Effective December 23, 2016, the Company accepted a Conversion Notice from China Electric Vehicle Corporation (“CEVC”) in regards to the Company’s Amended and Restated Promissory Note dated March 22, 2012 (“Note”). The outstanding unpaid principal balance of the Note was $20,679,069 due on December 31, 2016. to the terms of the Note, CEVC elected to convert the unpaid principal balance of the Note into shares of common stock of the Company’s Chinese subsidiary, Zhejiang Jonway Automobile Co. Ltd. (“Jonway Auto”)

As a result of the foregoing conversion, the Company’s indebtedness to CEVC under the Note has been satisfied in full and CEVC, or its designee, will hold approximately 39.479% of the equity of Jonway Auto and the Company’s equity position in Jonway Auto will be reduced from 51% to approximately 11.52%

The issuance of the Jonway Auto shares to CEVC or its designee is expected to be completed in the first quarter of 2017.