3. Related Party Transactions

Under our Intercorporate Services Agreement with Real Goods Solar, we had until September 30, 2013 provided services to RSOL in the ordinary course of business, for which we at least quarterly billed to and collected from Real Goods Solar. This agreement was terminated on December 19, 2013. We billed zero, $0.3 million, and $0.4 million under the Intercorporate Services Agreement for the years 2013, 2012, and 2011, respectively.

As specified by our Tax Sharing Agreement with Real Goods Solar, to the extent Real Goods Solar becomes entitled to utilize certain loss carryforwards relating to periods prior to its initial public offering, it will distribute to us the tax effect (estimated to be 34% for federal income tax purposes) of the amount of such tax loss carryforwards so utilized. These net operating loss carryforwards expire beginning in 2018 if not utilized. Due to our step acquisitions of Real Goods Solar, it experienced “ownership changes” as defined in Section 382 of the Internal Revenue Code. Accordingly, its use of the net operating loss carryforwards is limited by annual limitations described in Sections 382 and 383 of the Internal Revenue Code. As of December 31, 2013, $4.4 million of these net operating loss carryforwards remained available for current and future utilization, meaning that Real Goods Solar’s potential future payments to us, which would be made over a period of several years, could therefore aggregate to approximately $1.6 million based on current tax rates. Based on Real Goods Solar’s establishment of a valuation allowance for all its net deferred tax assets at December 31, 2012, we established a valuation allowance, by charging loss from equity method investment in 2012, for our entire $1.6 million deferred tax asset related to our Tax Sharing Agreement with Real Goods Solar.

On December 19, 2011, we entered into an Industrial Building Lease Agreement with Real Goods Solar for office space located in our owned building in Colorado. The five year lease commenced on January 1, 2012 and has a monthly payment of approximately $22,000 plus common area maintenance and tax expenses.

During 2013, we sold the majority of our investment in Real Goods Solar for total net proceeds of approximately $25 million. Following the sale of the first portion in May 2013, our voting ownership percentage declined to below 20% and our Chairman resigned as Chairman of RSOL’s board and, thus, we no longer had significant influence over Real Goods Solar. Therefore, we changed our accounting for our investment in RSOL from the equity to cost method. Due to this accounting method change, we will no longer report our portion of RSOL’s net income or loss each period.

At December 31, 2012, we had two loans receivable from Real Goods Solar totaling $2.7 million, bearing interest at an annual rate of 10%. During 2012, Real Goods Solar recorded an impairment and, through the equity method accounting for our investment in RSOL, the net carrying value of these loans was reduced to zero as of December 31, 2012. On March 27, 2013, the maturity dates for these loans were extended, with $1.0 million due April 26, 2014 and $1.7 million due April 30, 2014. On April 23, 2013, we entered into a conversion agreement with Real Goods Solar whereby the $1.7 million loan was reduced by $0.1 million in exchange for 62,111 shares of Real Goods Solar’s Class A common stock. The conversion ratio was determined based on the closing market price of Real Goods Solar’s Class A common stock on the date of the conversion. On November 5, 2013, we collected $2.1 million in cash from Real Goods Solar and $0.2 million of tenant improvements in settlement of the two outstanding loans made. The $2.3 million gain resulting from the collection of these loans are reported in Interest and other income on our consolidated statement of operations for the year ended December 31, 2013.

As of December 31, 2013, we owned 836,989 shares of Real Goods Solar’s Class A common stock.