Solar Energy Initiatives, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - EXHIBIT 31.1 - Solar Energy Initiatives, Inc.	ex311.htm
EX-32.1 - EXHIBIT 32.1 - Solar Energy Initiatives, Inc.	ex321.htm
EX-32.2 - EXHIBIT 32.1 - Solar Energy Initiatives, Inc.	ex322.htm
EX-31.2 - EXHIBIT 31.2 - Solar Energy Initiatives, Inc.	ex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2010

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from _______ to ________

COMMISSION FILE NUMBER 333-148155

Solar Energy Initiatives, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	3674	20-5241121
(State or other Jurisdiction of Incorporation	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification No.)
or Organization)

818 A1A North

Suite 201

Ponte Vedra Beach, Florida 32082

(Address of principal executive offices including zip code)

(904) 644-6090

Registrant’s telephone number, including area code:

Copies to:

Stephen M. Fleming, Esq.

Law Offices of Stephen M. Fleming PLLC

110 Wall Street, 11 th Floor

New York, New York 10005

516-833-5034

516-977-1209 (fax)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by a check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller Reporting Company [X]

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: as of March 16, 2010 the Company had 29,661,881 shares of its common stock, par value per share $0.001, issued and outstanding.

SOLAR ENERGY INITIATIVES, INC.

Form 10-Q for the Quarter Ended January 31, 2010

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (unaudited)	4

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	23

ITEM 3.	QUANTITATIVE AND QUALITITATIVE DISCLOSURES ABOUT MARKET RISKS	27

ITEM 4	CONTROLS AND PROCEDURES	27

PART II	OTHER INFORMATION	28

ITEM 1.	LEGAL PROCEEDINGS	28

ITEM 1A	RISK FACTORS	28

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	39

ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS	39

ITEM 5.	OTHER INFORMATION	39

ITEM 6.	EXHIBITS	40

	SIGNATURES	41

Cautionary Statement Regarding Forward-Looking Statements

This Report on Form 10-Q contains forward-looking statements. Forward-looking statements are statements that do not represent historical facts. We use words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “continue” and similar expressions to identify forward-looking statements. Forward-looking statements in this Report on Form 10-Q include, but are not limited to, those discussed in the section entitled "Management's Discussion and Analysis or Plan of Operation”, our plans and expectations regarding future financial results, operating results, business strategies, projected costs, products, competitive positions, management’s plans and objectives for future operations, and industry trends. These forward-looking statements are based on information available to us as of the date of this Report on Form 10-Q and current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond our control. Please see “Item 1A: Risk Factors” and our other filings with the Securities and Exchange Commission for additional information on risks and uncertainties that could cause actual results to differ. These forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we are under no obligation to, and expressly disclaim any responsibility to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

Estimates of future financial results are inherently unreliable.

From time to time, representatives of Solar Energy Initiatives, Inc. (f/k/a NP Capital Corp.) ("NP Capital,” "Solar Energy,” the ”Company," “we,” “our,” or “us”) may make public predictions or forecasts regarding the Company's future results, including estimates regarding future revenues, expense levels, earnings or earnings from operations. Any forecast regarding the Company's future performance reflects various assumptions. These assumptions are subject to significant uncertainties, and, as a matter of course, many of them will prove to be incorrect. Further, the achievement of any forecast depends on numerous factors (including those described in this discussion), many of which are beyond the Company's control. As a result, there can be no assurance that the Company's performance will be consistent with any management forecasts or that the variation from such forecasts will not be material and adverse. Investors are cautioned not to base their entire analysis of the Company's business and prospects upon isolated predictions, but instead are encouraged to utilize the entire available mix of historical and forward-looking information made available by the Company, and other information affecting the Company and its products, when evaluating the Company's prospective results of operations. In addition, representatives of the Company may occasionally comment publicly on the perceived reasonableness of published reports by independent analysts regarding the Company's projected future performance. Such comments should not be interpreted as an endorsement or adoption of any given estimate or range of estimates or the assumptions and methodologies upon which such estimates are based. Undue reliance should not be placed on any comments regarding the conformity, or lack thereof, of any independent estimates with the Company's own present expectations regarding its future results of operations. The methodologies employed by the Company in arriving at its own internal projections and the approaches taken by independent analysts in making their estimates are likely different in many significant respects. Although the Company may presently perceive a given estimate to be reasonable, changes in the Company's business, market conditions or the general economic climate may have varying effects on the results obtained through the use of differing analyses and assumptions. The Company expressly disclaims any continuing responsibility to advise analysts or the public markets of its view regarding the current accuracy of the published estimates of outside analysts. Persons relying on such estimates should pursue their own independent investigation and analysis of their accuracy and the reasonableness of the assumptions on which they are based.

The following information should be read in conjunction with the condensed consolidated Financial Statements and the accompanying Notes to condensed consolidated Financial Statements included in this Report on Form 10-Q. Our fiscal year ends on July 31 of the applicable calendar year. All references to fiscal periods apply to our fiscal quarters or year which ends on the last day of the calendar month end.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS


	January 31, 2010			July 31, 2009
ASSETS	(unaudited)

Current assets
Cash and cash equivalents	$	152,966		$	1,005,628
Accounts receivable		469,106			22,190
Other receivables		-			168,932
Inventory		2,270,198			226,412
Prepaid expenses and other current assets		11,361			3,289
Total current assets		2,903,631			1,426,451

Fixed assets, net		30,103			27,945
Domain name		1,650,000			1,650,000
Deferred offering costs		15,000			-
Deposits		13,248			12,748
Total assets	$	4,611,982		$	3,117,144

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	2,783,880		$	718,011
Commissions payable		8,958			76,178
Due to related parties		139,241			188,391
Accrued expenses		138,822			132,021
Deferred revenue		25,000			52,197
Note payable		400,000			400,000
Total current liabilities		3,495,901			1,566,798


Stockholders' equity
Common stock, $0.001 par; 100,000,000 authorized
26,364,878 and 22,626,567 issued and outstanding,
respectively		26,365			22,627
Paid-in capital		8,532,785			7,104,896
Loan fees to be paid in stock		8,400
Common stock payable		(8,400	)
Deferred compensation		(545,055	)		(446,166	)
Deposit from stockholder		125,000			-
Common stock subscription		(20,000	)		(20,000	)
Accumulated deficit		(7,029,099	)		(5,111,011	)
Total Solar Energy Initiative Inc shareholder's equity		1,089,996			1,550,346
Noncontrolling interest		26,085			-
Total stockholders' equity		1,116,081			1,550,346
Total liabilities and stockholders' equity	$	4,611,982		$	3,117,144

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the Three Months Ended January 31,			For the Three Months Ended January 31,			For the Six Months Ended January 31,			For the Six Months Ended January 31,
	2010			2009			2010			2009

Revenues, net	$	1,273,506		$	521,223		$	2,285,456		$	761,338
Cost of sales		974,120			443,011			1,724,536			515,649
Gross profit		299,386			78,212			560,920			245,689

Operating expenses
Selling, general and administrative		1,286,618			660,683			2,494,996			1,689,872
Total operating expenses		1,286,618			660,683			2,494,996			1,689,872

Loss from operations		(987,232	)		(582,471	)		(1,934,076	)		(1,444,183	)

Other income (expense)
Other income (expense)		(2,148	)					(2,148	)		643
Interest expense		(15,367	)		(71,861	)		(61,819	)		(79,776	)
Total other income (expense)		(17,515	)		(71,861	)		(63,967	)		(79,133	)

Loss before provision for income taxes		(1,004,747	)		(654,332	)		(1,998,043	)		(1,523,316	)
Provision for income taxes		-			-			-			-
Net loss		(1,004,747	)		(654,332	)		(1,998,043	)		(1,523,316	)

Loss attributable to Noncontrolling Interest		79,955			-			79,955			-
Loss attributable to Solar Energy Initiatives, Inc.	$	(924,792	)	$	(654,332	)	$	(1,918,088	)	$	(1,523,316	)

Net loss attributable to Solar Energy Iniatives, Inc.` per share – basic and diluted	$	(0.04	)	$	0.05		$	(0.08	)	$	(0.11	)

Weighted average shares outstanding – basic and diluted		26,257,390			14,155,062			24,984,345			13,592,059

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY



					Additional							Deposit		Common			Common						Total
	Common Stock				Paid-in		Deferred			Loan		from		Stock			Stock			Accumulated			Stockholders
	Shares		Amount		Capital		Comp			Fees		Shareholder		Payable			Subscription			Deficit			Equity

Balances, July 31, 2009		22,626,567	$	22,627	$	7,104,896	$	(446,166	)	$	-	$	-	$	-		$	(20,000	)	$	(5,111,011	)	$	1,550,346

Shares issued for consulting		1,300,000		1,300		511,700		(498,000	)		-		-		-			-			-			15,000

Shares issued for warrant call		2,038,500		2,039		772,564		-			-		-		-			-			-			774,603

Shares issued for payment of services		28,125		28		11,222		-			-		-		-			-			-			11,250

Deposit received from shareholder				-		-		-			-		125,000		-			-			-			125,000

Shares issued for commission		100,000		100		21,900		-			-		-		-			-			-			22,000

Shares issued for dealer incentives		13,000		13		4,539		-			-		-		-			-			-			4,552

Shares issued for employee incentives		30,000		30		12,720		-			-		-		-			-			-			12,750

Shares issued for loan fees		100,000		100		43,400		-			8,400		-		(8,400	)		-			-			43,500

Shares issued for employee compensation		128,686		129		49,844		-			-		-		-			-			-			49,973

Amortization of deferred compensation expense								399,111			-		-		-			-			-			399,111

Net loss																					(1,918,088	)		(1,918,088	)

Balances, January 31, 2010 (unaudited)		26,364,878	$	26,365	$	8,532,785	$	(545,055	)	$	8,400	$	125,000	$	(8,400	)	$	(20,000	)	$	(7,029,099	)	$	1,089,996

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	For the Six Months Ended January 31, 2010			For the Six Months Ended January 31, 2009


CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,998,043	)		(1,523,316	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		1,872			1,678
Stock based compensation		727,255			949,329
Convertible Debenture Amortization		-			49,124
Changes in operating assets and liabilities:
Accounts receivable		(446,916	)		(83,233	)
Other receivables		168,932
Inventory		(2,043,786	)		(62,609	)
Prepaid expenses and other current assets		(8,072	)		(10,639	)
Deposit		(500	)		(7,832	)
Accounts payable		2,065,869			344,351
Commissions payable		(67,220	)		-
Accrued expenses		6,801			2,222
Deferred revenue		(27,197	)		19,900
Due to Related Party		-			24,288
Net cash used by operating activities		(1,621,005	)		(296,737	)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in convertible debenture-related party
Purchase of fixed assets		(4,030	)		(20,609	)
Acquisition of domain name		-			(135,000	)
Net cash used by investing activities		(4,030	)		(155,609	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from converrtible debenture		-			325,000
Deferred offering costs		(15,000	)		-
Net proceeds from private placements		711,523			-
Proceeds from related parties		135,000			-
Proceeds paid to related parties		(184,150	)		-
Proceeds received from shareholder		125,000			-
Principal payments on notes payable		-			(200,000	)
Net cash provided by financing activities		772,373			125,000

Net increase (decrease) in cash and cash equivalents		(852,662	)		(327,346	)

Cash and cash equivalents at beginning of year		1,005,628			366,655

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	152,966		$	39,309

SUPPLEMENTAL DISCLOSURES

Cash operating activities:
Interest paid	$	15,367		$	12,929
Taxes paid	$	-		$	-
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued for deferred compensation	$	496,111		$	280,000
Acquisition of domain name
Notes payable assumed	$	-		$	840,000
Stock issued		-			650,000
Total non-cash consideration		-			1,490,000

Cash consideration ($25,000 paid during the ended July 31, 2008)		-			160,000
	$	-		$	1,650,000

Discounts from warrants and beneficial conversion feature	$	-		$	196,493

Shares issued for deferred compensation	$	998,000		$	-
Common stock payable for loan fees	$	8,400		$	-

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

Solar Energy Initiatives, Inc.

Notes to Condensed Consolidated Financial Statements

January 31, 2010

(UNAUDITED)

1.	Nature of Operations

Solar Energy Initiatives, Inc. was formed on June 20, 2006 and is a Delaware Corporation. On August 20, 2008, Solar Energy, Inc., a Florida corporation, was formed as a wholly owned subsidiary of Solar Energy Initiatives, Inc. to operate acquired solar assets, which included the World Wide Web domain name solarenergy.com, and the relationship management of an independent solar equipment dealer network. On September 25, 2009, Solar Energy Initiatives, Inc. formed a wholly owned subsidiary Solar Park Initiatives, Inc. (SPI), a Nevada corporation, to development large utility-scale solar projects. Throughout this Report, Solar Energy Initiatives, Inc., Solar Energy, Inc. and Solar Park Initiatives, Inc. may be individually and collectively hereafter referred to as: the “Company”, “Solar Energy”, “we”, or “us”.

Business Description

Solar Energy Initiatives also owns SolarEnergy.com, on the internet which is a digital property committed to driving consumer traffic, while serving as a platform for awareness of the benefits of solar and a source of business lead generation to Solar Energy’s channel partners.

Solar Energy Initiatives, Inc. (OTCBB: SNRY), is a diversified provider of solar solutions with three principal operating groups focused on large-scale projects, solar education and distribution of solar products. The Project Services Group (PSG) is a developer and manager of municipal and commercial scale solar projects. The SolarEos Group is dedicated to the education and continuous improvement of solar energy trade professionals. The Integrated Supply Group (ISG) is a wholesale distributor of branded photovoltaic and thermal (water heating) systems selling via a network of dealers throughout the United States and the Caribbean.

Solar Energy’s internet domain name, SolarEnergy.com, is a digital property committed to driving consumer traffic to us, while serving as a platform for awareness of the benefits of solar and a source of business lead generation to Solar Energy’s channel partners.

Through its diversified portfolio of solar businesses, Solar Energy is committed to restoring the nation’s economy through a grassroots campaign called ‘Renew the Nation’. Renew the Nation brings together a broad alliance of public and private sector interests focused on workforce development, job creation and economic growth through solar energy. For more information please visit www.solarenergy.com.

We have entered into supply agreements with manufacturers of solar products to establish pricing and delivery parameters. We have identified and will continue to seek solar technologies that have industry leading performance, are of high quality, offer competitive pricing and have strong warranties. We are selling solar power products including; solar panels and inverters which convert sun energy into electricity compatible with the utility network and solar thermal technologies that use the sun’s radiation for hot water applications. Our solar sales efforts are primarily focused on residential and commercial applications, primarily through our dealer network, where our selected solar energy products and systems offer customers economic benefits utilizing federal, state and local incentives and compared with the locally supplied electricity.

We are primarily focusing our sales efforts in regions where electricity prices and government incentives are attractive and have accelerated solar power adoption. The business segments we have identified to pursue can require a significant level of expertise and capital. We have obtained the expertise, and are seeking the necessary capital to further develop our plan. If we are unable to continue to acquire or develop such expertise or capital, we may not be able to fully develop our planned business and ultimately may be required to cease operations. We anticipate that the end customers of our sales processes will be homeowners, owners of large commercial and industrial buildings and facilities, municipalities and owners of large tracts of undeveloped land.

2.	Going Concern

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred losses from operations since our inception, and at the present time will need additional capital to maintain operations and execute our business plan. As such, our ability to continue as a going concern is contingent upon us being able to secure an adequate amount of debt or equity capital to enable us to meet our cash requirements. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets, the competitive environment in which we operate and the current credit shortage facing worldwide markets. See further information in the Subsequent Event Section.

3.	Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation — Interim Financial Information

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. They should be read in conjunction with the financial statements and related notes to the financial statements of Solar Energy Initiatives, Inc. for the years ended July 31, 2009 and 2008 appearing in the Company’s Form 10-K. The January 31, 2010 unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual financial statements filed with the Annual Report on Form 10-K have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The consolidated financial statements include the accounts of Solar Energy Initiatives, Inc. and its wholly owned subsidiaries Solar Energy, Inc. and Solar Park Initiatives, Inc. All significant intercompany transactions and balances have been eliminated in consolidation.

Financial Instruments

The Company's financial instruments consist primarily of cash, accounts receivable, accounts payable, and notes receivable and payables. These financial instruments are stated at their respective carrying values, which approximate their fair values.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying financial statements arise from our belief that we will secure an adequate amount of cash to continue as a going concern, that our allowance for doubtful accounts is adequate to cover potential losses in our receivable portfolio, that all long-lived assets are recoverable. In addition, the determination and valuation of derivative financial instruments is a significant estimate. The markets for our products are characterized by intense competition, rapid technological development, evolving standards, short product life cycles and price competition, all of which could impact the future realization of our assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

Revenue Recognition

The Company currently generates revenue from the sale of photovoltaic panels, solar thermal panels, balance of system products, and management system products to our dealers or other parties, and dealer training. The Company anticipates it will not perform any installations. The Company uses the following four basic criteria before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the seller's price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. We recognize revenue upon completion of a system installation for residential installations and we recognize revenue under the percentage-of-completion method for commercial installations. Amounts billed or received from customers in advance of performance are recorded as deferred revenue. Amounts received from grants or stimulus monies are recognized as deferred revenue until the requirements under governmental guidelines have been met.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. There were no accounts receivable presented net of the allowance for doubtful accounts. Management believes there were no uncollectible amounts as of January 31, 2010 therefore an allowance for doubtful accounts is not recorded as of the respective quarter end dates.

Warranty Reserves

The Company purchases its products for sale from third parties. The manufacturer warrants or guarantees the operating integrity, and performance of photovoltaic solar products at certain levels of conversion efficiency for extended periods, up to 25 years. The manufacturer also warrants or guarantees the functionality of inverters and balance of systems up to 10 years. Therefore, the Company does not recognize warranty expense.

Inventory

Inventories consist of photovoltaic solar panels, solar thermal panels and components, other component materials for specific customer orders and spare parts, and are valued at lower of cost (first-in, first-out) or market. Management provides a reserve to reduce inventory to its net realizable value. Certain factors could impact the realizable value of inventory, so management continually evaluates the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration expected demand, new product development, the effect new products might have on the sale of existing products, product obsolescence, and other factors. The reserve or write - down is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required. If actual market conditions are more favorable, reserves or write-downs may be reversed. As of January 31, 2010 inventory was $2,270,198. Inventory was acquired during the most recent quarters, therefore management believes there is no impairment.

Fixed Assets

Equipment and improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of equipment and improvements are provided over the estimated useful lives of the assets, or the related lease terms if shorter, by the straight-line method. Useful lives range as follows:

Computers and networks	3 years
Machinery and equipment	5-7 years
Furniture and fixtures	5-7 years
Office Equipment	3-10 years
Leasehold improvements	Lesser of lease term or useful life of asset

Expenditures for maintenance and repairs are charged to operations.

Long-Lived Assets and Impairment

The Company reviews long-lived assets, including certain identifiable intangibles for impairment whenever events or changes in circumstances indicate that the carrying value of the assets in question may not be recoverable. As of January 31, 2010 we had Long Lived Assets primarily consisting of the domain name. We believe that this asset is fairly valued as of the date of the report.

Domain Name

The domain name is determined to have an indefinite useful life, is not amortized, but is tested for impairment annually or more frequently if events or changes in circumstances indicate that the domain name might be impaired. The impairment test for indefinite-lived domain name consists of a comparison of their fair value with the carrying amount.

Stock-Based Compensation

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. The Company uses the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement

Income Taxes

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company records net deferred tax assets to the extent the Company believes these assets will more likely than not be realized. In making such determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. A valuation allowance is established against deferred tax assets that do not meet the criteria for recognition. In the event the Company were to determine that it would be able to realize deferred income tax assets in the future in excess of their net recorded amount, the would make an adjustment to the valuation allowance which would reduce the provision for income taxes.

The Company follows the accounting guidance which provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits. Income tax positions must meet a more-likely-than-not recognition threshold at the effective date to be recognized initially and in subsequent periods. Also included is guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Foreign Currency

Gains and losses from foreign exchange transactions will be included in the statements of operations and currently there are none.

Basic and Diluted Net Loss per Share

Basic net loss per share is computed by dividing the loss for the period by the weighted average number of common shares outstanding for the period. Fully diluted loss per share reflects the potential dilution of securities by including other potential issuances of common stock, including shares to be issued upon exercise of stock options and warrants, in the weighted average number of shares of common stock outstanding for a period and is not presented where the effect is anti-dilutive.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade accounts receivable. The Company maintains cash balances at a financial institution in Ponte Vedra Beach, Florida. Accounts at these institutions are secured by the Federal Deposit Insurance Corporation up to $250,000. At times, balances may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.

4.	Recent Accounting Pronouncements

On July 1, 2009, the Financial Accounting Standards Board (FASB) officially launched the FASB Accounting Standards Codification (ASC) 105 -- Generally Accepted Accounting Principles, which established the FASB Accounting Standards Codification (“the Codification”), as the single official source of authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the Securities and Exchange Commission. The Codification is designed to simplify U.S. GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to the Codification in respect of the appropriate accounting standards throughout this document as “FASB ASC”. Implementation of the Codification did not have any impact on the Company’s consolidated financial statements.

On June 30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic 105) – Generally Accepted Accounting Principles – amendments based on – Statement of Financial Accounting Standards No. 168 – The FASB Accounting and Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. Beginning with this Statement the FASB will no longer issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standard Updates. This ASU includes FASB Statement No. 168 in its entirety. While ASU’s will not be considered authoritative in their own right, they will serve to update the Codification, provide the bases for conclusions and changes in the Codification, and provide background information about the guidance. The Codification modifies the GAAP hierarchy to include only two levels of GAAP: authoritative and nonauthoritative. ASU No. 2009-01 is effective for financial statements issued for the interim and annual periods ending after September 15, 2009, and the Company does not expect any significant financial impact upon adoption.

In August 2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption.

In September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net Asset Value per Share (or its equivalent). This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”. SFAS No. 167 addresses the effect on FASB Interpretation 46(R), “Consolidation of Variable Interest Entities” of the elimination of the qualifying special-purpose entity concept of SFAS No. 166, “Accounting for Transfers of Financial Assets”. SFAS No. 167 also amends the accounting and disclosure requirements of FASB Interpretation 46(R) to enhance the timeliness and usefulness of information about an enterprise’s involvement in a variable interest entity. This Statement shall be effective as of the Company’s first interim reporting period that begins after November 15, 2009. Earlier application is prohibited. The Company does not anticipate any significant financial impact from adoption of SFAS No. 167. As of January 31, 2010, SFAS No. 167 has not been added to the Codification.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140”. SFAS No. 166 amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” by eliminating the concept of special-purpose entity, requiring the reporting entity to provide more information about sales of securitized financial assets and similar transactions, particularly if the seller retains some risk to the assets, changes the requirements for the de-recognition of financial assets, and provides for the sellers of the assets to make additional disclosures. This Statement shall be effective as of the Company’s first interim reporting period that begins after November 15, 2009. Earlier application is prohibited. The Company does not anticipate any significant financial impact from adoption of SFAS No. 166. As of January 31, 2010, SFAS No. 166 has not been added to the Codification.

In May 2009, the FASB issued FASB ASC 855, “Subsequent Events”. This Statement addresses accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. FASB ASC 855 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, the date issued or date available to be issued. The Company adopted this Statement in the fourth quarter of 2009.

In April 2009, the FASB issued an update to FASB ASC 820, “Fair Value Measurements and Disclosures”, related to providing guidance on when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. The update clarifies the methodology to be used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. The update also reaffirms the objective of fair value measurement, as stated in FASB ASC 820, which is to reflect how much an asset would be sold in and orderly transaction, and the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. The Company adopted this Statement in the fourth quarter of 2009 without significant financial impact.

In April 2009, the FASB ASC 320, “Investments – Debt and Equity”, amends current other-than-temporary guidance for debt securities through increased consistency in the timing of impairment recognition and enhanced disclosures related to credit and noncredit components impaired debt securities that are not expected to be sold. Also, the Statement increases disclosures for both debt and equity securities regarding expected cash flows, securities with unrealized losses, and credit losses. The Company adopted this Statement in the fourth quarter of 2009 without significant impact to our financial statements.

In April 2009, the FASB issued an update to FASB ASC 825, “Financial Instruments”, to require interim disclosures about the fair value of financial instruments”. This update enhances consistency in financial reporting by increasing the frequency of fair value disclosures of those assets and liabilities falling within the scope of FASB ASC 825. The Company adopted this update in the second quarter of 2009 without significant impact to the financial statements.

In April 2009, the FASB issued an update to FASB ASC 805, “Business Combinations”, that clarifies and amends FASB ASC 805, as it applies to all assets acquired and liabilities assumed in a business combination that arise from contingencies. This update addresses initial recognition and measurement issues, subsequent measurement and accounting, and disclosures regarding these assets and liabilities arising from contingencies in a business combination. The Company adopted this Statement in the fourth quarter of 2009 without significant impact to the financial statements.

In January 2009, the FASB issued an update to FASB ASC 325, “Investments – Other”, which amends the impairments guidance on recognition of interest income and impairment on purchased beneficial interests and beneficial interests that continue to be held by a transferor in securitized financial assets to achieve more consistent determination of whether an other-than-temporary impairment has occurred. The update also retains and emphasizes the objective of an other than-temporary impairment assessment and the related disclosure requirements in FASB ASC 320, “Investments – Debt and Equity Securities”, and other related guidance. The adoption of this update in the fourth quarter of 2009 did not have a significant impact on the Company’s financial statements.

In November 2008, EITF issued new guidance under FASB ASC 350, “Intangibles – Goodwill and Other” on accounting for defensive intangible assets”. The new guidance applies to all acquired intangible assets in which the acquirer does not intend to actively use the asset but intends to hold (lock up) the asset to prevent its competitors from obtaining or using the asset (a defensive asset). This guidance was adopted by the Company in January 2009 without impact to the financial statements.

In May 2008, the FASB issued an update to FASB ASC 470, “Debt”, with respect to accounting for convertible debt instruments that may be settled in cash upon conversion including partial cash settlement. This update applies to convertible debt instruments that, by their stated terms, may be settled in cash (or other assets) upon conversion, including partial cash settlement, unless the embedded conversion option is required to be separately accounted for as a derivative under FASB ASC 815, “Derivatives and Hedging”. Additionally, this update specifies that issuers of such instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost recognized in subsequent periods. The update is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. The Company does not currently have any debt instruments for which this update would apply. This update was adopted in August 2009 without significant financial impact.

In March 2008, the FASB issued an update to FASB ASC 815, “Derivatives and Hedging”. This update is intended to enhance the current disclosure framework in FASB ASC 815. Under this update, entities will have to provide disclosures about (a) how and why and entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under FASB ASC 815 and its related interpretations, and (c), how derivative instruments and related hedged items effect an entity’s financial position, financial performance and cash flows. This update is effective for all financial statements issued for fiscal and interim periods beginning after November 15, 2008. The Company does not currently have any derivative instruments, nor does it engage in hedging activities, therefore, the Company’s adoption of this update in the second quarter of 2009 was without significant financial impact.

In December 2007, the FASB issued an update to FASB ASC 805, “Business Combinations” which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquire, and the goodwill acquired. This update also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This update is effective for the Company with respect to business combinations for which the acquisition date is on or after January 1, 2009. The Company adopted this update in the second quarter of 2009.

In December 2007, the FASB issued an update to FASB ASC 810, “Consolidation”, which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. ASC 810 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of noncontrolling owners. This update is effective for the Company as of January 1, 2009. The Company adopted this update in February 2009.

In January 2010, the FASB issued an update to the Fair Value topic. This update requires new disclosures for 1) transfers in and out of levels 1 and 2 and 2) activity in level 3, by requiring the reconciliation to present separate information about purchases, sales, issuance, and settlements. Also, this update clarifies the disclosures related to the fair value of each class of assets and liabilities and the input and valuation techniques for both recurring and nonrecurring fair value measurements in levels 2 and 3. The effective date for the new disclosures and clarifications is for interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances, and settlements, which is effective for fiscal years beginning after December 15, 2010. This update is not expected to have a material impact on the Company’s financial statements.

Inventory

Inventories consist of photovoltaic solar panels, solar thermal panels and components, other component materials for specific customer orders and spare parts, and are valued at lower of cost (first-in, first-out) or market. Management provides a reserve to reduce inventory to its net realizable value. Certain factors could impact the realizable value of inventory, so management continually evaluates the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration expected demand, new product development; the effect new products might have on the sale of existing products, product obsolescence, and other factors. The reserve or write - down is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required. If actual market conditions are more favorable, reserves or write-downs may be reversed. As of January 31, 2010 inventory was $2,270,198. Inventory was acquired during the most recent quarters, therefore there is no impairment.

6.	Acquisition of Domain

On August 21, 2008, the Company entered into and closed a Website Purchase Agreement (the “WPA”) with Solar Energy, Inc. (“SEI”) and the shareholders of SEI pursuant to which the Company acquired the Domain Name, www.solarenergy.com, the web site that uses the domain name, the name Solar Energy, Inc. and all trade rights associated with these assets (collectively, the “SEI Assets”). In consideration for the purchased SEI Assets, the Company made a cash payment of $160,000 at closing, issued the seller a secured note collateralized by a lien on the assets referenced in the Website Purchase Agreement in the principal amount of $840,000 with 7.5% interest that is payable over a period of 21 months with principal payments of $40,000 per month and issued the seller 1,000,000 shares of common stock of the Company valued at $650,000.

The following is a schedule by years of future principle payments required under the Note Payable issued at closing:

For the period February 1, 2009 through May 1, 2010

400,000

In December 2009, the Company filed for arbitration against David H Smith revocable trust, and David Smith regarding potential violations of his website purchase agreement and consulting agreement. Interest has continued to accrue as per the agreement. Per the terms of the agreements we have suspended any additional payment of the note pending resolution of the dispute.

7.	Convertible Debenture

In November 2008, the Company entered into a convertible debenture agreement for $325,000 with four private investors. The debenture was converted into 1,300,000 shares of common stock, at $0.25 per share, on July 21, 2009 and accrued interest of $28,093, 12% per annum, was paid in August 2009. With the sale of the debenture, we issued 1,000,000 “A” warrants and 1,000,000 “B” warrants exercisable on a cash basis equal to $0.50 and $1.00 respectively. The A warrants can be exercised up to two years from the closing date. The “B” warrants can be exercised up to three years from the Closing Date. The Company shall have the right to call the “A” warrants if its stock trades at or is otherwise valued at, or above $1.00 per share for 10 consecutive days. The Company shall have the right to call the “B” warrants if its stock trades at, or is otherwise valued at, or above $1.50 per share for 10 consecutive days. The Company shall have the right, upon written notice to the holder to reduce the exercise period of the Warrants to a period of 15 days beginning on the date of the written notice. The warrants have been valued at $144,493 using the Black- Sholes Method. Additionally, the Company recorded a beneficial conversion feature totaling $180,507. The value of the warrants and the beneficial conversion feature was recorded as a discount to the convertible debenture and $325,000 was expensed through October 31, 2009.

8.	Stockholders' Equity

Common Stock

The authorized capital includes 100,000,000 shares of common stock, $0.001 par value per share. There are 26,364,878 shares of common stock issued and outstanding as of January 31, 2010.

On April 2, 2009 the Company issued 200,000 shares of common stock to four groups engaged to provide business consulting, and other services for the term of twelve months, valued at $80,000. The Company recorded the stock issuance as deferred compensation; a total of $33,333 has been amortized of which $20,000 was during the six months ended January 31, 2010.

In June 2009 the Company issued 300,000 shares of common stock to a group engaged to provide business consulting and other services for the term of eighteen months, valued at $114,000. The Company recorded the stock issuance as deferred compensation, and a total of $50,666 has been amortized, of which $38,000 was during the six months ended January 31, 2010.

In June 2009 the Company issued 75,000 shares of common stock to a group engaged to provide business consulting and other services for the term of three months, valued at $30,000. The Company recorded the stock issuance as deferred compensation, and a total of $30,000 of which $10,000 was during the six months ending January 31, 2010.

In June 2009 the Company issued 300,000 shares of common stock to a group engaged to provide business consulting and other services for the term of eighteen months, valued at $156,000. The Company recorded the stock issuance as deferred compensation, and a total of $60,667 has been amortized, of which $52,000 was during the six months ended January 31, 2010.

In July 2009 the Company issued 350,000 shares of common stock to a group engaged to provide business consulting and other services for the term of twelve months, valued at $140,000. The Company recorded the stock issuance as deferred compensation, and a total of $75,833 has been amortized, of which $70,000 was during the six months ended January 31, 2010.

In August 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services for the term of three months, valued at $48,000. The Company recorded the stock issuance as deferred compensation, of which the entire amount has been amortized during the six months ended January 31, 2010.

In August 2009 the Company issued 200,000 shares of common stock to a group engaged to provide business consulting and other services for the term of eighteen months, valued at $90,000. The Company recorded the stock issuance as deferred compensation, of which $25,000 has been amortized for the period ended January 31, 2010.

In September 2009 122,222 shares valued at $47,666 were issued in lieu of payroll, and the full value recorded as salaries.

In September 2009 50,000 shares valued at $19,500 were issued for consulting fees to Michael Dodak in lieu of cash payment per his consulting agreement, and the full value recorded as consulting expense.

In September 2009 100,000 shares valued at $39,000 were issued for a loan to the Company from two related parties. The entire amount was expensed and recorded as interest expense

In September 2009 the Company issued 200,000 shares of common stock to a group engaged to provide international business consulting and other services for the term of eighteen months, valued at $70,000. The Company recorded the stock issuance as deferred compensation, of which $19,444 has been amortized, for the period ended January 31, 2010.

In October 2009 the Company issued 9,000 shares of stock each to five Dealers, valued at $3,150 as part of a dealer incentive program. The Company recorded the full value as an expense for the period ending January 31, 2010.

In October 2009 5,000 shares valued at $1,750 were issued as employee incentives, and the full value expensed.

In October 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services for the term of twelve months, valued at $30,000. The Company recorded the stock issuance as deferred compensation, of which $10,000 has been amortized, for the period ended January 31, 2010.

In October 2009 the Company issued 650,000 shares of common stock to a group engaged to provide international business consulting and other services for the term of twelve months, valued at $260,000. The Company recorded the stock issuance as deferred compensation, of which $86,667 has been amortized for the period ended January 31, 2010.

In September 2009 the Company announced an offer to all holders of certain warrants that it would reduce the exercise price on the warrants to $0.30 per share for a temporary period. During the temporary warrant exercise price reduction period, which ended October 15, 2009, 2,038,500 warrants were exercised at $0.30 into a corresponding number of shares of common stock totaling 2,038,500 for a total of $611,523. The restricted shares were issued on October 15, 2009. As a result of modification of terms the company recorded additional compensation totaling $163,080.

In October 2009 the company issued 28,125 shares valued at $11,250 as settlement for an outstanding account payable.

In October 2009 the Company received $125,000 from a shareholder as a deposit for 10% interest in a future subsidiary company or shares of the Company converted at .30 per share, depending on future events.

Issuances in Current Quarter:

In January 2010 the Company issued 100,000 shares as commission valued at $22,000 and the entire amount expensed as commission expense for the period ending January 31, 2010.

In January 2010 the Company issued 25,000 shares as employee incentives valued at $11,000 and the entire amount expensed in the period ending January 31, 2010.

In January 2010 the Company issued 6,464 shares as compensation valued at $2,308 and the entire amount expensed to salaries for the period ending January 31, 2010.

In January 2010 the Company issued 4,000 shares to four dealers valued at $1,400 and the entire amount expensed for the period ending January 31, 2010.

Private Placement Warrants

As of January 31, 2010, warrants to purchase 2,226,000, 2,226,000, 857,143, 100,000, 1,000,000, 1,000,000, 708,053, 694,386, 360,672, and 1,536,667 respectively, of our common stock were granted in connection with the private placements as discussed above and as follows:

Number of Shares of Common Stock		Exercise Price		Expiration Date

	2,226,000	$	0.75	December-10
	2,226,000	$	1.50	June-11
	857,143	$	0.75	March-11
	100,000	$	0.50	June-11
	1,000,000	$	0.50	November-11
	1,000,000	$	1.00	November-12
	708,052	$	0.60	April-12
	694,386	$	0.60	May-12
	360,672	$	0.60	June-12
	1,536,667	$	0.60	July-12

9.	Controlling Interest

On September 25, 2009 the Company formed Solar Park Initiatives Inc, a wholly owned subsidiary. In October 2009, the Company announced that it was planning a to spin-off SPI, to its shareholders of record as of October 15, 2009, and that it hired Mr. Michael Gorton as the CEO of the new company. The Company’s shareholders of record, as of October 15, 2009, were to receive one common share of SPI stock for every two common shares of the Company owned. The distribution of such shares was contingent upon SPI making the required filings with the Securities and Exchange Commission. The Company is currently evaluating our options with respect to the proposed spin off of SPI. The tax implications for shareholders of the company are uncertain at this time.

In November 2009 SPI issued a total of 19,489,145 shares of common stock, of which 6,340,001 shares were issued to officers, employees and board members for services valued at $6,040. 13,099,145 shares were issued to Solar Energy Initiatives, Inc. for services and cash of the initial share issuance by SPI, which has been eliminated upon consolidation.

During the period ended January 31, 2010, SPI closed a private placement for the sale of units at $0.40 per unit made up of one share of common stock and one common stock purchase warrant with an exercise price of $1.20. In December 2009, 250,000 units of common stock were issued in this private placement for $100,000. As of January 31, 2010 the Company retains ownership of 68% as the controlling interest in SPI. as reflected in our financials. In addition, in March 2010 SPI closed a second private placement whereby it raised $200,000 on identical terms,

10.	Commitments and Contingencies

Operating Leases

On October 1, 2008 we entered into two lease agreements for office and warehouse/assembly space. On September 11, 2009, we added to our corporate office space by leasing the adjacent office suite as our space needs grew. Our corporate headquarters is located at 818 A1A, Suite 201, and Ponte Vedra Beach, FL 32082. The annual monthly least cost for 3357 square feet of office space is as follows:

Year 1:	$	6,714
Year 2:	$	6,994
Year 3:	$	7,273

We have entered into a 36 month lease. In addition, we have leased 6,000 square feet of warehouse/assembly and office space for Solar Energy, Inc.’s operations. Located at 10330 Chedoak Ct., Suite 101, Jacksonville, FL 32218, our annual lease cost will be $45,600 and we have entered into a 36 month lease.

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining non-cancelable lease terms in excess of one year.

For the remaining six months of fiscal year ending July 31, 2010	$	59,618

Fiscal year ending July 31, 2011		106,728

Thereafter		87,288
Total	$	253,634

Rent expense for the three and six months ending January 31, 2010 was $32,750 and $ 65,696 compared to $31,496 and $63,292 for the three and six months ending January 31, 2009.

Agreements for business consulting

In January 2009 the Company entered into a consulting arrangement with a company for business consulting and other services, and issued 100,000 shares of common stock.

In February 2009 the Company entered into a consulting arrangement with a company for business consulting and other services, and issued 87,500 shares of common stock

In August 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services.

In August 2009 the Company issued 200,000 shares of common stock to a group engaged to provide business consulting and other services.

In September 2009 the Company issued 200,000 shares of common stock to a group engaged to provide international business consulting and other services.

In October 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services.

In October 2009 the Company issued 650,000 shares of common stock to a group engaged to provide international business consulting and other services.

Management services

The Company has employment agreements with its CEO, CFO, and consulting agreements with former Company officers.

The Company entered into a five year employment agreement with Brad Holt as CEO. The terms of the contract included an initial salary of $120,000 until specific performance measures are met, at which time the salary is to be increased to $220,000. On March 1, 2008 the salary was increased to the $220,000, annually. Other performance bonuses are available at the discretion of the board of directors. There was an 18 month severance if terminated early.

In December, 2008 Brad Holt resigned as CEO. The Company entered into a consulting agreement with Mr. Holt for a period of four years. As terms of the settlement, Holt received $20,000 in back compensation, and all his current shares are unrestricted, held in attorney escrow, and subject to a 50,000 share per month “leak out” provision.

The Company entered into a five year employment agreement with David Surette as President, and CFO. The terms of the contract included an initial salary of $160,000 effective January 15, 2008 until April 15, 2008, at which time the salary is to be increased to $220,000. Other performance bonuses were available at the discretion of the board of directors. There was an 18 month severance if terminated early. On September 3, 2008, the Company entered into a severance agreement with Mr. Surette. Mr. Surette received $36,000 in cash; $18,000 on September 20, 2008 and $3,000 per month, for six (6) months, beginning October 1, 2008. In addition, Mr. Surette returned 25,000 shares of common stock he was issued in the form of consideration during his tenure as Chief Financial Officer.

The Company has entered into a five year employment agreement with Michael Dodak as VP of Corporate Development. The terms of the contract include an initial salary of $120,000 until specific performance measures are met, at which time the salary is to be increased to $150,000. Per the agreement, Mr. Dodak elected to convert his contract to a consulting agreement whereby he was paid $10,000, monthly. The consulting agreement runs thru December, 2012. There is an 18 month severance if terminated early.

In August 2009 the agreement was amended as follows:

·	The Company has requested that Mr. Dodak become the “Director of Solar Park Development” and COO of the Company. His compensation increased to $15,416.66 per month.
·	Upon stepping down as COO of the Company his compensation will revert to the $10,000 per month.

Mr. Dodak will receive bonuses for achieving certain milestones in developing Solar Parks and new options in line with the other Company management.

On February 1, 2010, Mr.Dodak was appointed President of the company with a salary of $200,000 per year

The Company has entered into a four year employment agreement with David W. Fann as CEO. The terms of the contract include an initial salary of $150,000. The base salary will increase to $220,000 when the company receives a minimum of $1,000,000. This increase took place in July 2009. There is an 18 month severance if terminated early.

The Company has entered into a four year employment agreement with Gregory N. Bakeman as President and CFO. The terms of the contract include an initial salary $160,000. The base salary will increase to $220,000 when the company receives a minimum of $1,000,000. This increase took place in July 2009. There is an 18 month severance if terminated early.

In January, 2010, Mr. Bakeman’s salary was reduced to $180,000 per year.

In April 2009 the Company hired Dean Leischow as Executive Vice President of Sales and Marketing. Mr. Leischow will be paid a salary of $120,000 per year, and received 100,000 shares of S-8 stock in lieu of cash for the first 90 days. The stock was issued in July 2009 with a value of $120,000. The entire amount was expensed as salaries for the year ending July 31, 2009. On December 1, Mr. Leischow resigned and will provide consulting services going forward.

In February, 2010 the CEO, President, CFO and COO were reduced to half pay for an undetermined period of time.

Beginning October 1, 2009, SPI has an employment agreement with its Chief Executive Officer (“CEO”), with a base salary of $220,000 annually. For the first 90 days of employment or until the Company completes its spin off, the CEO will accrue monthly payroll. Payment for all accrued amounts shall be made upon completion of spin-off in either company stock or cash at the option of the CEO. Additionally, the CEO will receive options to purchase 200,000 shares of Solar Energy at an exercise price of $0.34 per share. The options will vest according to performance metrics which are yet to be determined. Additionally, the CEO will have the option to roll the Solar Energy options into a pro-rata share of SPI’s stock options immediately after a spin off of SPI.

11.	Related Party Transactions

As of January 31, 2010 the Company has obligations to related parties for loans and related services totaling $139,241 of which $103,222 was due December 31, 2009, but payment was deferred until a later date pending a capital raise, and accruing interest at 12% per annum.

In October, 2009 the Company received $125,000 as a deposit from a shareholder as a deposit for 10% interest in a future subsidiary company or shares of the Company at $.30 per share depending on future events.

12.	Subsequent Events

The Company has evaluated subsequent events through March 17, 2010 and has the following subsequent events to report, as referred to the “Going Concern” section:

In March, 2010 the Company signed a 3-year lease agreement, with option to purchase, with the Williamsburg County Development Corporation for the use of a building in Kingstree, SC. Approximately 6,000 sq. ft. of the building will be used for technical and dealer training of solar applicants. The remaining 230,000 sq. ft. of building space will be used as a distribution and light manufacturing facility. The annual lease rate for the building is $5.00 per year. If the Company creates 200 or more permanent jobs as a result of its activities in South Carolina, it will be able to purchase the building for $1.00 at the end of the 3-year lease term.

In February, 2010,.Solar Energy and the Industrial Technology Research Institute (ITRI) Taiwan announced a broad business and technical collaboration agreement to build, integrate, test and commercialize a series of new solar products and solutions.

On March 10, 2010, the Company completed a private equity offering (the “Offering”) of units (the “Units”) pursuant to securities purchase agreements (the “Purchase Agreements”) by and between the Company and various accredited investors. Pursuant to the Offering, the Company issued a total of 3,055,558 shares of common stock, $0.001 par value per share (the “Shares”) and warrants to purchase 3,055,558 shares of common stock (the “Warrants”) at an exercise price of $0.25 per share. The Warrants are exercisable on a cash or cashless basis for three years. The investors received, among other rights, full ratchet anti-dilution rights for lower priced issuances of securities. The total gross proceeds the Company received from this Offering were $550,000. The Shares and the Warrants were issued in accordance with Rule 506 under Regulation D and, as a result, may only be resold in accordance with Rule 144, which provides a minimum holding period of six months.

In addition, the Company compensated Sandgrain Securities Inc., as placement agent (the “Placement Agent”), for assisting in the sale of Units by paying them commissions in the amount of $57,000 and issuing the Placement Agent 244,445 Shares and Warrants to purchase 244,445 shares of the Company’s common stock.

In March 2010, the Company announced today it has initiated the first class of its solar technical school located in Jacksonville, Florida. The new school is funded by stimulus dollars provided to the Company by collaborating public partners. The specialized vocational courses offered at the Company's technical school are the core element of the Company's Renew the Nation initiative. Renew the Nation is a nationwide effort to restore the U.S. economy through the market adoption of solar at the state and local level. The classes will target members of the construction industry and related trades affected by the economic downturn in an effort to re-train and re-deploy their workforce into the solar industry. The eight week long class will provide attendees with the tools and the technical knowledge to become certified solar technicians.

In March 2010, Solar Energy, entered into a strategic supply agreement with AET (Alternate Energy Technologies, LLC), a U.S. manufacturer of residential and commercial solar water heating systems. Solar Energy will begin distributing AET's Eagle Sun™ and Morningstar™ product lines. Established in 1975, AET is a manufacturer of flat plate solar thermal collectors in the U.S... March 1, 2010, Michael Dodak was appointed as President of the "Company"). Mr. Dodak does not have any family relationship with any director, executive officer or person nominated or chosen by the Company to become a director or executive officer. Except as disclosed herein, Mr. Dodak has not entered into a transaction, nor is there any proposed transaction, between Mr. Dodak and the Company in which Mr. Dodak has received direct or indirect compensation in excess of $120,000. There is no material plan, contract or arrangement between the Company and Mr. Dodak nor has any agreement been amended or any grant or award been triggered as a result of Mr. Dodak accepting this position. However, the Company and Mr. Dodak have amended Mr. Dodak's employment agreement to provide that he will receive $7,500 per month in compensation.

Item 2. Management Discussion and Analysis of Financial Condition or Plan of Operation

This discussion should be read in conjunction with our consolidated financial statements included in this Report on Form 10-Q and the notes thereto, as well as the other sections of this Report on Form 10-Q, including “Certain Risks and Uncertainties” and “Description of Business” sections thereof. This discussion contains a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Quarterly Report. Our actual results may differ materially.

Limited Operating History

There is limited historical financial information about our Company upon which to base an evaluation of our future performance. Our company generated approximately $1,273,506 in revenues from operations for the quarter ended January 31, 2010. While we have experienced and anticipate future growth in revenues, we cannot guarantee that we will be successful in our business. We are subject to risks inherent in a developing enterprise, including; limited capital resources, possible delays or disruptions in establishing key vendor relationships and difficult financial markets remaining from the world-wide economic recession. that are in many cases out of our control. There is no assurance that future financing will be available to our Company on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

Company Description and Overview

Solar Energy also owns SolarEnergy.com, a domain name and digital property committed to driving consumer traffic to us, while serving as a platform for awareness of the benefits of solar and a source of business lead generation to Solar Energy’s channel partners.

The following table sets forth our statements of operations data for the three and six months ended January 31, 2010, and January 31, 2009.

Summary Income Statement

	For the Three Months Ending Jan 31, 2010			For the Three Months Ending Jan 31, 2010			For the Six Months Ending Jan 31, 2010			For the Six Months Ending Jan 31, 2009

Revenues, net	$	1,273,506		$	521,223		$	2,285,456		$	761,338
Gross profit (loss)		299,386			78,212			560,920			245,689
Selling, general and administrative expenses		1,286,618			660,683			2,494,996			1,689,872

Total operating expenses		1,286,618			660,683			2,494,996			1,689,872
Loss from operations		(987,232	)		582,471			(1,934,076	)		(1,444,183	) )
Other Income (Expense)		(17,515	)		(71,861	)		(63,967	)		(79,133	)
Loss from operations before income taxes		(1,004,747	)		(654,332	)		(1,998,043	)		(1,523,316	) )
Income tax provision		-			-			-			-
Net loss		(1,004,747	)		(654,332	)		(1,998,0430	)		(1,523,316	)
Loss attributable to Noncontrolling Interest		79,955						79,955
Loss attributable to Solar Energy Initiatives, Inc.	$	(924,792	)	$	(654,332	)	$	(1,918,088	)	$	(1,523,316	)

THREE MONTHS ENDED JANUARY 31, 2010 AND JANUARY 31, 2009

Results of Operations

For the three months ended January 31, 2010, we generated $1,273,506 in revenues from operations and we incurred a loss of $924,797 attributable to Solar Energy Initiatives, Inc , of which $ 321,608 was non-cash stock compensation including $6,040 attributable to the controlling interest in Solar Park Initiatives. Our operating expenses included significant legal, consulting and accounting expenses, as well as business development. We expect to continue to use cash in our operating activities as we ramp up operations and include greater levels of Inventory. We have financed our operations since inception primarily through private sales of securities. As of January 31, 2010, we had $152,966 in cash, and negative working capital of $(592,270).

Revenues

For the three months ended January 31, 2010, we had revenues of $1,273,506. compared to $521,223 for the three months ended January 31, 2009. Revenues for the three months ended January 31, 2010 reflect dealer training, a municipality project and sales of solar energy systems and equipment. For the three months ended January 31, 2009 revenues relate primarily to sales of solar energy systems and equipment.

Cost of sales and gross profit

For the three months ended January 31, 2010 our Cost of Goods Sold were $974,120 compared to $443,011for the three months ended January 31, 2009, resulting in a gross profit from operations of $299,386 (23.5%) compared to $78,212 (15%), respectively. The increase is a result of increased sales.

Selling, general and administrative

Selling, general and administrative (“S, G & A”) expenses for the three months ended January 31, 2010 were $1,286,618 compared with $660,683 for the same period ending January 31, 2009. Major changes in S, G & A expenses were;

●	Salaries and wages increased from $380,427 in 2010 compared to $168,333 in 2009 primarily related to additions in staff.
●	Travel and entertainment increased in to $55,421 in 2010 compared with $21,782 in 2009 primarily related to International procurement related activities
●	Legal, accounting and professional costs were $157,512 in 2010 compared with $38,088 in 2009 primarily related to financing activities, and general corporate matters.
●	Cash and stock based consulting and director’s costs increased to $727,255 in 2010 from $310,479 in 2009 resulting primarily of outside consulting firms compensated in stock.

Research & development

For the three months ended January 31, 2010, and for the three months ended January 31, 2009, we did not record research and development expenses.

Other income (expense)

For the three months ended January 31, 2010 interest expense was $15,367, due to interest related to, loans from shareholders, and note interest, compared with $71,861 for the same period ending January 31, 2009. Other expense for the three months ended January 31, 2010 were $2,148 compared to $0.0.

Net Loss

Our net loss attributable to Solar Energy Initiatives, Inc. was $924,792 for the three months ended January 31, 2010 compared with $654,332 for the period ending January 31, 2009. The net loss primarily reflects our expenses relating to business activities that have been incurred ahead of our ability to recognize material revenues from our business plan.

Loss from noncontrolling interest in Solar Park Initiatives, Inc was 79,955 for the three months ended January 31, 2010 and $0.0 for the period ending January 31, 2009.

SIX MONTHS ENDED JANUARY 31, 2010 AND JANUARY 31, 2009

Results of Operations

For the six months ended January 31, 2010, we generated $2,285,456 in revenues from operations and we incurred a loss of $1,918,088 attributable to Solar Energy Initiatives, Inc , of which $ 727,255 was non-cash stock compensation including $6,040 attributable to the controlling interest in Solar Park Indicatives. Our operating expenses included significant legal, consulting and accounting expenses, as well as business development. We expect to continue to use cash in our operating activities as we ramp up operations and include greater levels of Inventory. We have financed our operations since inception primarily through private sales of securities. As of January 31, 2010, we had $152.966 in cash, and negative working capital of $(592,270)

Revenues

For the six months ended January 31, 2010, we had revenues of $2,285,456 compared to $761,338 for the six months ended January 31, 2009. Revenues for this quarter reflect dealer training, a municipality project and sales of solar systems and equipment.

Cost of sales and gross profit

For the six months ended January 31, 2010 our Cost of Goods Sold were $1,724,536 compared to $515,649, resulting in a gross profit from operations of $560,920 (24.5%) compared to $245,689 (32.3%) for the period ending January 31, 2009.

Selling, general and administrative

Selling, general and administrative expenses for the six months ended January 31, 2010 were $2,494,996 compared with $1,689,872 for the same period ending January 31, 2009. Major changes in S, G & A expenses were;

●	Salaries and wages increased from $665,240 in 2010 compared to $262,254 in 2009 primarily related to additions in staff.
●	Travel and entertainment increased in to $130,866 in 2010 compared with $42,291 in 2009 primarily related to International procurement related activities
●	Legal, accounting and professional costs were $193,016 in 2010 compared with $171,688 in 2009 primarily related to financing activities, and general corporate matters.
●	Cash and stock based consulting and director’s costs increased to $727,255 in 2010 from $330,996 in 2009 resulting primarily of outside consulting firms compensated in stock.

Research & development

For the three months ended January 31, 2010, and for the three months ended January 31, 2009, we did not record research and development expenses.

Other income (expense)

For the six months ended January 31, 2010 interest expense was $61,819, due to interest related to, loans from shareholders, and note interest, compared with $79,776 for the same period ending January 31, 2009.

Net Loss

Our net loss attributable to Solar Energy Initiatives, Inc. was $1,918,088 for the six months ended January 31, 2010 compared with $1,523,316 for the period ending January 31, 2009. The net loss primarily reflects our expenses relating to business activities that have been incurred ahead of our ability to recognize material revenues from our business plan.

Loss from noncontrolling interest in Solar Park Initiatives, Inc was 79,955 for the six months ended January 31, 2010 and $0.0 for the period ending January 31, 2009.

Liquidity and Capital Resources

As of January 31, 2010, we had cash of $152,966 and working capital deficit of ($592,270), compared with $39,309 in cash and working capital, of ($1,115,468) as of January 31, 2009. During the quarter ended January 31, 2010, we funded our operations from beginning to generate revenues and private sales of equity securities. For the same period in 2009, we funded our operations from private sales of equity securities, and beginning to generate revenues.

For the six months ended January 31, 2010 we used $1,621,005 of cash in operations compared to $296,737 for the six months ended January 31, 2009. Investing activities used $4,030 of cash during the six months ended January 31, 2010 for equipment purchases, and $155,609 during the same 2009 period primarily for the purchase of the domain name. Financing activities for the six months ended January 31, 2010 provided $772,373 primarily from private placement proceeds compared to $325,000 during the six months ending January 31, 2009.

The cost of our photovoltaic and solar thermal products can be potentially influenced by availability of raw materials and supply and demand imbalances. We are uncertain of the extent to which these factors will affect our working capital in the near future. A significant increase in cost of materials that we cannot pass on to our customers could cause us to run out of cash more quickly than our projections indicate, requiring us to raise additional funds or curtail operations.

As we continue to of developing our business, or we will be required to raise additional financing to supplement cash flows. Unless we can attain sufficient levels of revenues, we will need to raise additional funds during the next twelve month period. We have raised $500,000 since the January 31, 2010 period end and may require approximately $500,000 of additional capital funding to allow us to continue the execution of our business plan through July 31, 2010. If we are not successful in raising the required capital, or begin one or more of the projects in our business pipeline, we will need to reduce the breadth of our business. Management has put into place cost control actions that will be continually evaluated and adjusted as the business matures to self sustaining operations.

As of now there exists an imbalance between supply of solar panels (which is high) and demand which is low. This has led to a significant reduction in the selling price for solar panels over the past year. We expect that additional supply of solar panels from various manufacturers will be available and the trend of reduced prices to continue. While this bodes well for the overall economics of the sale of solar to potential customers, increased competition and the reduction in revenue per project or less gross margin on each panel sold could cause our business plan cash flow projections to be understated necessitating additional capital.

Since inception, our operations have primarily been funded through private equity financing, and convertible debt. We expect to continue to seek additional funding through private or public equity and debt financing as our business expands, and potentially seek a larger funding round to quickly drive the business forward.

However, there can be no assurance that our plans discussed above will materialize and/or that we will be successful in funding our estimated cash shortfalls through additional debt or equity capital and/or any cash generated by our operations. These factors, among others, indicate that we may be unable to continue as a going concern for a reasonable period of time.

Significant Capital Expenditures

During the six months ended January 31, 2010, we acquired approximately $4,030 of business assets, and furniture and equipment for office purposes. We use these assets in our business operations. As we continue to grow it will be necessary to purchase additional equipment.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

Pursuant to Item 305(e) of Regulation S-K the Company, as a smaller reporting company, is not required to provide the information required by this item.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

As of January 31, 2010, we carried out an evaluation, under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in Internal Controls.

There was no change in our internal controls over financial reporting that has materially affected, or is reasonable likely to materially affect, our internal control over financial reporting during the quarter covered by this Report.

PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business. The Company is currently not aware of, nor has any knowledge of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse affect on our business, financial condition or operating results.

In December 2009, the Company filed for arbitration against David Smith regarding potential violations of his website purchase agreement and consulting agreement.

Item 1A. RISK FACTORS

Although not required to include risk factors as the Company is a Smaller Reporting Company, the Company is voluntarily providing risk factors. This investment has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this prospectus. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could decrease. This means you could lose all or a part of your investment.

We have a limited operating history, there is no certainty that we will ever generate revenue and achieve profitability.

We generated revenue of $1,273,506 for the quarter ended January 31, 2010. We have incurred significant losses from development and operations. As shown in our financial statements, as of the periods ended January 31, 2010 and July 31, 2009, we have incurred a cumulative net loss of $7,029,099, and $5,111,011 respectively from operations. We will continue to incur operating losses in the future, primarily due to the initiation and expansion of our operations. Negative cash flow from operations may also continue into future. Our ability to achieve profitability depends upon our ability to; continue to sell dealerships and technical training classes, significantly expand the solar component and system sell-through to our dealer network, convert opportunities to sell large municipal and commercial projects, and successfully begin development of one or more solar park(s).

We may be unable to manage our growth or implement our expansion strategy.

We may not be able to implement our proposed product and service offerings, develop an active dealer network base and markets, or implement the other features of our business strategy at the rate or to the extent presently planned. Our projected growth will place a significant strain on our administrative, operational and financial resources. If we are unable to successfully manage our future growth, establish and continue to upgrade our operating and financial control systems, recruit and hire necessary personnel or effectively manage unexpected expansion difficulties, our financial condition and results of operations could be materially and adversely affected.

Additional financing will be necessary for the implementation of our growth strategy.

We will require additional equity and/or debt financing to pursue our growth strategy. Given our limited operating history existing losses, and a difficult financial market, there can be no assurance that we will be successful in obtaining additional financing. Lack of additional funding could force us to curtail substantially our growth plans. Furthermore, the issuance by us of any additional securities pursuant to any future fundraising activities undertaken by us would dilute the ownership of existing shareholders and may reduce the price of our common stock.

Debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. Our failure to successfully obtain additional future funding may jeopardize our ability to continue our business and operations.

The loss of our current directors and executive officers or our inability to attract and retain the necessary personnel could have a material adverse effect upon our business, financial condition or results of operations.

Our success is heavily dependent on the continued active participation of our current directors and officers. Loss of the services of our directors and officers could have a material adverse effect upon our business, financial condition or results of operations. Further, our success and achievement of our growth plans depend on our ability to recruit, hire, train and retain other highly qualified technical and managerial personnel. Competition for qualified employees among companies in the technology industry is intense, and the loss of any of such persons, or an inability to attract, retain and motivate any additional highly skilled employees required for the expansion of our activities, could have a materially adverse effect on us. The inability on our part to attract and retain the necessary personnel and consultants and advisors could have a material adverse effect on our business, financial condition or results of operations. Finally, we need to identify and engage independent directors to join the board and serve on the Audit Committee, including one that qualifies as an “accounting expert” to meet the public company listing qualifications of Sarbanes-Oxley, section 301. The Company is currently searching for additional directors, including an accounting expert, which is required to be listed on the National Association of Securities Dealers Automated Quotations (NASDAQ) exchange or other primary stock exchange.

If there is a shortage of components and/or key components rise significantly in price that may constrain our revenue growth. The market for photovoltaic installations has slowed recently, the result of world-wide financial and economic problems. The introduction of significant production capacity, however, has continued increasing supply and reducing the cost of solar panels. If demand increases and supply contracts, the resulting likely price increase could adversely affect sales and profitability. Additionally, we may not have sufficient financial resources to take advantage of supply opportunities as they may arise.

During 2009, the capacity to produce solar modules continued, primarily from China, which in the face of the most severe, world-wide, economic downturn in nearly a century significantly reduced the price of solar panels. As demand for solar panels will likely increase with an economic recovery, demand and pricing for solar modules on a per watt basis could increase, potentially limiting access to solar modules and reducing our selling margins for panels.

Our dependence on a limited number of third party suppliers for components could prevent us from delivering our proposed products to our customers within required timeframes, which could result in order cancellations and substantial harm to our business.

We purchase our products using materials and components procured from a limited number of third-party suppliers. If we fail to establish or maintain our relationships with these suppliers, or to secure additional supply sources from other suppliers, we may be unable to provide our products or our products may be available only at a higher cost or after a long delay, which could prevent us from delivering our products to our customers within required timeframes, and we may experience order cancellations and our business may fail. We currently have supply agreements with suppliers to allow us to buy products at market rates and procure sufficient product quantities to assemble and sell our products on acceptable commercial terms. The failure of a supplier to supply materials and components in a timely manner, or to supply materials and components that meet our quality, quantity and cost requirements could impair our ability to purchase our products or increase their costs, particularly if we are unable to obtain substitute sources of these materials and components on a timely basis or on terms acceptable to us. In order to obtain required supplies, we may need to make large inventory purchases on short notice, and prior to having purchase orders or deposits from our customers for product using the full amount of silicon required to be purchased. We may not have sufficient financial resources to make these purchases, which may exacerbate supply shortages.

Our business depends on the implementation of our current and future agreements with foreign and domestic manufacturers, securing contracts with other suppliers and orders with customers and ensuring products to sell.

To date, we have entered into various supply agreements with solar panel suppliers. We intend to pursue other agreements with component and balance of system suppliers to attempt to manage the cost of materials and supply allocations. If we are unable to maintain our supply agreements, establish competitive additional supply sources or we are unable to develop adequate sales, we may be forced to cease operations.

Our operating results will be subject to fluctuations and are inherently unpredictable; if we fail to meet the expectations of securities analysts or investors, our stock price may decline significantly.

Our quarterly revenue and operating results will be difficult to predict from quarter to quarter. It is possible that our operating results in some quarters will be below market expectations. Our quarterly operating results will be affected by a number of factors, including:

	•		the average selling price of the solar products that we purchase including PV and Thermal systems;
	•		the availability, pricing and timeliness of delivery of third party sources products, components and systems, particularly solar panels and balance of systems components, including steel, necessary for solar power products to function;
	•		the rate and cost at which we are able to expand to meet customer demand, including costs and timing of adding personnel;
	•		the amount and timing of sales of our systems, especially medium and large-scale projects, which may individually cause severe fluctuations in our revenue;
	•		our ability to meet project completion schedules and the corresponding revenue impact under such contractual devises as percentage-of-completion method of recognizing revenue for projects which may apply;
	•		construction cost overruns, including those associated with the introduction of new products;
	•		incentives play a major role in the buying/decision making process for our potential customers, significant changes in regulation or incentives may adversely affect our business;
	•		the impact of seasonal variations in demand and/or revenue recognition linked to construction cycles and weather conditions;
	•		unplanned additional expenses such as manufacturing failures, defects or downtime;
	•		acquisition and investment related costs;
	•		unpredictable volume and timing of customer orders, some of which are not fixed by contract but vary on a purchase order basis;
	•		unpredictable sales cycle time lines inherent with new solutions and products;
	•		geopolitical turmoil within any of the countries in which we operate or sell products;
	•		foreign currency fluctuations, particularly in the Euro or the Chinese Yuan;
	•		the effect of currency hedging activities;
	•		our ability to establish and expand customer relationships;
	•		changes in our manufacturing costs;
	•		changes in the relative sales mix of our solar cells, solar panels and imaging detectors;
	•		the availability, pricing and timeliness of delivery of other products, such as inverters necessary for our solar power products to function;
	•		our ability to successfully procure and sell new or enhanced solar power products in a timely manner;
	•		the timing of new product or technology affiliations or agreements by our competitors and other developments in the competitive environment;
	•		the willingness of solar panel suppliers to continue product sales to us;
	•		increases or decreases in electric rates due to changes in fossil fuel prices or other factors; and
	•		labor shortages, expertise shortages, shipping and other factors causing business delays.

We plan to base our operating expenses in part on our expectations of future revenue, and a significant portion of our expenses will be relatively fixed in the short term. If revenue for a particular quarter is lower than we expect, we likely will be unable to proportionately reduce our operating expenses for that quarter, which would harm our operating results for that quarter. This may cause us to miss discussed future expectations, current analysts’ guidance or any future guidance announced by us. If we fail to meet or exceed analyst or investor expectations or our own future guidance, even by a small amount, our stock price could decline, perhaps substantially.

Existing regulations and policies and changes to these regulations and policies may present technical, regulatory and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products.

The market for electricity generation products is heavily influenced by foreign, U.S. federal, state and local government regulations and policies concerning the electric utility industry, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. In the U.S. and in a number of other countries, these regulations and policies are being modified and may continue to be modified. Customer purchases of, or further investment in the research and development of, alternative energy sources, including solar power technology, could be deterred by these regulations and policies, which could result in a significant reduction in the potential demand for the solar power products of Solar Energy Initiatives, Inc.. For example, without certain major incentive programs and or the regulatory mandated exception for solar power systems, utility customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility network. These fees could increase the cost to our customers of using our solar power products and make them less desirable, thereby harming our business, prospects, results of operations and financial condition.

We anticipate that our solar power products and their installation will be subject to oversight and regulation in accordance with national and local ordinances relating to building codes, safety, environmental protection, utility interconnection and metering and related matters. It is difficult to track the requirements of individual states and design equipment to comply with the varying standards. Any new government regulations or utility policies pertaining to our solar power products may result in significant additional expenses to us and our resellers and their customers and, as a result, could cause a significant reduction in demand for our solar power products.

The reduction or elimination of government economic incentives could prevent us from achieving sales and market share.

We believe that the near-term growth of the market for on-grid applications, where solar power is used to supplement a customer’s electricity purchased from the utility network or sold to a utility under tariff, depends in large part on the availability and size of government and economic incentives. Because a significant portion of our sales are expected to involve the on-grid market, the reduction or elimination of government and economic incentives may adversely affect the growth of this market or result in increased price competition, both of which could cause our revenue to decline.

Today, the cost of solar power exceeds retail electric rates in many locations. As a result, federal, state and local government bodies in many countries, most notably Germany, Japan, Spain, Italy, Portugal, South Korea and the United States, have provided incentives in the form of feed-in tariffs, rebates, tax credits and other incentives to end users, distributors, system integrators and manufacturers of solar power products to promote the use of solar energy in on-grid applications and to reduce dependency on other forms of energy. These government economic incentives could be reduced or eliminated altogether. For example, Germany has been a strong supporter of solar power products and systems and political changes in Germany could result in significant reductions or eliminations of incentives, including the reduction of feed-in tariffs more rapidly than required by current law. Some solar program incentives expire, decline over time, are limited in total funding or require renewal of authority. Net metering and other operational policies in California, Japan or other markets could limit the amount of solar power installed there. Reductions in, or eliminations or expirations of, governmental incentives could result in decreased demand for and lower revenue from our products. Changes in the level or structure of a renewable portfolio standard could also result in decreased demand for and lower revenue from our products.

Problems with product quality or product performance of the products we distribute could result in a decrease in customers and revenue, unexpected expenses and loss of market share.

The solar products we purchase are complex and must meet stringent quality requirements. Products this complex may contain undetected errors or defects, especially when first introduced. For example, solar panels may contain defects that are not detected until after they are shipped or are installed because we cannot test for all possible scenarios. These defects could cause us to, or may cause us to request that suppliers incur significant re-engineering costs, divert the attention of our personnel from product selling efforts and significantly affect our customer relations and business reputation. If we deliver solar panels with errors or defects, or if there is a perception that such solar panels contain errors or defects, our credibility and the market acceptance and sales of its solar power systems could be harmed.

The possibility of future product failures could cause us to incur substantial expense to repair or replace defective products. Furthermore, widespread product failures may damage our market reputation and reduce our market share and cause sales to decline. We may need to indemnify dealers in the network and customers in some circumstances against liability from defects in our solar products. A successful indemnification claim against us could require us to make significant damage payments, which would negatively affect our financial results.

Since the solar products we plan to purchase and sell cannot be tested for the duration of their standard multi-year warranty period, we may be subject to unexpected warranty expense; if we are subject to installation, warranty and product liability claims, such claims could adversely affect our business and results of operations.

The current standard product warranty for the solar products we intend to sell includes a warranty period (up to ten-years) for defects in material and workmanship and a warranty period (up to twenty five-years) for declines in power performance as well as a typically one-year warranty on the functionality of solar cells (for electricity producing solar products). Due to the long warranty period and even though we intend to pass through the warranty from the manufacturer, we may bear the risk of extensive warranty claims long after we have shipped product and recognized revenue. Any warranty claims that the manufacturer does not cover would cause us to increase the amount of warranty reserves and have a corresponding negative impact on our results. Although the manufacturers represent that they conduct accelerated testing of their solar cells, our solar panels have not and cannot be tested in an environment simulating the full warranty period. As a result of the foregoing, we may be subject to unexpected warranty expense, which in turn would harm our financial results.

Like other retailers, distributors and manufacturers of products that are used by consumers, we face an inherent risk of exposure to product liability claims in the event that our solar products cause or their use result in injury. Our business may be subject to warranty and product liability claims in the event that its solar power systems fail to perform as expected or if a failure of its solar power systems results, or is alleged to result, in bodily injury, property damage or other damages. Since our planned solar energy products are electricity and heat producing devices, it is possible that our products could result in injury, whether by product malfunctions, defects, improper installation or other causes. Moreover, we may not have adequate resources in the event of a successful claim against us. We have evaluated the potential risks we face and believe that we can obtain appropriate levels of insurance for product liability claims. We will rely on our general liability insurance to cover product liability claims and have not obtained separate product liability insurance. However, a successful warranty or product liability claim against us that is not covered by insurance or is in excess of our available insurance limits could require us to make significant payments of damages. In addition, quality issues can have various other ramifications, including delays in the recognition of revenue, loss of revenue, loss of future sales opportunities, increased costs associated with repairing or replacing products, and a negative impact on our goodwill and reputation, which could also adversely affect our business and operating results. Our business’ exposure to warranty and product liability claims is expected to increase significantly in connection with its planned expansion into the new home market.

Warranty and product liability claims may result from defects or quality issues in certain third party technology and components that we or our suppliers incorporate into their/our solar power systems, particularly solar cells and panels, over which we have no control. While our agreements with our suppliers would generally include warranties, such provisions may not fully compensate us for any loss associated with third-party claims caused by defects or quality issues in such products. In the event we seek recourse through warranties, we will also be dependent on the creditworthiness and continued existence of the suppliers to our business.

We anticipate that our current standard warranty will differ by geography and end-customer application and will include such instruments as one-, two- or five-year comprehensive parts and workmanship warranties, after which the customer may typically extend the period covered by its warranty for an additional fee. Due to the warranty period, our business bears the risk of extensive warranty claims long after it has completed a project and recognized revenues. Future product failures could cause our business to incur substantial expenses to repair or replace defective products. While our business generally passes through manufacturer warranties it receives from its suppliers to its customers, it is responsible for repairing or replacing any defective parts during its warranty period, often including those covered by manufacturers warranties. If the manufacturer disputes or otherwise fails to honor its warranty obligations, our business may be required to incur substantial costs before it is compensated, if at all, by the manufacturer. Furthermore, the ‘business’ warranties may exceed the period of any warranties from our suppliers covering components included in its systems, such as inverters.

The products we intend to distribute may not gain market acceptance, which would prevent us from achieving sales and market share.

The development of a successful market for the products we intend to distribute may be adversely affected by a number of factors, some of which are beyond our control, including:

	our failure to offer products that compete favorably against other solar power products or providers on the basis of cost, quality and performance;
	our failure to offer products that compete favorably against conventional energy sources and alternative distributed-generation technologies, such as wind, biomass and solar thermal, on the basis of cost, quality and performance;
	our failure to develop and maintain successful relationships with vendors, distributors, systems integrators and other resellers, as well as strategic partners.

If the products we intend to distribute fail to gain market acceptance, we will be unable to achieve sales and market share.

Technological changes in the solar power industry could render the products we intend to distribute uncompetitive or obsolete, which could prevent us from achieving market share and sales.

Our failure to seek new technologies and to be at the forefront of new product offerings could cause us to become uncompetitive promoting less competitive or obsolete systems, which could prevent us from achieving market share and sales. The solar power industry is rapidly evolving and highly competitive. We may need to invest significant financial resources to keep pace with technological advances in the solar power industry and to compete in the future and we may be unable to secure such financing. We believe that a variety of competing solar power technologies may be under development by many companies that could result in lower manufacturing costs or higher product performance than those products selected by us. These development efforts may render obsolete the products we have selected to offer, and other technologies may prove more advantageous for the commercialization of solar power products.

If solar power technology is not suitable for widespread adoption or sufficient demand for solar power products does not develop or takes longer to develop than we anticipate, we would be unable to achieve sales and market share.

The market for solar power products is emerging and rapidly evolving, and its future success is uncertain. If solar power technology proves unsuitable for widespread commercial deployment or if demand for solar power products fails to develop sufficiently, we would be unable to achieve sales and market share. In addition, demand for solar power products in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate. Many factors will influence the widespread adoption of solar power technology and demand for solar power products, including:

	cost-effectiveness of solar power technologies as compared with conventional and competitive alternative energy technologies;
	performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;
	success of alternative distributed generation technologies such as hydrogen fuel cells, wind turbines, bio-diesel generators and large-scale solar thermal technologies;
	fluctuations in economic and market conditions that impact the viability of conventional and competitive alternative energy sources;
	increases or decreases in the prices of oil, coal and natural gas;
	capital expenditures by customers, which tend to decrease when the domestic or foreign economies slow;
	continued deregulation of the electric power industry and broader energy industry; and
	availability and or effectiveness of government subsidies and incentives.

We face intense competition from other companies producing solar power, system integrators and other energy generation products. If we fail to compete effectively, we may be unable to increase our market share and sales.

The mainstream power generation market and related product sectors are well established and we are competing with power generation from more traditional process that can generate power at lower costs than most renewable or environmentally driven processes. Further, within the renewable power generation and technologies markets we face competition from other methods of producing renewable or environmentally positive power. Then, the solar power market itself is intensely competitive and rapidly evolving. Our competitors have established market positions more prominent than ours, and if we fail to attract and retain customers and establish a successful distribution network for our solar products, we may be unable to achieve sales and market share. There are a number of major multi-national corporations that produce solar power products, including; Suntech, Sunpower, FirstSolar, BP Solar, Kyocera, Sharp, GE, Mitsubishi, Solar World AG and Sanyo. Also established integrators are growing and consolidating, including groSolar, Sunwize, Sunenergy and Real Goods Solar and we expect that future competition will include new entrants to the solar power market. Further, many of our competitors are developing and are currently producing products based on new solar power technologies that may have costs similar to, or lower than, our projected costs.

Most of our competitors are substantially larger than we are, have longer operating histories and have substantially greater financial, technical, manufacturing and other resources than we do. Our competitors' greater sizes in some cases provides them with competitive advantages with respect to manufacturing costs due to their ability to allocate fixed costs across a greater volume of production and purchase raw materials at lower prices. They also have far greater name recognition, an established distribution network and an installed base of customers. In addition, many of our competitors have well-established relationships with current and potential resellers, which have extensive knowledge of our target markets. As a result, our competitors will be able to devote greater resources to the research, development, promotion and sale of their products and may be able to respond more quickly to evolving industry standards and changing customer requirements than we can.

We may not address successfully the problems encountered in connection with any potential future acquisitions.

We expect to consider future opportunities to acquire or make investments in other technologies, products and businesses that could enhance our capabilities, complement our products, or expand the breadth of our markets or customer base. We have limited experience in acquiring other businesses and technologies. Potential and completed acquisitions and strategic investments involve numerous risks, including:

	problems assimilating the purchased technologies, products or business operations;
	problems maintaining uniform standards, procedures, controls and policies;
	problems arising from non-performance of acquired entities or assets;
	problems arising from overvaluation or with securing the required financing to close and/or make the acquisition operational;

	unanticipated costs associated with an acquisition;
	diversion of management's attention from our core business;
	adverse effects on existing business relationships with suppliers and customers;
	risks associated with entering new markets in which we have no or limited prior experience;
	potential loss of key employees of acquired businesses; and
	increased legal and accounting costs as a result of the newly adopted rules and regulations related to the Sarbanes-Oxley Act of 2002 and other such regulation such as increased internal control and reporting requirements.

We are subject to corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.

. We are in the process of evaluating our control structure to help ensure that we will be able to comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of compliance with these laws, rules and regulations is expected to be substantial. We cannot assure you that we will be able to fully comply with these laws, rules and regulations that address corporate governance, internal control reporting and similar matters. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition and the value of our securities.

Because the markets in which we compete are highly competitive and many of our competitors have greater resources than us, we may not be able to compete successfully and we may lose or be unable to gain market share.

Our solar business competes with a large number of competitors in the solar power market, including integrators such as groSolar, Sunwize, Sunenergy and Real Goods Solar, and manufacturers that may also directly supply projects at costs we cannot compete with, including Suntech, BP Solar, FirstSolar, SolarWorld AG and others. In addition, alternative technologies such as thin film and concentrators, which may compete with our technology in certain applications, continue to make market penetration. We expect to face increased competition in the future. Further, many of our competitors are developing and are currently producing products based on new solar power technologies that may ultimately have costs similar to, or lower than, our projected costs.

Our solar power products and services compete against other power generation sources including conventional fossil fuels supplied by utilities, other alternative energy sources such as wind, biomass, concentrated solar power “CSP” and emerging distributed generation technologies such as micro-turbines, sterling engines and fuel cells. In the large-scale on-grid solar power systems market, we will face direct competition from a number of companies that manufacture, distribute, or install solar power systems. Our primary competitors in the United States include Arizona Public Service Company, BP Solar International, Inc., a subsidiary of BP p.l.c., Conergy Inc., Dome-Tech Group, Eastwood Energy, EI Solutions, Inc., Florida Power and Light, GE Energy, a subsidiary of General Electric Corporation, Global Solar Energy, Inc., a subsidiary of Solon, groSolar, Power-Fab, Real Goods Solar, Schott Solar, Inc., Solar Integrated Technologies, Inc., SPG Solar, Inc., Sun Edison LLC, Suntech, SunTechnics Installation & Services, Inc., Sunwize, Sunenergy, Thompson Technology Industries, Inc. and WorldWater & Power Corporation. Our primary competitors in Europe include BP Solar, Conergy (through its subsidiaries AET Alternative Energies Technique GmbH, SunTechnics Solartechnik GmbH and voltwerk AG), PV-Systemtechnik Gbr, SAG Solarstrom AG, Solon AG and Taufer Solar GmbH. Additionally, our business will occasionally compete with distributed generation equipment suppliers such as Caterpillar, Inc. and Cummins Inc. Other existing and potential competitors in the solar power market include universities and research institutions. We also expect that future competition will include new entrants to the solar power market offering new technological solutions. As we enter new markets and pursue additional applications for our products and services, we expect to face increased competition, which may result in price reductions, reduced margins or loss of market share.

Competition is intense, and many of our competitors have significantly greater access to financial, technical, manufacturing, marketing, management and other resources than we do. Many also have greater name recognition, a more established distribution network and a larger installed base of customers. In addition, many of our competitors have well-established relationships with our potential suppliers, resellers and their customers and have extensive knowledge of our target markets. As a result, these competitors may be able to devote greater resources to the research, development, promotion and sale of their products and respond more quickly to evolving industry standards and changing customer requirements than we will be able to. Consolidation or strategic alliances among such competitors may strengthen these advantages and may provide them greater access to customers or new technologies. To the extent that government funding for research and development grants, customer tax rebates and other programs that promote the use of solar and other renewable forms of energy are limited, we will compete for such funds, both directly and indirectly, with other renewable energy providers and their customers.

If we cannot compete successfully in the solar power industry, our operating results and financial condition will be adversely affected. Furthermore, we expect competition in the targeted markets to increase, which could result in lower prices or reduced demand for our product and service offerings and may have a material adverse effect on our business and results of operations.

The demand for products requiring significant initial capital expenditures such as our solar power products and services are affected by general economic conditions.

The United States and countries worldwide have recently experienced a period of declining economies and unprecedented turmoil in financial markets. A sustained economic recovery is uncertain. In particular, terrorist acts and similar events, continued unrest in the Middle East or war in general could contribute to a slowdown of the market demand for products that require significant initial capital expenditures, including demand for solar power systems and new residential and commercial buildings. In addition, increases in interest rates may increase financing costs to customers, which in turn may decrease demand for our solar power products. If an economic recovery is slowed as a result of the recent economic, political and social events, or if there are further terrorist attacks in the United States or elsewhere, we may experience decreases in the demand for our solar power products, which may harm our operating results.

We will rely primarily upon copyright and trade secret laws and contractual restrictions to protect our proprietary rights, and, if these rights are not sufficiently protected, our ability to compete and generate revenue could suffer.

We will seek to protect our proprietary supplier and operational processes, documentation and other written materials primarily under trade secret and copyright laws. We also typically require employees and consultants with access to our proprietary information to execute confidentiality agreements. The steps taken by us to protect our proprietary information may not be adequate to prevent misappropriation of our technology. In addition, our proprietary rights may not be adequately protected because:

	•		people may not be deterred from misappropriating our operational assets despite the existence of laws or contracts prohibiting it;
	•		policing unauthorized use of our intellectual property may be difficult, expensive and time-consuming, and we may be unable to determine the extent of any unauthorized use; and
	•		the laws of other countries in which we access and or market our solar cells, such as some countries in the Asia/Pacific region, may offer little or no protection for our proprietary technologies.

Unauthorized copying or other misappropriation of our proprietary assets could enable third parties to benefit from our property without paying us for doing so. Any inability to adequately protect our proprietary rights could harm our ability to compete, to generate revenue and to grow our business.

We rely on suppliers to comply with intellectual property, copy write, hazardous materials and processes and trade secrecy laws and regulations and, if such laws and regulations are not sufficiently followed, our business could suffer substantially.

We endeavor to comply with all law and regulation regarding intellectual property law manufacturing process law and regulation, however, in many cases it is our supplier that must comply with such regulations and laws. While we make efforts to ensure that products sourced from third parties comply with required regulation and law and that the operation of our suppliers do as well, our business could suffer if a supplier was, or suppliers were, found to be non compliant with regulation and law in our, our customers’ or our suppliers’ jurisdictions.

Compliance with environmental regulations can be expensive, and noncompliance with these regulations may result in adverse publicity and potentially significant monetary damages and fines for us.

We are required to comply with all foreign, U.S. federal, state and local laws and regulations regarding pollution control and protection of the environment. In addition, under some statutes and regulations, a government agency, or other parties, may seek recovery and response costs from operators of property where releases of hazardous substances have occurred or are ongoing, even if the operator was not responsible for such release or otherwise at fault. In the course of future business we may use, generate and discharge toxic, volatile and otherwise hazardous chemicals and wastes in our operations or related research and development and manufacturing activities. Any failure by us to control the use of or to restrict adequately the discharge of, hazardous substances could subject us to potentially significant monetary damages and fines or suspensions in our business operations. In addition, if more stringent laws and regulations are adopted in the future, the costs of compliance with these new laws and regulations could be substantial. If we fail to comply with present or future environmental laws and regulations we may be required to pay substantial fines, suspend production or cease operations.

There are restrictions on the transferability of the securities.

Until registered for resale, investors must bear the economic risk of an investment in the Shares for an indefinite period of time. Rule 144 promulgated under the Securities Act (“Rule 144”), which provides for an exemption from the registration requirements under the Securities Act under certain conditions, requires, among other conditions, a six month holding period prior to the resale (in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under the Securities Act and that the Company is current in its filings. There is no guarantee that we will continue to maintain our public filings.

If we violated certain securities laws, we may not now be able to privately offer our equity securities for sale.

Any offering of our equity securities in or from the United States must be registered with the SEC or be exempt from registration. If our prior offers and sales were not exempt from registration, it is likely that they would be deemed integrated with future offerings unless we do not offer equity securities for at least six months. In the event of such integration, we would only be permitted to offer and sell equity securities after we file one or more new registration statements with the SEC and the registration statements have become effective. The registration process is both expensive and can be expected to take at least several months and would substantially hinder our efforts to obtain funds.

If the Company uses its stock in acquisitions of other entities there may be substantial dilution at the time of a transaction.

If the price of our common stock used for an acquisition is less than the amount paid by our shareholders, substantial dilution may be experienced. Additional dilution may be experienced by the sale of additional shares of common stock or other securities, or if the Company’s shares are issued to purchase other entities assets.

Our common stock is subject to the “Penny Stock” rules of the SEC.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

●	that a broker or dealer approve a person's account for transactions in penny stocks; and the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

●

obtain financial information and investment experience objectives of the person; and make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

●	sets forth the basis on which the broker or dealer made the suitability determination; and
●	that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the Over-The-Counter Bulletin Board, , and must be current in their reports with the Securities and Exchange Commission, in order to maintain price quotation privileges on the OTC Bulletin Board. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. In addition, we may be unable to get re-listed on the OTC Bulletin Board, which may have an adverse material effect on our Company.

Our common stock may be adversely affected by limited trading volume and the market price may fluctuate significantly, which may negatively affect our stockholders’ ability to sell their shares.

While the trading time and average stock volumes have increased over time, there can be no assurance that an active trading market will be sustained. An absence of an active trading market can be expected to adversely affect our stockholders’ ability to sell their shares. Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price without regard to our operating performance. In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially. These fluctuations may also cause short sellers to enter the market from time to time in the belief that our share price will decline. We cannot predict whether the market for our shares will be stable or appreciate over time.

Because each of our executive officers may voluntarily terminate his employment with us at any time on at least 30 days prior written notice to us, we cannot be sure if any of them will maintain their position with us for the foreseeable future.

In the event any of our executive officers terminate their employment with us, we may not be able to find suitable replacements on similar terms, if at all.

Although we plan on maintaining commercial insurance to reduce some operating hazard risks, such insurance may not be available to us at economically feasible rates, if at all.

In the absence of suitable insurance, we may be exposed to claims and litigation which we will not be financially able to defend or we may be subject to judgments which may be for amounts greater than our ability to pay.

Anti-takeover provisions could make a third-party acquisition of us difficult which may adversely affect the market price and the voting and other rights of the holders of our common stock.

Certain provisions of the Delaware General Corporation Law may delay, discourage or prevent a change in control. The provisions may discourage bids for our common stock at a premium over the market price. Furthermore, the authorized but unissued shares of our common stock are available for future issuance by us without our stockholders' approval. These additional shares may be utilized for a variety of corporate purposes including but not limited to future public or direct offerings to raise additional capital, corporate acquisitions and employee incentive plans. The issuance of such shares may also be used to deter a potential takeover of us that may otherwise be beneficial to our stockholders. A takeover may be beneficial to stockholders because, among other reasons, a potential suitor may offer stockholders a premium for their shares above the then market price.

The existence of authorized but unissued and unreserved shares may enable the Board of Directors to issue shares to persons friendly to current management which would render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, and merger or otherwise and thereby protect the continuity of our management.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In August 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services.

In August 2009 the Company issued 200,000 shares of common stock to a group engaged to provide business consulting and other services.

In September 2009 the Company issued 200,000 shares of common stock to a group engaged to provide international business consulting and other services.

In October 2009 the Company issued 9,000 shares of stock each to five Dealers, as part of a dealer incentive program.

In October 2009 5,000 shares valued at $1,750 were issued as employee incentives.

In October 2009 the Company issued 100,000 shares of common stock to a group engaged to provide business consulting and other services.

In October 2009 the Company issued 650,000 shares of common stock to a group engaged to provide international business consulting and other services.

In January 2010 the Company issued 100,000 shares as commission valued at $22,000 and the entire amount expensed as commission expense for the period ending January 31, 2010.

In January 2010 the Company issued 25,000 shares as employee incentives valued at $11,000 and the entire amount expensed in the period ending January 31, 2010.

In January 2010 the Company issued 6,464 shares as compensation valued at $2,308 and the entire amount expensed to salaries for the period ending January 31, 2010.

In January 2010 the Company issued 4,000 shares to four dealers valued at $1,400 and the entire amount expensed for the period ending January 31, 2010.

All of the above offerings and sales were deemed to be exempt under rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of the Company or executive officers of the Company, and transfer was restricted by the Company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Furthermore, all of the above-referenced persons were provided with access to our Securities and Exchange Commission filings.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit Number		Description of Exhibit
3.1		Certificate of Incorporation.(1)
3.2		By-Laws. (1)
3.3		Certificate of Amendment dated August 2, 2006(1)
3.4		Certificate of Amendment dated February 2, 2007(1)
3.5		Certificate of Amendment to the Certificate of Incorporation (6)
3.6		Certificate of Amendment to the Certificate of Incorporation (8)
4.1		0784655 B.C. LTD Promissory Note with the Company.(2)
4.2		Amended Convertible Debenture Purchase and Sale Agreement between 0784655 B.C. LTD, Envortus and the Company. (2)
4.3		Agreement for distribution of solar panels between an Asian Solar Photovoltaic Manufacturer and the Company*(9)
4.4		Form of Warrant issued to the April and May 2009 Investors (10)
4.5		Form of Subscription Agreement entered into by the April and May 2009 Investors (10)
4.6		Form of Securities Purchase Agreement (11)
4.7		Form of Common Stock Purchase Warrant (11)
10.1		Employment Agreement by and between Brad Holt and the Company(4)
10.2		Employment Agreement by and between David Fann and the Company(4)
10.3		Employment Agreement by and between David Surette and the Company(4)
10.4		Employment Agreement by and between Michael Dodak and the Company(4)
10.5		Website Purchase Agreement by and among NP Capital Corp, SEI Acquisition, Inc., Solar Energy, Inc., David H. Smith Revocable Trust dated June 16, 1993 and David Smith (7)
31.1		Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.2		Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

* Portions of this exhibit have been redacted pursuant to a request for confidential treatment submitted to the Securities Exchange Commission.

(1) Incorporated by reference to the Form SB-2 Registration Statement filed with the Securities Exchange Commission on December 17, 2007.

(2) Incorporated by reference to the Form SB-2 Registration Statement filed with the Securities Exchange Commission on February 1, 2008.

(3) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities Exchange Commission on March 6, 2008.

(4) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities Exchange Commission on April 1, 2008.

(5) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities Exchange Commission on April 25, 2008.

(6) Incorporated by reference to the Form 8K Current Report filed with the Securities Exchange Commission on August 1, 2008.

(7) Incorporated by reference to the Form 8K Current Report filed with the Securities Exchange Commission on August 27, 2008.

(8) Incorporated by reference to the Form 8K Current Report filed with the Securities Exchange Commission on September 25, 2008.

(9) Incorporated by reference to the Form S-1 Registration Statement filed with the Securities Exchange Commission on May 21, 2008.

(10) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on May 22, 2009.

(11) Incorporated by reference to the Form 8-K Current Report filed with the Securities Exchange Commission on March 8, 2010.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	SOLAR ENERGY INITIATIVES, INC.

Dated: March 17, 2010	By:	/s/David Fann
		David Fann
		Chief Executive Officer
		(Principal Executive Officer)

Dated: March 17, 2010	By:	/s/ Gregory Bakeman
		Gregory Bakeman
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

Attached files

Solar Energy Initiatives, Inc. Reports

Also read