Enesoon’s Operations

All of Enesoon’s revenues from its businesses were derived from (i) customers who are owners of energy stations, and (ii) project companies owned jointly by Enesoon and its local partners, to which Enesoon provides engineering, procurement and construction services, operating and maintenance services and/or sell its equipment.

Enesoon screens, selects and authorizes local partners to promote its business and use its technology in specific local markets. Enesoon chooses one exclusive partner in each county or district and sign a standard license agreement with such local partner, whereby Enesoon, for a fixed fee, grants the partner an exclusive right to use its Enesoon brand and develop the HSES system in the designated region. Enesoon will also provide its partner with preliminary technology solution and feasibility report.

Once its partner completes its valuation of the feasibility and economic benefits of operating its HSES system in the specified region and determines to establish such system, the partner will enter into a cooperation agreement with Enesoon for the formation of a joint venture, which Enesoon refers to as a project company. Under the cooperation agreement, Enesoon generally makes cash contribution in the project company in exchange for 10% to 15% of its equity interest and is entitled to appoint one director and one supervisor of the project company.

The project company will invest to build HSES stations, the cost of which depends on the size of the building floor areas that need heating and/or air conditioning. Project companies are recommended to use Enesoon’s technologies, project design, management software, core equipment, and TES media to build the stations. After the station is built, Enesoon is generally exclusively engaged for a term of 30 years to provide operating and maintenance services of the HSES systems using its Management System.