Document:

Table of Contents

Exhibit 4.38
HAITAOCHE LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
	CONTENTS
	    
	PAGE(S)

	 
	 
	 

	REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
	 
	F-2

	 
	 
	 

	CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2019 AND 2020
	 
	F-3

	 
	 
	 

	CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2020
	 
	F-4

	 
	 
	 

	CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2020
	 
	F-5

	 
	 
	 

	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2020
	 
	F-6

	 
	 
	 

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	 
	F-7

​
​
​

F-1

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Haitaoche Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Haitaoche Limited (the “Company”) as of December 31, 2019 and 2020, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audits of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Marcum Bernstein & Pinchuk LLP
We have served as the Company’s auditor since 2020.
Beijing, China
May 14, 2021
​

F-2

Table of Contents

HAITAOCHE LIMITED
CONSOLIDATED BALANCE SHEETS
(Amounts in U.S. dollars except for number of shares)
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	ASSETS
	 
	​
	  
	 
	​
	  

	Current assets:
	 
	​
	  
	 
	​
	  

	Cash and cash equivalents
	​
	$
	 3,545
	​
	$
	 607,360

	Amount due from related parties
	​
	 
	 195,998
	​
	 
	 704,981

	Prepaid expenses and other current assets
	​
	 
	 4,554
	​
	 
	 441,359

	Total current assets
	​
	 
	 204,097
	​
	 
	 1,753,700

	Property and equipment, net
	​
	 
	 2,095
	​
	 
	 962

	Intangible asset, net
	​
	 
	 7,234
	​
	 
	 293,300

	Other non-current assets
	​
	 
	 4,174,438
	​
	 
	 4,545,201

	Total non-current assets
	​
	 
	 4,183,767
	​
	 
	 4,839,463

	Total assets
	​
	$
	 4,387,864
	​
	$
	 6,593,163

	​
	​
	​
	​
	​
	​
	​

	LIABILITIES AND SHAREHOLDERS’ EQUITY
	​
	 
	  
	​
	 
	  

	Current liabilities:
	​
	 
	  
	​
	 
	  

	Advances from customers
	​
	$
	 85,354
	​
	$
	 411,756

	Income tax payable
	​
	 
	 3,479
	​
	 
	 3,712

	Amount due to related parties
	​
	 
	 278,836
	​
	 
	 10,115

	Accrued expenses and other current liabilities
	​
	 
	 5,079
	​
	 
	 5,956

	Total liabilities
	​
	 
	 372,748
	​
	 
	 431,539

	​
	​
	​
	​
	​
	​
	​

	Shareholders’ equity 
	​
	 
	​
	​
	​
	​

	Preferred shares (par value of $0.001 per share; 2,526,316  and  3,020,734 shares authorized, issued and outstanding as of December 31, 2019 and 2020, respectively)
	​
	​
	 2,526
	​
	 
	 3,021

	Ordinary shares (par value of $0.001 per share; 47,473,684 shares authorized, 8,000,000 shares issued and outstanding as of December 31, 2019 and 2020, respectively)
	​
	 
	 8,000
	​
	 
	 8,000

	Additional paid-in capital
	​
	 
	 5,492,875
	​
	 
	 7,624,648

	Statutory reserve
	​
	 
	 7,565
	​
	 
	 7,565

	Accumulated deficit
	​
	 
	 (1,557,118)
	​
	 
	 (1,723,443)

	Accumulated other comprehensive (loss) income
	​
	 
	 61,268
	​
	 
	 241,833

	Total shareholders’ equity
	​
	 
	 4,015,116
	​
	 
	 6,161,624

	​
	​
	​
	​
	​
	​
	​

	Total liabilities and shareholders’ equity
	​
	$
	 4,387,864
	​
	$
	 6,593,163

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

F-3

Table of Contents

HAITAOCHE LIMITED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(Amounts in U.S. dollars except for number of shares)
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Net revenues
	​
	$
	 45,848,384
	​
	$
	 1,207,455

	Cost of revenues
	​
	 
	 (45,661,792)
	​
	 
	 (1,206,919)

	Gross profit
	​
	 
	 186,592
	​
	 
	 536

	​
	​
	​
	​
	​
	​
	​

	Selling and marketing expenses
	​
	 
	 (195,044)
	​
	 
	 (10,958)

	General and administrative expenses
	​
	 
	 (127,260)
	​
	 
	 (266,250)

	Operating loss
	​
	 
	 (135,712)
	​
	 
	 (276,672)

	​
	​
	​
	​
	​
	​
	​

	Interest expense
	​
	 
	 (2,898)
	​
	 
	 (916)

	Foreign currency exchange gains (loss)
	​
	 
	 (31,838)
	​
	 
	 86,229

	Other income (loss), net
	​
	 
	 60,798
	​
	 
	 25,034

	​
	​
	​
	​
	​
	​
	​

	Loss before income taxes
	​
	 
	 (109,650)
	​
	 
	 (166,325)

	Income tax expense
	​
	 
	 —
	​
	 
	 —

	Net loss
	​
	 
	 (109,650)
	​
	 
	 (166,325)

	​
	​
	​
	​
	​
	​
	​

	Other comprehensive income
	​
	 
	  
	​
	 
	  

	Foreign currency translation adjustment
	​
	 
	 112,428
	​
	 
	 180,565

	Total comprehensive income
	​
	$
	 2,778
	​
	$
	 14,240

	​
	​
	​
	​
	​
	​
	​

	Net loss per ordinary share:
	​
	 
	  
	​
	 
	  

	Basic and diluted
	​
	 
	 (0.0137)
	​
	 
	 (0.0208)

	Weighted average ordinary shares outstanding
	​
	 
	  
	​
	 
	  

	Basic and diluted
	​
	 
	 8,000,000
	​
	 
	 8,000,000

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

F-4

Table of Contents

HAITAOCHE LIMITED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in U.S. dollars except for number of shares)
	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	    
	​
	​

	​
	    
	​
	    
	​
	​
	    
	​
	    
	​
	​
	    
	    
	    
	​
	    
	​
	    
	Accumulated
	    
	    

	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	Additional
	​
	    
	​
	    
	​
	Other
	​
	Total

	​
	​
	Preferred shares
	​
	Ordinary shares
	​
	paid-in
	​
	Statutory
	​
	Accumulated
	​
	Comprehensive
	​
	shareholders’

	​
	​
	Shares
	​
	Amount
	​
	Shares
	​
	Amount
	​
	capital
	​
	reserve
	​
	deficit
	​
	(loss) income
	​
	equity

	Balance as of December 31, 2018
	 
	 2,526,316
	​
	$
	 2,526
	 
	 8,000,000
	​
	$
	 8,000
	 
	 1,583,790
	 
	 7,565
	 
	 (1,447,468)
	 
	 (51,160)
	 
	 103,253

	​
	 
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​

	Capital contribution
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 3,909,085
	 
	 —
	 
	 —
	 
	 —
	 
	 3,909,085

	Net loss
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 —
	 
	 —
	 
	 (109,650)
	 
	 —
	 
	 (109,650)

	Foreign currency translation adjustment, net of nil income taxes
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 —
	 
	 —
	 
	 —
	 
	 112,428
	 
	 112,428

	Balance as of December 31, 2019
	 
	 2,526,316
	​
	$
	 2,526
	 
	 8,000,000
	​
	$
	 8,000
	 
	 5,492,875
	 
	 7,565
	 
	 (1,557,118)
	 
	 61,268
	 
	 4,015,116

	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​
	​

	Capital contribution
	 
	 494,418
	​
	$
	 495
	 
	 —
	​
	 
	 —
	 
	 8,094,367
	 
	 —
	 
	 —
	 
	 —
	 
	 8,094,862

	Return of contribution
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 (5,962,594)
	 
	 —
	 
	 —
	 
	 —
	 
	 (5,962,594)

	Net loss
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 —
	 
	 —
	 
	 (166,325)
	 
	 —
	 
	 (166,325)

	Foreign currency translation adjustment, net of nil income taxes
	 
	 —
	​
	 
	 —
	 
	 —
	​
	 
	 —
	 
	 —
	 
	 —
	 
	 —
	 
	 180,565
	 
	 180,565

	Balance as of December 31, 2020
	 
	 3,020,734
	​
	 
	 3,021
	 
	 8,000,000
	​
	$
	 8,000
	 
	 7,624,648
	 
	 7,565
	 
	 (1,723,443)
	 
	 241,833
	 
	 6,161,624

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

F-5

Table of Contents

HAITAOCHE LIMITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in U.S. dollars except for number of shares)
	​

	​

	​

	​

	​

	​

	​

	​
	    
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	CASH FLOWS FROM OPERATING ACTIVITIES:
	​
	​
	  
	 
	​
	  

	Net loss
	​
	$
	 (109,650)
	​
	$
	 (166,325)

	Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
	​
	 
	  
	​
	 
	  

	Depreciation and amortization
	​
	 
	 2,599
	​
	 
	 4,589

	Foreign currency exchange gains (loss)
	​
	 
	 31,838
	​
	 
	 (86,229)

	Changes in operating assets and liabilities
	​
	 
	  
	​
	 
	  

	Inventories
	​
	 
	 43,677
	​
	 
	 —

	Prepaid expenses and other current assets
	​
	 
	 1,208,541
	​
	 
	 (436,805)

	Amount due from related parties
	​
	 
	 55,637
	​
	 
	 (508,983)

	Advances from customers
	​
	 
	 (368,662)
	​
	 
	 326,402

	Accrued expenses and other current liabilities
	​
	 
	 (22,306)
	​
	 
	 877

	Amount due to related parties
	​
	 
	 (551,813)
	​
	 
	 (268,721)

	Income tax payable
	​
	 
	 (33,158)
	​
	 
	 —

	Other non-current assets
	​
	 
	 (97,819)
	​
	 
	 —

	Net cash (used in) provided by operating activities
	​
	 
	 158,884
	​
	 
	 (1,135,195)

	​
	​
	​
	​
	​
	​
	​

	CASH FLOWS FROM INVESTING ACTIVITIES:
	​
	 
	  
	​
	 
	  

	Purchase of intangible asset
	​
	 
	 —
	​
	 
	 (289,679)

	Net cash provided by (used in) investing activities
	​
	 
	 —
	​
	 
	 (289,679)

	​
	​
	​
	​
	​
	​
	​

	CASH FLOWS FROM FINANCING ACTIVITIES:
	​
	 
	  
	​
	 
	  

	Proceeds from interests-free borrowings from a related party
	​
	 
	 405,319
	​
	 
	 —

	Repayments of interest-free borrowings to related parties
	​
	 
	 (4,632,015)
	​
	 
	 —

	Capital contribution
	​
	 
	 3,909,085
	​
	 
	 8,094,862

	Return of contribution
	​
	 
	 —
	​
	 
	 (5,962,594)

	Net cash (used in) provided by financing activities
	​
	 
	 (317,611)
	​
	 
	 2,132,268

	​
	​
	​
	​
	​
	​
	​

	Effect of exchange rate changes on cash and cash equivalents
	​
	 
	 143,992
	​
	 
	 (103,579)

	​
	​
	​
	​
	​
	​
	​

	Net decrease in cash and cash equivalents
	​
	 
	 (14,735)
	​
	 
	 603,815

	Cash and cash equivalents at beginning of year
	​
	 
	 18,280
	​
	 
	 3,545

	Cash and cash equivalents at end of year
	​
	$
	 3,545
	​
	$
	 607,360

	​
	​
	​
	​
	​
	​
	​

	SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
	​
	 
	  
	​
	 
	  

	Income tax paid
	​
	$
	 33,158
	​
	$
	 —

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

F-6

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

1.ORGANIZATION AND PRINCIPAL ACTIVITIES
Haitaoche Limited (“Haitaoche” or the “Company”) is a holding company incorporated under the laws of the Cayman Islands on January 13, 2015. The Company commenced operations through its variable interest entities (“VIEs”) in the People’s Republic of China (“PRC”). The Company is mainly engaged in sales of imported automobiles in PRC.
The consolidated financial statements reflect the activities of Haitaoche and each of the following entities:
	​

	​

	​

	​

	​

	​

	​

	​

	​

	​
	    
	​
	    
	​
	    
	Percentage of
	    
	​

	​
	​
	Date of
	​
	Place of
	​
	effective
	​
	Principal

	Name
	​
	Incorporation
	​
	incorporation
	​
	ownership
	​
	Activities

	Wholly owned subsidiaries
	 
	  
	 
	  
	 
	  
	​
	​

	Haitaoche Hongkong Limited (Haitaoche HK)
	 
	January 28, 2015
	 
	HK
	 
	 100
	%
	Investment holding company

	Ningbo Taohaoche Technology Co., Ltd. (Wholly Foreign-owned Enterprise “WFOE” or “Ningbo Taohaoche”)
	 
	July 11, 2019
	 
	PRC
	 
	 100
	%
	WFOE, a holding company

	​
	​
	​
	​
	​
	​
	​
	​
	​

	VIEs
	 
	  
	 
	  
	 
	  
	​
	​

	Ningbo Jiusheng Automobile Sales and Services Co., Ltd. (“Ningbo Jiusheng”)
	 
	September 18, 2017
	 
	PRC
	 
	VIE
	 
	Sales of automobiles

	Qingdao Shengmeilianhe Import Automobile Sales Co., Ltd. (“Qingdao Shengmei”)
	 
	November 4, 2013
	 
	PRC
	 
	VIE
	 
	Sales of automobiles

​
Reorganization
Haitaoche and its wholly-owned subsidiary Haitaoche HK were established as the holding companies of Ningbo Taohaoche. Ningbo Taohaoche entered into a series of contractual arrangements with VIEs and VIEs’ shareholders on July 11, 2019, which allow Haitaoche to exercise effective control over VIEs and receive substantially all the economic benefits of them. These contractual agreements include Power of Attorneys, Exclusive Option Agreements, Exclusive Consulting and Service Agreements, Equity Pledge Agreements (collectively “VIE Agreements”).
In October and November 2020, Haitaoche, WFOE, Haitaoche VIE Entities and their nominee shareholder renewed the VIE agreements through a series of amended and restated contractual agreements and arrangements, in which no substantial change except for the change of nominee shareholder compared to the version signed on July 11, 2019.
As a result of these contractual arrangements, the Company is fully and exclusively responsible for the management of VIEs, assumes all of risk of losses of VIEs and has the exclusive right to exercise all voting rights of VIEs’ Shareholders. Therefore, the Company is considered the primary beneficiary of VIEs and has consolidated the assets, liabilities, results of operations, and cash flows of them.

F-7

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

1.ORGANIZATION AND PRINCIPAL ACTIVITIES – continued
Haitaoche, Ningbo Jiusheng and Qingdao Shengmei are under common control before and after the reorganization, thus the consolidation of VIEs is accounted for in the manner consistent with a reorganization of entities under common control at carrying value. The consolidation of the Company has been prepared on the basis as if the reorganization had become effective as of the beginning of the first period presented in the consolidated financial statements.
The VIE contractual arrangements
Other subsidiaries of Haitaoche Limited and the original nominal shareholders of the two VIEs are doing advertising business in China which is the restricted industry and the government’s policies on WOFE and restricted industries changes from time to time. Haitaoche HK and Ningbo Taohaoche are considered a foreign-invested enterprise. To comply with PRC laws and regulations, Haitaoche primarily conducts its business in China through VIEs, based on a series of contractual arrangements. The following is a summary of the contractual arrangements that provide Haitaoche with effective control of its VIEs and that enables it to receive substantially all the economic benefits from their operations.
Each of the VIE Agreements is described in detail below:
Business Operation Agreements
Pursuant to the Business Operation Agreements, among WFOE and VIEs and their shareholders dated on July 11, 2019 which were amended in October and November 2020, each shareholder of VIEs confirms and agrees that without prior written consent of WFOE or other parties designated by WFOE, VIEs shall not engage in any transaction that would have material effects on its assets, business, personnel, obligations, rights and operation. VIEs and the shareholders agree to accept WFOE’s proposals from time to time relating to the employment or dismissal of employees, daily operation and management, and financial management system, and strictly implement the same. The shareholders agree that it shall issue the power of attorney, whereby, the shareholders shall irrevocably authorize WFOE’s designee to exercise the shareholder’s rights on behalf of the shareholder, and exercise all voting rights in the name of the shareholders in the shareholder’s meeting of VIEs. The shareholders further agree to replace the person authorized in such power of attorney, in accordance with WFOE’s requirement at any time. WFOE shall have the right to decide whether to terminate all the agreements between WFOE and VIEs, including by not limited to the Exclusive Consultancy and Services Agreement.
Agreement on Disposal of Equity and Assets
Pursuant to the Agreement on Disposal of Equity and Assets, among WFOE and VIEs and their shareholders dated on July 11, 2019, the parties agree that from the effective date of this agreement, save as disclosed to WFOE and approved by WFOE in writing in advance, WFOE has the exclusive option to purchase or designate a third party to purchase at any time, all the equity interest held by the authorizing party in VIEs or all the assets owned by VIEs, at the lowest price permitted under the laws and regulations of the People’s Republic of China at the time of the exercise of such option. This option shall be granted to WFOE upon the effectiveness of this agreement after it is executed by all parties, and such option shall be irrevocably and shall not be changed during the term of this agreement. This agreement shall come into force upon the execution by all parties and have a term of ten years. Before the expiration of this agreement, if WFOE requests, this agreement shall be renewed according to WFOE’s request, and the parties shall enter into another agreement on disposal of equity and assets or continue to perform this agreement as required by WFOE.

F-8

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

1.ORGANIZATION AND PRINCIPAL ACTIVITIES – continued
Exclusive Consultancy and Services Agreement
Pursuant to the Exclusive Consultancy and Services Agreement, dated July 11, 2019, between WFOE and VIEs, WFOE agrees to provide relevant consultation and services to WFOE as the sole consulting and services provider of VIEs. VIEs agrees to accept the consultation and services provided by WFOE within the validity period of this agreement. VIEs further agrees that, except with the prior written consent of WFOE, VIEs shall not accept any consultation and services provided by any third party within the business scope set forth in this agreement during the term of this agreement. WFOE shall have sole and exclusive rights to and interests in all rights, ownership, interests and intellectual property rights arising from the performance of this agreement. VIEs undertakes that if it intends to conduct any business cooperation with other enterprises, it shall obtain the consent of WFOE, and under equal conditions, WFOE or its affiliated companies shall have the priority of cooperation. The parties agree that for each financial quarter when VIEs make profit, VIEs shall determine and pay the services fee.
Equity Pledge Agreement
Pursuant to the Equity Pledge Agreement, dated July 11, 2019 between WFOE, VIEs, and the shareholders of VIEs, the shareholders of VIEs, shall pledge all its Equity Interest in VIEs to WFOE as security for WFOE’s rights and interest. Unless otherwise expressly approved in writing by WFOE after the effectiveness of the agreement, the pledge hereunder may be discharged only after VIEs and the pledger have properly fulfilled all their duties and obligations under all the agreements, which shall be acknowledged by WFOE in writing. During the term of the pledge, if VIEs fail to pay service fee pursuant to the Exclusive Consultancy and Services Agreement, or fails to perform other terms of such agreement or any terms of the Business Operation Agreement and the Agreement on Disposal of Equity and Assets, WFOE shall have the right to enforce the pledge right pursuant to this agreement with a reasonable notice.
Risks in relation to the VIE structure
On March 15, 2019, the National People’s Congress approved the Foreign Investment Law, or the FIL, which took effect on January 1, 2020. The FIL does not explicitly classify whether variable interest entities that are controlled through contractual arrangements would be deemed as foreign invested enterprises if they are ultimately “controlled” by foreign investors. Since the FIL is relatively new, uncertainties still exist in relation to its interpretation and implementation, and it is still unclear how the FIL would affect variable interest entity structure and business operation.
Haitaoche believes that the contractual arrangements with its VIEs and their respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
		●	revoke the business and operating licenses of the Company’s PRC subsidiary and VIEs;

		●	discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and VIEs;

		●	limit the Company’s business expansion in China by way of entering into contractual arrangements;

		●	impose fines or other requirements with which the Company’s PRC subsidiary and VIEs may not be able to comply;

		●	require the Company or the Company’s PRC subsidiary and VIEs to restructure the relevant ownership structure or operations; or

F-9

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

1.ORGANIZATION AND PRINCIPAL ACTIVITIES – continued
		●	restrict or prohibit the Company’s use of the proceeds of the additional public offering to finance the Company’s business and operations in PRC.

The Company’s business has been directly operated by the VIEs. As of December 31, 2019 and 2020, the VIEs accounted for an aggregate of 99.99% and 99.99%, respectively, of the Company’s consolidated total assets, and 99.87% and 99.90% respectively of the Company’s consolidated total liabilities.
As of December 31, 2019 and 2020, there were no pledge or collateralization of the VIEs’ assets that can only be used to settle obligations of the VIEs. The amount of the net assets of the VIEs was $4,015,327 and $6,161,984 as of December 31, 2019 and 2020, respectively. The creditors of the VIEs’ third-party liabilities did not have recourse to the general credit of Haitaoche in normal course of business. Haitaoche has not provided any financial support to VIEs for the years ended December 31, 2019 and 2020.
​
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
		(a)
	Basis of presentation

The accompanying consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
		(b)
	Principles of consolidation

The consolidated financial statements include the financial statements of Haitaoche, its subsidiaries, its VIEs for which Haitaoche is the primary beneficiary. All inter-company transactions and balances have been eliminated upon consolidation.
		(c)
	Use of estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period and accompanying notes. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions includes allowance for prepaid expenses, other current and non-current assets, the useful lives of property and equipment, intangible assets and valuation allowance for deferred tax assets.
		(d)
	Fair value measurement

The Company applies Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements.
ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability.
ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

F-10

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
		(d)
	Fair value measurement- continued

Level 2 inputs to the valuation methodology include quoted prices for identical or similar assets and liabilities in active markets or in inactive markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.
The carrying amounts of amount due from related parties, prepaid expense and other assets, advances from customers, amount due to related parties and accrued expenses and other current liabilities approximate their fair values because of their short-term nature.
		(e)
	Cash and cash equivalents

Cash and cash equivalents consist of cash in bank.
		(f)
	Prepaid expenses, other current assets and other non-current assets

Prepaid expenses, other current assets and other non-current assets consist of advances to suppliers, legal deposit, deductible input VAT, long-term receivables from suppliers and others. Advances to suppliers and long-term receivables from suppliers refer to advances for purchase of automobiles. The Company reviews a supplier’s credit history and background information before advancing a payment. The Company maintains an allowance for doubtful accounts based on a variety of factors, including but not limited to the aging of prepayments, concentrations, credit-worthiness, historical and current economic trends and changes in delivery patterns. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would provide allowance for such amount in the period when it is considered impaired. There were no allowances recognized for the prepaid expenses, other current assets and other non-current assets for the years ended December 31, 2019 and 2020.
		(g)
	Property and equipment, net and intangible assets, net

Property and equipment as well as intangible assets are stated at cost less accumulated depreciation and depreciated on a straight-line basis over the estimated useful lives of the assets. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its intended use. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation and amortization are removed from the accounts, and any resulting gains or losses are included in income/loss in the year of disposition. Estimated useful lives are as follows:
	​

	​

	​

	​
	    
	Estimated Useful Life

	Office equipment
	 
	3 Years

	Furniture and fixtures
	 
	5 Years

	Software
	 
	10 Years

	Domain name
	 
	10 Years

​
		(h)
	Value added tax

Haitaoche’s China subsidiaries and VIEs are subject to value-added tax (“VAT”) for sales of automobiles. Revenue from sales of automobiles is generally subject to VAT at applicable tax rates, and subsequently paid to PRC tax authorities after netting input VAT on purchases. The excess of output VAT over input VAT is reflected in accrued expenses and other payables. The Company reports revenue net of PRC’s VAT for all the periods presented in the consolidated statements of operations.

F-11

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
		(i)
	Revenue recognition

The Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, starting January 1, 2018 using the modified retrospective method for contracts that were not completed as of January 1, 2018. The adoption of this ASC 606 did not have a material impact on the Company’s consolidated financial statements, considering there were no unfinished contracts from prior years at the date of initial adoption.
The core principle of the new revenue standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The following five steps are applied to achieve that core principle:
Step 1: Identify the contract with the customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when the company satisfies a performance obligation
The Company primarily sells automobiles to car dealers and individual customers through signing written sales contracts. The Company presents the revenue generated from its sales of automobiles on a gross basis as the Company is a principal. The revenue is recognized at a point in time when the Company satisfies the performance obligation by transferring promised product to a customer upon acceptance by customers.
The following table identifies the disaggregation of the revenue for the years ended December 31, 2019 and 2020, respectively:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Sales of automobiles to car dealers
	​
	$
	 38,233,976
	​
	$
	 1,157,284

	Sales of automobiles to individual customers
	​
	 
	 7,614,408
	​
	 
	 50,171

	Net revenues
	​
	$
	 45,848,384
	​
	$
	 1,207,455

​
Advances from customers
Advances from customers for sales of automobiles are deferred when corresponding performance obligation is not satisfied and recognized as revenue upon the Company transfers the control of products to the customers. The balances of advances from customers as of December 31, 2019 and 2020 were $85,354 and $411,756, respectively.
		(j)
	Cost of revenue

Cost of revenue consists primarily of cost of automobiles purchased from domestic and overseas regions.
		(k)
	Government grants

The Company primarily receives tax refund and development supporting bonus from tax bureau and local government without any condition or restriction. The government grants are recorded in other income on the consolidated statements of operations in the period in which the amounts of such subsidies are received without future performance requirement. The recognized government grants recorded in other income were $60,798 and nil for the years ended December 31, 2019 and 2020, respectively.

F-12

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
		(l)
	Income taxes

The Company accounts for income taxes using the asset/liability method prescribed by ASC 740 Income Taxes. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if, based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.
The provisions of ASC 740-10-25, “Accounting for Uncertainty in Income Taxes,” prescribe a more-likely-than-not threshold for consolidated financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This interpretation also provides guidance on the recognition of income tax assets and liabilities, classification of current and deferred tax assets and liabilities, accounting for interest and penalties associated with tax positions, and related disclosures. The Company’s operating subsidiaries in PRC are subject to examination by the relevant tax authorities. According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitations is extended to five years under special circumstances, where the underpayment of taxes is more than RMB 100,000 ($14,484). In the case of transfer pricing issues, the statute of limitation is ten years. There is no statute of limitation in the case of tax evasion. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred.
As of December 31, 2019 and 2020, the Company did not have any significant unrecognized uncertain tax positions and the Company does not believe that its unrecognized tax benefits will change over the next twelve months. In addition, the Company did not have any interest or penalties associated with uncertain tax position.
		(m)
	Foreign currency translation

The reporting currency of the Company is the U.S. dollar (“USD” or “$”). The functional currency of subsidiaries, VIEs located in China is the Chinese Renminbi (“RMB”), the functional currency of subsidiaries located in Hong Kong is the Hong Kong dollars (“HK dollar” or “HK$”). For the entities whose functional currency is the RMB and HK$, result of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments are reported as foreign currency translation adjustment and are shown as a separate component of other comprehensive (loss) income in the consolidated statements of comprehensive (loss) income.
Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date. Both exchanges rates were published by the Federal Reserve Board. Any transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are shown as foreign currency exchange (gains) loss in the consolidated statements of operations and comprehensive income (loss) as incurred.
​

F-13

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
The consolidated balance sheets amounts, with the exception of equity, on December 31, 2019 and 2020 were translated at RMB6.9618 to $1.00 and at RMB6.5250 to $1.00, respectively. Equity accounts were stated at their historical rates. The average translation rates applied to consolidated statements of operations and cash flows for the years ended December 31, 2019 and 2020 were RMB6.9081 to $1.00 and RMB6.9042 to $1.00, respectively.
		(o)
	Net income (loss) per share

Basic income (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding for the period. Diluted income (loss) per share is calculated by dividing net income (loss) attributable to ordinary shareholders as adjusted for the effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Potentially dilutive shares are excluded from the computation if their effect is anti-dilutive.
		(p)
	Comprehensive income (loss)

Comprehensive income (loss) is comprised of the Company’s net income and other comprehensive loss. The components of other comprehensive income (loss) consist solely of foreign currency translation adjustments.
		(q)
	Commitments and contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed. Legal costs incurred in connection with loss contingencies are expensed as incurred.
		(r)
	Concentrations of credit risk

As of December 31, 2019 and 2020, cash, and cash equivalents balances in the PRC are $3,545 and $607,360, respectively, which were primarily deposited in financial institutions located in Mainland China, and each bank account is insured by the government authority with the maximum limit of RMB 500,000 (equivalent to $72,420). To limit exposure to credit risk relating to deposits, the Company primarily place cash and cash equivalent deposits with large financial institutions in China which management believes are of high credit quality and management also continually monitors the financial institutions’ credit worthiness.
The following table sets forth information as to each customer that accounted for 10% or more of total revenue for the years ended December 31, 2019 and 2020. The balances of accounts receivable were nil as of December 31, 2019 and 2020.
	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​
	​
	Year ended
	​
	Year ended
	 

	​
	​
	December 31, 2019,
	​
	December 31, 2020,
	 

	​
	​
	​
	​
	​
	% of
	​
	​
	​
	​
	% of
	 

	Customer
	​
	Amount
	​
	Total
	​
	Amount
	​
	Total
	 

	A
	    
	$
	 —
	    
	*
	    
	$
	 629,090
	    
	 52
	%

	B
	​
	 
	 —
	 
	*
	​
	 
	 515,513
	 
	 43
	%

	C
	​
	 
	 11,171,714
	 
	 24
	%  
	 
	 —
	 
	*
	​

	D
	​
	 
	 8,570,447
	 
	 19
	%  
	 
	 —
	 
	*
	​

	Total
	​
	$
	 19,742,161
	 
	 43
	%  
	$
	 1,144,603
	 
	 95
	%

	*
	represented the percentage below 10%

F-14

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
		(r)
	Concentrations of credit risk- continued

The following table sets forth information as to each supplier that accounted for 10% or more of total purchase for the years ended December 31, 2019 and 2020. The balances of accounts payable were nil as of December 31, 2019 and 2020.
	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​

	​
	​
	Year ended
	​
	Year ended
	 

	​
	​
	December 31, 2019,
	​
	December 31, 2020,
	 

	​
	​
	​
	​
	​
	% of
	​
	​
	​
	​
	% of
	 

	Supplier
	​
	Amount
	​
	Total
	​
	Amount
	​
	Total
	 

	A
	    
	$
	 —
	    
	*
	    
	$
	 513,859
	    
	 43
	%

	B
	​
	 
	 —
	 
	*
	​
	 
	 324,004
	 
	 27
	%

	C
	​
	 
	​
	 
	​
	​
	 
	 273,772
	 
	 23
	%

	D
	​
	 
	 6,807,495
	 
	 15
	%  
	 
	 —
	 
	*
	​

	E
	​
	 
	 21,955,960
	 
	 48
	%  
	 
	 —
	 
	*
	​

	Total
	​
	$
	 28,763,455
	 
	 63
	%  
	$
	 1,111,636
	 
	 92
	%

	*
	represented the percentage below 10%

		(s)
	Recent accounting standards

In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public companies, the standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In July 2018, ASU 2016-02 was updated with ASU 2018-11, Targeted Improvements to ASC Topic 842, which provides entities with relief from the costs of implementing certain aspects of the new leasing standard. Specifically, under the amendments in ASU 2018-11, (1) entities may elect not to recast the comparative periods presented when transitioning to ASC 842 and (2) lessors may elect not to separate lease and non-lease components when certain conditions are met. In November 2019, ASU 2019-10, Codification Improvements to ASC 842 modified the effective dates of all other entities. For all other entities, the amendments in ASU 2019-10 are effective for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021. Early application of the guidance is permitted. The Company is an “emerging growth company” (“EGC”) as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGC can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company will adopt ASU 2016-02 from January 1, 2021 and will use the additional modified retrospective transition method provided by ASU No. 2018-11 for the adoption. The Company does not expect that this standard will have a material impact on its consolidated financial statements.
In June 2016, the FASB issued new accounting guidance ASU 2016-13 for recognition of credit losses on financial instruments, which is effective January 1, 2020, with early adoption permitted on January 1, 2019. The guidance introduces a new credit reserving model known as the Current Expected Credit Loss (CECL) model, which is based on expected losses, and differs significantly from the incurred loss approach used today. The CECL model requires measurement of expected credit losses not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information and will likely result in earlier recognition of credit reserves. The Company will adopt ASU 2016-13 from January 1, 2021, and does not expect that this standard will have a material impact on its consolidated financial statements.

F-15

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued
		(s)
	Recent accounting standards- continued

Other accounting standards that have been issued by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent standards that are not anticipated to have an impact on or are unrelated to its consolidated financial condition, results of operations, cash flows or disclosures.
​
3.PREPAID EXPENSES AND OTHER CURRENT ASSETS
As of December 31, 2019 and 2020, prepaid expenses and other current assets consisted of the following:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Advance to suppliers (1)
	​
	$
	 —
	​
	$
	 411,756

	Deductible tax receivable
	​
	 
	 1,572
	​
	 
	 29,603

	Others
	​
	 
	 2,982
	​
	 
	 —

	Prepaid expenses and other current assets
	​
	$
	 4,554
	​
	$
	 441,359

	(1)	The balance mainly represented the advances to suppliers for automobiles purchase as of December 31, 2020, which was fully settled subsequently in first quarter of 2021.

​
4.INTANGIBLE ASSETS
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Domain names (1)
	​
	$
	 —
	​
	$
	 289,164

	Others
	​
	 
	 8,333
	​
	 
	 7,234

	Total
	​
	 
	 8,333
	​
	 
	 296,398

	Less: Accumulated amortization
	​
	 
	 (1,099)
	​
	 
	 (3,098)

	Intangible assets, net
	​
	$
	 7,234
	​
	$
	 293,300

	(1)	The Company acquired several domain names for use with the Company’s of operation.

5.OTHER NON-CURRENT ASSETS
As of December 31, 2019 and 2020, other non-current assets consisted of the following:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	​
	2019
	​
	2020

	Long-term receivables from suppliers(1)
	    
	$
	 4,077,373
	    
	$
	 4,441,638

	Legal deposit
	​
	 
	 97,065
	​
	 
	 103,563

	Other non-current assets
	​
	$
	 4,174,438
	​
	$
	 4,545,201

	(1)	Other non-current assets mainly represented the receivable from a foreign supplier, Brueggmann Group (“BG”) in Germany, for prepayment made in early 2016 of automobiles purchase. BG has never delivered the automobiles. The prepayment amounts were $3,884,212 and $4,231,221, as of December 31, 2019 and 2020, respectively. 

F-16

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

5.OTHER NON-CURRENT ASSETS – continued
In August 2018, the Company filed a lawsuit under the district court of Hamburg (Landgericht Hamburg) against 1) Michael Brueggmann-Kirschberger and 2) Dirk Bjoern Kirschberger ("Defendants"), who are the CEO and Marketing Director, respectively, of BG. The Company filed this lawsuit to assert its refund claims against Defendants in the amount of EUR 3,459,706 plus interest. The first oral hearing took place in February 2020 before the Court. Further hearings followed in June and October 2020. In all these hearings, the Court focused on the question whether it has jurisdiction over the case. With its interlocutory judgement, which was issued by the Court on November 16, 2020, the court confirmed its jurisdiction. Defendants are entitled to appeal this decision and ask the Higher Regional Court in Hamburg for review. With letter dated December 9, 2020 submitted to external legal counsel on December 18, 2020, Defendants have appealed this judgement. With court order dated April 14, 2021, the Higher Regional Court in Hamburg indicated that it has dismissed Defendants’ appeal. Defendants have been granted a period of 2 weeks to comment on this court order. As of the date of issuance of this financial statements, the Defendants have asked for an extension of time for their brief till May 10, 2021, which have been granted.
As of the date of issuance of these consolidated financial statements, although lawsuit is still ongoing, the Company’s management, with the assistance of its external legal counsel, believes it has solid factual and legal arguments for the claim and expects the recovery of the amounts to be probable later than one year. Therefore, the balances were presented as non-current assets, and no allowances were recognized as of December 31, 2019 and 2020.
​
6.RELATED PARTY TRANSACTIONS AND BALANCES
The following is a list of related parties which the Company has transactions with during the years ended December 31, 2019 and 2020:
	​
	    
	Name
	    
	Relationship
	 

	(a)
	​
	Beijing Haitaoche Consulting Co., Ltd. (“Beijing Haitaoche”)
	​
	An entity ultimately controlled by Mr. Lin Mingjun (“Mr. Lin”), controlling shareholder and chief executive officer of the Company
	​

	(b)
	​
	Mr. Huang Erquan
	​
	Supervisor of Ningbo Jiusheng
	​

	(c)
	​
	Mr. Wu Xinyu
	​
	General manager of Ningbo Jiusheng
	​

	(d)
	​
	Ningbo Lulufa Automobile Sales Co., Ltd. (“Ningbo Lulufa”)
	​
	An entity ultimately controlled by Mr. Lin
	​

	(e)
	​
	Ningbo Haitaoche Technology Co., Ltd. (“Ningbo Haitaoche”)
	​
	An entity ultimately controlled by Mr. Lin
	​

	(f)
	​
	Ningbo Meishan Haitaoche International Trading Co., Ltd. (“Meishan Haitaoche”)
	​
	An entity ultimately controlled by Mr. Lin
	​

	(g)
	​
	Beijing Lulufa Network Co., Ltd.  (“Beijing Lulufa”)
	​
	An entity ultimately controlled by Mr. Lin
	​

	(h)
	​
	Ningbo Meishan Baoshuigangqu Lelebai Investment Co., Ltd. (“Lelebai”)
	​
	An entity ultimately controlled by Mr. Lin
	​

	(i)
	​
	Shanghai Jieying Automobile Sales Co., Ltd. (“Shanghai Jieying”)
	​
	A subsidiary of Kaixin Auto Holdings, in which Mr.Lin is Chief Executive Officer
	​

	(j)
	​
	Beijing Qilin Zhenyi Information Technology Co., Ltd. (“Beijing Qilin”)
	​
	A subsidiary of Kaixin Auto Holdings, in which Mr.Lin is Chief Executive Officer
	​

​
​

F-17

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

6.RELATED PARTY TRANSACTIONS AND BALANCES – continued
Amounts due from related parties
As of December 31, 2019 and 2020, amounts due from related parties, consisted of the following:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Shanghai Jieying (1)
	​
	$
	 —
	​
	$
	 689,655

	Beijing Qilin (1)
	​
	 
	 —
	​
	 
	 15,326

	Beijing Haitaoche
	​
	 
	 195,998
	​
	 
	 —

	Amounts due from related parties
	​
	$
	 195,998
	​
	$
	 704,981

	(1)	The balance mainly consisted of advanced funds provided to related parties to finance daily operations.

Amounts due to related parties
As of December 31, 2019 and 2020, amounts due to related parties consisted of the following:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Beijing Haitaoche (1)
	​
	​
	 —
	​
	​
	 10,115

	Ningbo Haitaoche (2)
	 
	​
	 278,836
	 
	​
	 —

	Amounts due to related parties
	​
	$
	 278,836
	​
	$
	 10,115

	(1)	The balance mainly represented the payable to Beijing Haitaoche of consulting fee.

	(2)	The balance mainly represented the advance fund from the related party for daily operational purpose.

Related party transactions
During the years ended December 31, 2019 and 2020, the Company had the following material related party transactions:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Advance fund from related parties for daily business operations:
	 
	​
	  
	 
	​
	  

	Meishan Haitaoche
	​
	$
	 —
	​
	$
	 3,765,829

	Lelebai
	​
	 
	 —
	​
	 
	 796,618

	Ningbo Haitaoche
	​
	 
	 30,999,997
	​
	 
	 579,373

	Beijing Haitaoche
	​
	 
	 2,969,726
	​
	 
	 197,634

	Ningbo Lulufa
	​
	 
	 —
	​
	 
	 152

	Beijing Lulufa
	​
	 
	 55,008
	​
	 
	 —

	​
	​
	​
	​
	​
	​
	​

	Automobiles purchased from related parties:
	​
	 
	  
	​
	 
	  

	Beijing Lulufa
	​
	 
	 1,429,723
	​
	 
	 513,859

	Ningbo Haitaoche
	​
	 
	 3,625,965
	​
	 
	 —

	Beijing Haitaoche
	​
	 
	 587,294
	​
	 
	 —

	Automobiles deposit received from a related party:
	​
	 
	  
	​
	 
	  

	Meishan Haitaoche
	​
	 
	 253,158
	​
	 
	 —

​

F-18

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

6.RELATED PARTY TRANSACTIONS AND BALANCES – continued
	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	​
	​
	​
	​
	​

	Automobiles sold to related parties:
	 
	  
	 
	  

	Meishan Haitaoche
	 
	 11,171,714
	 
	 —

	​
	​
	​
	​
	​

	Operating advance to related parties:
	 
	  
	 
	  

	Meishan Haitaoche
	 
	 —
	 
	 3,765,829

	Ningbo Haitaoche
	 
	 31,117,540
	 
	 860,535

	Lelebai
	 
	 —
	 
	 796,618

	Shanghai Jieying
	 
	 —
	 
	 651,778

	Beijing Qilin
	 
	 —
	 
	 14,484

	Ningbo Lulufa
	 
	 —
	 
	 152

	Beijing Lulufa
	 
	 55,008
	 
	 —

	Beijing Haitaoche
	​
	 3,167,247
	​
	 —

	​
	​
	​
	​
	​

	Vehicle deposit recognized into revenue:
	 
	  
	 
	  

	Meishan Haitaoche
	 
	 434,270
	 
	 —

	​
	​
	​
	​
	​

	Technical service fee paid to a related party:
	 
	  
	 
	  

	Beijing Haitaoche
	 
	 117,717
	 
	 9,559

	​
	​
	​
	​
	​

	Proceeds from interest free borrowings:
	 
	  
	 
	  

	Mr. Wu Xinyu
	 
	 405,319
	 
	 —

	​
	​
	​
	​
	​

	Repayments of interest-free borrowings:
	 
	  
	 
	  

	Mr. Huang Erquan
	 
	 4,020,852
	 
	 —

	Mr. Wu Xinyu
	 
	 611,163
	 
	 —

	​
	​
	​
	​
	​

​
​
7.INCOME TAXES
Cayman Islands
The Company is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, the Company is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
Hong Kong
On March 21, 2018, the Hong Kong Legislative Council passed The Inland Revenue (Amendment) (No. 7) Bill 2017 (the “Bill”) which introduces the two-tiered profits tax rates regime. The Bill was signed into law on March 28, 2018 and was announced on the following day. Under the two-tiered profits tax rates regime, the first 2 million Hong Kong Dollar (“HKD”) of profits of the qualifying group entity will be taxed at 8.25%, and profits above HKD 2 million will be taxed at 16.5%. The Company’s Hong Kong subsidiaries did not have assessable profits that were derived in Hong Kong for the years ended December 31, 2019 and 2020. Therefore, no Hong Kong profit tax has been provided for the years ended December 31, 2019 and 2020.
PRC
The Company’s PRC subsidiary, VIEs are subject to the PRC Enterprise Income Tax Law (“EIT Law”) and are taxed at the statutory income tax rate of 25%, unless otherwise specified.

F-19

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

7.INCOME TAXES – continued
The components of the income tax expense are as follows:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Current income tax expense
	​
	$
	 —
	​
	$
	 —

	Deferred income tax expense
	​
	 
	 —
	​
	 
	 —

	Total income tax expense
	​
	$
	 —
	​
	$
	 —

​
The reconciliations of the statutory income tax rate and the Company’s effective income tax rate are as follows:
	​

	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended
	 

	​
	​
	December 31,
	 

	​
	    
	2019
	    
	2020
	 

	Net (income) loss before provision for income taxes
	​
	$
	 109,650
	​
	$
	 166,325
	​

	PRC statutory tax rate
	​
	 
	 25
	%  
	 
	 25
	%

	Income tax (expense) benefit at statutory tax rate
	​
	 
	 27,413
	​
	 
	 41,581
	​

	​
	​
	​
	​
	​
	​
	​
	​

	Expenses not deductible for tax purpose
	​
	 
	 —
	​
	 
	 —
	​

	Effect on valuation allowance
	​
	 
	 (27,413)
	​
	 
	 (41,581)
	​

	Income tax expense
	​
	$
	 —
	​
	$
	 —
	​

	Effective tax rates
	​
	 
	 0
	%  
	 
	 0
	%

​
The tax effect of temporary difference under ASC Topic 740 “Accounting for Income Taxes” that gives rise to deferred tax asset as of December 31, 2019 and 2020 is as follows:
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Deferred tax assets:
	 
	​
	  
	 
	​
	  

	Tax loss carry forwards
	​
	$
	 401,895
	​
	$
	 388,064

	Valuation allowance
	​
	 
	 (401,895)
	​
	 
	 (388,064)

	Deferred tax assets, net
	​
	 
	 —
	​
	 
	 —

​
The movements of the valuation allowance are as follows:
	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	Balance at the beginning of the year
	 
	 380,888
	 
	 401,895

	Current year addition
	 
	 27,413
	 
	 63,017

	Reduction due to usage of NOL
	 
	 —
	 
	 (21,435)

	Reduction due to statute expiration
	 
	 (1,473)
	 
	 (55,527)

	Exchange rate effect
	 
	 (4,933)
	 
	 115

	Balance at the end of the year
	 
	 401,895
	 
	 388,064

​
As of December 31, 2020, the Company had tax losses carryforwards of $1,566,096. The Company determined that the negative evidence outweighed the positive evidence, and therefore the Company evaluated there might be not enough taxable income to settle the tax loss carry forwards which will expire from 2021 to 2025. Therefore, the Company has recorded a full allowance for its deferred tax assets.
​

F-20

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

8.EQUITY
		(a)
	Ordinary shares

The Company was established under the laws of the Cayman Islands on January 13, 2015. The authorized number of ordinary shares was 47,473,684 with par value of $0.001 per share. Ordinary shares of the Company amounted to 8,000,000 as of December 31, 2019 and 2020.
The shareholders’ equity structures as of December 31, 2019 and 2020 were presented after giving retroactive effect to the reorganization of the Company that was completed on July 11, 2019. Immediately before and after reorganization, the Company together with its wholly-owned subsidiary and its VIEs were effectively controlled by the same shareholders.
		(b)
	Preferred shares

As of December 31, 2020, the authorized number of preferred shares is 3,020,734,with a par value of US0.001, which consisted of 2,000,000 Series A preferred shares and 1,020,734 Series A-1 preferred shares. The Board of Directors may from time to time declare dividends and other distributions to preferred shareholders. Each preferred share shall be convertible into one ordinary share subject to adjustment for stock dividends or stock splits and have the same voting rights as ordinary shares
On November 30, 2020, Haitaoche issued 494,418 Series A-1 preferred shares to FIT RUN Limited.
All preferred shares of Haitaoche will be exchanged for ordinary shares of Kaixin Auto Holdings (“Kaixin”) at a conversion ratio of 1:6.7178 upon the completion of Kaixin’s acquisition of the Company, see Note 11 for further discussion.
		(c)
	Statutory reserve and restricted net assets

Ningbo Taohaoche, Ningbo Jiusheng, and Qingdao Shengmei operate in the PRC, therefore, they are required to reserve 10% of their net profit after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation to the statutory reserve by the Company is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by the Company in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends.
Relevant PRC statutory laws and regulations permit the payment of dividends by the Company’s PRC subsidiary and VIEs only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Furthermore, registered share capital and capital reserve accounts are also restricted from distribution. As a result of these PRC laws and regulations, the Company’s PRC subsidiary and VIEs is restricted in their ability to transfer a portion of their net assets to the Company either in the form of dividends, loans or advances. The Company’s restricted net assets, comprising of additional paid-in-capital and statutory reserve of Company’s PRC subsidiary and VIEs, were $5,500,440 and $7,632,213 as of December 31, 2019 and 2020, respectively.
​

F-21

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

9.COMMITMENTS AND CONTINGENCIES
Operating leases
The Company leases its offices under non-cancelable operating lease agreements. Rent and related utilities expense under all operating leases, included in operating expenses in the consolidated statements of operations and comprehensive (loss) income, amounted to $27,496 and $1,615for the years ended December 31, 2019 and 2020, respectively.
The future minimum rental payments required under operating leases as of December 31, 2021 amounted to $292.
10.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
The Company performed a test on the restricted net assets of consolidated subsidiary in accordance with Securities and Exchange Commission Regulation S-X Rule 4-08 (e) (3), “General Notes to Financial Statements” and concluded that it was applicable for the Company to disclose the financial statements for the parent company.
The condensed financial information of the parent company, Haitaoche Limited, has been prepared using the same accounting policies as set out in the Company’s consolidated financial statements except that the parent company has used equity method to account for its investment in its subsidiaries.
Haitaoche’s share of income and losses from its subsidiaries, and VIEs is reported as losses from subsidiaries, and VIEs in the accompanying condensed financial information of parent company.
Haitaoche is incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, Haitaoche is not subject to income or capital gains taxes. In addition, dividend payments are not subject to withholdings tax in the Cayman Islands.
Haitaoche did not have significant capital and other commitments, long-term obligations, or guarantees as of December 31, 2019 and 2020.
​

F-22

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

10.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY- continued
PARENT COMPANY BALANCE SHEETS
	​

	​

	​

	​

	​

	​

	​

	​
	​
	As of December 31,

	​
	    
	2019
	    
	2020

	ASSETS
	​
	​
	​
	​
	​
	​

	Investment in subsidiaries and consolidated VIEs
	 
	​
	 4,015,116
	 
	​
	 6,161,624

	Total assets
	​
	$
	 4,015,116
	​
	$
	 6,161,624

	​
	​
	​
	​
	​
	​
	​

	LIABILITIES AND SHAREHOLDERS’ EQUITY
	​
	 
	  
	​
	 
	  

	Total liabilities
	​
	 
	 —
	​
	 
	 —

	​
	​
	​
	​
	​
	​
	​

	Shareholders’ equity
	​
	 
	  
	​
	 
	  

	Preferred shares (par value of $0.001per share; 2,526,316 and 3,020,734 shares issued and outstanding as of December 31, 2019 and 2020, respectively)
	​
	 
	 2,526
	​
	 
	 3,021

	Ordinary shares (par value of $0.001 per share; 47,473,684 shares authorized and 8,000,000 shares issued and outstanding as of December 31, 2019 and 2020, respectively)
	​
	 
	 8,000
	​
	 
	 8,000

	Additional paid-in capital
	​
	 
	 5,492,875
	​
	 
	 7,624,648

	Accumulated deficit
	​
	 
	 (1,488,285)
	​
	 
	 (1,474,045)

	Total shareholders’ equity
	​
	 
	 4,015,116
	​
	 
	 6,161,624

	Total liabilities and shareholders’ equity
	​
	$
	 4,015,116
	​
	$
	 6,161,624

​
​

F-23

Table of Contents
HAITAOCHE LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in U.S. dollars except for number of shares)

10.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY- continued
PARENT COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Operating income:
	 
	​
	  
	 
	​
	  

	Share of income of subsidiaries
	​
	$
	 2,778
	​
	$
	 15,794

	​
	​
	​
	​
	​
	​
	​

	Loss before income tax expense
	​
	 
	 2,778
	​
	 
	 15,794

	Income tax expense
	​
	 
	 —
	​
	 
	 —

	Net loss
	​
	 
	 2,778
	​
	 
	 15,794

	​
	​
	​
	​
	​
	​
	​

	Other comprehensive (loss) income
	​
	 
	 —
	​
	 
	 —

	​
	​
	​
	​
	​
	​
	​

	Total comprehensive (loss) income
	​
	$
	 2,778
	​
	$
	 15,794

​
PARENT COMPANY STATEMENTS OF CASH FLOWS
	​

	​

	​

	​

	​

	​

	​

	​
	​
	For the years ended

	​
	​
	December 31,

	​
	    
	2019
	    
	2020

	Cash flows from operating activities
	​
	$
	 —
	​
	$
	 —

	Cash flows from investing activities
	​
	 
	 —
	​
	 
	 —

	Cash flows from financing activities
	​
	 
	 —
	​
	 
	 —

	Net increase in cash, cash equivalents and restricted cash
	​
	 
	 —
	​
	 
	 —

	Cash, cash equivalents and restricted cash, at beginning of year
	​
	 
	 —
	​
	 
	 —

	Cash, cash equivalents and restricted cash, at end of year
	​
	$
	 —
	​
	$
	 —

​
​
11.SUBSEQUENT EVENTS
On December 31, 2020, Kaixin Auto Holdings (Kaixin) announced that it entered into share purchase agreement (the “SPA”) with the shareholders of Haitaoche. Pursuant to the SPA, Kaixin will acquire 100% of the share capital of Haitaoche from the shareholders (the “Acquisition”). As consideration for the Acquisition, Kaixin will issue 74,035,502 ordinary shares of Kaixin to the shareholders of Haitaoche. Each ordinary shares and preferred share of Haitaoche shall be convertible into such number of ordinary shares of Kaixin at the conversion ratio of 1:6.7178. Upon the completion of the Acquisition, the Haitaoche shareholders will collectively hold 51% of Kaixin’s issued and outstanding shares. On April 15, 2021, NASDAQ approved the acquisition of 100% of the share capital of Haitaoche pursuant to the SPA.
The Company has performed an evaluation of subsequent events through the date of the consolidated financial statements were issued, and determined that no events that would have required adjustment or disclosure in the consolidated financial statements other than those discussed in above.

F-249678-CARES Combined.pdf

Exhibit 10.1
​
FIRST AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
​
​
THIS FIRST AMENDMENT TO AMENDED AND RESTATED NOTE PURCHASE AGREEMENT (this “First Amendment”) is entered into as of May 12, 2021 by and among CAPSTONE GREEN ENERGY CORPORATION, a Delaware corporation formerly known as CAPSTONE TURBINE CORPORATION (the “Company”), the Purchaser signatory hereto and GOLDMAN SACHS SPECIALTY LENDING GROUP, L.P. (as successor in interest to Goldman Sachs Specialty Lending Holdings, Inc.), as collateral agent for the Purchasers (in such capacity, the “Collateral Agent”).
​
RECITALS
​
A. The  Company, certain subsidiaries of the Company, the Purchaser and the Collateral Agent are parties to a certain Amended and Restated Note Purchase Agreement, dated as of October 1, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Note Purchase Agreement”; capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Note Purchase Agreement), pursuant to which the Purchaser has agreed to purchase the Notes issued by Company; 
B.The Company has requested an amendment to the Note Purchase Agreement, and subject to the terms and conditions hereof, the Purchaser (being the sole Purchaser under the Note Purchase Agreement) executing this Amendment is willing to do so; 
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter contained, and intending to be legally bound, the parties hereto agree as follows:
​
A.  AMENDMENTS
​
		1.	Section 5.17(a) of the Note Purchase Agreement is hereby amended by replacing clause (a) thereof in its entirety with the following:

“(a) Expand its Rental Fleet by at least:
		1.	2.00 MW by the 9 month anniversary of the Additional Notes Closing Date; and

		2.	12.50 MW by the 18 month anniversary of the Additional Notes Closing Date;”

		2.	Section 6.8 of the Note Purchase Agreement is hereby amended by replacing clause (b) thereof in its entirety with the following:

“(b)Minimum Consolidated Liquidity.  Company shall not permit Consolidated Liquidity to be less than:
(i) prior to May 12, 2021, $9,000,000; 
(ii) from May 12, 2021 to March 31, 2022, $12,200,000; and
(iii) after March 31, 2022, $9,000,0000.” 
​

		3.	Section 5.1 of the Note Purchase Agreement is hereby amended by replacing clause (a) thereof in its entirety with the following:

“(a)Monthly Reports.  Solely in the event any Purchaser makes a written request therefor after the Closing Date, as soon as practicable and in any event within thirty days after such written request, provided however, if at the time of such request Company has already prepared the materials in this Section 5.1(a), then five days after such written request, the consolidated balance sheet of Company and its Subsidiaries as at the end of such month and the related consolidated statements of income, and consolidated statements of cash flows of Company and its Subsidiaries for such month and for the period from the beginning of the then current Fiscal Year to the end of such month, all in reasonable detail, together with a Financial Officer Certification with respect thereto;”
​
​
		4.	Section 5.1 of the Note Purchase Agreement is hereby amended by replacing clause (b) thereof in its entirety with the following:

“(b)Quarterly Financial Statements.  Upon filing with the Securities and Exchange Commission, a Form 10-Q, and solely in the event any Purchaser makes a written request therefor after the Closing Date, as soon as practicable and in any event within forty-five days after the end of each Fiscal Quarter of each Fiscal Year (commencing with the Fiscal Quarter ending March 30, 2019), the consolidated balance sheets of Company and its Subsidiaries as at the end of such Fiscal Quarter and the related consolidated statements of income and cash flows of Company and its Subsidiaries for such Fiscal Quarter and for the period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter, setting forth in each case in comparative form the corresponding figures for the corresponding periods of the previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal Year, all in reasonable detail, together with a Financial Officer Certification with respect thereto;”
​
		5.	Section 5.1 of the Note Purchase Agreement is hereby amended by replacing clause (c) thereof in its entirety with the following:

​
“(c)Annual Financial Statements.  Upon filing with the Securities and Exchange Commission, a Form 10-K, and solely in the event any Purchaser makes a written request therefor after the Closing Date, as soon as practicable and in any event within ninety days after the end of each Fiscal Year, commencing with the Fiscal Year ending March 31, 2019, (i) the consolidated balance sheets of Company and its Subsidiaries as at the end of such Fiscal Year and the related consolidated  statements of income, and cash flows of Company and its Subsidiaries for such Fiscal Year, setting forth in each case in comparative form the corresponding figures for the previous Fiscal Year and the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial statements, in reasonable detail, together with a Financial Officer Certification with respect thereto; and (ii) with respect to such consolidated financial statements a report thereon of an Acceptable Auditor (which report and accompanying financial statements shall be unqualified as to going concern and scope of audit (other than a going concern or like qualification resulting solely from an upcoming maturity date for the Notes occurring within one year from the time such opinion is delivered) , and shall state that such consolidated financial statements fairly present, in all material respects, the consolidated financial position of Company and its Subsidiaries as at the dates indicated and the results of their operations and their cash flows for the periods indicated in conformity with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in such financial statements) and that the examination by such accountants in connection with such consolidated financial statements has been 

made in accordance with generally accepted auditing standards);”
​
		6.	Section 5.1 of the Note Purchase Agreement is hereby amended by replacing clause (i)  thereof in its entirety with the following:

“(i)Financial Plan.  Solely in the event any Purchaser makes a written request therefor after the Closing Date, as soon as practicable and in any event no later than thirty days after the end of each Fiscal Year, a consolidated plan and financial forecast and updated model prepared for Company’s Board of Directors for such Fiscal Year and each Fiscal Year (or portion thereof) through the final maturity date of the Notes (a “Financial Plan”);”
		7.	Section 5.1 of the Note Purchase Agreement is hereby amended by replacing clause (j)  thereof in its entirety with the following:

“(j)Insurance Report.  Solely in the event any Purchaser makes a written request therefor after the Closing Date, as soon as practicable and in any event no later than thirty days after such request is made, one or more certificates from the Note Parties’ insurance broker(s) together with accompanying endorsements, in each case in form and substance satisfactory to Requisite Purchasers, and a summary outlining all material insurance coverage maintained as of the date of such summary by Company and its Subsidiaries and all material insurance coverage planned to be maintained by Company and its Subsidiaries in the immediately succeeding Fiscal Year;”
		8.	Each of Sections 5.1(g), 5.1(h), 5.1(l) and 5.1(m) of the Note Purchase Agreement is hereby amended by making the first letter of the first word of the section lowercase and adding the following at the beginning of the first sentence of each section:

“In the event Consolidated Liquidity is less than $25,000,000,”
C.  EFFECTIVENESS 
​
Notwithstanding any other provision of this Amendment and without affecting in any manner the rights of the Purchaser hereunder, it is understood and agreed that this Amendment shall not become effective, and the Note Parties shall have no rights under this Amendment, until the Purchaser shall have received the following documents, in form and substance satisfactory to the Purchaser: executed counterparts to this Amendment from the Company, each other Note Party and the Purchaser. At any time after the execution of this First Amendment, Purchaser may, upon providing written notice to Company, rescind paragraphs three through eight of this First Amendment in which case the amendments contained in paragraphs three through eight shall cease to be effective and the language of the provisions amended in paragraphs three through eight shall revert to their formulation prior to this First Amendment.
​
D.   REPRESENTATIONS
​
Each Note Party hereby represents and warrants to the Purchaser and the Collateral Agent that: 
​
1.Each of the Note Parties and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (b) has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and as proposed to be conducted, to enter into the Note Documents to which it is a party and to carry out the transactions contemplated thereby, and (c) is qualified to do business and in good standing in every jurisdiction where its assets are located and wherever necessary to carry out its business and operations, except in jurisdictions where the failure to be so qualified or in good standing has not had, and could not be reasonably expected to have, a Material Adverse Effect; and 

​
2.The execution, delivery and performance of this First Amendment has been duly authorized by all necessary action on the part of each Note Party that is a party hereto.
​
E.  OTHER AGREEMENTS
​
1.Continuing Effectiveness of Note Documents.  As amended hereby, all terms of the Note Purchase Agreement and the other Note Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Note Parties party thereto.  To the extent any terms and conditions in any of the other Note Documents shall contradict or be in conflict with any terms or conditions of the Note Purchase Agreement, after giving effect to this First Amendment, such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Note Purchase Agreement as modified and amended hereby. Upon the effectiveness of this First Amendment such terms and conditions are hereby deemed modified and amended accordingly to reflect the terms and conditions of the Note Purchase Agreement as modified and amended hereby.
​
2.Reaffirmation of Guaranty.  Each Guarantor consents to the execution and delivery by the Note Parties of this Amendment and the consummation of the transactions described herein, and ratifies and confirms the terms of the Guaranty to which such Guarantor is a party with respect to the indebtedness now or hereafter outstanding under the Note Purchase Agreement as amended hereby and all promissory notes issued thereunder. Each Guarantor acknowledges that, notwithstanding anything to the contrary contained herein or in any other document evidencing any indebtedness of the Note Parties to the Purchasers or any other obligation of the Note Parties, or any actions now or hereafter taken by the Purchasers with respect to any obligation of the Note Parties , the Guaranty to which such Guarantor is a party (i) is and shall continue to be a primary obligation of such Guarantor, (ii) is and shall continue to be an absolute, unconditional, continuing and irrevocable guaranty of payment, and (iii) is and shall continue to be in full force and effect in accordance with its terms.  Nothing contained herein to the contrary shall release, discharge, modify, change or affect the original liability of any Guarantor under the Guaranty to which such Guarantor is a party.    
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3.Acknowledgment of Perfection of Security Interest. Each Note Party hereby acknowledges that, as of the date hereof, the security interests and liens granted to Collateral Agent and the Purchasers under the Note Purchase Agreement and the other Note Documents are in full force and effect, are properly perfected and are enforceable in accordance with the terms of the Note Purchase Agreement and the other Note Documents.
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4.Effect of Agreement.  Except as set forth expressly herein, all terms of the Note Purchase Agreement, as amended hereby, and the other Note Documents shall be and remain in full force and effect and shall constitute the legal, valid, binding and enforceable obligations of the Note Parties to the Purchasers and Collateral Agent.  The execution, delivery and effectiveness of this First Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power or remedy of the Purchasers under the Note Purchase Agreement, nor constitute a waiver of any provision of the Note Purchase Agreement. This First Amendment shall constitute a Note Document for all purposes of the Note Purchase Agreement.
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5.Governing Law. This First Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York and all applicable federal laws of the United States of America.
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6.No Novation.This First Amendment is not intended by the parties to be, and shall not be construed to be, a novation of the Note Purchase Agreement and the other Note Documents or an accord and satisfaction in regard thereto.
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7. Costs and Expenses.  The Note Parties agrees to pay on demand all costs and expenses of Purchaser and Collateral Agent in connection with the preparation, execution and delivery of this Amendment, including, without limitation, the reasonable fees and out-of-pocket expenses of outside counsel for Purchaser and Collateral Agent with respect thereto.
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8.Counterparts.  This First Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument.  Delivery of an executed counterpart of this First Amendment by facsimile transmission, electronic transmission (including delivery of an executed counterpart in .pdf format) shall be as effective as delivery of a manually executed counterpart hereof.
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9.Binding Nature.  This First Amendment shall be binding upon and inure to the benefit of the parties hereto, their respective successors, successors-in-titles, and assigns.  No third party beneficiaries are intended in connection with this First Amendment.
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10.Entire Understanding.  This First Amendment sets forth the entire understanding of the parties with respect to the matters set forth herein, and shall supersede any prior negotia­tions or agreements, whether written or oral, with respect thereto.
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11.Release.  (a) Each Note Party hereby releases, acquits, and forever discharges Collateral Agent and each of the Purchasers, and each and every past and present subsidiary, affiliate, stockholder, officer, director, agent, servant, employee, representative, and attorney of Collateral Agent and the Purchasers (each a “Releasee”), from any and all claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys' fees) of any kind, character, or nature whatsoever, known or unknown, fixed or contingent, which such Note Party may have or claim to have now or which may hereafter arise out of or connected with any act of commission or omission of Releasee existing or occurring on or prior to the date of this First Amendment or any instrument executed on or prior to the date of this First Amendment including, without limitation, any claims, liabilities or obligations arising with respect to the Note Purchase Agreement or the other of the Note Documents.  The provisions of this paragraph shall be binding upon each Note Party and shall inure to the benefit of Releasees, and their respective heirs, executors, administrators, successors and assigns, and the other released parties set forth herein.  No Note Party is aware of any claim or offset against, or defense or counterclaim to, any Note Party’s obligations or liabilities under the Note Purchase Agreement or any other Note Document.  The provisions of this Section shall survive payment in full of the Obligations, full performance of the terms of this First Amendment and the Note Documents, and/or Collateral Agent’s or each Purchaser’s actions to exercise any remedy available under the Note Documents or otherwise.  Each Note Party warrants and represents that such Note Party is the sole and lawful owner of all right, title and interest in and to all of the claims released hereby and each Note Party has not heretofore voluntarily, by operation of law or otherwise, assigned or transferred or purported to assign or transfer to any person any such claim or any portion thereof.
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IN WITNESS WHEREOF, this First Amendment has been duly executed as of the date first written above.
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CAPSTONE GREEN ENERGY CORPORATION, as the Company and as a Note Party 
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By: ​ ​​ ​/s/ Darren R. Jamison​ ​​ ​​ ​
Name: Darren R. Jamison 
Title: President and Chief Executive Officer
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Guarantors: 
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CAPSTONE TURBINE INTERNATIONAL, INC.  
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By: ​ ​​ ​/s/ Darren R. Jamison​ ​​ ​​ ​
Name: Darren R. Jamison 
Title: President and Chief Executive Officer
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CAPSTONE TURBINE FINANCIAL SERVICES, LLC   
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By: ​ ​​ ​/s/ Darren R. Jamison​ ​​ ​​ ​
Name: Darren R. Jamison 
Title: President and Chief Executive Officer
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GOLDMAN SACHS SPECIALTY LENDING GROUP, L.P. as Purchaser 
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By: ​ ​​ ​/s/ Justin Betzen ​ ​​ ​​ ​
Name: Justin Betzen
Title: Vice President
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GOLDMAN SACHS SPECIALTY LENDING GROUP, L.P. as Collateral Agent
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By: ​ ​​ ​/s/ Justin Betzen ​ ​​ ​​ ​
Name: Justin Betzen
Title: Vice President

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