subject to audit and adjustment. We file income tax returns in the United States federal jurisdiction and certain states.

Equity Transaction Fair Values

The estimated fair value of our Common Stock issued in share-based payments is measured by the more relevant of (1) the prices received in private placement sales of our stock or, (2) the Company's publically-quoted market price. We estimate the fair value of simple warrants and stock options when issued or, in the case of issuances to non-employees, when vested, using the Black-Scholes option-pricing ("Black-Scholes") model that requires the input of subjective assumptions. When valuing more complex warrants, options, or other derivative equity instruments, we use a binomial lattice-based option pricing model or Monte Carlo option pricing model, whichever management deems more appropriate in the circumstances. Recognition in stockholders’ equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period. Subsequent changes in fair value are not recognized.

Net Income (Loss) per Share

Basic net income or loss per share is computed by dividing the net income or loss attributable to common stockholders for the period by the weighted average number of shares of Common Stock outstanding for the period. Diluted income per share reflects the potential dilution of other potential issuances of Common Stock including shares to be issued upon exercise of options and warrants and upon conversion of convertible debt and preferred stock. Potentially dilutive shares are not included in the event of a loss as the effect of doing so would be anti-dilutive. As of June 30, 2015, options to purchase 819,591 shares, warrants to purchase 464,013 shares of our Common Stock, and 467,501 shares issuable upon the conversion of convertible notes payable have been excluded from the calculation of diluted loss per share, as their effect would have been anti-dilutive. As of June 30, 2014, options to purchase 408,834 shares and warrants to purchase 587,592 shares of our Common Stock have been excluded from the calculation of diluted loss per share as their effect would have been anti-dilutive.

NOTE 3 - LIABILITIES ARISING FROM REVERSE MERGER

Liabilities arising from the reverse merger represent long term real estate leases which had been abandoned, general unsecured liabilities, commercial liens, and tax liens filed with various states all associated with the Company’s pre-reverse merger operations, which were unknowingly assumed in the March 2011 reverse merger transaction. The statute of limitations for most of such liabilities is five years and for most liens is ten years, subject to renewal at the lien holders’ option, depending upon the jurisdiction. Although the liens accrue interest at between 8% and 12% per year, the Company has ceased accruing interest as it believes the liability recorded to date is adequate to cover the ultimate claims that may, one day, be presented. Liabilities not associated with a lien have been accrued based upon management’s estimation of the amount to be paid. Liabilities associated with a lien have been accrued at face value. Management believes all such liabilities have been indemnified by Pegasus Funds, LLC (and/or its affiliates or related parties) to which (including its assigns) the Company issued 534,654 shares of its common stock as part of the reverse merger transaction. However, as the Company is obligor, the Company has recorded the liability. To date, only one lien holder has approached the Company concerning payment. Such lien holder is pursuing the former management of the Company first through litigation. To the extent such lien holder recovers the liability from the former management, the lien against the Company will be reduced.

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In March 2015, the Company entered into a settlement agreement with Pegasus Funds LLC ("Pegasus") regarding its indemnification of the Company in regards to the legacy liabilities. In the settlement agreement, the Company agreed to accept the return of 215,154 shares of the original 534,654 shares of its Common Stock issued to Pegasus and its principals and affiliates in acquiring the shell company, Kupper Parker Communications, Inc., which later became Principal Solar, Inc. As the shares of Common Stock were initially issued in a common stock for preferred stock share exchange with Pegasus, the shares returned by Pegasus will be cancelled without further accounting recognition. Cancellation of the shares will be recognized for accounting purposes once they are received from Pegasus.

In the settlement with Pegasus, the Company preserved its rights to pursue the individual(s) serving as officers of Kupper Parker Communications, Inc. prior to the exchange of shares, who had agreed in the Exchange Agreement to "satisfy and assume liability for the payment of any additional liabilities not identified" in the agreement. In April 2015 the Company filed a lawsuit against the remaining individual serving as an officer of Kupper Parker Communications, Inc. prior to the exchange of shares seeking an amount of $991,371 plus accruing interest and legal fees. Any recovery from the lawsuit is uncertain at this time, and such recovery would in no way diminish our potential obligation to third parties.

NOTE 4 - COMPENSATION PAYABLE

Certain members of the management team have deferred payment of their compensation for the benefit of the Company. No interest is accrued on such deferral and no formal terms of payment have been established.

NOTE 5 - ACQUISITIONS

Principal Sunrise IV (fka "IS 46")

In November 2014, the Company entered into a Membership Interest Purchase Agreement ("MIPA") with Innovative Solar Systems, LLC, a solar developer operating primarily in North Carolina, to acquire Innovative Solar 46, LLC ("PS IV"), the owner of a 78.5mw AC solar project to be built in Cumberland County, North Carolina.

On August 11, 2015, the Company assigned its contractual rights under the MIPA for the amount of $7.0 million and the reimbursement of its advances to date under the MIPA of $4.7 million. The net proceeds from the assignment were scheduled to be received by the Company as follows: $7.6 million at closing; $2.5 million on August 31, 2015; $1.6 million at the project's commercial operation date, expected to be early 2016. The gain on the transaction is expected to be approximately $6.8 million after transaction costs estimated at $200,000. See NOTE 14 "Assignment of Principal Sunrise IV".

Principal Sunrise V (fka "IS 42") (pending)

On March 2, 2015, the Company entered into a MIPA with Innovative Solar Systems, LLC, a solar developer operating primarily in North Carolina, to acquire Innovative Solar 42, LLC ("PS V"), the owner of a 72.9mw AC solar project to be built in Fayetteville, North Carolina. PS V holds a single and intangible asset, a 10-year power purchase agreement ("PPA") with Duke Energy Progress, Inc. PS V does not have, nor has it ever had, any other assets, any liabilities, any employees, any revenues, or any operations of any kind. As such, PS V is not a "business" as defined in the accounting literature, and it has no historical financial statements. PSI agreed to pay Innovative Solar Systems, LLC $5,832,000 for 100% of the membership interest of PS V in a series of payments of approximately $300,000 per month between execution of the MIPA and the financial close (the point at which all project financing is arranged), and a balloon payment at financial close sufficient to having cumulatively paid 70% of the $5,832,000 purchase price. The remaining 30% of the purchase price will be paid in installments of $150,000 per month through the project's commercial operation date. At June 30, 2015, a total of $1,170,000 has been paid to date, and failure by the Company to make any of the future scheduled payments may result in the loss of all payments made through such date. The Company is working with engineering and construction firms on final designs, and the total cost of the project based upon the preliminary work is expected to be approximately $147.2 million. The Company is in discussion with multiple parties to provide the acquisition, construction, and permanent financing for the project, however, no assurance can be given that adequate financing on terms acceptable, or even available, to the Company will be obtained. Closing of the acquisition is expected to occur no later than August 30, 2015, and construction is expected to be completed in early 2016.

- 10 -

The acquisition of Principal Sunrise VII for which the Company entered into a binding term sheet on June 9, 2015, did not meet our expectations and was abandoned. Evaluation costs incurred to the point the acquisition was abandoned were not material and expensed in the current period.

NOTE 6 - NOTES PAYABLE

Acquisition Note Payable

On June 17, 2013, Powerhouse One, LLC secured financing of $5,050,000 from Bridge Bank, National Association to acquire the membership interest (and the underlying solar arrays) of co-sellers, Vis Solis, Inc., a Tennessee limited liability company, and AstroSol, Inc., a Tennessee corporation. The note matures on June 17, 2017, and bears a fixed interest rate of 7.5% annually. Interest is paid monthly and principal is paid quarterly beginning in September 2013 based on an 11-year amortization schedule. Covenants include the maintenance of a restricted cash account, routine reporting, and a minimum debt service coverage ratio calculated separately for Powerhouse One of not less than 1.10:1, measured quarterly following the first anniversary of the debt. The debt also restricts the payment of dividends, and it is secured by all the assets of Powerhouse and further guaranteed by Principal Solar, Inc.

In conjunction with the acquisition note payable, warrants to purchase 37,763 shares of Common Stock were issued to Bridge Bank with an exercise price of $4.00 and a contractual life of 10 years. The value of the warrants issued in connection with this debt, as determined using the Black-Scholes model, was $81,449 and is recorded as a discount to the debt. The discount is being amortized as interest expense over the life of the note.

The Bridge Bank warrants have cashless exercise rights, redemption rights providing the Company the right to redeem the warrants for $604,200, anti-dilution rights associated with offerings of equity securities, a term expiring on the first to occur of (i) the 10 year anniversary of the grant, (ii) the closing of the Company’s initial public offering, or (iii) the liquidation of the Company (each a “Termination Event”). In each case, unless exercised earlier, the warrants are automatically exercised on a cashless basis upon a Termination Event. The Company also provided the holder registration rights in connection with the grant of the warrants.

Convertible Debenture (Alpha)

On March 2, 2015, the Company entered into a convertible loan agreement with Alpha Capital Anstalt ("Alpha") to borrow $1,250,000 (the "Loan"). The Loan is convertible into shares of Common Stock at a rate of $4.00 per share, bears interest at a rate of 8.0% per annum, all principal and interest is due on September 2, 2015, and the loan is secured by the assets of the Company and its subsidiaries (excluding Powerhouse One and all interest in its operations, its assets, and proceeds or distributions therefrom). The loan also contains certain "down round" protection that, due to the loan's short maturity, the prohibition in the debenture of issuing further debt, and management's assessment of the probability of issuing future convertible debt below $4.00 as remote, no separate value has been assigned to this aspect of the debt. The principal and accrued interest amounts on the Loan are convertible at any time into shares of Common Stock at a rate of $4.00 per share. In connection with the Loan, the Company granted Alpha 234,375 warrants having a term of 5 years and an exercise price of $6.00 per share (See NOTE 8 - DERIVATIVE LIABILITY ON WARRANTS). On July 1, 2015, the Company issued Convertible Debentures with a conversion price of $.50 per share and warrants exercisable at $6.00 per share (see NOTE 14 "Convertible Debentures (TCH)"). In its consent to this later transaction, Alpha waived its "down round" rights in this single instance.

Convertible Notes Payable, Related Parties

In June 2014, the Company issued convertible notes of $250,000 each to two of its Board members, Messrs. Heller and Marmol, to fund deposits on potential future acquisitions. Such potential acquisitions remain subject to significant uncertainties including due diligence, obtaining construction and permanent financing, and negotiating PPAs, developer agreements, and interconnection agreements. The notes bear interest at a rate of 18% per year and matured on December 5, 2014, and all principal and interest was due at maturity. Principal and interest is payable in cash or shares of Common Stock, at the option of the holder, at a conversion price of $4.00 per share. The notes were secured pursuant to a security agreement by the Company's interest in the otherwise unencumbered net cash flow, if any, from the operations of its Powerhouse One subsidiary. The Company may prepay the notes at any time, but the holders of the notes were guaranteed to receive a minimum of six months interest on the notes.

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On February 27, 2015 (made effective on the original maturity date), the notes were modified to extend the maturity date to September 30, 2015, to reduce the interest rate from 18% to 12% per annum, to eliminate all collateral securing the notes, and to subordinate the note to the Convertible Debenture issued March 2, 2015. In May 2015, in connection with the issuance of Series A Preferred (See NOTE 9 "Series A Preferred"), the notes were again modified to subordinate them to the Series A Preferred. All other aspects of the notes remained unchanged.

On December 1, 2014, Michael Gorton, the Company's Chief Executive Officer, loaned to the Company pursuant to a convertible promissory note the amount of $130,000. The note initially would have matured on June 30, 2015, bears interest at a rate of 12% per annum, is convertible into shares of our Common Stock at a price of $6.00 per share, and was secured by a claim on proceeds, if any, of a solar project being acquired (PS IV). The notes can be prepaid at any time prior to maturity without penalty. On February 27, 2015, the note was modified to extend the maturity date to September 30, 2015, eliminate all collateral securing the note, and subordinate the note to the Convertible Debenture issued March 2, 2015. In May 2015, in connection with the issuance of Series A Preferred (See NOTE 9 "Series A Preferred"), the note was again modified to subordinate it to the Series A Preferred. All other aspects of the note remained unchanged.

Convertible Notes Payable, Non-Related Party

In January 2015, the Company issued a convertible note to an unrelated party in the amount of $50,000. The note bears interest at a rate of 12% per year and matures on September 30, 2015, and all principal and interest is due at maturity. Principal and interest is payable in cash or shares of Common Stock, at the option of the holder, at a conversion price of $6.00 per share. The note is secured pursuant to a security agreement by our interest in proceeds, if any, stemming from our interest in PS IV. The Company may prepay the note at any time without penalty.

NOTE 7 - LEASES

The Company's solar arrays sit on properties subject to long-term real estate leases (or similar agreements in the case of rooftop installations) with initial terms equal to the PPA and having one or more renewal options. Rental payments under the leases vary in type between fixed price, percentage of revenue, or, in the case of rooftop installations, no separate charge. The Company's current solar array installations are as follows:

Installation	Location	kW	Date	Term	Rent
Powerhouse One	Fayetteville, TN	3,000	Aug 2011	20 yr. + 2 5-yr renewals	4% of revenue
SunGen StepGuys	Alfred, ME	110	Sep 2009	25 yr. + 2 25-yr renewals	None

The Company recognized expenses of $17,806 and $20,541 in rent under the Powerhouse One lease in the six months ended June 30, 2015 and 2014, respectively.

In each case, the Company is obligated to remove such installations at the end of the lease terms. As the expected termination dates are decades off; there is little experience de-installing solar arrays anywhere in the world; and, costs are expected to be minimal; such removal costs have not been separately accounted for.

The Company maintains its headquarters in Dallas, Texas pursuant to a month-to-month lease at a cost of $500 per month.

NOTE 8 - DERIVATIVE LIABILITY ON WARRANTS

On March 2, 2015, the Company issued warrants to purchase 234,375 shares of Common Stock with a 66-month contractual term to Alpha Capital Anstalt in connection with the issuance of convertible debentures (See NOTE 6 "CONVERTIBLE DEBENTURE"). The warrants were immediately exercisable into the Company’s Common Stock with an exercise price of $6.00 per share. However, as the warrants have “down round” protection, they are treated as a derivative liability and were valued using a binomial lattice-based option valuation model using holding period assumptions developed from the Company's business plan and management assumptions, and expected volatility from comparable companies including OTC Pink^®and small-cap companies. Increases or decreases in the Company's share price, the volatility of the share price, changes in interest rates in general, and the passage of time will all impact the value of these warrants. The Company re-values these warrants at the end of each reporting period and any changes are reflected as gains or losses in current period results.

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Input assumptions on the issuance date were as follows:

Estimated fair value			$6.77
Expected life (years)			5.51
Risk free interest rate			1.65%
Volatility			146.11%

The fair value of the warrant derivative liability outstanding as of June 30, 2015, was determined using "Level 2 Observable Inputs" as defined in ASC 820, entitled "Fair Value Measurement".

The following table sets forth a summary of changes in fair value of the warrants in 2015:

Beginning balance December 31, 2014	$	-
Derivative warrants issued		1,586,884
Change in fair value included in net loss		(1,280,433	)
Balance at June 30, 2015	$	306,451

In this issuance of convertible debentures and warrants, done at arm's length between unrelated parties, the value of the warrants alone exceeded the proceeds received. The Company's need for ongoing financing made the transaction attractive, despite the economics. The application of FASB Topic 820 entitled "Fair Value Measurement", resulted in a loss on the date of issuance of $336,884, offset by a subsequent gain of $1,280,433 stemming from the subsequent movement in the price of our Common Stock, together resulting in a net gain on derivative liability warrants of $962,764 and $943,549 for the three and six months ended June 30, 2015, respectively.

On July 1, 2015, the Company issued Convertible Debentures with a conversion price of $.50 per share and warrants exercisable at $6.00 per share (see NOTE 14 "Convertible Debentures (TCH)"). In its consent to this later transaction, Alpha waived its "down round" rights in this single instance.

On May 6, 2015, the Company issued Series A Preferred stock (NOTE 9 “Preferred Stock”) resetting the exercise price of the warrants to $4.00 per share.

NOTE 9 – CAPITAL STOCK

Preferred Stock

The Company has authorized 100,000,000 shares of $.01 par value Class A preferred stock.

Series A Preferred (Mandatorily Redeemable)

On May 6, 2015, the Company contracted to issue, in two separate tranches, 500,000 shares of its newly designated $.01 par value Series A Preferred stock ("Series A Preferred") to an unrelated investor at a purchase price of $4.00 per share that could result in proceeds to the Company of up to $2,000,000. The preferred shares have a dividend rate of 12% per annum and, along with accrued dividends, are convertible into shares of our Common Stock at a price of $4.00 per share at any time on or before the third day following the receipt of proceeds from a public offering of securities of the Company. If the shares are not converted by the holder during that time, the Company shall redeem the shares at face value plus accrued dividends from the proceeds of the public offering.

The first tranche of $1,000,000 was funded on May 6, 2015. The second tranche of $1,000,000 was to be funded when a) a Registration Statement, as may be amended, was declared effective by the Securities and Exchange Commission, and b) the Company presented to the holder financing commitments to construct and operate one of our two announced solar projects, PS V.

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In connection with the issuance, the Company agreed to grant the holder warrants to purchase 375,000 shares of its Common Stock, 187,500 with each tranche, at a purchase price of $6.00 per share. As the warrants were not complex in nature, they were valued using the Black-Scholes option-pricing model.

Input assumptions on the issuance date were as follows:

Estimated fair value			$1.00
Expected life (years)			5.0
Risk free interest rate			1.58%
Volatility			168.93%

The Company evaluated the detachable warrants in accordance with FASB ASC No. 470-20, “Debt with Conversion and Other Options” and FASB ASC 815, “Derivatives and Hedging” and allocated the proceeds from issuance of the Series A preferred to the warrants based on the relative fair value of the preferred stock and warrants at issuance, and recorded the allocation to the warrants as additional paid-in capital. The allocation of the warrants to additional paid-in capital was offset by the accretion of the Series A Preferred.

Use of proceeds from the issuance is limited to repayment of a certain convertible note outstanding in the amount of $50,000, development of PS IV and PS V, and general corporate purposes. The incurrence of additional debt or issuance of additional preferred equity instruments, the payment of dividends, or the repurchase of our Common shares is prohibited.

Absent an IPO

The Company's failure to complete a public offering on or before July 1, 2015, was an event of default under the Series A Preferred, the remedy for which was the Company agreed to aggressively seek strategic alternatives including, without limitation, marketing the Company to a private equity group, seeking out a strategic purchaser, seeking a merger of equals, or selling its interest in one or more of the solar projects. The Company has taken such steps and considers the event of default of no further consequence.

The failure to complete an IPO on or before July 1, 2015, also caused the Series A Preferred to be reclassified from a convertible temporary equity to a mandatorily redeemable liability. Whereas the Series A Preferred incurred dividends prior to its reclassification on June 30, 2015, as a liability, it will incur interest expense thereafter.

	Series A
	Mandatority Redeemable
	Preferred Stock

Series A preferred stock issuance gross proceeds	$	1,000,000
Series A preferred issuance costs		(10,293	)
Net proceeds		989,707
Allocation of net proceeds to warrants		(156,270	)
Net proceeds allocated to Series A preferred stock		833,437
Accretion		166,563
Series A accrued dividends		18,333
Fair value of redeemable Series A preferred stock at June 30, 2015	$	1,018,333

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Common Stock

The Company has authorized 300,000,000 shares of $.01 par value Common Stock, and it trades on the OTC Pink^® under the symbol “PSWW.” Holders of our Common Stock are entitled to one vote per share and receive dividends or other distributions when, and if, declared by our Board of Directors. In addition to shares outstanding, we have reserved 966,090 shares for issuance upon exercise of equity incentive awards with options to purchase 819,591 shares of Common Stock granted to date.

Stueben Investment

Effective June 14, 2013, the Company entered into a Subscription Agreement with Steuben Investment Company II, L.P. (“Steuben”). Pursuant to the subscription agreement, Steuben purchased 727,273 shares of the Company’s common stock for an aggregate of $1,600,000 or $2.20 per share. As additional consideration in connection with the subscription, the Company granted Steuben warrants to purchase 545,455 shares of the Company’s common stock with an exercise price of $4.00 per share and a term of 10 years. The Company also provided Steuben registration rights whereby the Company was required to file a registration statement and take all necessary actions to maintain the availability of Rule 144 for a period of two years following its effective date. The registration statement became effective on February 3, 2015.

In the event we fail to take all necessary actions to enable Steuben to sell shares pursuant to Rule 144, we may have to pay to Steuben penalties totaling $216,000 which could have a material adverse effect on our available cash, limit our ability to raise capital, and negatively impact our results of operations. The Company has not accrued a liability for this potential penalty, as it believes the payment of any such penalty is not probable.

Restricted Stock

In January 2015, the Company awarded to an engineering firm, in exchange for its services on Principal Sunrise IV, 12,500 restricted shares pursuant to the 2014 Equity incentive Plan. The value of the shares on the date of grant totaled $37,500 and the amount was capitalized as construction in progress.

Stock Options

The Company maintains the 2014 Equity Incentive Plan (the "Plan"), pursuant to which 716,090 shares of Common Stock had previously been reserved for issuance. In January 2015, the Board of Directors reserved an additional 250,000 shares of Common Stock pursuant to the Plan and 819,591 of the total 966,090 reserved have been issued to date.

2015 Grants

In February 2015, the Company granted 6,250 options to acquire shares of Common Stock having an exercise price of $6.00 per share, a 10-year term, and immediate vesting to each of five directors as a discretionary bonus. The options were valued using the Black-Scholes model and the resulting equity-based compensation expense included in general and administrative expenses for 2015 was $187,500. The Company also granted in February 2015 options to acquire 6,000 shares of Common Stock to each of two advisors. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 5-years based upon their continued service of two years from the grant date. The options were valued using the Black-Scholes model and the resulting equity-based compensation expense included in general and administrative expenses for 2015 was $72,000. Finally, the Company granted to a consultant in February 2015 options to acquire 6,250 shares of Common Stock. The options have an exercise price of $6.00 per share, immediate vesting, and expiration dates extending to 10-years based upon continued service of three years from the date of grant. The options were valued using the Black-Scholes model and the resulting equity-based compensation expense included in general and administrative expenses for 2015 was $37,500.

In May 2015, the Company granted to two Board members options to acquire 18,000 shares of Common Stock each. The options have an exercise price of $6.00 per share, immediate vesting of 12,000 shares to reflect the grant that was overlooked in January 2014 and the balance vest over the following 8 months. The options expire 10-years from the date of grant. The options were valued using the Black-Scholes model and the resulting equity-based compensation expense included in general and administrative expenses for three month period ending June 30, 2015 was $146,065 and $48,688 of compensation expense related to options not yet vested remains unrecognized at June 30, 2015. Such amount is expected to be recognized during the remainder of 2015. In May 2015, the Company granted to a new Board member options to acquire 18,000 shares of Common Stock. The options have an exercise price of $6.00 per share, vest over 24 months, and expire 10-years from the date of grant. The options were valued using the Black-Scholes model and the resulting equity-based compensation expense included in general and administrative expenses for the three and six months ended June 30, 2015 was $8,115 and $89,262 of compensation expense related to options not yet vested remains unrecognized at June 30, 2015. Such amount is expected to be recognized during the years 2015 through 2017.

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Equity-based compensation expense included in general and administrative expenses for the three and six month in 2015 was $192,339 and $533,410, respectively.

As the Company does not have a significant history of post vesting exercises to estimate an expected life of the option, the simplified method was used wherein the expected life becomes the mid-point of the options vesting date and their contractual life. The valuation of all of the option issuances above were based upon the following parameters:

Estimated fair value	$	6.00
Expected life (years)		2.5	to	5
Risk free interest rate		0.52	to	1.58%
Volatility		168.93%

Warrants

The Company had 464,013 warrants outstanding at June 30, 2015, with a weighted average term of 5 years and a weighted average exercise price of $5.81 per share.

NOTE 10 - NONCONTROLLING INTEREST

The original owners of Powerhouse One continue to own approximately 11% of the membership interest of the limited liability company. The noncontrolling interests of equity investors in Powerhouse One is reported on the consolidated balance sheet and statement of operations as "Noncontrolling interest in subsidiary" ("noncontrolling interest") and reflects their respective interests in the equity and the income or loss of the limited liability company.

The following table sets forth the activity in the noncontrolling interest equity account during 2015:

Balance December 31, 2014	$	832,711
Earnings allocated to noncontrolling interest		24,535
Balance June 30, 2015		857,246

NOTE 11 – RELATED PARTY TRANSACTIONS

Other than the Board member options described herein in a note entitled "Stock Options”, the issuance of convertible notes described herein in the note entitled "Convertible Notes Payable, Related Parties", no other related party transactions occurred during the three and six months ended June 30, 2015 and 2014.

NOTE 12 - TAXES

Our estimated $9.2 million federal income tax net operating loss carryover expires over the period from 2030 through 2034. Our federal and state income tax returns are no longer subject to examination for years before 2011. We have taken no tax positions that, more likely than not, may not be realized.

The Company has established a valuation allowance to fully reserve the net deferred tax assets in the accompanying financial statements, due to the uncertainty of the timing and amounts of future taxable income.

NOTE 13 - COMMITMENTS AND CONTINGENCIES

In connection with the acquisition of Principal Sunrise IV (fka IS 46), a third-party arranged, on behalf of the Company, a letter of credit with the off-taker, Duke Energy Progress, Inc., in the amount of $800,000. In the event the letter of credit is drawn upon by the beneficiary, the Company is liable to the provider for the notional amount of the letter of credit plus its costs.

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NOTE 14 - SUBSEQUENT EVENT

Convertible Debentures (TCH)

On July 1, 2015, the Company agreed to issue, in one or more separate tranches, up to $2,000,000 of a newly created Senior Secured Convertible Debenture ("Debentures") security to three of its existing equity investors: Steuben Investment Company II, L.P. ("Steuben"), TCH Principal Solar, LP, ("TCH"), and SMCDLB, LLC ("SMC"). The Debentures:

●

bear an interest rate of 8% per annum, due and payable at maturity;

●

mature on September 1, 2015, provided however that the maturity date may be extended up to six months from the closing date if the maturity date for the Alpha Capital Anstalt ("Alpha") debt is also extended to be co-terminus with the Debentures;

●

are convertible into the Company's $.01 par value Common Stock at a rate of two shares of Common Stock for each $1.00 invested ($.50 per share) in the Debentures; and

●

may be prepaid by the Company at any time without penalty upon 10 days notice.

In connection with the Debentures, the Company granted to the holders 60-month warrants to purchase up to 166,667 shares of Common Stock at a price of $6.00 per share.

On August 12, 2015, the Convertible Debentures (TCH) were repaid in full for an amount of $1.1 million including $10 thousand of accrued interest.

Short-Term Advance

On August 3, 2015, the Company accepted a short-term advance from one of its consultants of approximately $240 thousand. The advance was non-interest bearing except amounts outstanding beyond October 3, 2015, bear interest at a rate of 12% per annum. The Company incurred a one-time fee of $36 thousand in connection with the advance.

On August 12, 2015, the short-term advance was repaid in full for an amount of $240 thousand plus the fee of $36 thousand.

Assignment of Principal Sunrise IV

On August 11, 2015, the Company assigned its contractual rights under the MIPA for the amount of $7.0 million and the reimbursement of its advances to date under the MIPA of $4.7 million. The net proceeds from the assignment were scheduled to be received by the Company as follows: $7.6 million at closing; $2.5 million on August 31, 2015; $1.6 million at the project's commercial operation date, expected to be early 2016. The gain on the transaction is expected to be approximately $6.8 million after transaction costs estimated at $200,000.

Proceeds from the assignment were used to: repay debt and accrued interest of the Convertible Debentures held by Alpha ($1.3 million); redeem the outstanding Series A Preferred ($1.03 million); repay the Convertible Debenture (TCH) issued July 1, 2015 ($1.1 million); repay convertible notes payable, related party ($724 thousand); repay convertible notes payable ($51 thousand); repay a short-term advance of August 3, 2015 ($276 thousand); pay deferred compensation ($1.2 million), accounts payable, and for general working capital. Following application of the proceeds as described above, the Company has no debt or redeemable preferred stock outstanding except the Acquisition Note Payable (NOTE 5) and the note payable for insurance premiums.

In addition to amounts owed by the assignee to the Company at the project’s commercial operation date, the assignee owes the seller, Innovative Solar Systems, LLC, an additional $600 thousand. If the assignee, for whatever reason, fails to pay the amount due the seller, the Company has agreed to do so thereby creating a contingent liability of the Company. Additionally, as a part of the closing, the assignee and the Company agreed to escrow the scheduled August 31, 2015, payment pending the Company meeting its on-going responsibilities as co-developer including, but not limited to, advising on engineering matters, providing technical assistance on project design, overseeing substation design and construction, organizing documentation and permitting, interpreting test results, and opining on final acceptance matters, and resolving a fee dispute related to the project.  Finally, the assignee, the Company, and the third-party arranging a letter of credit in connection with Principal Sunrise IV (see NOTE 13), have separately agreed to relieve the Company of its obligation under the letter of credit.

Sale of Powerhouse One

On August 17, 2015, the Company sold its Powerhouse One subsidiary in exchange for $1.6 million, the payment of $767 thousand due to the minority owners, and extinguishmentof the Acquisition Note Payable (see NOTE 5) having an outstanding balance of $4.5 million. Proceeds from the sale will be used to further reduce accounts payable, deferred compensation, and for general working capital purposes. Though the asset represented the Company's primary source of revenue, the cost of operations and debt service consumed nearly all the net cash flow.

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

This Item 2 should be read in the context of the information included in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission and elsewhere in this Quarterly Report, including our financial statements and accompanying notes in Item 1 of this Quarterly Report.

BUSINESS

Our primary objective is to build a significant, innovative and valuable solar company. We are currently employing our business expertise, our Board of Directors, advisory team and employee expertise with the goal of accelerating growth in an industry that we believe is ripe for consolidation today based upon our management’s observation that the solar industry has many unrelated participants (i.e., that it is "fragmented"), our observation of the industry's rapid expansion and growing acceptance of solar generation, and the observable declining costs for solar panels and inverters. These observations have caused us to believe the solar industry is on the brink of building very large scale projects in the next two to three years due to the number of projects currently proposed. The Company plans to:

	1.	Aggregate the large community of fragmented solar entities in an accelerating acquisition strategy with the goal of creating a large balance sheet of solar electricity generation.
	2.	Establish thought leadership by networking with, in the view of our management, some of the best-known and highly regarded individuals in the sector, who author white papers, define standards and host webinars at www.PrincipalSolarInstitute.org.

	3.	Develop new commercial utility-scale solar projects leveraging our existing partnerships and relationships and those of our Board members and advisors, many of whom have spent decades in management roles within the traditional utility or energy industries, to make introductions to solar project developers, financiers, and utility industry executives with whom we hope to negotiate power purchase agreements, interconnection agreements, and other agreements.
	4.	Build an entity capable of creating innovative large-scale solar projects by hiring capable and experienced engineers and engaging developers experienced in the design and construction of large-scale solar projects, both domestically and abroad; by hiring capable executives in accounting, legal, real estate, etc., necessary to manage such an endeavor; and by obtaining financing from commercial banks, non-bank lenders (assuming such financing is available), and one or more public or private offerings of our equity securities in combination sufficient to fund the project. We expect such financing needs could fall within the range of $1.5 to $2.0 billion, which funding may not be available on favorable terms, if it all.

To date, we have completed the acquisition of four entities (including three solar power production companies). We have begun to create what we call the “world’s first distributed solar utility” - although there are many individual solar projects in operation throughout the world, we don’t believe that anyone has previously attempted to bring together multiple, disparate, geographically diverse solar projects under common ownership thereby building a complete utility-scale solar power generation company. We utilize a partnership strategy that leverages creative deal making expertise and our team of energy industry personnel with significant experience in the industry.

Our strategy is to couple an aggregate of fifty years of electric utility expertise with business expertise, entrepreneurial innovation, financial know-how, and solar engineering to create a new era in electricity generation. We hope to become the recognized leader in solar energy delivery by consolidating a significant share of the fragmented solar market to gain significant momentum and, when grid parity (i.e., solar power being as expensive if not cheaper than traditionally generated energy) has arrived, building large scale projects with an ultimate goal of generating gigawatts (GW) of cost effective, clean electricity with the goal of stabilizing electrical prices and preserving natural resources.

COMPARISON OF OPERATING RESULTS

(all amounts rounded to the nearest thousand)

Three Months Ended June 2015 and 2014

Power generation revenue was $288 thousand in 2015 compared to $283 thousand in 2014.

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Direct operating costs declined $23 thousand in 2015 compared to 2014. Repairs and maintenance decreased by $15 thousand reflecting 2014 costs incurred to clear trees and perform additional preventative maintenance. Insurance and lease expense each decreased by $5 thousand as 2014 reflecting a cumulative adjustment from prior periods. Property taxes increased by $5 thousand as 2015 included cumulative adjustments from prior periods. Other direct costs netted to a decrease of $3 thousand.

The increase in general and administrative expenses of approximately $850 thousand was comprised of:

Increases

●

an increase in equity compensation (non-cash) expense of $154 thousand resulting from option grants to members of the Board of Directors, and $21 thousand resulting from options granted to executives and Board members in the intervening periods

●

an increase in consulting costs of $99 thousand resulting from two additional individuals supporting our fundraising efforts

●

an increase of $46 thousand stemming from the engagement of an investor relations firm in connection with a public offering

●

an increase of $700 thousand for accounting, legal, offering expenses and filing fees resulting from a public offering that was ultimately withdrawn

Decreases

●

a decrease of $29 thousand in public relations expenses as we renegotiated the contract to better reflect our level of activity and a shift to investor relations

●

a decrease of $21 thousand in the Delaware franchise tax as 2014 included a cumulative full year adjustment for 2013 whereas the expense is now recorded and paid quarterly

●

a reclassification of $100 thousand in advisory and engineering expenses to construction in progress.

●

other changes netting to a decrease of $20 thousand

Interest expense increased by $662 thousand including an increase of $676 thousand ($44 thousand in cash and $632 thousand non-cash reflecting the amortization of the debt discount attributed to the warrants) resulting from the March 2, 2015, issuance of debentures to Alpha Capital Anstalt; offset by a $12 thousand decrease resulting from the cessation at December 31, 2014, of the interest accrual for legacy liabilities; and other insignificant changes.

Due to movements in the price of the Company's stock, the withdrawal of a public offering, and changes in the Company's future prospects, our independent valuation firm estimated a decline at June 30, 2015, in the value of the warrants issued in connection with the March 2, 2015, issuance of debentures to Alpha Capital Anstalt. As a result, the derivative liability was reduced and the Company recorded a gain of $963 thousand in the three months ended June 30, 2015.

Six Months Ended June 2015 and 2014

Power generation revenue was $472 thousand in 2015 compared to $501 thousand in 2014, a decrease of $29 thousand. The decrease is due to protracted snows in the northeastern U.S. during the last winter (the location of our SunGen Mill 77 facility) and extended periods of rain in the Midwest in the spring (the location of our Powerhouse One facility).

Direct operating costs declined $23 thousand in 2015 compared to 2014. Repairs and maintenance decreased by $15 thousand reflecting 2014 costs incurred to clear trees and perform additional preventative maintenance. Insurance and lease expense each decreased by $5 thousand as 2014 reflecting a cumulative adjustment from prior periods. Property taxes increased by $5 thousand as 2015 included cumulative adjustments from prior periods. Other direct costs netted to a decrease of $3 thousand.

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The increase in general and administrative expenses of approximately $1.3 million was comprised of:

Increases

●

an increase in equity compensation (non-cash) expense of $474 thousand for a total of $535 thousand for the six months including $341 thousand resulting from option grants to members of the Board of Directors, $110 thousand resulting from option grants to advisors, $37 thousand resulting from options granted to a business partner; and $47 thousand resulting from option granted in prior periods

●

an increase in consulting costs of $128 thousand resulting from two additional individuals supporting our fundraising efforts

●

an increase of $32 thousand in legal fees stemming from financings including the March 2, 2015, including $30 thousand stemming from the issuance of debentures with Alpha Capital Anstalt, $10 thousand stemming from the May 6, 2015, issuance of Series A Preferred stock, offset by decreases in other legal fees

●

an increase of $93 thousand stemming from the engagement of an investor relations firm in connection with a public offering

●

an increase of $741 thousand for accounting, legal, offering expenses and filing fees resulting from a public offering that was ultimately withdrawn

Decreases

●

a decrease of $67 thousand in public relations expenses as we renegotiated the contract to better reflect our level of activity and a shift to investor relations

●

a decrease of $25 thousand in the Delaware franchise tax as 2014 included a cumulative full year adjustment for 2013 whereas the expense is now recorded and paid quarterly

●

a reclassification $100 thousand of advisory and engineering expenses to construction in progress.

●

other changes netting to a decrease of $20 thousand

Interest expense increased by $885 thousand including an increase of $866 thousand ($33 thousand in cash and $833 thousand non-cash reflecting the amortization of the debt discount attributed to the warrants) resulting from the March 2, 2015, issuance of debentures to Alpha Capital Anstalt; an increase of $44 thousand incurred for the convertible notes (related parties and others); offset by a $25 thousand decrease resulting from the cessation at December 31, 2014, of the interest accrual for legacy liabilities; and other insignificant changes.

Due to movements in the price of the Company's stock, the withdrawal of a public offering, and changes in the Company's future prospects, our independent valuation firm estimated a decline at June 30, 2015, in the value of the warrants issued in connection with the March 2, 2015, issuance of debentures to Alpha Capital Anstalt. As a result, the derivative liability was reduced and the Company recorded a gain of $944 thousand in the six months ended June 30, 2015.

COMPARISON OF BALANCE SHEETS

(all amounts rounded to the nearest thousand)

Significant changes in the balance sheet between June 30, 2015, and December 31, 2014, include the following:

Accounts receivable increased by $92 thousand due to better production in May/June compared to the November/December.

Deposits were $250 thousand in December 2014 consisting on money advances on Principal Sunrise V, and $70 thousand in June 2015 consisting of amounts advanced in anticipation a public offering later withdrawn. The funds were refunded to the Company in July 2015.

Construction in progress increased $4.4 million between December 2014 and June 2014 reflecting additional development on Principal Sunrise IV.

Compensation payable increased $399 thousand between December 2014 and June 2014 reflecting the ongoing deferral of compensation by the Company's senior team.

Accounts payable increased $1.0 million between December 2014 and June 2014 reflecting the Company's limited availability of funds during that time.

Increases in convertible notes payable, convertible debenture payable, mandatorily redeemable Series A preferred stock, and the interest payable and additional paid in capital between December 2014 and June 2014 reflects the Company's ongoing fundraising efforts to meet its finding needs.

- 20 -

The increase in accrued expenses of $574 thousand between December 2014 and June 2014 reflects estimated costs associated with an anticipated public offering later withdrawn.

The creation of the derivative liability on warrants arising between December 2014 and June 2014 reflects the warrants issued in connection with the convertible debenture with Alpha Capital Anstalt.

LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity and Trends In Liquidity

Assignment of Principal Sunrise IV

On August 11, 2015, the Company assigned its contractual rights under the MIPA to acquire Principal Sunrise IV for the amount of $7.0 million and the reimbursement of its advances to date under the MIPA of $4.7 million. The net proceeds from the assignment were scheduled to be received by the Company as follows: $7.6 million at closing; $2.5 million on August 31, 2015; $1.6 million at the project's commercial operation date, expected to be early 2016.

Proceeds from the assignment were used to: repay all outstanding debt and redeemable preferred stock other than the Acquisition Note Payable and the note payable for insurance premiums. Assigning its rights to Principal Sunrise IV also relieved the Company of ongoing payment obligations totaling more than $500 thousand per month plus the cost of ongoing development efforts. Using the proceeds, the Company was also able to reduce its deferred compensation ($1.2 million) and its accounts payable. Following application of the proceeds from the assignment, the Company has no debt or redeemable preferred stock outstanding except the Acquisition Note Payable (NOTE 6 in Item 1 Financial Statements hereof.) and the note payable for insurance premiums.

Sale of Powerhouse One

On August 17, 2015, the Company sold its Powerhouse One subsidiary in exchange for $1.5 million, the payment of $767 thousand due to the minority owners, and assumption of the Acquisition Note Payable (see NOTE 5) having an outstanding balance of $4.5 million. Proceeds from the sale will be used to further reduce accounts payable, deferred compensation, and for general working capital purposes. Though the asset represented the Company's primary source of revenue, the cost of operations and debt service consumed nearly all the net cash flow.

Eliminating a significant amount of debt, the redeemable preferred stock, and the ongoing monthly obligations for Principal Sunrise IV, the Company is in an improved situation but remains dependent upon the remaining payments from the assignment of Principal Sunrise IV to maintain its business. Eliminating the debt, the redeemable preferred stock, and having the Acquisition Note Payable assumed as a part of the sale of Powerhouse One, also removed all prohibitions to raise money through future debt and equity offerings.

Cash flows from existing sources do not cover the costs of administering our business and our monthly net cash flow reflects a deficit of between $150,000 and $200,000 each month. We also expect the need for additional funds to increase as we seek additional acquisitions and meet our increasing reporting obligations (which will increase our quarterly operating expenses in connection with costs relating to the preparation of and filing of periodic reports, financial statements and other disclosures and filings with the Securities and Exchange Commission, which we estimate in the amount of $100,000 per quarter), and provide for the ongoing payments for our pending acquisitions until permanent financing is arranged, an additional $550,000 to $700,000 per month.

As is typical in early-stage companies, our liquidity and capital resources are limited. As such, we are highly dependent upon our ability to raise money in one or more private placements of equity securities in order to continue our operations and pursue our business plan. If we are unable to acquire additional funding to support our ongoing funding requirements, we may be required to curtail or cease operations.

To date, we have funded our operations primarily through private placements of common stock and convertible debt securities. Since the date of the reverse merger with Principal Solar Texas, we have sold 2,085,004 shares of our common stock for aggregate proceeds of $8,453,041. These sales of our common stock reflect issuance prices ranging from $2.20 to $6.76 per share (weighted average of $4.05). Though no longer outstanding, we have previously sold convertible debt yielding gross proceeds of $1,930,000, and preferred shares yielding proceeds of $990 thousand. Although we have successfully financed our operations through the issuance of common stock and convertible debt to date, we cannot be assured that we will be able to continue to be successful in financing our operations in the future.

Future acquisitions are expected to be separately financed and self-supporting from a cash flow perspective.

- 21 -

OFF-BALANCE SHEET ARRANGEMENTS

The assignment of the Company's contractual rights under the MIPA to acquire Principal Sunrise IV described under Liquidity and Capital Resources, eliminated the off-balance sheet obligation thereunder.

Principal Sunrise V (fka "IS 42") (pending)

On March 2, 2015, the Company entered into a MIPA with Innovative Solar Systems, LLC, a solar developer operating primarily in North Carolina, to acquire Innovative Solar 42, LLC ("PS V"), the owner of a 72.9mw AC solar project to be built in Fayetteville, North Carolina. PS V holds a single and intangible asset, a 10-year power purchase agreement ("PPA") with Duke Energy Progress, Inc. PS V does not have, nor has it ever had, any other assets, any liabilities, any employees, any revenues, or any operations of any kind. As such, PS V is not a "business" as defined in the accounting literature, and it has no historical financial statements. PSI agreed to pay Innovative Solar Systems, LLC $5,832,000 for 100% of the membership interest of PS V in a series of payments of approximately $300,000 per month between execution of the MIPA and the financial close (the point at which all project financing is arranged), and a balloon payment at financial close sufficient to having cumulatively paid 70% of the $5,832,000 purchase price. The remaining 30% of the purchase price will be paid in installments of $150,000 per month through the project's commercial operation date. At June 30, 2015, a total of $1,170,000 has been paid to date, and failure by the Company to make any of the future scheduled payments may result in the loss of all payments made through such date. The Company is working with engineering and construction firms on final designs, and the total cost of the project based upon the preliminary work is expected to be approximately $147.2 million. The Company is in discussion with multiple parties to provide the acquisition, construction, and permanent financing for the project, however, no assurance can be given that adequate financing on terms acceptable, or even available, to the Company will be obtained. Closing of the acquisition is expected to occur no later than August 30, 2015, and construction is expected to be completed in early 2016.

CRITICAL ACCOUNTING POLICIES

We use estimates throughout our statements and changes in estimates could have a material impact on our operations and financial position. We consider an accounting estimate to be critical if: (1) the estimate requires us to make assumptions about matters that are highly uncertain at the time the estimate is made or (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

There have been no changes in the critical accounting policies disclosed in our Annual Report on Form 10-K filed March 17, 2015.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary market risk is the continued acceptance of our debt and equity securities, the sale of which is necessary to finance our administrative and acquisition-related needs. See "Liquidity and Capital Resources" in Item 2 herein. There have been no changes in management's assessment of its risk as disclosed in our Annual Report on Form 10-K filed March 17, 2015.

ITEM 4 CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized, and reported within the time period specified in the SEC's rules and forms and is accumulated and communicated to the Company's management, as appropriate, in order to allow timely decisions in connection with required disclosure.

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Evaluation of Disclosure Controls and Procedures

The Company's principal executive officer and its principal financial officer carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of June 30, 2015, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, the Company's Chief Executive Officer and Chief Financial Officer concluded the Company's disclosure controls and procedures were effective as of June 30, 2015.

Changes In Internal Controls Over Financial Reporting

There were no changes in our internal controls over financial reporting during the three months ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. See Risk Factors in Part II item 1A herein.

Limitations on the Effectiveness of Controls

The Company’s disclosure controls and procedures are currently providing the Company’s Chief Executive Officer and Chief Financial Officer with reasonable assurances that the Company’s disclosure controls and procedures will achieve their objectives. The Company’s management does not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting can or will prevent all human error. A control system, no matter how well designed and implemented, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact that there are internal resource constraints, and the benefit of controls must be weighed relative to their corresponding costs. Because of the limitations in all control systems, no evaluation of controls can provide complete assurance that all control issues and instances of error, if any, within the Company’s financial statements are detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur due to human error or mistake. Additionally, controls, no matter how well designed, could be circumvented by the individual acts of specific persons within the organization. The design of any system of controls is also 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 objectives under all potential future conditions.

We are a smaller reporting company and are required to comply with the internal control reporting and disclosure requirements of Section 404 of the Sarbanes-Oxley Act. Although we are working to comply with these requirements, we have limited financial personnel making compliance with Section 404 - especially with segregation of duty control requirements – very difficult, if not impossible, and cost prohibitive. While the SEC has indicated it expects to issue supplementary regulations easing the burden of Section 404 requirements for smaller reporting companies like us, such regulations have not yet been issued.

- 23 -

PART II

ITEM 1 LEGAL PROCEEDINGS

The descriptions of liabilities arising from the reverse merger in Note 3 of the Notes to Unaudited Consolidated Financial Statements in Part I Item 1 of this Quarterly Report is incorporated herein by reference.

ITEM 1A RISK FACTORS

An additional risk factors not included in the Annual Report on Form 10-K filed with the SEC on March 17, 2015, or the Quarterly Reports on Form 10- Q filed May 13, 2015:

The sale of the Company's Powerhouse One subsidiary leaves it with no meaningful source of revenue.

Historically, more than 96% of our consolidated power generation revenue arose from our Powerhouse One solar installation in Fayetteville, Tennessee. With the sale of Powerhouse One, the Company has eliminated it primary source of revenue and is dependent upon the remaining payments from the assignment of its contractual rights in Principal Sunrise IV and the proceeds from the sale of Powerhouse One to maintain its business.

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarterly period covered by this report, the Company completed additional closings of its private placement of equity securities pursuant to which it sold 279,835 shares of its Common Stock at a price of $6.00 per share resulting in gross proceeds to the Company of $1,679,001, all of which was used to fund the Company's administrative needs and further its acquisitions of PS IV and PS V.

On May 6, 2015, the Company contracted to issue, in two separate tranches, 500,000 shares of its newly designated $.01 par value Series A Preferred stock ("Series A Preferred") to an unrelated investor at a purchase price of $4.00 per share that could result in proceeds to the company of up to $2,000,000. The preferred shares have a dividend rate of 12% per annum and, along with accrued dividends, are convertible into shares of our Common Stock at a price of $4.00 per share at any time on or before the third day following the receipt of proceeds from the Company's current public offering. If the shares are not converted by the holder during that time, the Company shall redeem the shares at face value plus accrued dividends from the proceeds of the public offering. In connection with the issuance, the Company granted the holder warrants to purchase 375,000 shares of its Common Stock, also in two tranches, at a purchase price of $6.00 per share. Use of proceeds from the issuance is limited to repayment of a certain convertible note outstanding in the amount of $50,000, development of PS IV and PS V, and general corporate purposes. The Company agreed to deliver subordination agreements regarding convertible notes held by related parties, and the incurrence of additional debt or issuance of additional equity instruments superior to the Series A Preferred, the payment of dividends, or the repurchase of our Common shares is prohibited.

No underwriters were involved in the transactions described above. The Company’s issuance of Common Stock, convertible debt, warrants, and any Common Stock issuable upon conversion or exercise thereof, was, or will be, exempt from registration under the Securities Act of 1933 pursuant to exemptions from registration provided by Rule 506 of Regulation D and Sections 4(2) of the Securities Act of 1933, insofar as such securities were issued only to “accredited investors” within the meaning of Rule 501 of Regulation D. The recipients of these securities took such securities for investment purposes without a view to distribution. Furthermore, they each had access to information concerning the Company and its business prospects. There was no general solicitation or advertising for the purchase of the securities and the securities are restricted pursuant to Rule 144.

ITEM 6 EXHIBITS

The Exhibit Index immediately preceding the exhibits required to be filed with this report is incorporated herein by reference.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

August 19, 2015
	PRINCIPAL SOLAR, INC.
	(Registrant)


	/s/ David N. Pilotte
	David N. Pilotte
	Chief Financial Officer

- 25 -

EXHIBIT INDEX

Exhibit Number		Description of Exhibit

2.1(1)		Exchange Agreement (March 7, 2011), Principal Solar (Texas), the Company, the shareholders of Principal Solar (Texas) and Pegasus Funds LLC

3.1(13)		Certificate of Incorporation (Delaware) (September 27, 2012)

3.2(13)		Certificate of Ownership and Merger (Delaware) (October 3, 2012)

3.3(12)		Bylaws

3.4 (10)		Certificate of Amendment to the Certificate of Incorporation (May 6, 2015)

4.1(1)		Form of Common Stock Certificate

4.2(5)		2014 Equity Incentive Plan (June 11, 2014)

4.3(6)		8% Senior Secured Convertible Debenture due September 2, 2015, with Alpha Capital Anstalt (March 2, 2015)

4.4(6)		Common Stock Purchase Warrant with Alpha Capital Anstalt (March 2, 2015)

4.5(17)		Binding Term Sheet to issue up to $2 million in Senior Secured Convertible Debentures dated July 1, 2015

10.1(1)		Employment Agreement with Michael Gorton (January 1, 2012)

10.2(1)		Form of Nonstatutory Stock Option Agreement

10.3(1)		Form of Nonstatutory Stock Option Grant Notice

10.4(1)		Employment Agreement with R. Michael Martin

10.5(1)		Common Stock Warrant to Purchase 151,050 Shares of Common Stock (Bridge Bank) (June 17, 2013)

10.6(1)		Warrant to Purchase 2,181,818 Shares of Common Stock (Steuben Investment Company II, L.P.) (June 14, 2013)

10.7(1)		Registration Rights Agreement (Steuben Investment Company II, L.P.) (June 14, 2013)

10.8(1)		Purchase and Sale Agreement (Powerhouse One, LLC Acquisition) (December 31, 2012)

10.9(1)		First Amendment to Purchase and Sale Agreement (Powerhouse One, LLC Acquisition) (June 2013)

10.10(1)		Loan and Security Agreement (Powerhouse One, LLC Acquisition) (June 2013)

10.11(1)		Pledge and Security Agreement dated June 10, 2013, by and between the Company, Vis Solis, Inc. and Astrosol, Inc. in favor of Bridge Bank

10.12(1)		Guaranty dated June 10, 2013 by the Company in favor of Bridge Bank

10.13(1)		Consulting Agreement with Carlyle Capital Markets, Inc. (December 4, 2013)

10.14(2)		Letter Agreement with Steuben Investment Company II, L.P. Regarding Registration Rights Agreement Penalties (February 5, 2014)

- 26 -

10.15(2)		Professional Services Agreement with DNP Financial, LLC (January 14, 2014)

10.16(2)		Form of Generation Partners Amended and Restated Pilot Extended Participation Agreement (power purchase agreement)

10.17(3)		Form of Convertible Corporate Promissory Note (Secured) with Messrs. Heller and Marmol (June 5, 2014)

10.18(3)		Form of Corporate Security Agreement with Messrs. Heller and Marmol (June 5, 2014)

10.19(4)		Amendment #1 to Registration Rights Agreement (October 7, 2014)

10.20(5)		Membership Interest Purchase Agreement with Innovative Solar Systems, LLC re Innovative Solar 46, LLC (November 6, 2014)

10.21(5)		Warrant Exercise Agreement with Steuben Investment Company II, L.P. (November 1, 2014)

10.22(5)		Form of Note and Security Modification Agreement re Corporate Convertible Promissory Note (Secured) with Messrs. Heller and Marmol (December 5, 2014)

10.23(5)		Form of Stock Option Notice and Agreement

10.24(6)		Securities Purchase Agreement with Alpha Capital Anstalt (March 2, 2015

10.25(6)		Security Agreement with Alpha Capital Anstalt (March 2, 2015)

10.26(6)		Subsidiary Guaranty with Alpha Capital Anstalt (March 2, 2015)

10.27(9)		Engineering, Procurement and Construction Agreement between Principal Solar, Inc. and Alpha Technologies Services (April 27, 2015)

10.28(11)		Membership Interest Purchase Agreement with Innovative Solar Systems, LLC re Innovative Solar 42, LLC (March 2, 2015)

10.29(13)		Purchase and Sale Agreement with SMCDLB, LLC re Series A Preferred Stock (May 15, 2015)

10.30(13)		Warrant to Purchase Common Stock issued to SMCDLB, LLC (May 15, 2015)

10.31(13)		Form of Note and Security 2nd Modification Agreement re Corporate Convertible Promissory Note (Secured) with Messrs. Gorton, Heller, and Marmol (May 11, 2015)

10.32(8)		Binding Term Sheet re Joint Development Agreement by and between Principal Solar, Inc. and Energy Surety Partners, LLC dated June 5, 2015.

10.33(16)		Binding Term Sheet by and between Principal Solar, Inc. and Innovative Solar Systems, LLC dated June 9, 2015

10.34(18)		Assignment Agreement among Principal Solar, Inc., Carolina Energy Partners II, LLC, and Innovative Solar Systems, LLC dated August 11, 2015, re the Membership Interest Purchase Agreement to acquire Innovative Solar 46, LLC dated November 6, 2014

10.35*		Purchase and Sale Agreement by and among Principal Solar, Inc. et al (sellers) and Magnolia Sun, LLC (buyer) re the sale of Powerhouse One, LLC (August 18, 2015)

14.1(7)		Code of Business Conduct (March 10, 2015)

21.1(15)		Subsidiaries of the Registrant

- 27 -

31.1*		Certification pursuant to Rule 13a-14(a)/15d-14(a) (Chief Executive Officer)

31.2*		Certification pursuant to Rule 13a-14(a)/15d-14(a) (Chief Financial Officer)

32.1*		Section 1350 Certification (Chief Executive Officer)

32.2*		Section 1350 Certification (Chief Financial Officer)

99.1(1)		Glossary

101.INS*		XBRL Instance
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation
101.DEF*		XBRL Taxonomy Extension Definition
101.LAB*		XBRL Taxonomy Extension Labels
101.PRE*		XBRL Taxonomy Extension Presentation

* Filed herewith.

(1) Filed as exhibits to the Company’s Registration Statement on Form S-1 (File: 333-193058), filed with the Securities and Exchange Commission on December 23, 2013, and incorporated herein by reference.

(2) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 1 (File: 333-193058), filed with the Securities and Exchange Commission on May 2, 2014, and incorporated herein by reference.

(3) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 2 (File: 333-193058), filed with the Securities and Exchange Commission on July 17, 2014, and incorporated herein by reference.

(4) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 4 (File: 333-193058), filed with the Securities and Exchange Commission on October 20, 2014, and incorporated herein by reference.

(5) Filed as exhibits to the Company’s Registration Statement on Form S-1/A, Amendment No. 5 (File: 333-193058), filed with the Securities and Exchange Commission on December 22, 2014, and incorporated herein by reference.

(6) Filed as exhibits to the Company’s Current Report on Form 8-K/A (File: 333-193058), filed with the Securities and Exchange Commission on March 5, 2015, and incorporated herein by reference.

(7) Filed as an exhibit to the Annual Report on Form 10-K (File: 333-193058), filed with the Securities and Exchange Commission on March 17, 2015, and incorporated herein by reference.

(8) Filed as Exhibits to the Company's Registration Statement on Form S-1/A, Amendment No. 3 (File: 333-203075), filed with the Securities and Exchange Commission on June 5, 2015.

(9) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on May 1, 2015, and incorporated herein by reference.

(10) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on May 12, 2015, and incorporated herein by reference.

(11) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q (File: 333-193058) filed with the Securities and Exchange Commission on May 13, 2015, and incorporated herein by reference.

(12) Filed as exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File: 333-193058), filed with the Securities and Exchange Commission on December 23, 2013, and incorporated herein by reference.

(13) Filed as Exhibits to the Company’s Registration Statement Filed on Form S-1/A, Amendment No. 1 (File: 333-203075), filed with the Securities and Exchange Commission on May 19, 2015.

(14) Filed as Exhibits to the Company’s Registration Statements on Form S-1/A, Amendment No. 2 (File: 333-203075), filed with the Securities and Exchange Commission on May 21, 2015.

(16) Filed as an Exhibit to the Company’s Registration Statement on Form S-1/A, Amendment No. 4 (File: 333-203075), filed with the Securities and Exchange Commission on June 11, 2015.

(17) Filed as an exhibit to the Company's Current Report on Form 8-K/A (File: 333-193058) filed with the Securities and Exchange Commission on July 8, 2015, and incorporated herein by reference.

(18) Filed as an exhibit to the Company's Current Report on Form 8-K (File: 333-193058) filed with the Securities and Exchange Commission on August 17, 2015, and incorporated herein by reference.

- 28 -

Exhibit 10.35

PURCHASE AND SALE AGREEMENT

BY AND AMONG

MAGNOLIA SUN LLC
(the Purchaser),

PRINCIPAL SOLAR, INC.

VIS SOLIS, INC.

and

AstroSol, inc.

(the Sellers)

AND

PRINCIPAL SOLAR, INC.

(the Sellers' Representative)

August 18, 2015

TABLE OF CONTENTS

ARTICLE I DEFINITIONS		1

1.1	Definitions	1

ARTICLE II PURCHASE AND SALE OF THE INTERESTS		10

2.1	Sale of the Interests to the Purchaser	10
2.2	Purchase Price	10
2.3	Proration of Project Costs and Revenues	10
2.4	Confirmation of Proration	11
2.5	Option Payment	13

ARTICLE III CLOSING		13

3.1	Closing	13
3.2	Conditions Precedent to the Purchaser's Obligation to Close	13
3.3	Conditions Precedent to the Sellers' Obligation to Close	14
3.4	Deliveries and Actions Taken at the Closing	15

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SELLERS		17

4.1	Organization	17
4.2	Authority	17
4.3	Enforceability	17
4.4	No Conflicts; Consents and Approvals	17
4.5	Litigation	18
4.6	Interests	18
4.7	Brokers	18
4.8	Solvency	18

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANIES		19

5.1	Organization	19
5.2	Authority	19
5.3	No Conflicts; Consents and Approvals	19
5.4	Capitalization of the Companies	19
5.5	Financial Statements	20
5.6	Officers	20
5.7	Bank Accounts	20
5.8	Absence of Undisclosed Liabilities	20
5.9	Assets	21
5.10	Real Property	21
5.11	Contracts	22
5.12	Employees; Employee Benefit Plans	22
5.13	Intellectual Property	22
5.14	Permits; Compliance with Law	23

i

5.15	Litigation	24
5.16	Taxes	24
5.17	Environmental Matters	25
5.18	Absence of Changes	26
5.19	Affiliate Transactions	27
5.20	Insurance	27
5.21	Brokers	28
5.22	Minutes; Books and Records	28
5.23	Solar Data and Project Attributes	28
5.24	Accuracy of Materials	28

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER		28

6.1	Organization	28
6.2	Authority	28
6.3	Enforceability	29
6.4	No Conflicts; Consents and Approvals	29
6.5	Brokers	29
6.6	Litigation	29

ARTICLE VII COVENANTS		29

7.1	Access	29
7.2	Conduct of the Business	30
7.3	Books and Records	31
7.4	Bank Accounts and Email Addresses	31
7.5	Energy Regulatory Filings	31
7.6	Notification of Certain Matters	31
7.7	Further Assurances	32
7.8	Governmental Approvals	32
7.9	Tax Matters	33
7.10	Confidentiality	35
7.11	The Sellers' Representative	35

ARTICLE VIII INDEMNIFICATION		36

8.1	Indemnification	36
8.2	Claim Procedures	38
8.3	Survival of Claims	38
8.4	Exclusive Remedy	39
8.5	Third-Party Claims	39

ARTICLE IX TERMINATION		40

9.1	Causes of Termination	40
9.2	Effect of Termination	40
9.3	Specific Performance	40

ARTICLE X MISCELLANEOUS		40

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10.1	Entire Agreement	40
10.2	No Waiver; Modifications in Writing	41
10.3	Communications	41
10.4	Costs and Expenses	42
10.5	Counterparts	42
10.6	Binding Effect; Assignment	42
10.7	Governing Law and Jurisdiction; Waiver of Jury Trial	42
10.8	Severability of Provisions	43
10.9	Headings; Exhibits and Schedules	43
10.10	Terms Generally	43
10.11	Joint Effort	43

Exhibits

Exhibit A – Form of Assignment of Membership Interest

Exhibit B – Form of Non-Foreign Person Affidavit

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PURCHASE AND SALE AGREEMENT

This Purchase and Sale Agreement (this "Agreement") is made and entered into as of August 18, 2015 (the "Execution Date"), by and among Magnolia Sun LLC, a Delaware limited liability company (the "Purchaser"), Principal Solar, Inc., a Delaware corporation ("Principal Solar"), Vis Solis, Inc., a Tennessee corporation and successor to Vis Solis, LLC ("Vis Solis"), and AstroSol, Inc., a Tennessee corporation ("AstroSol" and together with Principal Solar and Vis Solis, each, a "Seller" and collectively, the "Sellers"), and Principal Solar, in its capacity as the Sellers' Representative, as appointed pursuant to Section 7.11 (the "Sellers' Representative"). Each of the Purchaser, the Sellers and the Sellers' Representative are referred to herein as a "Party" and collectively, as the "Parties."

RECITALS

WHEREAS, the Sellers jointly own all of the issued and outstanding equity interests (the "Powerhouse One Interests") in Powerhouse One, LLC, a Tennessee limited liability company ("Powerhouse One");

WHEREAS, Powerhouse One owns all of the issued and outstanding equity interests (the "Project Company Interests," and together with the Powerhouse One Interests, the "Interests") in the following companies: (a) Lincoln Farm I, LLC, a Tennessee limited liability company; (b) Lincoln Farm II, LLC, a Tennessee limited liability company; (c) Lincoln Farm III, LLC, a Tennessee limited liability company; and (d) Lincoln Farm IV, LLC, a Tennessee limited liability company (each, a "Project Company" and collectively, the "Project Companies," and together with Powerhouse One, each, a "Company" and collectively, the "Companies"); and

WHEREAS, the Purchaser wishes to purchase from the Sellers, and the Sellers wish to sell to the Purchaser, all of the Powerhouse One Interests, according to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of these premises and the mutual and dependent promises hereinafter set forth, the Parties agree as follows:

ARTICLE I
DEFINITIONS

1.1 Definitions. As used in this Agreement, the following terms have the meanings specified below:

"AAA" has the meaning provided therefor in Section 2.5(a).

"Actual Net Working Capital" means the actual Net Working Capital as of the Closing Date determined in connection with the preparation of the Proration Statement.

"Affiliate" of any specified Person means any other Person directly or indirectly controlling, controlled by or under common control with such specified Person. For the purposes of this definition, "control," when used with respect to any Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

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"Agreed Accounting Firm" has the meaning provided therefor in Section 2.5(a).

"Agreement" has the meaning provided therefor in the preamble to this Agreement.

"Arbitrator" has the meaning provided therefor in Section 7.9(c)(iii).

"Assets" has the meaning provided therefor in Section 5.9.

"Base Purchase Price" means One Million, Seven Hundred Forty Thousand, One Hundred Eighty-Nine and 17/100 Dollars.

"Benefit Plan" means employee benefit plans, as defined in Section 3(3) of ERISA, and all other profit sharing, deferred compensation (including a list of participants therein), bonus, stock option, stock purchase, stock bonus, phantom stock, vacation pay, holiday pay, severance, dependent care assistance, excess benefit, incentive compensation, salary continuation, medical, life or other insurance, employment, severance, termination, golden parachute, consulting, supplemental retirement plan or agreement, supplemental unemployment and other employee benefit plans, programs, agreements or arrangements, including all unwritten employee benefit plans, programs, agreements and arrangements, if any, maintained or contributed to by a Person for the benefit of its employees (or former employees) or independent contractors or their beneficiaries.

"Bridge Bank Indebtedness" means the aggregate amount of the Indebtedness payable to Bridge Bank, National Association, solely under the Bridge Bank Loan Agreement. The Parties agree that the Bridge Bank Indebtedness is equal to $4,831,863.41.

"Bridge Bank Loan Agreement" means that certain Loan and Security Agreement, dated as of June 10, 2013, by and among Bridge Bank, National Association, a National Banking Association, Powerhouse One, LLC, Lincoln Farm I, LLC, Lincoln Farm II, LLC, Lincoln Farm III, LLC and Lincoln Farm IV, LLC.

"Business" means the business of operating the Projects.

"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in New York are authorized or obligated by Law or executive order to close.

"Claim Deadline" means 11:59 p.m. (CST) on the three (3)-year anniversary of the Closing Date.

"Closing" has the meaning provided therefor in Section 3.1.

"Closing Date" has the meaning provided therefor in Section 3.1.

"Code" means the Internal Revenue Code of 1986, as amended.

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"Company" and "Companies" have the meaning provided therefor in the recitals to this Agreement.

"Company Fundamental Representations" has the meaning provided therefor in Section 8.3(a)(ii).

"Contract" means any agreement, contract, lease, consensual obligation, promissory note, evidence of indebtedness, purchase order, letter of credit, license, promise or undertaking of any nature (whether written or oral and whether express or implied), including executed letters of intent, executed term sheets, and similar evidences of an agreement in principle.

"Damages" means all damages (including direct and direct damages and incidental, punitive and consequential damages), losses, deficiencies, judgments, diminution in value, costs, claims, expenses, obligations, fines, expenditures, liabilities, assessments, adjustments, settlement payments, penalties and expenses including fees and expenses of counsel incurred in investigating, defending or settling any claim or Proceeding.

"Effective Time" means July 1, 2015 at 9:00 a.m. EST.

"Encumbrance" means any lease, license, pledge, option, right of first offer, right of first refusal, easement, deed of trust, right of way, encroachment, conditional sales agreement, security interest, mortgage, zoning Law or ordinance, encumbrance, lien, charge or restriction of any kind, including any restriction on the use, voting, transfer or other attribute of ownership, whether voluntarily incurred or arising by operation of Law, or any agreement to grant or create any of the foregoing.

"Environmental Law" means all applicable Laws relating to pollution, protection or preservation of the environment, natural resources or human health and safety, including any applicable provisions of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. ("CERCLA"), the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Clean Water Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. § 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. § 136 et seq., and the Oil Pollution Act of 1990, 33 U.S.C. § 2701 et seq., together with all rules and regulations thereunder, and all analogous state or local statutes and regulations.

"Environmental Liability" means any indebtedness, liability, obligation, claim (whether pending or threatened), loss, damage, fine, penalty, cost, expense, deficiency or responsibility, whether known or unknown, contingent or otherwise, arising under any Environmental Law, whether based on negligence, strict liability or otherwise, including any costs and liabilities for investigation, removal, remediation, restoration, abatement, monitoring, personal injury, property damage, natural resource damages, court costs, and reasonable attorneys' fees.

"Environmental Permits" has the meaning provided therefor in Section 5.17(a)(i).

"ERISA" means the Employee Retirement Income Security Act of 1974, as amended, together with all rules and regulations thereunder.

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"Estimated Net Working Capital" means the estimated Net Working Capital as of the Closing Date as agreed to by the Purchaser and the Sellers on the Closing Date.

"Execution Date" has the meaning provided therefor in the preamble to this Agreement.

"Excluded Project Costs" means (a) any and all costs and expenses arising in connection with the Indebtedness under the Bridge Bank Loan Agreement but excluding any prepayment fees payable pursuant to Section 2.3(d) of the Bridge Bank Loan Agreement, and (b) any costs and expenses arising under the O&M Agreements. The Parties acknowledge and agree that the Sellers shall remain responsible for the payment of all Excluded Project Costs.

"Final Settlement Date" has the meaning provided therefor in Section 2.4(a).

"Financial Statements" has the meaning provided therefor in Section 5.5(a).

"GAAP" or "generally accepted accounting principles" means generally accepted accounting principles in the United States, applied on a consistent basis.

"Governmental Authority" means any department, commission, board, bureau, court, agency or any other instrumentality of any federal, state, provincial, county, city or municipal government or similar political subdivision, whether foreign or domestic.

"Hazardous Materials" means any substance, waste, contaminant or material that is listed, defined, designated, classified or regulated as hazardous, radioactive or toxic, or as a pollutant or contaminant, under or pursuant to any Environmental Law including petroleum and petroleum-derived products, asbestos, polychlorinated biphenyls and radioactive materials.

"Indebtedness" means, without duplication, all obligations of any Company to any Person (a) for money borrowed; (b) evidenced by bonds, debentures, notes or other similar instruments (including any seller notes issued in connection with any acquisition undertaken by a Company); (c) under any letter of credit, banker's acceptance, payment, performance or surety bond or related reimbursement agreement, in each case only to the extent drawn; (d) issued or assumed as the deferred purchase price of property or services (including earn-outs or other contingent payments), for conditional sales or under any title retention agreement; (e) under any non-competition, severance or similar arrangement; (f) under any deferred compensation arrangement or phantom equity arrangement; (g) relating to any lease that is required to be classified as a capital lease in accordance with GAAP, in the amount thereof accounted for as a liability in accordance with GAAP; (h) under any interest rate protection agreement (valued on a market quotation basis); (i) to guarantee or be liable for obligations of any other Person of the types described in clauses (a)-(i); (j) under any off-balance sheet financing arrangement (excluding all operating leases); (k) for underfunded employee pension benefit plans and for any unsatisfied obligation for "withdrawal liability" to a "multiemployer plan" as such terms are defined under ERISA; (l) that are characterized as long-term liabilities under GAAP; and (m) for any accrued interest, prepayment premiums, penalties, unpaid fees, expenses or other monetary obligations related to any of the foregoing; provided, however, that Indebtedness shall not include any debt financing incurred by a Company in connection with the consummation of the Transactions.

"Indemnified Party" means a Purchaser Indemnified Party or a Seller Indemnified Party.

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"Indemnifying Notice" has the meaning provided therefor in Section 8.2.

"Indemnifying Party" has the meaning provided therefor in Section 8.2.

"Insurance Policies" has the meaning provided therefor in Section 5.20(a).

"Intellectual Property" shall mean all intellectual property and proprietary rights throughout the world, including all patents (and applications therefor, as well as all patent disclosures), trademarks and other indicia of source (and registrations and applications for registration therefor), copyrights (and registrations and applications for registration therefor), trade secrets and confidential information (including customer and supplier lists and marketing information), and computer software (including object code and source code thereof and data and databases related thereto).

"Interests" has the meaning provided therefor in the recitals to this Agreement.

"Knowledge of the Purchaser" and variations thereof means, except as explicitly provided to the contrary in this Agreement, the actual knowledge of Charles Wheeler without any obligation to make inquiries.

"Knowledge of the Sellers" and variations thereof means, except as explicitly provided to the contrary in this Agreement, the actual knowledge of the Sellers and their respective officers, without any obligation to make inquiries.

"Law" means any federal, state, local or similar constitution, statute, law, ordinance, rule, regulation, order, writ, injunction, directive, judgment or decree of any Governmental Authority.

"Licenses" has the meaning provided therefor in Section 5.13(b).

"Material Contract" means any of the following Contracts entered into by any Company or that binds or affects any Company or any Project:

(a)

any power purchase agreement or energy sales agreement;

(b)

any agreement for the purchase, exchange or sale of renewable energy credits or green attributes;

(c)

any interconnection or transmission-related agreement;

(d)

any engineering, procurement and construction agreement, panel or inverter supply agreement, operation and maintenance agreement, warranty agreement for equipment of the Project;

(e)

any exclusivity or non-competition agreement;

(f)

any loan agreement, note, mortgage, indenture, security agreement and other contracts, agreements and instruments relating to Indebtedness or guarantees of the obligations of any other Person or the mortgaging, pledging or otherwise placing Encumbrances on any asset or group of assets of any Company or any Project;

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(g)

any contract or agreement pursuant to which any Company is a lessor or a lessee of any personal property or the lessor or lessee of any real property;

(h)

any contract or agreement with any Governmental Authority;

(i)

any contract or agreement that contains earn-out, deferred or contingent payment obligations on the part of any Seller or any Company;

(j)

any contract or agreement that grants any right of first refusal or first offer or similar right or otherwise relating to the acquisition or disposition by the Sellers or any Company or their respective predecessors of any assets (whether by acquisition or disposition of equity interests, assets or otherwise), and pursuant to which the Sellers or any Company has any remaining obligation or potential liability;

(k)

any contract or agreement involving a remaining commitment by the Sellers or a Company as to which the expected annual cost of performing such contract by such Company, or the annual revenue expected to be received under such contract by such Company exceeds, or any contract to sell or otherwise dispose of any capital assets having a fair market value in excess of, Five Thousand Dollars ($5,000);

(l)

any noncompetition or similar contracts running in favor of any Seller or any Company;

(m)

any payment, performance or surety bond or surety agreement;

(n)

any settlement, conciliation or similar agreement with any Governmental Authority or any other Person;

(o)

any contract or agreement with any officer or manager of the Sellers or any Company, or any Affiliate of any of the foregoing, or in the case of any individual, any immediate family member of any of the foregoing;

(p)

any Contract that provides for non-monetary obligations on the part of such Company, the non-performance of which obligations would reasonably be expected to have a material adverse effect on a Company; and

(q)

any Contract to which a Company is a party, or by the terms of which a Company is bound, that is material to such Project or Company.

"Material Property Contracts" has the meaning provided therefor in Section 5.10(a).

"Net Working Capital" means the net working capital of the Companies calculated in each instance in the same manner and using the same assumptions and methodologies set forth in Schedule 1.1.

"Notice" has the meaning provided therefor in Section 10.3.

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"Option Payment" means the aggregate amount of all monies owed to Vis Solis and AstroSol, pursuant to that certain that certain LLC Membership Minority Interest Option Agreement between Vis Solis [sic], AstroSol, Inc. and Principal Solar, Inc., dated May 31, 2013 and Agreement Among Powerhouse One, LLC Members Regarding Subsidiary Guaranty of Powerhouse One, LLC, dated February 19, 2015, by and among the Sellers. The Parties agree that the Option Payment is equal to Seven Hundred Sixty-Six Thousand, Eight Hundred Twenty Seven Dollars ($766,827).

"Organizational Documents" means (a) the articles or certificate of incorporation or formation and bylaws of a corporation; (b) the partnership agreement and any statement of partnership or formation of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the certificate of formation, limited liability company agreement, regulations or comparable documents of a limited liability company; and (e) any amendment to any of the foregoing.

"Owned Real Property" has the meaning provided therefor in Section 5.10(c).

"Party" or "Parties" has the meaning provided therefor in the preamble to this Agreement.

"Permits" has the meaning provided therefor in Section 5.14(a).

"Person" means any individual, sole proprietorship, corporation, partnership, joint venture, limited liability partnership, limited liability company, trust, unincorporated association, institution or other entity, including a Governmental Authority.

"Powerhouse One" has the meaning provided therefor in the recitals to this Agreement.

"Powerhouse One Interests" has the meaning provided therefor in the recitals to this Agreement.

"Pre-Effective Time Tax Period" means any taxable period that ends prior to the Effective Time for any Straddle Period.

"Principal Solar" has the meaning provided therefor in the preamble to this Agreement.

"Proceeding" means a charge, complaint, action, order, writ, injunction, judgment, decree, inquiry, suit, litigation, proceeding, hearing, dispute, arbitration, audit, investigation, claim or demand (whether civil, criminal or administrative), pending, commenced, brought, conducted or heard by or before, any Governmental Authority or arbitrator.

"Project" and "Projects" have the meaning provided therefor in Section 5.1.

"Project Attributes" means the renewable energy certificates or credits, green tags, emission credits, carbon offsets and any other environmental attribute currently available or available at any time in the future related to each Company or Project.

"Project Company" and "Project Companies" have the meaning provided therefor in the recitals to this Agreement.

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"Project Company Interests" has the meaning provided therefor in the recitals to this Agreement.

"Project Costs" means (a) all direct operating costs attributable to the ownership and operation of the Business (including, without limitation, (i) costs of insurance relating specifically to the Projects, (ii) amounts payable to third parties on account of electric generation from the Projects, (iii) Taxes based upon or measured by the ownership or operation of the Projects or the electric generated therefrom and (iv) debt service, including amounts owed and payable under the Bridge Bank Loan Agreement), (b) all direct capital expenditures incurred in the ownership and operation of the Projects in the ordinary course of business, and (c) overhead costs charged to the Projects, if any, by unaffiliated third parties, excluding any Excluded Project Costs.

"Proration Statement" has the meaning provided therefor in Section 2.4(a).

"Proration Statement Date" has the meaning provided therefor in Section 2.4(a).

"Purchase Price" has the meaning provided therefor in Section 2.2.

"Purchaser" has the meaning provided therefor in the preamble to this Agreement.

"Purchaser Fundamental Representations" has the meaning provided therefor in Section 8.3(c).

"Purchaser Indemnified Parties" means the Purchaser and its Affiliates (including, after the Closing, the Companies and any Affiliates thereof) and their respective shareholders, members, partners, directors, managers, officers, employees, representatives, consultants and agents (which in no event shall include or be deemed to include any Seller).

"Purchaser Reimbursement" means an amount equal to the sum of the following items (without duplication): (a) all Project Costs and all other expenditures attributable to the Projects (whether capitalized or expensed), other than Taxes and pre-paid costs and expenses, attributable to the period of time commencing prior to the Effective Time and paid by the Purchaser; (b) any sales proceeds and any other monies collected by the Sellers and not remitted or paid to the Purchaser with respect to the ownership or operation of the Projects and attributable to the period of time commencing at the Effective Time, including insurance proceeds collected by the Sellers with respect to losses and events that occurred on or after the Effective Time; (c) all Taxes allocated to the Sellers in accordance with Section 7.9(e), but that are paid by the Purchaser; (d) all pre-paid costs and expenses allocated to the Sellers in accordance with Section 2.3(b), but that are paid by the Purchaser; (e) the amount by which, if any, the Estimated Net Working Capital exceeds the Actual Net Working Capital, and (f) the amount of any Excluded Project Costs paid by the Purchaser.

"PV System" means a photovoltaic system, including photovoltaic panels, racks, wiring and other electrical devices, conduit, weatherproof housings, hardware, one or more inverters, remote monitoring systems, connectors, meters, disconnects and over current devices.

"Real Property Interests" has the meaning provided therefor in Section 5.10(a).

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"Registered Intellectual Property" has the meaning provided therefor in Section 5.13(a).

"Seller Indemnified Parties" means the Sellers and their respective shareholders, members, directors, managers, officers, employees and agents (which in no event shall include or be deemed to include the Purchaser, the Companies, or any of their Affiliates).

"Seller" and "Sellers" have the meaning provided therefor in the preamble to this Agreement.

"Sellers' Fundamental Representations" has the meaning provided therefor in Section 8.3(a)(ii).

"Seller Reimbursement" means an amount equal to the sum of the following items (without duplication): (a) the amount of all Project Costs and all other expenditures attributable to the Projects (whether capitalized or expensed), other than Taxes and pre-paid costs and expenses, attributable to the period of time commencing at the Effective Time and paid by the Sellers, (b) any sales proceeds and any other monies collected by the Purchaser and not remitted or paid to the Sellers with respect to the ownership or operation of the Projects and attributable to the period of time prior to the Effective Time, including insurance proceeds collected by the Purchaser with respect to losses and events that occurred prior to the Effective Time, (c) the amount equal to all Taxes allocated to the Purchaser in accordance with Section 7.9(e), but that are paid by the Sellers; (d) all pre-paid costs and expenses allocated to the Purchaser in accordance with Section 2.3(b), but that are paid by the Seller; and (e) the amount by which, if any, the Actual Net Working Capital exceeds the Estimated Net Working Capital.

"Sellers' Representative" has the meaning provided therefor in the preamble to this Agreement.

"Solar Data" means any and all solar data with regard to the Projects included on Schedule 5.23.

"Solar Tax Credits\" means (a) any grant under Section 1603 of Division B of the American Recovery and Reinvestment Act of 2009, P.L. 111-5, as amended, including any similar provision concerning a refundable tax credit that replaces such grant program, (b) any investment tax credit under Title 26, Section 48 of the Code or any successor or other similar provision, including any similar provision concerning a refundable tax credit that replaces such investment tax credit program, and (c) other tax credits established by the United States Internal Revenue Service or a state of the United States for the purchase, lease or other acquisition of a PV System.

"Straddle Period" means any taxable period that begins before the Effective Time and ends after the Effective Time.

"Tax" means all (a) United States federal, state or local or non-United States taxes, assessments, duties, levies, fees and other charges of any nature imposed by any Governmental Authority, including all income, franchise, profits, capital gains, capital stock, transfer, sales, use, occupation, property, excise, severance, windfall profits, stamp, stamp duty reserve, license, payroll, withholding, ad valorem, value added, alternative minimum, environmental, customs, social security (or similar), unemployment, sick pay, disability, registration and other taxes, assessments, charges, duties, fees or levies, whether disputed or not, together with all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon; (b) any liability for the payment of any amount of a type described in clause (a) arising as a result of being or having been a member of any consolidated, combined, unitary or other group or being or having been included or required to be included in any Tax Return of any such group; and (c) any liability for the payment of any amount of a type described in clause (a) or clause (b) as a result of any obligation to indemnify or otherwise assume or succeed to the liability of any other Person.

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"Tax Return" means all reports, estimates, declarations of estimated Tax, information statements and returns relating to, or required to be filed in connection with, any Taxes and any schedules attached to or amendments of (including refund claims with respect to) any of the foregoing.

"Termination Date" has the meaning provided therefor in Section 9.1(b).

"Third-Party Claim" has the meaning provided therefor in Section 8.5(a).

"Transactions" means the transactions contemplated by this Agreement and the other agreements contemplated hereby.

"Vis Solis" has the meaning provided therefor in the preamble to this Agreement.

ARTICLE II
PURCHASE AND SALE OF THE INTERESTS

2.1 Sale of the Interests to the Purchaser. At the Closing, but effective as of the Effective Time, the Purchaser shall acquire all of the Powerhouse One Interests from the Sellers, and the Sellers shall sell, assign, transfer and deliver to the Purchaser, all of the Interests, free and clear of any and all Encumbrances, for the Purchase Price.

2.2 Purchase Price. In consideration of the Interests and the Transactions, and subject to the terms and conditions set forth in this Agreement, the Purchaser shall, at the Closing: (a) deliver, or cause to be delivered, to Principal Solar the Base Purchase Price, in immediately available funds; (b) deliver, or cause to be delivered, to Vis Solis and AstroSol the Option Payment (with 25.1% of such Option Payment delivered to Vis Solis and 74.9% of such Option Payment delivered to AstroSol), subject to Section 2.6, in immediately available funds and (c) deliver, or cause to be delivered, to Bridge Bank, National Association, the Bridge Bank Indebtedness, in immediately available funds (collectively, the "Purchase Price").

2.3 Proration of Project Costs and Revenues.

(a) Except as expressly provided otherwise in this Agreement, the Sellers shall remain entitled to all of the rights of ownership (including the right to all electric generation, proceeds of electric generation and other proceeds), and shall remain responsible for all Project Costs, in each case attributable to the period of time prior to the Effective Time. Except as expressly provided otherwise in this Agreement, and subject to the occurrence of the Closing, the Purchaser shall be entitled to all of the rights of ownership (including the right to all electric generation, proceeds of electric generation and other proceeds), and shall be responsible for all Project Costs, in each case attributable to the period of time commencing at the Effective Time.

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(b) The determination of whether Project Costs or any other items are attributable to the period of time prior to the Effective Time or the period of time commencing at the Effective Time shall be in accordance with the following: (i) for debt service and all other payment obligations (other than Taxes, pre-paid costs and expenses and Excluded Project Costs), such determination shall be based on when the payment obligation is due; and (ii) for all other Project Costs and other items, such determination shall be based on when services are rendered, when the goods are delivered, or when the work is performed. Notwithstanding the foregoing, (y) Taxes shall be allocated between the Purchaser and the Sellers in accordance with Section 7.9(e), and (z) pre-paid costs and expenses covering a period of time that begins before the Effective Time and ends on or after the Effective Time shall be allocated between the Purchaser and the Seller based on the number of days in the applicable period falling before, and the number of days in the applicable period falling at or after the Effective Time. All Excluded Project Costs shall be remain the responsibility of, and shall be allocated entirely to, the Sellers.

2.4 Confirmation of Proration.

(a) No later than forty-five (45) days after the Closing, the Purchaser shall prepare and deliver to the Sellers, in accordance with this Agreement, an itemized statement (the "Proration Statement") setting forth any Purchaser Reimbursement and any Seller Reimbursement as of the date of such statement (the "Proration Statement Date"). As soon as practicable after receipt of the Proration Statement, and no later than ten (10) days after such receipt, the Sellers shall deliver to the Purchaser a written report containing any changes that the Sellers propose to the Proration Statement. If the Sellers fail to propose any changes to the Proration Statement within the ten-day period set forth above, it shall be deemed that the Sellers agree with the Proration Statement, which shall become final and binding on the Parties. If the Sellers propose any changes to the Proration Statement within the ten-day period set forth above, the Sellers and the Purchaser shall undertake to agree with respect to the disputed amounts not later than fifteen (15) days after receipt by the Purchaser of the Sellers' requested changes (such date, the "Final Settlement Date"). If the Parties reach an agreement on the Proration Statement on or before the Final Settlement Date, the Proration Statement, as agreed to by the Parties, shall be final, binding, and conclusive on the Parties, and within three (3) Business Days after the Final Settlement Date, (i) the Purchaser will pay to Principal Solar the amount, if any, by which the Seller Reimbursement exceeds the Purchaser Reimbursement or (ii) Principal Solar will pay to the Purchaser the amount, if any, by which the Purchaser Reimbursement exceeds the Seller Reimbursement. If the Sellers and the Purchaser are not able to agree on the final Proration Statement on or prior to the Final Settlement Date, then the Sellers and the Purchaser will resolve such differences solely in accordance with Section 2.5.

(b) After the Proration Statement Date, (i) if either Party receives monies belonging to the other Party, including, without limitation, any proceeds of electric generation, then such amount shall, within thirty (30) days after the end of the calendar month in which such amounts were received, be paid over to the proper Party, (ii) if either Party pays monies for Project Costs which are the obligation of the other Party, then such other Party shall, within thirty (30) days after the end of the calendar month in which the applicable invoice and proof of payment of such invoice were received, reimburse the Party which paid such Project Costs, (iii) if a Party receives an invoice of an expense or obligation which is owed by the other Party, such Party receiving the invoice shall promptly forward such invoice to the Party obligated to pay the same, and (iv) if an invoice or other evidence of an obligation is received by a Party, which is partially an obligation of both the Sellers and the Purchaser, then the Parties shall consult with each other, and each shall promptly pay its portion of such obligation to the obligee thereof.

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2.5 Dispute Resolution.

(a) In the event the Sellers and the Purchaser are required to resolve a dispute regarding the Proration Statement, a certified public accountant or a firm of certified public accountants mutually acceptable to the Purchaser and the Sellers, which firm shall not include any of the six largest international accounting firms (i.e., Deloitte, PricewaterhouseCoopers, Ernst & Young, KPMG, BDO International and Grant Thornton International) (the "Agreed Accounting Firm") shall act as an expert to decide all points of such dispute in accordance with the terms of this Agreement. If the Parties are unable to agree upon the designation of the Agreed Accounting Firm, then the Sellers or the Purchaser shall in writing request the Dallas, Texas office of the American Arbitration Association ("AAA") to designate the Agreed Accounting Firm in Dallas, Texas. If issues are submitted to the Agreed Accounting Firm for resolution, the Sellers and the Purchaser will each enter into a customary engagement letter with the Agreed Accounting Firm at the time the issues remaining in dispute are submitted to the Agreed Accounting Firm. The Agreed Accounting Firm will be directed to (i) review the initial draft of the Proration Statement submitted by the Purchaser, the written report submitted by the Sellers and the records relating thereto only with respect to items that remain disputed immediately following the Final Settlement Date, as identified by the Sellers in such written report and (ii) determine the final calculations for the Purchaser Reimbursement and the Seller Reimbursement.

(b) The Sellers and the Purchaser will each furnish the Agreed Accounting Firm such work papers and other records and information relating to the objections in dispute as the Agreed Accounting Firm may reasonably request and that are available to such Party or its Affiliates (and such parties' independent public accountants). The Sellers and the Purchaser will, and will cause their representatives to, cooperate and assist in the conduct of any review by the Agreed Accounting Firm, including making available books, records and, as available, personnel as reasonably required. The Agreed Accounting Firm will conduct the expert determination proceedings in Dallas, Texas in accordance with the terms of this Section 2.5. The Agreed Accounting Firm's determination will be made within forty-five (45) days after submission of the matters in dispute. The determination by the Agreed Accounting Firm will be final and binding on both parties, without right of appeal. In determining the proper amount of any adjustment to the Purchaser Reimbursement or the Seller Reimbursement proposed by the Purchaser, the Agreed Accounting Firm may not increase or decrease any item included in the Purchaser Reimbursement or the Seller Reimbursement more than the increase or the decrease, as applicable, proposed by the Sellers in its report, and may not award damages or penalties to the Sellers or the Purchaser with respect to any matter.

(c) Within three (3) days after the decision of the Agreed Accounting Firm with respect to the final calculations for the Purchaser Reimbursement and the Seller Reimbursement, (i) the Purchaser will pay to Principal Solar the amount, if any, by which the Seller Reimbursement exceeds the Purchaser Reimbursement or (ii) Principal Solar will pay to the Purchaser the amount, if any, by which the Purchaser Reimbursement exceeds the Seller Reimbursement. In the event the Purchaser or Principal Solar files an action in a court of law or equity to enforce the ruling of the Agreed Accounting Firm, such Party shall also recover from the other its costs and reasonable attorneys' fees incurred in seeking and obtaining judicial enforcement of the ruling of the Agreed Accounting Firm. It is the intent of the Parties that any adjustment made pursuant to this Section 2.5 shall be made only once and without duplication. The procedure set forth in this Section 2.5 is the exclusive procedure for determining the Final Purchase Price.

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(d) The Sellers and the Purchaser will each bear its own legal fees and other costs of presenting its case to the Agreed Accounting Firm. The costs and expenses of the Agreed Accounting Firm shall be shared one-half by Principal Solar and one-half by the Purchaser. The Parties intend that the procedures set forth in this Section 2.5 shall not constitute or be handled as arbitration proceedings under the Federal Arbitration Act or any applicable state arbitration act, and that the provisions of this clause (d) shall be specifically enforceable.

2.6 Option Payment. The Parties acknowledge and agree that the payment of the Option Payment in accordance with Section 2.2 will constitute the exclusive method by which the Option Payment will be paid among the Parties. Upon payment by the Purchaser of the Option Payment in accordance with Section 2.2, the Purchaser will have no further obligation to Vis Solis or AstroSol with respect to the Option Payment or any other payment other than pursuant to this Agreement, and neither Vis Solis nor AstroSol will have no further right to receive payment of such amounts.

ARTICLE III
CLOSING

3.1 Closing. Subject to the terms and conditions of this Agreement, the execution and delivery by the Parties of this Agreement and the closing of the Transactions (the "Closing") shall take place on the date that is five (5) Business Days after the Purchaser provides the Sellers with written notice of Closing (such date that the Closing occurs, the "Closing Date") at the Purchaser's offices, and the Closing shall be deemed to have occurred, and be effective, as of 9:00 a.m. EST on the Closing Date.

3.2 Conditions Precedent to the Purchaser's Obligation to Close. The Purchaser's obligation to purchase the Interests and consummate the Transactions is subject to the satisfaction, at or prior to the Closing, of each of the following conditions:

(a) Accuracy of Representations. The representations and warranties set forth in Article IV and Article V that are qualified with respect to materiality must be true and correct in all respects, and the representations and warranties set forth in Article IV and Article V that are not so qualified must be true and correct in all material respects, in each case as of the Closing Date, except for those representations and warranties which are as of a specific date, which shall be true and correct as of such date.

(b) The Sellers' Performance. The Sellers shall have performed and complied in all material respects with the covenants, obligations, agreements and conditions required to be performed or complied with by them hereunder on or prior to the date of the Closing.

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(c) Compliance Certificate. The Purchaser shall have received a certificate of the Sellers certifying as to the matters set forth in Sections 3.2(a) and 3.2(b).

(d) No Material Adverse Change. There has been no material adverse change to the Companies, the Projects or the Business.

(e) No Violation. The consummation of the Transactions shall not violate any applicable Law.

(f) Necessary Documents. The Purchaser has received all documents (i) evidencing all requisite approvals of the Sellers and the Companies authorizing the Transactions, and (ii) otherwise required for the consummation or performance of any of the Transactions.

(g) Required Consents. The Sellers and the Companies shall have received all governmental, regulatory and contractual consents and approvals for or in connection with the Transactions or the other agreements, documents and instruments of the Companies contemplated by this Agreement and no such consent or approval shall have been withdrawn, suspended or conditioned.

(h) No Injunction. No Proceeding by any Governmental Authority or other Person shall have been instituted or threatened that questions or challenges the validity of, or seeks to enjoin, the consummation of the Transactions, and the consummation of the Transactions shall not violate any order, decree or judgment of any court, Permit, Law, or Governmental Authority having competent jurisdiction.

(i) Actions and Proceedings. Prior to the Closing, all actions, proceedings, instruments and documents required to carry out the Transactions contemplated hereby or incident hereto and all other legal matters required for such Transactions are reasonably satisfactory to counsel for the Purchaser.

3.3 Conditions Precedent to the Sellers' Obligation to Close. The Sellers' obligation to sell the Interests and consummate the Transactions is subject to the satisfaction, at or prior to the Closing, of each of the following conditions:

(a) Accuracy of Representations. The representations and warranties set forth in Article VI that are qualified with respect to materiality must be true and correct in all respects, and the representations and warranties set forth in Article VI that are not so qualified must be true and correct in all material respects, in each case as of the Closing Date, except for those representations and warranties which are as of a specific date, which shall be true and correct as of such date.

(b) The Purchaser's Performance. The Purchaser shall have performed and complied in all material respects with the covenants, obligations, agreements and conditions required to be performed or complied with by it hereunder on or prior to the date of the Closing.

(c) Compliance Certificate. The Sellers shall have received a certificate of the Purchaser certifying as to the matters set forth in Sections 3.3(a) and 3.3(b) above.

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(d) No Violation. The consummation of the Transactions shall not violate any applicable Law.

(e) Necessary Documents. The Sellers have received all documents (i) evidencing all requisite approvals of the Purchaser authorizing the Transactions, and (ii) otherwise required for the consummation or performance of any of the Transactions.

(f) Required Consents. The Purchaser shall have received all governmental, regulatory and contractual consents and approvals for or in connection with the Transactions or the other agreements, documents and instruments of the Purchaser contemplated by this Agreement and no such consent or approval shall have been withdrawn, suspended or conditioned.

(g) No Injunction. No Proceeding by any Governmental Authority or other Person shall have been instituted or threatened that questions or challenges the validity of, or seeks to enjoin, the consummation of the Transactions, and the consummation of the Transactions shall not violate any order, decree or judgment of any court, Permit, Law, or Governmental Authority having competent jurisdiction.

(h) Actions and Proceedings. Prior to the Closing, all actions, proceedings, instruments and documents required to carry out the Transactions contemplated hereby or incident hereto and all other legal matters required for such Transactions are reasonably satisfactory to counsel for the Sellers.

3.4 Deliveries and Actions Taken at the Closing.

(a) Deliveries by the Sellers. On the Closing Date:

(i) the Sellers shall assign the Powerhouse One Interests, free and clear of any and all Encumbrances, in an assignment of membership interest in the form of Exhibit A;

(ii) the Sellers shall deliver to the Purchaser a certificate of the Secretary of State of Tennessee, and each state in which each Company is required to be qualified to do business, stating that each Company is in good standing or has comparable active status in such state;

(iii) the Sellers shall deliver to the Purchaser a certificate executed by a duly authorized officer certifying that the conditions described in Section 3.2(a) and Section 3.2(b) have been satisfied;

(iv) the Sellers shall deliver to the Purchaser a certificate of the Secretary of each Company certifying that attached to such certificate are true and complete copies of (A) each Company's Organizational Documents, as amended through and in effect on the Closing Date, and (B) resolutions of each Company's board of managers or similar governing body and the Sellers, authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which the Companies are a party and the consummation of the Transactions;

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(v) the Sellers shall deliver to the Purchaser a non-foreign person affidavit duly executed by the Sellers dated as of the Closing Date in the form attached hereto as Exhibit B;

(vi) the Sellers shall deliver to the Purchaser the written resignation, effective as of the Closing Date, of the managers and non-employee officers of the Companies set forth on Schedule 3.4(a)(vi);

(vii) the Sellers shall deliver to the Purchaser payoff letters from all holders of Indebtedness (including all Indebtedness arising under the Bridge Bank Loan Agreement) and release documentation evidencing the release of all Encumbrances, each in a form acceptable to the Purchaser;

(viii) the Sellers shall deliver to the Purchaser copies of all third party consents and Governmental Authority consents set forth on Schedule 4.4(b) in form and substance acceptable to the Purchaser in its sole discretion; and

(ix) the Sellers shall have delivered such other documents and instruments as the Purchaser or the Purchaser's counsel may reasonably request so as to better evidence or effectuate the Transactions.

(b) Deliveries by the Purchaser. On the Closing Date:

(i) the Purchaser will deliver the Purchase Price to the Sellers at the Closing wired to an account designated by the Sellers;

(ii) the Purchaser shall deliver to the Sellers a certificate of the Secretary of State of Delaware stating that the Purchaser is in good standing or has comparable active status in such state;

(iii) the Purchaser shall deliver to the Sellers a certificate executed by a duly authorized officer certifying that the conditions described in Section 3.3(a) and Section 3.3(b) have been satisfied;

(iv) the Purchaser shall deliver to the Sellers a certificate of the Secretary of the Purchaser certifying that attached to such certificate are true and complete copies of (A) the Purchaser's Organizational Documents, as amended through and in effect on the Closing Date, and (B) resolutions of the Purchaser's board of managers or similar governing body authorizing the execution, delivery and performance of this Agreement and the other agreements contemplated hereby to which the Purchaser is a party and the consummation of the Transactions;

(v) the Purchase Price allocation to be delivered pursuant to Section 7.9(a); and

(vi) the Purchaser shall have delivered such other documents and instruments as the Sellers or the Sellers' counsel may reasonably request so as to better evidence or effectuate the Transactions.

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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each of the Sellers, jointly and severally, represents and warrants to the Purchaser as of the Execution Date and Closing Date as follows:

4.1 Organization. Principal Solar is duly formed, validly existing and in good standing under the Laws of the State of Delaware. Vis Solis is duly formed, validly existing and in good standing under the Laws of the State of Tennessee. AstroSol, Inc. is duly formed, validly existing and in good standing under the Laws of the State of Tennessee. Schedule 4.1 sets forth each jurisdiction in which each Seller is qualified to transact business as a foreign corporation. Except as set forth on Schedule 4.1, each Seller is duly qualified to do business and in good standing in each jurisdiction where such qualification is required, except to the extent the failure to be so qualified would not be material. The Organizational Documents of each Seller that have previously been furnished to the Purchaser reflect all amendments thereto and are correct and complete. None of the Sellers is in default under or in violation of any provision of its Organizational Documents.

4.2 Authority. Each Seller has all requisite power and authority to (a) execute and deliver this Agreement and perform its obligations hereunder and (b) execute and deliver all other agreements and instruments to be executed and delivered by the Sellers pursuant to this Agreement and perform its respective obligations thereunder. The execution, delivery and performance of this Agreement and each other document to which each Seller is or will be a party and the consummation of each of the transactions and undertakings contemplated thereby have been duly and validly authorized by all requisite action on the part of the Sellers and no other proceedings by the Sellers are necessary to authorize the execution and delivery of the Agreement and the consummation of the Transactions.

4.3 Enforceability. This Agreement has been executed by each of the Sellers and constitutes a valid and binding obligation of each of the Sellers enforceable against each Party in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors' rights generally and by general principles of equity.

4.4 No Conflicts; Consents and Approvals.

(a) The execution and delivery of this Agreement and the consummation of the Transactions will not (i) conflict with any provision of the Organizational Documents of any of the Sellers, (ii) violate any applicable Law, Permit or other authorization of a Governmental Authority applicable to the Sellers, (iii) breach, violate or result in a default under (with or without notice or lapse of time or both), terminate, amend, cancel, modify or give rise to any right on the part of any Person to terminate, amend, cancel, modify, accelerate any obligation under, or require any of the Sellers to make a payment under, any Material Contract, (iv) create or impose any Encumbrance on any Company, Project or Asset, or (v) create any other consequence that would have a material adverse effect on any of the Companies.

(b) Except as set forth on Schedule 4.4(b), no consent, approval or authorization of, filing with or notice to any third party or any Governmental Authority is required on the part of any Seller in connection with the execution and delivery of this Agreement or the consummation of the Transactions.

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4.5 Litigation. There are no Proceedings pending and, to the Knowledge of the Sellers, there are no Proceedings threatened against any Seller, in any such case at law or in equity, before any Governmental Authority or arbitral body against or affecting any Seller, that would reasonably be expected to have an adverse effect on the ability of a Seller to perform its obligations under the Agreement or to consummate the Transactions.

4.6 Interests. The authorized and issued and outstanding number and class of all equity interests in the Companies are set forth on Schedule 4.6. The Interests constitute 100% of the issued and outstanding equity interests in the Companies. The Sellers are the record and beneficial owners of, and hold good and valid title to, the Powerhouse One Interests, free and clear of any and all Encumbrances. Powerhouse One is the record and beneficial owner of, and holds good and valid title to, the Project Company Interests, free and clear of any and all Encumbrances. At the Closing, the Sellers will transfer the Powerhouse One Interests to the Purchaser, free and clear of any and all Encumbrances. The Project Company Interests are free and clear of any and all Encumbrances. All outstanding Interests have been duly authorized and validly issued and are fully paid and nonassessable. No Company has violated any securities Laws or preemptive right or right of first refusal of any Person in connection with the offer, sale or issuance of any its equity securities. No Company has the right to acquire any capital stock or other equity interest of any other Person and no Project Company (a) owns any capital stock, security, partnership interest or other equity interest of any kind in any Person, or (b) is a partner or member of any partnership, limited liability company or joint venture.

4.7 Brokers. Except as set forth on Schedule 4.7, all negotiations relating to this Agreement and the Transactions have been carried out without the services of any Person acting on behalf of any of the Sellers, any Affiliate of the Sellers or any Company in such manner as to give rise to any valid claim against the Purchaser or any Company for any brokerage or finder's commission or similar compensation.

4.8 Solvency. No petition or notice has been presented, no order has been made and no resolution has been passed for the bankruptcy, liquidation, winding-up or dissolution of either Seller. No receiver, trustee, custodian or similar fiduciary has been appointed over the whole or any part of either Seller's assets or the income of either Seller. Neither Seller has any plan or intention of, or has received any notice that any other Person has any plan or intention of, filing, making or obtaining any such petition, notice, order or resolution or of seeking the appointment of a receiver, trustee, custodian or similar fiduciary. Neither Seller is now insolvent nor will be rendered insolvent by any of the Transactions. As used in this Section 4.8, "insolvent" means that the sum of the debts and other liabilities of each Seller exceed the fair market value of such Seller's assets. Immediately after giving effect to the consummation of the Transactions, each Seller (a) will be able to pay its liabilities as they become due; and (b) will have assets (calculated at fair market value) that exceed its liabilities.

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANIES

Each of the Sellers, jointly and severally, represents and warrants to the Purchaser as of the Execution Date and Closing Date as follows:

5.1 Organization. Each Company is duly formed, validly existing and in good standing under the Laws of the State of Tennessee. Schedule 5.1 sets forth each jurisdiction in which each Company is qualified to transact business as a foreign company. Except as set forth on Schedule 5.1, each Company is duly qualified to do business and in good standing in each jurisdiction where such qualification is required, except to the extent the failure to be so qualified would not be material. The Organizational Documents of each Company that have previously been furnished to the Purchaser reflect all amendments thereto and are correct and complete. No Company is in default under or in violation of any provision of its Organizational Documents. The only business activity that has been carried or is currently carried on by each Company is the development and ownership of the photovoltaic solar electric generating facility described on Schedule 5.1 (each a "Project", and collectively, the "Projects").

5.2 Authority. Each Company has all requisite limited liability company (and corporate, as applicable) power and authority to own the Projects, the Assets and to carry on its business as currently conducted. Each Company has all requisite power and authority to (a) execute and deliver this Agreement and perform its obligations hereunder and (b) execute and deliver all other agreements and instruments to be executed and delivered by the Companies pursuant to this Agreement and perform its obligations thereunder.

5.3 No Conflicts; Consents and Approvals.

(a) The execution and delivery of this Agreement and the consummation of the Transactions will not (i) conflict with any provision of the Organizational Documents of any Company, (ii) violate any applicable Law, Permit or other authorization of a Governmental Authority applicable to a Company, a Project or its Assets, (iii) breach, violate or result in a default under (with or without notice or lapse of time or both), terminate, amend, cancel, modify or give rise to any right on the part of any Person to terminate, amend, cancel, modify, accelerate any obligation under, or require any Company to make a payment under, any Material Contract, (iv) cause a loss or adverse modification of any license, franchise, permit or other authorization or right (contractual or otherwise) to operate each Company's business or to own any Asset, (v) create or impose any Encumbrance on any Asset, or (vi) create any other consequence that would have a material adverse effect on a Company.

(b) Except as set forth on Schedule 5.3(b), no consent, approval or authorization of, filing with or notice to any third party or any Governmental Authority is required on the part of any Company in connection with the execution and delivery of this Agreement or the consummation of the Transactions.

5.4 Capitalization of the Companies. Except as set forth on Schedule 5.4, there are no (a) obligations, contingent or otherwise, of any Company to (i) repurchase, redeem or otherwise acquire any equity interests of such Company; or (ii) provide funds to, or make any investment in (in the form of a loan, capital contribution or otherwise), or provide any guarantee with respect to the obligations of any other Person; (b) preemptive or similar rights on the part of any holder of equity interest of any Company; (c) subscriptions, options, warrants, conversion, exchange or other rights, agreements or commitments of any kind obligating any Company to issue, sell or purchase, or cause to be issued and sold, any equity interests of such Company or any securities convertible into or exchangeable for any such equity interests; (d) commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment in respect of the equity interests or other securities of any Company; (e) outstanding or authorized equity interest appreciation, phantom equity interest, profit participation, or similar rights with respect to any equity securities of any Company; (f) member agreements, voting trusts or other agreements or understandings to which any Company is a party, relating to the voting or transfer of any equity interests of any Company; or (g) bonds, debentures, notes or other indebtedness which have the right to vote (or which are convertible into, or exchangeable for, securities having the right to vote) on any matters on which members of any Company are entitled to vote.

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5.5 Financial Statements.

(a) The Sellers have delivered to the Purchaser, a complete and correct copy of (i) unaudited consolidated balance sheets by quarter of Powerhouse One as of and for the years ended December 31, 2013 and December 31, 2014, and the related statements of income; (ii) unaudited consolidated balance sheets by quarter of Powerhouse One as of and for the two quarters ended June 30, 2015, and the related statements of income; (iii) audited consolidated balance sheets of Powerhouse One as of and for the years ended December 31, 2012 and December 31, 2011, and the related statements of income, retained earnings, and cash flow (collectively, the "Financial Statements"). Except as set forth on Schedule 5.5(a), the Financial Statements (including in all cases the notes thereto, if any) fairly present in all material respects the financial condition and results of operations and cash flows of each Company as of the dates and for the periods indicated and have been prepared in accordance with GAAP consistently applied throughout the periods covered thereby.

(b) All accounts receivable of each Company as of the Execution Date are (i) bona fide receivables incurred in the ordinary course of business and arising from sales actually made, (ii) properly reflected on such Company's books and records and balance sheets in accordance with GAAP and (iii) valid and enforceable claims and not subject to any counterclaim, or a claim for a chargeback, deduction, credit, set-off or other offset, other than as reflected by the reserve for bad debts. All accounts payable of each Company arose in bona fide arm's length transactions in the ordinary course of business, and no account payable is delinquent more than thirty (30) days in its payment.

5.6 Officers. Schedule 5.6 sets forth a correct and complete list of the officers of each Company, if any.

5.7 Bank Accounts. Schedule 5.7 sets forth (a) the names and locations of all banks and other financial institutions and depositories at which each Company maintains accounts of any type or safe deposit boxes, (b) the account number of each such account, (c) the number of each such safe deposit box, and (d) the current authorized signatory or signatories on each such account or safe deposit box.

5.8 Absence of Undisclosed Liabilities. Except as set forth on Schedule 5.8, no Company has any Indebtedness, Encumbrance, obligation or liability (whether accrued or fixed, absolute or contingent, matured or unmatured, determined or determinable or otherwise), other than in the case of a Company those (a) reflected on or disclosed in the Financial Statements or the notes thereto or (b) disclosed in this Agreement or any of the Schedules hereto.

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5.9 Assets. Each Company owns, free and clear of any and all Encumbrances, all of the real, personal, tangible and intangible property and assets (a) shown on the Financial Statements or acquired thereafter, (b) necessary to conduct the Project and such Company's business as presently conducted ((a) and (b) collectively, the "Assets"), and (c) comprising the Project Attributes. All improvements located on property and all of each Company's machinery, equipment and other tangible personal property are free from defects and in good condition and repair in all material respects, ordinary wear and tear excepted, and are useable in the ordinary course of business and suitable for the purposes for which they are presently used and presently proposed to be used. For each Company, no Person other than the Company owns any equipment or other tangible assets or properties situated on the premises of such Company or used in or necessary to the operation of the business of such Company.

5.10 Real Property.

(a) Schedule 5.10(a) contains a true, correct and complete list of all Contracts, including Material Contracts, which provide the Companies with any rights in or to real property, including rights in the nature of leases, easements, licenses, rights of way, franchise agreements, restrictive covenants, purchase agreements, agreements to relinquish or limit surface access rights with regards to minerals, options to purchase or lease, or applications for or bids to Governmental Authorities made by or on behalf of the Companies with respect to, any of the foregoing interests in real property or other material interests in real property (collectively, "Real Property Interests"), and all amendments and supplements thereto to which each Company is a party or by which such Company is bound (collectively, the "Material Property Contracts"). True, correct and complete copies of such Material Property Contracts have been delivered to the Purchaser. Each Material Property Contract is legal, valid, binding and enforceable and in full force and effect and will continue to be legal, valid, enforceable, binding and in full force and effect on the same terms and conditions immediately subsequent to the Closing.

(b) Except as set forth on Schedule 5.10(b), (i) to the Knowledge of the Sellers, no Material Property Contract has been breached in any respect or canceled by the other party that has not been duly cured or reinstated and no Company has received written notice of any planned breach or cancellation; (ii) each Company has performed all of the obligations required to be performed by it on or before the Execution Date and the Closing Date under the Material Property Contracts, and no Company is in receipt of any notice of default under any Material Contract or any notice that the counterparty to any Material Property Contract intends to modify, cancel or terminate such Material Property Contract; (iii) no event has occurred which with the passage of time or the giving of notice or both would result in a breach or default under any Material Property Contract; (iv) there are no renegotiations of, attempts or requests to renegotiate or outstanding rights to renegotiate, any terms of any of the Material Property Contracts; and (v) no Material Property Contract is subject to any ground leases, mortgages, deeds of trust or other superior Encumbrances or interests that would entitle the holder thereof to interfere with or disturb the lessee's use and enjoyment of the leased premises or the exercise of the lessee's rights under the Material Property Contract so long as the lessee is not in default, beyond all applicable notice and cure periods.

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(c) Schedule 5.10(c) lists all items of real property owned by any Company (the "Owned Real Property"). Except as set forth on Schedule 5.10(c), the respective Company has good, marketable and indefeasible title to the Owned Real Property, free and clear of any and all Encumbrances. There are no outstanding options, rights of first offer or rights of first refusal to purchase any Owned Real Property or any portion thereof or interest therein.

(d) No Company has received notice of any pending or contemplated condemnation, expropriation or other proceeding in eminent domain affecting the Real Property Interests or any portion thereof or interest therein, and to the Knowledge of the Sellers, no such proceeding has been threatened against the Real Property Interests. No Seller or Company has received any notice that the current use and occupancy of the Real Property Interests violates any Law in any material respect, and to the Knowledge of the Sellers, no such violations exist.

5.11 Contracts. Schedule 5.11 sets forth a complete and correct list of all Material Contracts and amendments and supplements thereto. The Sellers have provided to the Purchaser complete and correct copies, or, in the case of oral Material Contracts, a reasonably detailed written description, of the Material Contracts (including all amendments thereto) as in effect on the Execute Date. Except as set forth on Schedule 5.11, (i) to the Knowledge of the Sellers, no Material Contract has been breached in any respect or canceled by the other party that has not been duly cured or reinstated and neither the Sellers nor the Companies have received written notice of any planned breach or cancellation, (ii) each Company has performed all of the obligations required to be performed by it on or before the Closing Date under the Material Contracts, and neither the Sellers nor the Companies are in receipt of any notice of default under any Material Contract or any notice that the counterparty to any Material Contract intends to modify, cancel or terminate such Material Contract, (iii) no event has occurred which with the passage of time or the giving of notice or both would result in a breach or default under any Material Contract, (iv) there are no renegotiations of, attempts or requests to renegotiate or outstanding rights to renegotiate, any terms of any of the Material Contracts, and (v) no Company is a party to any contract, agreement, arrangement or license the performance of which could reasonably be expected to have a material adverse effect. Each Material Contract is legal, valid, binding and enforceable and in full force and effect and will continue to be legal, valid, enforceable, binding and in full force and effect on the same terms and conditions immediately subsequent to the Closing.

5.12 Employees; Employee Benefit Plans.

(a) No Company has, and has not at any time had, any employees.

(b) No Company sponsors, maintains or participates in, and has not at any time in the past sponsored, maintained or participated in, any Benefit Plan.

5.13 Intellectual Property.

(a) Schedule 5.13(a) lists all registered trademarks, copyrights, trade names, service marks, logos and patents, including pending applications to register any of the foregoing with any Governmental Authority, as well as any domain names, that are owned by any Company and which have not expired or been abandoned (the "Registered Intellectual Property"). The operation of each Company and each Project, including the use by any Company of the Registered Intellectual Property, has not infringed, misappropriated or otherwise violated the Intellectual Property of any other Person in any manner that would be material, and to the Knowledge of the Sellers, no Person is infringing on the Intellectual Property owned by any Company; and there is no claim pending or, to the Knowledge of the Sellers, threatened, related to any of the foregoing.

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(b) Schedule 5.13(b) lists all written licenses to which any Company is a party, pursuant to which (i) a Company permits any Person to use any of the Intellectual Property owned by a Company or (ii) any Person permits a Company to use any trademarks, logos, service marks, trade names, copyrights or patents not owned by such Company, except for off-the-shelf software licenses (collectively, "Licenses"). The Sellers have delivered to the Purchaser complete and correct copies of the Licenses listed on Schedule 5.13(b). No Company is, and, to the Knowledge of the Sellers, no other party thereto is, in breach or default, in any material respect, under any License, and each License is in full force and effect. The computer systems and software of each Company have been sufficient for the operation of its business and have not suffered a material outage or other failure in the past twenty-four (24) months.

5.14 Permits; Compliance with Law.

(a) Schedule 5.14(a) lists all governmental and quasi-governmental licenses, permits, certificates, entitlements, accreditations, certificates, or other approvals and authorizations maintained by each Company in connection with the conduct of its business as currently conducted (the "Permits"). The Permits listed on Schedule 5.14(a) constitute all Permits necessary to permit each Company lawfully to continue to conduct its business in the manner in which it conducts such business and to own and use its assets in the manner in which it owns and uses such assets. Each Permit is in full force and effect and no event has occurred and is continuing that permits, or after notice or lapse of time or both would permit, any modification, revocation, or termination of any such Permit. Except as set forth on Schedule 5.14(a), (i) each Company has at all times been in compliance with each Permit; and (ii) neither the Sellers nor the Companies have received any notice or other communications from any Governmental Authority regarding (A) any actual, alleged, or potential violation of, or failure to comply with, any Permit or (B) any actual, proposed, or potential revocation, suspension, cancellation, termination or modification of any Permit.

(b) Except as set forth on Schedule 5.14(b), (i) each Company has complied in all respects and is in compliance with applicable Laws and is in compliance with the Permits (including with respect to bidding, pricing, billing and performance of all contracts with any Governmental Authority); (ii) no notice, charge, claim, action, investigation or assertion has been filed, commenced or, to the Knowledge of the Sellers, threatened in writing against a Company alleging any violation of any of the foregoing; (iii) no investigation with respect to any of the foregoing has been commenced; and (iv) there are no facts or circumstances which could form the basis of any violation of an applicable Law. Neither the Companies nor any of their respective directors, officers, employees, managers or agents has made any bribes, kickback payments or other similar payments of cash or other consideration in violation of the Law, including payments to customers or clients or employees of customers or clients for purposes of doing business with such Persons.

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5.15 Litigation. Except as set forth on Schedule 5.15, there are no actions, suits, or legal or arbitration proceedings (a) pending and, to the Knowledge of the Sellers, there are no actions, suits or legal or arbitration proceedings threatened against a Company or a Project, in any such case at law or in equity before any Governmental Authority or arbitral body that, if determined adversely, would materially affect the ownership, operation or value of a Company or a Project; or (b) pending or threatened by the Sellers or a Company against any Person, at law or in equity, or before or by any Governmental Authority (including any proceedings with respect to the transactions contemplated hereby). No Company is a party to or subject to, any judgment, order, injunction or decree of any Governmental Authority.

5.16 Taxes. Except as set forth on Schedule 5.16:

(a) (i) Each Company has timely filed all Tax Returns that it was required to file; (ii) all such Tax Returns were correct and complete in all respects and were prepared in compliance with all applicable Laws and regulations; (iii) all Taxes owed by each Company, whether or not shown as due on any Tax Return, have been paid; (iv) each Company has provided to the Purchaser true and complete copies of each Tax Return filed by such Company, including each income Tax Return and franchise or excise Tax Return based on income, filed since the date of formation of such Company; and (v) all Taxes that each Company is required to withhold or to collect for payment to any Governmental Authority have been duly withheld and collected and paid to the proper Governmental Authority.

(b) Each Company (i) has not been audited and has not received any written or, to the Knowledge of the Sellers, other notice of initiation of an audit, request for information related to Tax matters, or any notice of deficiency or proposed adjustment of any Tax by any Governmental Authority, in each case for any period for which the statute of limitations on assessment of Taxes remains open, and (ii) has not extended any applicable statute of limitations on assessment or collection of any Taxes, which statute of limitations remains open.

(c) Each Company (i) is not a party to any allocation, indemnification or sharing agreement with respect to Taxes, (ii) has not participated, and has not been required to be included, in the filing of any Tax Return by or for any consolidated, combined, unitary or similar group for Tax purposes, and has never been a member of any such group, (iii) is not currently the beneficiary of any extension of time within which to file any Tax Return; and (iv) is not liable, as a transferee or successor, by contract or otherwise, for the Taxes of any other Person.

(d) Each Project Company is and has at all times since its formation been treated as a disregarded entity for U.S. federal income tax purposes, and no election has been filed with respect to such Company to cause it to be treated as an association taxable as a corporation for U.S. federal income tax purposes.

(e) No written claim, and, to the Knowledge of the Sellers, no other claim has ever been made by a Governmental Authority in a jurisdiction where a Company does not file Tax Returns that a Company may be subject to taxation in or by that jurisdiction. There are no Encumbrances on any of the assets of any Company that arose in connection with any failure (or alleged failure) to pay any Tax. No power of attorney with respect to any Taxes has been executed or filed with any Governmental Authority with respect to a Company relating to any Tax Return for which the applicable statute of limitations has not expired.

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(f) No Company has engaged in a transaction that is or is substantially similar to a listed transaction or a reportable transaction within the meaning of any of Sections 6011, 6111 and 6112 of the Code.

(g) Since December 31, 2011, no Company has made or changed any election for Tax purposes, changed an annual accounting period for Tax purposes, filed any amended Tax Return, entered into any closing agreement for Tax purposes, settled any Tax claim or assessment relating to such Company, surrendered any right to claim a refund of Taxes, consented to any extension or waiver of the limitation period applicable to any Tax claim or assessment relating to such Company, or taken any other action relating to the filing of any Tax Return or the payment of any Tax, if such election, adoption, change, amendment, agreement, settlement, surrender, consent or other action would have the effect of increasing the Tax liability of the Purchaser or such Company for any period on or after the Effective Time or decreasing any Tax attribute of the Purchaser or such Company existing prior to the Effective Time.

(h) No Company has agreed, and no Company is required, to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise, no Company has made any similar election, and no Company is required to apply any similar rules, under any comparable state, local or foreign Tax provision. No Company will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending on or after the Effective Time as a result of any (i) change in method of accounting for a taxable period ending prior to the Closing Date; (ii) installment sale or open transaction disposition made prior to the Closing Date; (iii) use of the completed contract or percentage of completion method of accounting, (iv) prepaid amount received prior to the Closing Date; (v) closing agreement under Section 7121 of the Code (or other comparable agreement) entered into prior to the Closing Date; or (vi) cancellation of debt to which Section 108(i) of the Code applies.

(i) None of the Assets constitutes tax-exempt bond financed property or tax-exempt use property, within the meaning of Section 168 of the Code. No Company is a party to any "safe harbor lease" that is subject to the provisions of Section 168(f)(8) of the Internal Revenue Code as in effect prior to the Tax Reform Act of 1986. None of the assets of any Company will, on or after the Effective Time, be non-amortizable under Section 197(f) of the Code.

5.17 Environmental Matters.

(a) Except for any matter set forth on Schedule 5.17(a):

(i) Each Company is and has been in compliance in all respects with all applicable Environmental Laws and has obtained, maintained and complied with the terms of all permits, licenses, consents and approvals required under all applicable Environmental Laws to entitle such Company to own and operate its Assets and to carry on and conduct its business ("Environmental Permits"), with each such Environmental Permit set forth on Schedule 5.17(a);

(ii) There are no pending or, to the Knowledge of the Sellers, threatened Proceedings, claims or demands arising under any Environmental Laws with respect to the Companies, the Real Property Interests, the Projects or with respect to any of the Assets (whether real, personal or mixed) formerly owned or operated by either of the Companies;

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(iii) No Company has treated, stored, transported, handled, manufactured, distributed, released, exposed any Person to, disposed of, or arranged for or permitted the disposal of, Hazardous Materials at or to a site, or owned, leased or operated a site, that (A) pursuant to CERCLA or any other Law, has been placed or is proposed to be placed by the United States Environmental Protection Agency or similar state authority on the National Priorities List or similar state list, (B) has been or is involved in any government-sponsored voluntary cleanup program, or (C) is or has been contaminated by any Hazardous Materials so as to give rise to any current or future environmental claims;

(iv) No release or threatened release of Hazardous Materials is occurring or has occurred at or from any Real Property Interests or any other property formerly owned, operated, leased or used by any Company or the Sellers so as to give rise to any current or future environmental claims or for which applicable Environmental Law requires any Company to (A) provide notice to any Person, (B) perform any investigation, or (C) undertake any form of response action;

(v) No Company has agreed to indemnify for or defend against, nor has any Company assumed, undertaken or otherwise become subject to, any material Environmental Liability of any Person; and

(vi) The Sellers have delivered to the Purchaser true and complete copies of all environmental site assessments, compliance audits, remediation studies, or release reports, copies of any notices of violation or documents initiating regulatory or judicial or other proceedings, and any other documents materially bearing on environmental, health or safety liabilities, that are in the possession, custody, or control of the Sellers (including, in the case of such assessments, audits, studies or reports, those that were prepared on behalf of any Company) that relate to any Company, any Project or the current or former business or facilities of any Company (including the Real Property Interests); provided, that such reports and documents are provided as is, and the Sellers make no representation or warranty as to the accuracy of any facts asserted, statements made, or conclusions reached in any such reports or documents.

5.18 Absence of Changes. Since December 31, 2013, except as set forth on Schedule 5.18, (a) each Project and the business of each Company has been conducted in all material respects in the ordinary course consistent with past practice; (b) neither the Sellers nor any Company has suffered any damage, destruction or casualty loss over $5,000, whether or not covered by insurance; (c) neither the Sellers nor any Company has discharged or satisfied any Encumbrance or paid any material obligation or liability, other than current liabilities paid in the ordinary course of business consistent with past custom and practice, or cancelled, compromised, waived or released any material right or material claim; (d) neither the Sellers nor any Company has failed to promptly pay and discharge current liabilities except where disputed in good faith by appropriate proceedings; (e) neither the Sellers nor any Company has instituted or settled any material proceeding; (f) neither the Sellers nor any Company has conducted its cash management customs and practices (including the collection of receivables, payment of payables, maintenance of control and credit practices) other than in the usual and ordinary course of business consistent with past custom and practice; and (g) neither the Sellers nor any Company has entered into any agreement, whether oral or written, to do any of the foregoing other than this Agreement.

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5.19 Affiliate Transactions.

(a) Except as set forth on Schedule 5.19(a), (i) no officer, director, manager, stockholder, member, employee, or Affiliate of any Company or, to the Knowledge of the Sellers, any immediate family member to any such individual or any entity controlled by such a Person, is a party to any contract, agreement, arrangement or license with any Company or has any interest in any Asset used by any Company; (ii) there are no loans, leases or other agreements or transactions between any Company and any other entity that controls or is under common control with any Company; and (iii) none of the assets, tangible or intangible, or properties that are used by any Company are owned by the Sellers or its Affiliates (other than the Companies).

(b) Schedule 5.19(b) contains a description of all intercompany services provided to or on behalf of any Company by the Sellers or its Affiliates (other than the Companies) and the costs associated therewith.

5.20 Insurance.

(a) Schedule 5.20(a) contains a true and complete list of all insurance policies (including policies providing property, vehicle, casualty, liability, and workers' compensation coverage and bond and surety arrangements and insurance certificates) to which any Company is a party or which provide coverage to or for the benefit of or with respect to a Company or any director, manager, employee or officer of a Company in his or her capacity as such (the "Insurance Policies"), indicating in each case the type of coverage, name of the insured, the insurer, the premium, the expiration date of each Insurance Policy and the amount of coverage. Schedule 5.20(a) also describes any self-insurance or co-insurance arrangements by or affecting any Company, including any reserves established thereunder. Each Insurance Policy is in full force and effect and shall remain in full force and effect in accordance with its terms following the Closing. The Sellers have delivered to the Purchaser complete and correct copies of the Insurance Policies. Neither Seller nor any Company has received any notice of pending or threatened termination of any Insurance Policy, and each Company is in compliance in all material respects with all terms and conditions contained therein. All potential insurance claims for matters arising prior to the Closing Date for which insurance coverage is (or would have been) available have been timely and properly tendered to the respective insurance carrier by each Company. No Company has been refused any insurance by any insurance carrier to which it has applied for any such insurance or with which it has carried such insurance. During the past three (3) years, no insurance carrier has questioned, denied or disputed coverage of any claim in excess of $5,000 individually or $25,000 in the aggregate or otherwise cancelled or threatened to cancel any insurance policy which covered a Company (or its assets, properties, products, employees, operations or business).

(b) Schedule 5.20(b) sets forth a true, correct and complete list of all claims pending on any Insurance Policy and there is no such claim (i) as to which the Sellers or a Company has been notified that coverage has been questioned, denied or disputed by the underwriter, and (ii) that has or could erode historical or current insurance policy limits.

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5.21 Brokers. Except as set forth on Schedule 5.21, all negotiations relating to this Agreement and the Transactions have been carried out without the services of any Person acting on behalf of any Company in such manner as to give rise to any valid claim against the Purchaser or any Company for any brokerage or finder's commission or similar compensation.

5.22 Minutes; Books and Records. The Sellers have delivered to the Purchaser true, complete and accurate copies, or the complete original, minute books, of each Company. The books of account and other records of each Company are complete and correct in all material respects. The minute books of each Company accurately reflect in all material respects all actions taken at meetings, or by written consent in lieu of meetings, of the stockholders, members, board of directors, board of managers or others performing similar functions.

5.23 Solar Data and Project Attributes. Schedule 5.23 sets forth a true and complete list of the Solar Data and Project Attributes as of the Effective Time. The Sellers have delivered to the Purchaser true and complete copies of all books and records containing the Solar Data and Project Attributes and any other information listed on Schedule 5.23 in the format identified on said Schedule 5.23. With respect to each item of Solar Data and Project Attributes identified on Schedule 5.23, (a) each Company possesses all right, title, and interest in and to each item of Solar Data and Project Attribute and has the right, title, interest and ability to convey the same to the Purchaser without reservations or restrictions; (b) no item on Schedule 5.23 is subject to any outstanding injunction, judgment, order, decree, ruling, or charge; and (c) neither the Sellers nor any Company has agreed to indemnify any Person for or against any interference, infringement, misappropriation, or other conflict with respect to such items on Schedule 5.23.

5.24 Accuracy of Materials. No representation or warranty made by any Seller or any Company in this Agreement or otherwise in connection with the Transactions or any other materials made available to the Purchaser or its agents and representatives pursuant to, or in connection with, this Agreement and the Transactions, contain any untrue statement of material fact or omit to state a material fact necessary to make the statements in this Agreement or other materials not misleading.

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Sellers as of the Execution Date and Closing Date as follows:

6.1 Organization. The Purchaser is duly formed, validly existing and in good standing under the Laws of the State of Delaware. The Purchaser is not in default under or in violation of any provision of its Organizational Documents.

6.2 Authority. The Purchaser has all requisite limited liability company power and authority to (a) execute and deliver this Agreement and perform its obligations hereunder and (b) execute and deliver all other agreements and instruments to be executed and delivered pursuant to this Agreement and perform its obligations thereunder. The execution, delivery and performance of this Agreement and each other document to which the Purchaser is or will be a party and the consummation of each of the transactions and undertakings contemplated thereby have been duly and validly authorized by all requisite action on the part of the Purchaser and no other proceedings by the Purchaser are necessary to authorize the execution and delivery of the Agreement and the consummation of the Transactions.

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6.3 Enforceability. This Agreement has been executed by a duly authorized officer of the Purchaser and constitutes a valid and binding obligation of the Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors' rights generally and by general principles of equity.

6.4 No Conflicts; Consents and Approvals.

(a) The execution and delivery of this Agreement and the consummation of the Transactions by the Purchaser will not (i) breach or violate or result in a default under any applicable Law, permit held by the Purchaser or other authorization of a Governmental Authority applicable to the Purchaser or its assets, (ii) conflict with the Organizational Documents of the Purchaser or (iii) breach, violate or result in a default under (with or without notice or lapse of time or both), terminate or give rise to or any right on the part of any Person to terminate, any mortgage, lease, agreement, deed of trust, indenture or any other instrument to which the Purchaser is a party or by which the Purchaser or any of its properties or assets are bound.

(b) No consent, approval or authorization of or filing with any third party or Governmental Authority is required on the part of the Purchaser in connection with the execution and delivery of this Agreement or the consummation of the Transactions.

6.5 Brokers. Except as set forth on Schedule 6.5, all negotiations relating to this Agreement and the Transactions have been carried out without the services of any Person acting on behalf of the Purchaser or any Affiliate of the Purchaser in such manner as to give rise to any valid claim against the Sellers for any brokerage or finder's commission or similar compensation.

6.6 Litigation. There are no Proceedings pending and, to the Knowledge of the Purchaser, there are no Proceedings threatened against the Purchaser, in any such case at law or in equity before any Governmental Authority or arbitral body against or affecting the Purchaser, that would reasonably be expected to have an adverse effect on the ability of the Purchaser to perform its obligations under the Agreement or to consummate the Transactions.

ARTICLE VII
COVENANTS

7.1 Access. The Sellers shall give to the Purchaser and its representatives, from and after the Execution Date, access during normal business hours to the premises, employees, agents and consultants of the Sellers and the Companies, and such copies of the Financial Statements, Material Contracts, books and records, and Leases and other documentation, so as to enable the Purchaser to inspect and evaluate all aspects of the Companies' business and operations, Assets, operating results (including revenues, cash flows and tax returns for the last three (3) years), condition (financial and otherwise), current and contingent liabilities, capitalization, ownership, and legal affairs relating to the business. The Purchaser agrees to conduct its review, and to cause its representatives to conduct their review, in a manner designed to minimize any disruption of the Companies' business.

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7.2 Conduct of the Business. The Sellers shall cause the Companies to operate and conduct the Companies' business diligently and only in the ordinary course, consistent with past practices and not make any material change in its methods of accounting (except as required by GAAP), management or operations. In furtherance thereof, unless the Purchaser's prior consent to do otherwise is obtained, no Seller shall, and no Seller shall cause any of the Companies to, take any of the following actions:

(a) enter into any Contract with any Person that imposes aggregate payment obligations on any Company other than contracts that are terminable without penalty or payment on notice of thirty (30) days or less;

(b) amend, terminate, extend, violate or breach any Material Contract;

(c) issue, sell, pledge, encumber, authorize the issuance of, enter into any contract to issue, sell, pledge, encumber, or authorize the issuance of, or otherwise permit to become outstanding, any additional shares of equity interest, or any appreciation rights, or any option, warrant, conversion, or other right to acquire any such equity interest, or any security convertible into any such equity interest, or pay or declare or agree to pay or declare any dividend or other distribution with respect to any equity interests;

(d) purchase or redeem, or agree to purchase or redeem, any equity interest;

(e) sell, lease, grant, transfer or otherwise dispose of any asset or make any material commitment relating to its assets or enter into or terminate any lease of real property;

(f) enter into or propose to enter into an agreement providing for the possible acquisition (by way of merger, purchase of capital stock, purchase of assets or otherwise) of any material portion of the capital stock or assets of another entity;

(g) borrow any money, incur any Indebtedness, or become contingently liable for any obligation or liability of others;

(h) enter into any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any Person;

(i) make or commit to make any capital expenditure, or enter into any lease of capital equipment as lessee or lessor;

(j) pay, prepay or discharge any liability other than in the ordinary course of business or fail to pay any liability when due;

(k) write-off or write-down any Assets;

(l) make any changes in its accounting methods or practices or revalue its assets, except for (i) those changes required by GAAP, and (ii) changes in its tax accounting methods or practices that may be necessitated by changes in applicable Tax Laws;

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(m) authorize or effect any change in such Company's Organizational Documents;

(n) cancel, compromise or settle any material claim or action of such Company (unless such claim is otherwise paid or discharged by the Sellers at or before Closing);

(o) voluntarily adopt a plan of complete or partial liquidation or dissolution of such Company;

(p) create or incur any Encumbrance on any property or asset of any Company, or on the equity interests in any Company;

(q) materially modify, amend, terminate, transfer, assign, convey, or deliver any Permit or waive, release, or assign any material rights or claims thereunder;

(r) submit an application for, or modify, revoke, withdraw or otherwise adversely affect any pending application for, any Permit for a Project;

(s) enter into any Contract with any Seller, any Affiliate of any Seller or any directors, officers, employees, or managers; or

(t) authorize any of, or commit or agree to take any of, the foregoing actions.

7.3 Books and Records. The Sellers shall provide to the Purchaser, reasonably promptly but in no event later than five (5) Business Days after the Closing, all of the books and records of the Sellers related to the Companies and all of the books and records of the Companies; provided that the Sellers shall be entitled to retain, at the Sellers' sole expense, copies of such books and records delivered to the Purchaser pursuant to this Section 7.3.

7.4 Bank Accounts and Email Addresses. The Sellers shall, no later than the Closing, transfer to the Purchaser (i) all signing authority and other rights to all accounts of any time and safe deposit boxes with all banks and other financial institutions an depositories for each Company; and (ii) access to, and control over, all email addresses used by the Companies.

7.5 Energy Regulatory Filings. As promptly as is reasonably practicable, and in any case within five (5) days after the Execution Date, the Sellers and the Purchaser, as applicable shall file or cause to be filed with the applicable energy regulatory authorities such applications as are necessary to obtain any required approval for the various transactions contemplated hereby.

7.6 Notification of Certain Matters.

(a) The Sellers shall give prompt notice to the Purchaser of (i) the occurrence or non-occurrence, to the Knowledge of the Sellers, of any event the occurrence or non-occurrence of which would cause any representation or warranty of the Sellers contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing Date; (ii) any failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.6 shall not limit or otherwise affect the remedies available hereunder to the Purchaser; and (iii) any governmental complaints, investigations or hearings (or communications indicating that the same may be contemplated), adjudicatory proceedings or submissions involving any property or other assets of any Company.

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(b) The Purchaser shall give prompt notice to the Sellers of (i) the occurrence or non-occurrence, to the Knowledge of the Purchaser, of any event the occurrence or non-occurrence of which would cause any representation or warranty of the Purchaser contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Closing Date; (ii) any failure to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 7.6 shall not limit or otherwise affect the remedies available hereunder to the Sellers.

7.7 Further Assurances. Each Party agrees that from and after the Execution Date, each of them will:

(a) execute and deliver such further instruments of conveyance and transfer and take such other action as may reasonably be requested by any Party to carry out the purposes and intents hereof; and

(b) take any and all actions requested by the Sellers, the Companies, the Purchaser or their respective Affiliates with respect to any (i) required consents and (ii) Permit to ensure such Permits are validly issued, effective, and in full force and effect after consummation of the Transactions.

7.8 Governmental Approvals. Each Party hereby agrees, from and after the Execution Date, to take cause to be taken the following actions:

(a) in the event that any permanent, preliminary or temporary injunction, decision, order, judgment, determination or decree is entered or issued, in any proceeding that would make consummation of the Transactions in accordance with the terms of this Agreement unlawful, or that would prevent, enjoin or otherwise prohibit consummation of Transactions, the prompt taking of any and all steps (including the appeal thereof and the posting of a bond, but excluding the taking of the steps contemplated by Section 7.8(b)) necessary to vacate, modify, reverse, suspend, eliminate or remove such actual injunction, decision, order, judgment, determination or decree so as to permit such consummation contemplated by this Agreement; and

(b) the prompt taking of any and all actions (the sequence of which shall lie in the sole discretion of the Purchaser) necessary to avoid the entry of any permanent, preliminary or temporary injunction or other order, decree, decision, determination or judgment that would delay, restrain, prevent, enjoin or otherwise prohibit consummation of the Transactions, including the defense through litigation on the merits of any claim asserted in any court, agency or other proceedings by any person or entity, including any Governmental Authority, seeking to delay, restrain, prevent, enjoin or otherwise prohibit consummation of the Transactions.

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7.9 Tax Matters.

(a) Purchase Price Allocation. At the Closing, the Purchaser shall provide the Sellers with an allocation of the Purchase Price for Tax purposes. The Parties and their respective Affiliates shall file all Tax Returns consistent in all respects with such allocation.

(b) Tax Returns Relating to a Pre-Closing Tax Period. The Sellers shall, at the Sellers' own expense, prepare and file (or cause to be filed) any Tax Return of the Companies for any taxable period ending prior to the Closing Date that is due after the Closing Date. The Purchaser shall prepare and file any Tax Return of the Companies that is due after the Closing Date for any taxable period beginning on or before the Closing Date.

(c) Tax Return Preparation and Filing Procedures; Refunds.

(i) All Tax Returns for which the Sellers are responsible under Section 7.9(b) shall be (A) prepared in accordance with past custom and practice of the Companies and the Sellers in preparing its Tax Returns and, in any event, in accordance with applicable Law, and (B) made available by the Sellers (along with the associated Tax workpapers) to the Purchaser for review no later than thirty (30) days before the due date (including extensions) for filing such Tax Returns (or if such Tax Returns are due less than sixty (60) days after Closing, then promptly after such Tax Returns have been prepared). Within fifteen (15) days of such delivery, the Purchaser shall deliver to the Sellers a written statement describing the Purchaser's objections, if any, to such Tax Return and all grounds therefor. If the Purchaser and the Sellers are unable to resolve such objections, then any remaining disputes shall be resolved as provided in Section 7.9(c)(iii). If any disputes over such Tax Returns are not resolved at least five (5) days before such Tax Returns are due, then such Tax Returns shall be filed as prepared by the Sellers (with such changes as the Purchaser and the Sellers may have agreed upon), following which, if such Tax Returns have been filed in a manner inconsistent with the resolution of such disputes, they shall be amended. Each such Tax Return shall be filed on or before the due date (including extensions) for filing such Tax Return and the Sellers shall pay any Tax owed by the Companies as shown on such Tax Return.

(ii) The Purchaser shall, with respect to any Tax Return for which the Purchaser is responsible under Section 7.9(b), make such Tax Return and the associated Tax workpapers available for review by the Sellers no later than thirty (30) days before the due date (including extensions) for filing such Tax Returns (or if such Tax Returns are due less than sixty (60) days after Closing, then promptly after such Tax Returns have been prepared). Within fifteen (15) days of such delivery (but no later than five (5) days before such returns are due), the Sellers shall deliver to the Purchaser a written statement describing its objections, if any, to such Tax Return and all grounds therefor. If the parties are unable to resolve such objections within such 15-day period (and, in any event, at least five (5) days before such Tax Returns are due), then such Tax Return shall be filed as prepared by the Purchaser, and any remaining disputes shall be resolved as provided in Section 7.9(c)(iii), following which, if such Tax Returns have been filed in a manner inconsistent with such resolution, they shall be amended. The Purchaser shall file (or cause to be filed) each such Tax Return before the due date (including extensions) for filing such Tax Return and the Sellers shall pay any Tax owed by the Companies as shown on such Tax Return to the extent such Tax relates to a Pre-Closing Tax Period (as determined under Section 7.9(e) below).

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(iii) If the Sellers and the Purchaser are unable to agree upon any Tax Return prepared pursuant to Section 7.9(c)(i) or Section 7.9(c)(ii) or to the allocation prepared pursuant to Section 7.9(a), then the Sellers and the Purchaser will refer the matter to the AAA to resolve such dispute pursuant to binding arbitration in New York, New York in accordance with the Commercial Arbitration Rules of the AAA. The arbitration will be conducted before a single arbitrator, which arbitrator shall be mutually agreed upon by the Sellers and the Purchaser (such selected arbitrator, the "Arbitrator"). The Arbitrator shall be instructed to resolve any disputes referred to it within thirty (30) days after such referral. The resolution of disputes by the Arbitrator shall be set forth in writing and shall be conclusive and binding upon all Parties and the Parties shall join in the execution and cooperate in the filing of any amended Tax Return required to implement such resolution. The fees and expenses of the Arbitrator shall be borne by the Party whose positions generally did not prevail in such determination, or if the Arbitrator determines that neither the Sellers nor the Purchaser could be fairly found to be the prevailing party, then such fees, costs and expenses shall be borne fifty (50%) by the Sellers and fifty (50%) by the Purchaser.

(d) Cooperation on Tax Matters.

(i) The Parties shall cooperate fully, to the extent reasonably requested by the other Parties, in connection with the filing of Tax Returns and any audit, litigation or other Proceeding with respect to Taxes. Such cooperation shall include the retention and (upon the other Party's request) the provision of records and information which are reasonably relevant to any such Tax Return, or any such audit, litigation or other Proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder.

(ii) The Parties agree to (A) retain or cause to be retained all books and records with respect to Tax matters pertinent to the Companies relating to any Tax period beginning before the Execution Date until the expiration of the applicable statute of limitations (and, to the extent notified by the Purchaser or the Sellers, any extensions thereof) of the respective Tax periods, and to abide by all record retention agreements entered into with any Tax authority, (B) provide to the other Parties, upon request, all books and records with respect to Tax matters pertinent to the Companies relating to any taxable period beginning before the Execution Date until the expiration of the statute of limitations (and, to the extent notified by the Purchaser or the Sellers, any extensions thereof) of the respective periods, and (C) give the other Parties reasonable written Notice prior to transferring, destroying or discarding any such books and records and, if any of the other Parties so requests, the other Parties shall allow such requesting Party to take possession of such books and records.

(e) Allocation of Taxes. In the case of any Straddle Period, the amount of any Taxes for the Pre-Effective Time Tax Period shall (i) in the case of ad valorem property Taxes, be deemed to be the amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of calendar days during the Straddle Period before the Effective Time and the denominator of which is the total number of calendar days in the Straddle Period, and (ii) in the case of all other Taxes, be determined based on an interim closing of the books immediately prior to the Effective Time.

(f) Certain Taxes. All transfer, documentary, sales, use, real property gains, stamp, registration, and other similar Taxes and fees incurred in connection with this Agreement shall be paid by the Sellers when due, and the Sellers will, at their own expense, file all necessary Tax Returns and other documentation with respect to all such transfer, documentary, sales, use, real property gains, stamp, registration, and other similar Taxes and fees.

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(g) Solar Tax Credits. Neither the Purchaser nor the Sellers shall take any action, or fail to take any action, that could reasonably be expected to, or actually does, result in any disallowance, expiration, forfeiture, recapture or other reduction of any Solar Tax Credits.

7.10 Confidentiality. After the Closing, each Seller shall and shall cause its respective Affiliates to continue to maintain the confidentiality of all information, documents and materials relating in any manner to the Transactions, the Companies, and the Projects, except to the extent disclosure of any such information is required by Law. In the event that any Seller reasonably believes after consultation with counsel that it or he is required by Law to disclose any confidential information described in this Section 7.10, such Seller will (a) provide the Purchaser with prompt Notice before such disclosure so that the Purchaser may obtain a protective order or other assurance that confidential treatment will be accorded such confidential information and (b) cooperate with the Purchaser in attempting to obtain such order or assurance.

7.11 The Sellers' Representative.

(a) Appointment. In addition to the other rights and authority granted to the Sellers' Representative elsewhere in this Agreement, upon and by virtue of the approval of this Agreement by the Sellers, all of the Sellers collectively irrevocably constitute and appoint the Sellers' Representative as their agent and representative to act from and after the date hereof and to do any and all things and execute any and all documents which may be necessary, convenient or appropriate to facilitate the consummation of the transactions contemplated by this Agreement, including but not limited to: (i) execution of the documents and certificates pursuant to this Agreement; (ii) receipt of payments under or pursuant to this Agreement and disbursement thereof to the Sellers and others, as contemplated by this Agreement; (iii) receipt and forwarding of notices and communications pursuant to this Agreement; (iv) administration of the provisions of this Agreement; (v) giving or agreeing to, on behalf of all or any of the Sellers, any and all consents, waivers, amendments or modifications deemed by the Sellers' Representative, in its reasonable and good faith discretion, to be necessary or appropriate under this Agreement and the execution or delivery of any documents that may be necessary or appropriate in connection therewith; (vi) amending this Agreement or any of the instruments to be delivered to the Purchaser pursuant to this Agreement; (vii) (A) submitting claims for indemnification on behalf of the Sellers pursuant to Article VIII, and (B) agreeing to, negotiating, entering into settlements and compromises of matter relating to claims for indemnification made by the Sellers pursuant to Article VIII, (viii) in addition to those matters specifically referenced in clauses (vii) above, (A) disputing or refraining from disputing, on behalf of each Seller relative to any amounts to be received by such Seller under this Agreement or any agreements contemplated hereby, any claim made by the Purchaser under this Agreement or other agreements contemplated hereby, (B) negotiating and compromising, on behalf of each Seller, any dispute that may arise under, and exercising or refraining from exercising any remedies available under, this Agreement or any other agreement contemplated hereby, and (C) executing, on behalf of each such Seller, any settlement agreement, release or other document with respect to such dispute or remedy; except, in each case, with respect to a dispute between a Seller, on the one hand, and the Sellers' Representative, on the other hand; (ix) engaging, and paying fees relating to, attorneys, accountants, agents or consultants on behalf of such the Sellers in connection with this Agreement or any other agreement contemplated hereby and the transactions contemplated hereby and thereby; and (x) taking all actions necessary or appropriate in the judgment of the Sellers' Representative for the accomplishment of any of the foregoing.

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(b) Authority. A decision, act, consent or instruction of the Sellers' Representative shall constitute a decision of all the Sellers and shall be final, binding and conclusive upon each Seller, and the Purchaser may rely upon any decision, act, consent or instruction of the Sellers' Representative as being the decision, act, consent or instruction of each and every Seller. The Purchaser is hereby relieved from any liability to any person for any acts done by it in accordance with such decision, act, consent or instruction of the Sellers' Representative. Notices or communications to or from the Sellers' Representative shall constitute notice to or from each of the Sellers for purposes of this Agreement.

(c) Additional Authorization; Irrevocable Appointment. Notwithstanding anything to the contrary in Section 7.11(a) or 7.11(b), in the event that the Sellers' Representative is of the opinion that it requires further authorization or advice from the Sellers on any matters concerning this Agreement, the Sellers' Representative shall be entitled to seek such further authorization from the Sellers prior to acting on their behalf. The appointment of the Sellers' Representative is coupled with an interest and shall be irrevocable by any Seller in any manner or for any reason. This authority granted to the Sellers' Representative shall not be affected by the death, illness, dissolution, disability, incapacity or other inability to act of the principal pursuant to any applicable Law.

(d) Payment to the Sellers. The Purchase Price and any other amounts received by the Sellers' Representative from the Purchaser pursuant to this Agreement shall be distributed (i) if specified in this Agreement, in accordance with the terms of this Agreement, and (ii) if not specified in this Agreement, in the discretion of the Sellers' Representative.

ARTICLE VIII
INDEMNIFICATION

8.1 Indemnification. Subject to the other provisions of this Article VIII:

(a) Each Seller, jointly and severally, shall indemnify the Purchaser Indemnified Parties from and against Damages incurred by the Purchaser Indemnified Parties arising, directly or indirectly, from or in connection with:

(i) any breach of any representation or warranty of any Company or any Seller set forth in this Agreement or any other agreement executed by any Company or any Seller in connection with this Agreement;

(ii) any breach of or failure by any Company or any Seller to perform any covenant or obligation of the Companies or the Sellers set forth in this Agreement or any other agreement executed by any Seller in connection with this Agreement;

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(iii) any disallowance, expiration, forfeiture, recapture or other reduction of any Solar Tax Credits as a result of (A) the transactions contemplated by this Agreement, (B) any action accruing prior to the Closing Date, (C) any action taken by, or with respect to, any Company or any Project prior to or on the Closing Date, or (D) any action taken, or failure to take any action, by the Sellers or its Affiliates prior to, on or after the Closing Date;

(iv) any Damages (including legal fees and disbursements, court costs, the cost of appellate proceedings, and any other costs of defense and litigation) arising out of any litigation set forth, or that should be set forth, on any Schedule to this Agreement;

(v) any Damages (including legal fees and disbursements, court costs, the cost of appellate proceedings, and any other costs of defense and litigation) arising in connection with any option, deposit, contingent, or any other type of payment due by any of the Sellers to any of the other Sellers; and

(vi) any Damages (including reasonable legal fees and disbursements, court costs, the cost of appellate proceedings, and any other reasonable costs of litigation) that any the Purchaser Indemnified Party incurs to establish and enforce its right to the indemnification provisions in this Article VIII, provided the Purchaser Indemnified Party is successful in establishing that right.

(b) The Purchaser shall indemnify the Seller Indemnified Parties from and against Damages incurred by the Seller Indemnified Parties arising, directly or indirectly, from or in connection with:

(i) any breach of any representation or warranty of the Purchaser set forth in this Agreement or any other agreement executed by the Purchaser in connection with this Agreement;

(ii) any breach of or failure by the Purchaser to perform any covenant or obligation of the Purchaser set forth in this Agreement or any other agreement executed by the Purchaser in connection with this Agreement;

(iii) any disallowance, expiration, forfeiture, recapture or other reduction of any Solar Tax Credits as a result of any action taken by the Purchaser, any Company or any Project after the Closing Date; and

(iv) any Damages (including reasonable legal fees and disbursements, court costs, the cost of appellate proceedings, and any other reasonable costs of litigation) that any Seller Indemnified Party incurs to establish and enforce its right to the indemnification provisions in this Article VIII, provided the Seller Indemnified Party is successful in establishing that right.

(c) Without limiting the foregoing, (i) all representations, warranties, covenants and agreements set forth in this Agreement or in any schedule or exhibit to this Agreement, and the Purchaser Indemnified Parties' and Seller Indemnified Parties' right to rely on them as written and the related right to indemnification as contemplated herein, will not be affected by any examination made for or on behalf of any of the Parties or the knowledge of any of their officers, directors, managers, security holders, employees, agents or representatives or the acceptance of any certificate or opinion; and (ii) no Party shall be entitled to any indemnification hereunder in respect of any Damage to the extent caused by any matter constituting a breach of such Party's representations, warranties or covenants in the Agreement.

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8.2 Claim Procedures. Any claim for Damages pursuant to this Article VIII shall be in writing (an "Indemnifying Notice"), shall be given by the applicable Indemnified Party to the Party or Parties from whom indemnity is sought (collectively, the "Indemnifying Party"), and shall describe the claim in reasonable detail and indicate the estimated amount of such claim, if reasonably practical. If the Indemnifying Party does not notify the Indemnified Party within thirty (30) days following its receipt of an Indemnification Notice that the Indemnifying Party disputes its liability to the Indemnified Party, the applicable indemnification claim specified in such Indemnification Notice shall be conclusively deemed an obligation of the Indemnifying Party hereunder, and the Indemnifying Party shall pay the Indemnified Party an amount equal to the amount of such indemnification claim.

8.3 Survival of Claims. The right of the Purchaser Indemnified Parties and the Seller Indemnified Parties to assert an indemnification claim for Damages pursuant to this Article VIII shall survive the Closing for the periods set forth in this Section 8.3.

(a) The right of the Purchaser Indemnified Parties to assert a claim for Damages pursuant to Section 8.1(a)(i) for a breach of the representations or warranties set forth in this Agreement shall terminate at the Claim Deadline; provided, however, that the right of the Purchaser Indemnified Parties to assert a claim for Damages:

(i) (A) for a breach of the representations and warranties of the Companies in Section 5.12 (Employees; Employee Benefit Plans), Section 5.16 (Taxes) or Section 5.17 (Environmental Matters); or (B) arising, directly or indirectly, from or in connection with Taxes attributable to the Pre-Closing Tax Period, in each case shall survive the Closing for seven (7) years; and

(ii) (A) for breaches of the representations and warranties of (A) the Sellers in Sections 4.1 (Organization), 4.2 (Authority), 4.3 (Enforceability), 4.4 (No Conflicts; Consents and Approvals), 4.5 (Litigation), 4.6 (Interests) and 4.7 (Brokers) (collectively, the "Sellers' Fundamental Representations"); or (B) for breaches of the representations and warranties of the Companies in Sections 5.1 (Organization), 5.2 (Authority), 5.3 (No Conflicts; Consents and Approvals), 5.4 (Capitalization of the Companies), 5.15 (Litigation), Section 5.19 (Affiliate Transactions) and 5.21 (Brokers) (collectively, the "Company Fundamental Representations"), in each case shall survive the Closing indefinitely.

(b) The right of the Purchaser Indemnified Parties to assert a claim for Damages for any claim pursuant to Section 8.1(a)(ii), Section 8.1(a)(iii), Section 8.1(a)(iv) or Section 8.1(a)(v) shall survive the Closing indefinitely.

(c) The right of the Seller Indemnified Parties to assert a claim for Damages pursuant to Section 8.1(b)(i) for a breach of the representations or warranties set forth in this Agreement shall terminate at the Claim Deadline; provided, that the right of the Seller Indemnified Parties to assert a claim for Damages for a breach of the representations and warranties of the Purchaser in Sections 6.1 (Organization), 6.2 (Authority), 6.3 (Enforceability), 6.4 (No Conflicts; Consents and Approvals) and 6.5 (Brokers) (collectively, the "Purchaser Fundamental Representations"), in each case, shall survive the Closing indefinitely.

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(d) The right of the Seller Indemnified Parties to assert a claim for Damages for any claim pursuant to Section 8.1(b)(ii), Section 8.1(b)(iii) or Section 8.1(b)(iv) shall survive the Closing indefinitely.

8.4 Exclusive Remedy. If Closing occurs, the indemnities set forth in this Agreement (as limited by Section 8.3) shall be the sole and exclusive remedy of the Parties indemnified hereunder for breach of any representation, warranty or covenant set forth in this Agreement; provided, however, nothing in this Section 8.4 (i) shall be deemed to affect any Person's right to equitable relief (including specific performance in a court of law) for breach of a covenant set forth in this Agreement (whether or not such covenant is set forth in Article VII) and (ii) shall not be applicable to any Damages to the extent that the Party against whom relief is sought is found by a court of competent jurisdiction in a final nonappealable decision to have committed fraud.

8.5 Third-Party Claims.

(a) If any claim by an Indemnified Party hereunder results from any claim or Proceeding by a third party (a "Third-Party Claim"), then such Indemnified Party shall give the Indemnifying Party written Notice thereof (together with a copy of such Third-Party Claim, process or other legal proceeding) promptly after becoming aware of such Third-Party Claim; provided, however, that the failure of such Indemnified Party to give such Notice shall not impair the rights of such Indemnified Party under this Article VIII, except to the extent that (and only to the extent that) the Indemnifying Party is actually and materially prejudiced by such failure to give Notice. The Indemnifying Party shall have the right to defend, at its own expense and by its own counsel reasonably acceptable to the Indemnified Party, any such matter involving the asserted liability of the Indemnified Party; provided, however, that the Indemnified Party shall have the rights to participate in the defense of such asserted liability at the Indemnified Party's own expense. In the event that such Indemnifying Party shall decline to participate in or assume the defense of such action, or if the Indemnifying Party discontinues the diligent and timely conduct thereof, any of the Indemnified Parties may undertake such defense and the Indemnifying Party shall be responsible for reimbursing the Indemnified Parties for their legal fees and expenses in connection therewith as and when such fees and expenses are incurred by them.

(b) (i) The Indemnifying Party shall obtain the prior written consent of the Indemnified Party before entering into any settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of such settlement or cessation, injunctive or other equitable relief will be imposed against the Indemnified Party or if such settlement does not expressly and unconditionally release the Indemnified Party from all liabilities and obligations with respect to such claim, without prejudice and (ii) the Indemnifying Party shall promptly inform the Indemnified Party of any settlement offers received and shall inform any third party claimant that any such settlement offers shall and must be shared with the Indemnified Party.

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ARTICLE IX
TERMINATION

9.1 Causes of Termination. This Agreement and the Transactions may be terminated:

(a) At any time by mutual written consent of the Sellers and the Purchaser;

(b) By the Sellers or the Purchaser, upon written notice to the other Party if the Closing does not occur on or prior to August 30, 2015 (the "Termination Date"); provided that the right to terminate this Agreement pursuant to this Section 9.1(b) shall not be available to any Party that is in material breach of this Agreement at such time;

(c) By the Sellers if, on the Closing Date, any of the conditions set forth in Section 3.3 shall not have been satisfied or waived (or have become incapable of fulfillment), other than through the failure of the Sellers to comply with its material obligations under this Agreement; or

(d) By the Purchaser if, on the Closing Date, any of the conditions set forth in Section 3.2 shall not have been satisfied or waived (or have become incapable of fulfillment), other than through the failure of the Purchaser to comply with its material obligations under this Agreement.

9.2 Effect of Termination. In the event of a valid termination of this Agreement as provided in Section 9.1, this Agreement shall cease to have force and effect, and there shall be no further liability or obligation on the part of the Sellers or the Purchaser, except that the applicable provisions of Article I, Section 4.7, Section 5.21, Section 6.5, Article IX, and Article X shall survive termination of this Agreement.

9.3 Specific Performance. The Parties agree that, prior to the Closing Date, irreparable damage would occur in the event that any of the provisions of this Agreement are not performed by the Parties in accordance with their specific terms or are otherwise breached, including any wrongful failure to consummate the Closing. It is accordingly agreed that the Purchaser shall be entitled to an injunction or injunctions or other specific performance or equitable relief to prevent breaches of this Agreement and to cause the Closing to occur on the terms and subject to the conditions thereto set forth herein. In that regard, the Sellers hereby waive (a) any defenses in any action for specific performance that such other Party is required to mitigate damages or otherwise has an adequate remedy under law and (b) any requirement under any Law to post a bond or other security as a prerequisite to obtaining such equitable relief. If the Purchaser brings any action to enforce specifically the performance of the terms and provisions hereof by the other Party, the Termination Date shall automatically be extended by (i) the amount of time during which such action is pending, plus twenty (20) Business Days or (ii) such other time period established by the court presiding over such action. The Sellers agree that they will not oppose the granting of any injunction, specific performance or other equitable relief sought in accordance with this Section 9.3 on the basis that the other Party has an adequate remedy at law or that any award of specific performance is not an appropriate remedy for any reason at law or in equity.

ARTICLE X
MISCELLANEOUS

10.1 Entire Agreement. This Agreement, including the exhibits and schedules hereto and the other agreements contemplated hereby, embody the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersede all prior understandings related to the subject matter hereof.

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10.2 No Waiver; Modifications in Writing. No amendment, waiver, consent, modification or termination of any provision of this Agreement shall be effective unless executed in writing by the Parties hereto. Any amendment, waiver, supplement or modification of or to any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given.

10.3 Communications. Any notice, request, instruction, consent, correspondence or other document to be given hereunder by any Party to the other Parties (herein collectively called "Notice") shall be in writing and delivered in person or by courier service requiring acknowledgment of receipt of delivery or mailed by certified mail, postage prepaid and return receipt requested, or by facsimile (confirmed by facsimile as received), as follows:

If to the Purchaser or, after the Closing, the Companies:

Greenbacker Group

369 Lexington Avenue, Suite 312

New York, New York 10017

Attention: Charles Wheeler

Telephone: 646-237-7884

Email: charles.wheeler@greenbackercapital.com

With a copy (which shall not constitute notice) to:

Winstead PC

500 Winstead Building

2728 N. Harwood St.

Dallas, Texas 75201

Attention: Sargon Daniel

Telephone: 214-745-5841

Email: sdaniel@winstead.com

and, if to the Sellers:

Principal Solar, Inc.

2560 King Arthur Blvd, Suite 124 PMB 65

Lewisville, Texas 75056

Attention: Chief Executive Officer

With a copy (which shall not constitute notice) to:

Settle & Pou, PC

3333 Lee Parkway, Eighth Floor

Dallas, Texas 75219

Attention: Quentin Faust

Telephone: 214-520-3300

Facsimile: 214-526-4145

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or to such other address as the Purchaser or the Sellers may designate in writing by giving Notice as provided above. Notice shall be deemed to have been duly given: at the time delivered, if personally delivered; upon actual receipt (or at the beginning of the recipient's next Business Day if not received during recipient's normal business hours), if sent by facsimile; upon actual receipt (or, if not actually received, on the fifth Business Day following deposit with the U.S. Post Office), if mailed; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

10.4 Costs and Expenses. Except as specifically provided to the contrary in this Agreement, whether or not the Transactions are consummated, each Party shall pay its own costs and expenses incident to or incurred in connection with preparation and execution of this Agreement and the consummation of the Transactions.

10.5 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile or other electronic copies (such as .pdf files delivered by electronic mail) of signatures shall constitute original signatures for all purposes of this Agreement and any enforcement hereof.

10.6 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of each Company, each Seller, the Sellers' Representative and the Purchaser, and their respective permitted successors and assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the Parties to this Agreement, and their respective permitted successors and assigns. No Party may assign its rights and obligations under this Agreement to any other Person without the prior written consent of the other Parties, and any such attempted assignment without such consent shall be void; provided, however, that the Purchaser may assign its rights and obligations hereunder, in whole or in part, to any of its Affiliates.

10.7 Governing Law and Jurisdiction; Waiver of Jury Trial. This Agreement will be constructed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties will be governed by, the laws of the state of New York without regard to principles of conflicts of law, and all claims relating to or arising out of this Agreement, or the breach thereof, whether sounding in contract, tort or otherwise, will likewise be governed by the laws of New York (without regard to conflicts of law principles). Any action or proceeding under or in connection with this Agreement must be brought in a state or federal court situated in New York, New York, and each Party hereby irrevocably (a) submits to the exclusive jurisdiction of such courts, and (b) waives any objection it may now or hereafter have as to the venue of any such action or proceeding brought in such court or that such court is an inconvenient forum. THE PARTIES HEREBY WAIVE AND SHALL NOT SEEK JURY TRIAL IN ANY LAWSUIT, PROCEEDING, CLAIM, COUNTERCLAIM, DEFENSE OR OTHER LITIGATION OR DISPUTE UNDER OR IN RESPECT OF THIS AGREEMENT.

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10.8 Severability of Provisions. Any provision of this Agreement that is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof or affecting or impairing the validity or enforceability of such provision in any other jurisdiction.

10.9 Headings; Exhibits and Schedules. The article, section and other headings and captions and Table of Contents used or contained in this Agreement or the schedules or exhibits hereto are for convenience of reference only and shall not affect the interpretation or construction of this Agreement. The schedules or exhibits referred to herein are attached hereto and incorporated herein by this reference. Any matter disclosed on one schedule hereto shall be deemed to be disclosed on any other schedule(s) hereto only to the extent that the relevance or applicability of such disclosure to such other schedule(s) is reasonably apparent on its face.

10.10 Terms Generally. The words "hereby," "herein," "hereof," "hereunder" and words of similar import refer to this Agreement as a whole (including any Exhibits and Schedules hereto) and not merely to the specific Section, paragraph or clause in which such word appears. All references in this Agreement to Sections, Exhibits and Schedules are references to Sections of, and Exhibits and Schedules to, this Agreement unless the context otherwise requires. The words "include," "includes" and "including" are deemed to be followed by the phrase "without limitation." The definitions given in this Agreement apply equally to both the singular and plural forms of the terms defined. Whenever the context requires, any pronoun includes the corresponding masculine, feminine and neuter forms.

10.11 Joint Effort. Preparation of this Agreement has been a joint effort of the Parties and the resulting document shall not be construed more severely against one Party than against the other Party.

* * * * *

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IN WITNESS WHEREOF, the Purchaser, the Sellers and the Sellers' Representative have executed this Agreement as of the date first written above.

	THE PURCHASER:

	MAGNOLIA SUN LLC

	By:	/s/ Charles Wheeler
	Name:	Charles Wheeler
	Title:	Authorized Signatory

SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

	SELLERS:

	PRINCIPAL SOLAR, INC.

	By:	/s/ Michael Gorton
	Name:	Michael Gorton
	Title:	Chief Executive Officer

	VIS SOLIS, INC.

	By:	/s/ R. Keith Gordon, Esq., LEED AP
	Name:	R. Keith Gordon, Esq., LEED AP
	Title:	General Counsel

	AstroSol, inc.

	By:	/s/ R. Keith Gordon, Esq., LEED AP
	Name:	R. Keith Gordon, Esq., LEED AP
	Title:	General Counsel

	SELLERS' REPRESENTATIVE:

	PRINCIPAL SOLAR, INC.

	By:	/s/ Michael Gorton
	Name:	Michael Gorton
	Title:	Chief Executive Officer

SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT]

Exhibit 31.1

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

(Chief Executive Officer)

Certification by the Chief Executive Officer

I, Michael Gorton, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Principal 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, 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 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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: August 19, 2015

		/s/ Michael Gorton
		Michael Gorton
		Chief Executive Officer

Exhibit 31.2

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

(Chief Financial Officer)

Certification by the Chief Financial Officer

I, David Pilotte, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Principal 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, 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 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 (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

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: August 19, 2015

		/s/ David Pilotte
		David Pilotte
		Chief Financial Officer

Exhibit 32.1

Section 1350 Certification

(Chief Executive Officer)

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 Principal Solar, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Gorton, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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.

		Date: August 19, 2015

		/s/ Michael Gorton
		Michael Gorton
		Chief Executive Officer

Exhibit 32.2

Section 1350 Certification

(Chief Executive Officer)

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 Principal Solar, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David N. Pilotte, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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.

		Date: August 19, 2015

		/s/ David N. Pilotte
		David N. Pilotte
		Chief Financial Officer

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