Helix Wind, Corp. - FORM 10-K/A

Attached files

file	filename
EX-32.1 - CERTIFICATION - Helix Wind, Corp.	helix_10ka-ex3201.htm
EX-31.2 - CERTIFICATION - Helix Wind, Corp.	helix_10ka-ex3102.htm
EX-31.1 - CERTIFICATION - Helix Wind, Corp.	helix_10ka-ex3101.htm
EX-32.2 - CERTIFICATION - Helix Wind, Corp.	helix_10ka-ex3202.htm
EX-3.4 - AMENDED AND RESTATED ARTICLES OF INCORPORATION - Helix Wind, Corp.	helix_10ka-2008art.htm
EX-2.2 - ARTICLES AND PLAN AND AGREEMENT OF MERGER - Helix Wind, Corp.	helix_10ka-articles.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Amendment No.1)

x ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2010

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File No. 000-52107

HELIX WIND, CORP.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	20-4069588 (I.R.S. Employer Identification No.)

13125 Danielson Street, Suite 101
Poway, California	92064
(Address of Principal Executive Offices)	(Zip Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of Each Class Common Stock, Par Value $0.0001	Name of Each Exchange on Which Registered None

Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

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 o

Indicate by 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer (Do not check if a smaller company) o	Smaller reporting company x

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

The aggregate market value of the shares of common stock held by non-affiliates of the issuer, based upon the closing price of the common stock as of the last business day of the registrant's most recently completed year end as reported on the OTC Bulletin Board ($0.0011 per share), was approximately $1,123,630. Shares of common stock held by each executive officer and director and by each person who owned 10% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The determination of who was a 10% stockholder and the number of shares held by such person is based on Schedule 13G filings with the Securities and Exchange Commission as of December 31, 2010.

As of July 26, 2011 , there were 1,750,000,000 shares of the issuer's common stock outstanding. The common stock is the issuer's only class of stock currently outstanding.

	TABLE OF CONTENTS	Page

	PART I

ITEM 1.	BUSINESS	1

ITEM 1A.	RISK FACTORS	4

ITEM 1B.	UNRESOLVED STAFF COMMENTS	10

ITEM 2.	PROPERTIES	10

ITEM 3.	LEGAL PROCEEDINGS	11

ITEM 4.	(REMOVED AND RESERVED)	12

	PART II

ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	12

ITEM 6.	SELECTED FINANCIAL DATA	13

ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	13

ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	25

ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	25

ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	25

ITEM 9A.	CONTROLS AND PROCEDURES	25

ITEM 9B.	OTHER INFORMATION	26

	PART III

ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	26

ITEM 11.	EXECUTIVE COMPENSATION	27

ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	31

ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR INDEPENDENCE	34

ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	35

	PART IV

ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	36

	SIGNATURES	38

	CONSOLIDATED FINANCIAL STATEMENTS	F-1

Explanatory Note

This Form 10-K/A is being filed as Amendment No. 1 to our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on March 31, 2011(“Original Annual Report”), in response to the SEC’s comments thereto, for the purpose of revising the following:

·	Item-9A Controls and Procedures to address disclosure required by Item 308 of Regulation S-K at December 31, 2010; and

·	Fair Value of Financial Instruments to address disclosure required by ASC 820 at December 31, 2010; and

Correction of an error reported in derivative liability in its financial statements for the year ended December 31, 2010. The Company had previously recorded an increase in its derivative liability and a charge to interest expense for potential shares outstanding if all common stock equivalents were converted that would be in excess of the Company’s authorized amount. These potential shares, however, were already accounted for in the derivative liability calculation. This restatement included revisions to the following notes thereto: Note 2-Basis of Presentation and Summary of Significant Accounting Policies, in Restatement and in Going Concern, Note 6-Derivative Liabilities and in the following Items: Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations, under Other income and expense, Net income, Going Concern and Liquidity and Capital Resources and Item 1A - Risk Factors, in the first paragraph of the first risk factor and the ninth risk factor.

Except for the foregoing amended disclosure, this Form 10-K/A has not been amended or updated to reflect events that occurred after March 31, 2011, the filing date of the Original Annual Report. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original Annual Report, including any amendments to those filings.

In this report, unless the context indicates otherwise, the terms "Helix Wind," "Company," "we," "us," and "our" refer to Helix Wind, Corp., a Nevada corporation, and its wholly-owned subsidiaries.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934 or the "Exchange Act." These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results.

In some cases, you can identify forward looking statements by terms such as "may," "intend," "might," "will," "should," "could," "would," "expect," "believe," "anticipate," "estimate," "predict," "potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management's current expectations and belief, which management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

	●	new competitors are likely to emerge and new technologies may further increase competition;

	●	our operating costs may increase beyond our current expectations and we may be unable to fully implement our current business plan;

	●	our ability to obtain future financing or funds when needed;

	●	our ability to successfully obtain a diverse customer base;

	●	our ability to protect our intellectual property through patents, trademarks, copyrights and confidentiality agreements;

	●	our ability to attract and retain a qualified employee base;

	●	our ability to respond to new developments in technology and new applications of existing technology before our competitors;

	●	acquisitions, business combinations, strategic partnerships, divestures, and other significant transactions may involve additional uncertainties; and

	●	our ability to maintain and execute a successful business strategy.

Other risks and uncertainties include such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the "SEC." You should consider carefully the statements under "Item 1A. Risk Factors" and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

PART I

ITEM 1. BUSINESS

General

The Company was incorporated under Nevada law on January 10, 2006 under the corporate name Terrapin Enterprises, Inc. On December 6, 2006, the Company merged its newly-formed, wholly-owned subsidiary, Black Sea Oil, Inc. into it and changed its corporate name to Black Sea Oil, Inc. pursuant to a Plan and Agreement of Merger dated December 6, 2006. Prior to the merger with Black Sea Oil, Inc., the Company was focused on developing and offering interactive educational enrichment media programming specifically designed for children ages 6 to 12 years of age. Since December 2006, the Company has decided to seek and investigate a business combination with a private entity whose business presents an opportunity for its shareholders.

On February 11, 2009, the Company (then called “Clearview Acquisitions, Inc.”) completed its acquisition of Helix Wind, Inc., a Nevada corporation (“Helix Wind”) which was incorporated in the State of Nevada on September 12, 2006, by merging Helix Wind with and into Helix Wind Acquisition Corp., a wholly-owned subsidiary of the Company. The Company then changed its name to our current name, “Helix Wind, Corp.” The Company’s principal offices are located at 13125 Danielson Street, Suite 101, Poway, CA 92064. The Company is engaged in the small wind turbine renewable energy business offering a paradigm breaking distributed power technology platform designed to produce electric energy from the wind. In 2010, the Company generated approximately $105,000 in revenues from sales of its vertical axis wind turbines. The Company intends to utilize two distinct distribution channels to market and sell its products: (i) direct sales to end users and certified distributors; and (ii) indirect or channel sales with certified distributors domestically and internationally.

Small Wind Turbine Business

The Company provides small wind turbines for residential, commercial and vertical market applications. Wind power is an abundant, renewable, emissions free energy source that can be utilized on large and small scales. The Company’s turbines offer a pollution free alternative to conventional energy sources.

The Company offers wind turbines in two sizes for electricity production. The S322 is rated at 2.0 kilowatts (kW) of power output while the S594 is rated at 4.5kW of power output. The power output rating is based upon the instantaneous power output of the units, which varies with wind speed that is converted into electricity. Both units are suitable for residential and commercial applications working as single unit installations or as an array arrangement of multiple units. The Company’s products are positioned as simple, inexpensive, and easy-to-assemble systems that work in a wide range of wind conditions. All wind turbines require wind to operate.

Vertical market applications the Company plans to offer, include turbines for liquid pumping for the petroleum industry, where injection pumping is required at off grid and remote locations, water pumping industry for off grid drinking water and agricultural applications in developing countries, Cell Tower installations, Digital billboards, and a host of others.

The Company’s business model is straightforward as it has substantially out-sourced its manufacturing functions to countries with labor cost advantages. Multiple vendors are intended to be utilized to minimize the risk of contractors copying full-scale designs and infringing upon the Company’s patents. The Company’s U.S. operations involve quality control, assembly, testing, and shipping (initial quality assurance and quality control will be done overseas during production and before shipment). The Company’s vendor manufacturers are expected to be ISO9000 certified. The Company intends to focus on processes that add greater value – design, development, and sales. The Company plans to maintain minimal inventory; systems will be assembled, tested, packed, and shipped as orders flow in.

The Company currently has insufficient capital and personnel to fulfill orders for its products and has had to severely curtail its operations beginning in February 2010. The Company is seeking additional capital to be able to ramp its operations back up, and is exploring other alternatives for its intellectual property and other assets. There can be no assurances that the Company will be able to obtain sufficient capital for its operations, or that there will be other alternatives for its intellectual property and other assets.

Small Wind Turbine Industry Overview

The U.S. market for small wind turbines has reached 100 MW of installed capacity, growing 15 percent in 2009, according to a report by the American Wind Energy Association.

The U.S. market now accounts for about half of the global small wind turbine market, according to the report. This growth is largely credited to federal and state incentives for the market growth. The 2009 American Recovery and Reinvestment Act (ARRA) expanded the federal Investment Tax Credit (ITC) for small wind turbines in 2009, allowing consumers to take 30% of the total cost of a small wind system as a tax credit. According to the report, the ITC was perhaps the most important factor in last year’s small wind turbine market growth.

The report found 9,800 units were sold in the U.S. in 2009, representing 20.3 MW of new capacity, bringing the total number of small wind turbines installed in the U.S. to approximately 100,000.

During the recession of 2009, $80 million of private equity was invested into small wind turbine manufacturing companies, boosting to over $250 million the total equity invested over the past five years. This investment helped manufacturers increase production, lower costs, meet sustained demand, and even acquire competitors, according to the report.

The most favorable markets exist in states where policies, regulations and incentives help lower the payback period. The leading domestic markets appeared to be in the Midwest last year, but the largest markets overall remain in the Northeast, upper Midwest and California. Generally speaking, states that offer small-wind consumer incentives at a level of $2 per Watt of capacity or more attract the strongest share of the market.

In addition to distributed power generation for residences and businesses, the Company’s turbines are also ideal for applications in the following markets:

Cell Phone Towers

Grid-tied and off-grid cell phone towers, particularly in developing nations, often utilize diesel generators and batteries for primary and backup power. The Company’s turbines could be mounted in balanced pairs to generate primary and backup electricity for this application. The Company is pursuing cell tower mounting systems with partners in Argentina, India, Canada and the U.S. As of the date of this report, the Company has not installed any turbines on cell towers.

Liquids Pumping (water and petroleum)

Water Pumping: The Company’s turbines generate high amounts of torque, even at low wind speeds, and can be utilized to drive pneumatic pumps for field applications. Developing nations in South America and Sub-Saharan Africa are predominately comprised of agrarian, off grid economies. The Company’s turbines are ideally suited for water pumping installations in off-grid rural areas.

Injection Pumping: The petroleum industry increasingly finds itself operating in ever more remote and harsh environments; however, many manufacturing processes require reliable precision injection pumps at various stages. The Company turbines can be utilized in conjunction with compressor technology to reliably serve this function.

One of the key factors which we expect to fuel the increased adoption of renewable energy sources such as wind power is the increasing concerns of global warming and the growing pressure on governments to curb it. Changing public opinion in the face of global warming and the resulting legislative mandates combined with falling net purchase costs of small wind systems and increasing utility supplied fossil fuel energy costs drive the growth of the small scale power generation segment. Federal and state policies, especially rebate programs and property tax exemptions, are boosting demand. Improvements in interconnection policies, net metering policies, local zoning statutes, and permitting processes will also play a growing role in increasing the demand for small scale power generation sources. Concerns about climate change and energy security are giving further impetus to increasing the demand in this market.

As of the date of this report, the Company has not installed any turbines which are being used in connection with pumping.

Digital Signage

Another rapidly growing small wind market is the billboard market and digital signage markets. Billboards across the country can be easily powered by wind as they exist in an analogue format today while making the transition to digital sign billboards and displays over time.

Sports Arenas

Late in 2010 the Company had begun to see a market trend in the sports arena space. The growing need for large venues to begin to take their first vital steps towards energy independence combined with the iconic nature of the Company’s small-wind products would tend to be a good fit.

Governmental Regulation

Each state is responsible for regulating the sale, installation and interconnection of alternative energy within their state. Currently there is no Federal-level regulation that specifically controls the sale, distribution and installation of small wind turbines beyond general small business regulations. The Public Utility Regulatory Policies Act of 1978, or PURPA, requires utilities to interconnect and purchase energy from small wind systems. Individual utilities are permitted to regulate that process.

There is a Federal tax credit available to installers of small wind systems. Owners of small wind systems with 100 kW of capacity and less can receive a credit for 30% of the total installed cost of the system, not to exceed $4,000. The credit was available beginning October 3, 2008, the day the bill was signed into law, through December 31, 2016. For turbines used for homes the credit is additionally limited to the lesser of $4,000 or $1,000 per kW of capacity.

Competition

The Company competes with all energy suppliers and manufacturers of energy producing equipment. The Company directly competes with manufacturers and suppliers of other vertical axis wind turbine (“VAWT”) systems, such as WePower Sustainable Energy Solutions, Windside Production Ltd., Mariah Power and OregonWind Inc., as well as indirectly with traditional horizontal axis wind turbine (“HAWT”) wind turbines. To a lesser extent, the Company competes with providers of solar-thermal and solar-photovoltaic energy production. We believe the Company’s aesthetic design, comparable generation capacity and lower production cost lend the Company’s competitive advantages over both traditional horizontal axis wind propeller designs and emerging technologies. One of the main distinguishing advantages is the ability to remotely monitor the wind turbine through our proprietary Wind Turbine Monitoring System (WTMS). The WTMS monitors dozens of variables including wind speed, wind gusts, temperature, generator output and via algorithms, other turbine functions. The Company’s WTMS can enable a turbine owner to remotely monitor the functionality of the turbine from any computer’s web browser any time and from any location. The monitoring system will also allow the Company to develop its own database of wind speed data and performance metrics, facilitate customer demand side management and enable predictive generation modeling. One current disadvantage for the Company is that several competitors have longer operating histories and significantly more financial resources.

Intellectual Property

The Company owns all rights, title and interest in two currently pending U.S. patent applications, five pending foreign applications (China, India, New Zealand, Australia, and Europe), and one patent issued in Nigeria. The Company also owns two U.S. federal trademark registrations.

The patent applications (and the Nigerian patent) broadly cover the same technology, namely vertical axis wind turbines with segmented Savonius rotors. The Savonius rotor is assembled by interlocking several relatively small and easily manageable individual blade segments. This unique segmented design has several advantages over traditional vertical axis wind turbine designs, including ease of manufacturing, ease of assembly, and suitability for residential use.

On January 18, 2011, a Notice of Allowance was awarded to one of the U.S. patent applications, serial no. 11/705,844, filed on February 13, 2007 (the '844 application). The Company expects this application to issue in a matter of weeks. All of the foreign patent applications claim priority to this application and none of these patent applications have been examined to date. The term of any patent issued in a foreign country depends on the law of that country, but in general is 20 years from the filing date.

On February 1, 2011, a continuation patent application was filed in the United States based on the '844 application, in order to preserve the ability to pursue subject matter that may not have been captured during prosecution of the '844 application.

The Company owns U.S. federal trademark registration no. 3,524,780 for "HELIX WIND," registered on October 28, 2008. The registration is due for renewal on October 28, 2018. Helix Wind also owns U.S. federal trademark registration no. 3,506,184 for "E2 ENERGY (R)EVOLUTION," registered on September 23, 2008. The registration is due for renewal on September 23, 2018. Both of these U.S. federal trademark registrations are in International Class 007 for use in connection with"wind turbines and accessories for wind turbines."

Research and Development

Our research and development initiatives have been directed at improving the efficiency and reliability of our wind turbines, the development and completion of the Wind Turbine Monitoring System (WTMS), partnering with our inverter manufacturer to improve on the inverter’s interaction with the turbine generator and development of other power electronics. During 2010, our research, development and engineering expenses were approximately $278,000, with approximately $124,000 related to product development and testing and the balance of approximately $154,000 related to stock based compensation, a non-cash expense, for this group. Future research and development will focus on the continued improvement of our current wind turbines’ performance, enhancing the WTMS with new functionality and developing proprietary power electronics. In addition we will focus on operating process quality improvements within our manufacturing facilities and reviewing ways to reduce product cost of goods.

Employees

As of the date of this report, we have 3 full-time employees, no part-time employees and 2 independent contractors. The Company had a reduction in force in February 2010 to reduce its cost until it is able to close a capital raise to sustain the operation and build its infrastructure. The Company plans to increase the number of employees provided it can raise additional capital. We also retain a limited number of independent contractors to perform projects. To implement our business strategy, we expect, over time, continued growth in our employee and infrastructure requirements, particularly as we expand our engineering, sales and marketing capacities going forward.

Available Information

A copy of our annual report on Form 10-K for our fiscal year ended December 31, 2010 will be furnished without charge upon receipt of a written request identifying the person so requesting a report as a stockholder of the Company at such date to any person who was a beneficial owner of our common stock on the record date. Requests should be directed to the Corporate Secretary at the address on the cover page to this report. Our annual and quarterly reports, along with all other reports and amendments filed with or furnished to the SEC are publicly available free of charge on the Investor section of our website at www.helixwind.com as soon as reasonably practicable after these materials are filed with or furnished to the SEC. The information on our website is not part of this or any other report we file with, or furnish to the SEC. The SEC also maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov.

ITEM 1A. RISK FACTORS

This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See "Forward-Looking Statements," above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially.

Risks Related To Our Financial Condition and Our Business

Our auditors have expressed substantial doubt amount our ability to continue as a “going concern”. Accordingly, there is significant doubt about our ability to continue as a going concern.

Our business began recording minimal revenues in 2009 and we may never become profitable. As of December 31, 2010, we had an accumulated deficit of $43,990,692 and a negative working capital of $2,405,360 excluding the derivative liability of $4,120,046. A significant amount of capital will be necessary to advance the development of our products to the point at which they will become commercially viable and these conditions raise substantial doubt about our ability to continue as a going concern.

If we continue incurring losses and fail to achieve profitability, we may have to cease our operations. Our financial condition raises substantial doubt that we will be able to continue as a “going-concern”, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements as of December 31, 2010. These financial statements do not include any adjustments that might result from the uncertainty as to whether we will continue as a “going-concern”. Our ability to continue as a “going-concern” is dependent upon our generating cash flow sufficient to fund operations. Our business plans may not be successful in addressing these issues. If we cannot continue as a “going-concern”, you may lose your entire investment in us.

We do not have sufficient cash on hand. If we do not generate sufficient revenues from sales among other factors, we will be unable to continue our operations.

We estimate that within the next 12 months we will need substantial cash and liquidity for operations, and we do not have sufficient cash on hand to meet this requirement. Although we are seeking additional sources of debt or equity financings, there can be no assurances that we will be able to obtain any additional financing. We recognize that if we are unable to generate sufficient revenues or obtain debt or equity financing, we will not be able to earn profits and may not be able to continue operations.

There is limited history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to continue to generate enough operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

Additionally, as described in more detail below, the significant dilution to the current number of outstanding shares of Company common stock, which is expected to occur from the conversion of the Company’s currently outstanding convertible promissory notes and warrants makes obtaining additional financing very difficult.

We have numerous lawsuits pending against the Company, several of which have resulted in judgments against the Company, and insufficient capital resources to retain legal counsel to respond to the lawsuits; we expect additional lawsuits to occur from unpaid creditors of the Company.

As described in Part II, Item 1 “Legal Proceedings”, the Company has numerous lawsuits pending against it, several of which have resulted in judgments against the Company for substantial sums of money, and reasonably expects additional lawsuits to be filed by creditors with outstanding unsatisfied debt obligations owed to them by the Company. The Company insufficient capital to retain legal counsel to defend itself in these actions and/or may not have any defense against the legal actions claiming the Company owes the creditor for services provided. Additionally, the Company does not have sufficient capital to pay the judgments which have been awarded against the Company The default judgments which have been awarded against the Company, and additional judgments in any of these pending lawsuits or future lawsuits, could result in the seizure of all remaining assets of the Company which would have a material adverse effect on the Company. If the judgments remain unpaid, the Company may be forced to seek the protection afforded by Chapter 7 of the federal bankruptcy laws, or seek the protection of state insolvency laws, which would have a material adverse effect on the Company and its shareholders.

We have a limited operating history and if we are not successful in continuing to grow the business, then we may have to scale back or even cease ongoing business operations.

We have a very limited history of revenues from operations (approximately $1,300,000 from inception to date). We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to sign customer contracts or operate on a profitable basis. As we are in the early production stage, potential investors should be aware of the difficulties normally encountered in commercializing the product. If the business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in us.

If we are unable to obtain additional funding, business operations will be harmed and if we do obtain additional financing then existing shareholders may suffer substantial dilution.

We anticipate that we will require substantial cash and liquidity, which we do not have at this time, to fund continued operations for the next twelve months, depending on revenue, if any, from operations. Additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. We currently do not have any contracts or commitments for additional financing. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail and possibly cease operations. Any additional equity financing may involve substantial dilution to then existing shareholders.

We have significant debt obligations, and if we fail to restructure or repay or outstanding indebtedness, the lenders may take actions that would have a material adverse impact on the Company.

The Company has significant outstanding indebtedness. As of December 31, 2010, the Company had a gross aggregate outstanding principal balance of $3,199,919 in convertible debt obligations. If the lenders under these convertible notes do not convert their notes to common stock and demand repayment, the Company does not have sufficient cash to pay its debt obligations. Our failure to repay this debt could result in events of default under the convertible notes which provide the lenders with certain rights, including the right to institute an involuntary bankruptcy proceeding against the Company. If the debt remains unpaid past the due dates and the lenders choose to exercise their rights of default, the Company may be forced to seek the protection afforded by Chapter 7 of the federal bankruptcy laws which would have a material adverse effect on the Company. The Company’s default on its debt obligations or potential need to seek protection under the federal bankruptcy laws raise substantial doubt about our ability to continue as a going concern.

Because we are small and have insufficient capital, we may have to limit business activity which may result in a loss of your investment.

Because we are small and do not have much capital, we must limit our business activity. As such we may not be able to complete the sales and marketing efforts required to drive our sales. In that event, if we cannot generate revenues, you will lose your investment.

If we are unable to continue to retain the services of Messrs. James Tilton and Kevin Claudio, or if we are unable to successfully recruit qualified Officers and Board members, management and company personnel having experience in the small wind turbine industry, we may not be able to continue operations.

Our success depends to a significant extent upon the continued services of Mr. James Tilton, Chief Operating Officer and Mr. Kevin Claudio, Chief Financial Officer. The loss of the services of Mr. Tilton and Mr. Claudio could have a material adverse effect on our strategy and prospective business. These individuals are committed to devoting substantially all of their time and energy to us. This employee could leave us with little or no prior notice. We do not have “key person” life insurance policies covering any of our employees. Additionally, there are a limited number of qualified technical personnel with significant experience in the design, development, manufacture, and sale of our wind turbines, and we may face challenges hiring and retaining these types of employees.

In order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified management and company personnel with experience in the small wind turbine business. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain new and existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms. Additionally, the Company has made efforts to identify and recruit additional members for its board of directors. However, to date, the Company has been unable to retain any additional board members, and the board members it has identified have expressed a reluctance to join the board until the Company is better capitalized.

We are a new entrant into the small wind turbine industry without profitable operating history.

As of December 31, 2010, we had an accumulated deficit of $43,990,692. We expect to derive our future revenues from sales of our systems, however, the realization of these revenues is highly uncertain. We continue to devote substantial resources to expand our sales and marketing activities, further increase manufacturing capacity, and expand our research and development activities. As a result, we expect that our operating losses will increase and that we may incur operating losses for the foreseeable future

If we are unable to successfully achieve broad market acceptance of our systems, we may not be able to generate enough revenues in the future to achieve or sustain profitability.

We are dependent on the successful commercialization of our systems. The market for small wind turbines is at an early stage of development and unproven. The technology may not gain adequate commercial acceptance or success for our business plan to succeed.

If we cannot establish and maintain relationships with distributors, we may not be able to increase revenues.

In order to increase our revenues and successfully commercialize our systems, we must establish and maintain relationships with our existing and potential distributors. A reduction, delay or cancellation of orders from one or more significant distributors could significantly reduce our revenues and could damage our reputation among our current and potential customers. We had previously signed 33 distribution agreements throughout the United States and international locations. The agreements have no termination penalties and not all of the distributors are currently active.

We were recently sued by one of our distributors and may face additional lawsuits in the future.

We were recently named in a lawsuit by one of our distributors for claims which include misrepresentation, breach of contact, breach of warranties and unfair practices under consumer protection statutes relating to our products and performance under the distribution agreement. While we believe we have defenses to these claims, there is a potential that the claims could be decided against us, which could result on our obligation to pay damages to the distributor, which would have an adverse effect on our financial condition. Additionally, we could face similar lawsuits from distributors or customers in the future.

If we can not assemble a large number of our systems, we may not meet anticipated market demand or we may not meet our product commercialization schedule.

To be successful, we will have to assemble our systems in large quantities at acceptable costs while preserving high product quality and reliability. If we cannot maintain high product quality on a large scale, our business will be adversely affected. We may encounter difficulties in scaling up production of our systems, including problems with the supply of key components, even if we are successful in developing our assembly capability, we do not know whether we will do so in time to meet our product commercialization schedule or satisfy the requirements of our customers. In addition, product enhancements need to be implemented to various components of the platform to provide better overall quality and uptime in high wind regimes. The system is now rated to support 100 mph sustained winds. The implementation of the enhancements to our system may also delay significant production by requiring additional manufacturing changes and technical support to facilitate the manufacturing process.

If we are unable to raise sufficient capital, we may not be able to pay our key suppliers.

Our ability to pay key suppliers on time will allow us to effectively manage our business. Currently we have a large outstanding liability with our product manufacturer that is inhibiting us from receiving additional units at this time. In addition, we have other large outstanding accounts payable with key suppliers that may inhibit the Company from receiving system product in the future.

If we experience quality control problems or supplier shortages from component suppliers, our revenues and profit margins may suffer.

Our dependence on third-party suppliers for components of our systems involves several risks, including limited control over pricing, availability of materials, quality and delivery schedules. Any quality control problems or interruptions in supply with respect to one or more components or increases in component costs could materially adversely affect our customer relationships, revenues and profit margins.

International expansion will subject us to risks associated with international operations that could increase our costs and decrease our profit margins.

International operations are subject to several inherent risks that could increase our costs and decrease our profit margins including:

- reduced protection of intellectual property rights;

- changes in foreign currency exchange rates;

- changes in a specific country’s economic conditions;

- trade protective measures and import or export requirements or other restrictive actions by foreign governments; and

- changes in tax laws.

If we cannot effectively manage our internal growth, our business prospects, revenues and profit margins may suffer.

If we fail to effectively manage our internal growth in a manner that minimizes strains on our resources, we could experience disruptions in our operations and ultimately be unable to generate revenues or profits. We expect that we will need to significantly expand our operations to successfully implement our business strategy. As we add marketing, sales and build our infrastructure, we expect that our operating expenses and capital requirements will increase. To effectively manage our growth, we must continue to expend funds to improve our operational, financial and management controls, and our reporting systems and procedures. In addition, we must effectively expand, train and manage our employee base. If we fail in our efforts to manage our internal growth, our prospects, revenue and profit margins may suffer.

Our technology competes against other small wind turbine technologies. Competition in our market may result in pricing pressures, reduced margins or the inability of our systems to achieve market acceptance.

We compete against several companies seeking to address the small wind turbine market. We may be unable to compete successfully against our current and potential competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance. The current level of market penetration for small wind turbines is relatively low and as the market increases, we expect competition to grow significantly. Our competition may have significantly more capital than we do and as a result, they may be able to devote greater resources to take advantage of acquisition or other opportunities more readily.

Our inability to protect our patents and proprietary rights in the United States and foreign countries could materially adversely affect our business prospects and competitive position.

Our success depends on our ability to obtain and maintain patent and other proprietary-right protection for our technology and systems in the United Stated and other countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from using our proprietary rights.

If we cannot effectively increase and enhance our sales and marketing capabilities, we may not be able to increase our revenues.

We need to further develop our sales and marketing capabilities to support our commercialization efforts. If we fail to increase and enhance our marketing and sales force, we may not be able to enter new or existing markets. Failure to recruit, train and retain new sales personnel, or the inability of our new sales personnel to effectively market and sell our systems, could impair our ability to gain market acceptance of our systems.

If we encounter unforeseen problems with our current technology offering, it may inhibit our sales and early adoption of our product.

We continue to improve on the products performance capabilities, but any unforeseen problems relating to the units operating effectively in the field could have a negative impact on adoption, future shipments and our operating results.

We are to establish and maintain required disclosure controls and procedures and internal controls over financial reporting and to meet the public reporting and the financial requirements for our business.

Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because we have limited resources, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures. In addition, the attestation process by our independent registered public accounting firm is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accounting firm. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, or our independent registered public accounting firm is unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted.

Risks Related to Common Stock

There is a significant risk of our common shareholders being diluted as a result of our outstanding convertible securities.

We have 1,750,000,000 shares of common stock issued and outstanding as of the date of this report, which is all of the shares which are authorized under our charter documents. We also have outstanding a gross aggregate principal balance of $3,199,919 of Convertible Notes as of December 31, 2010 which may be converted into shares of common stock at the conversion rate as provided in the convertible notes. Because the conversion rate under the Convertible Notes is at a discounted price from the trading price of the Company’s common stock, and the low trading price of the Company’s common stock, any additional conversions of these Convertible Notes would result in the issuance of a significant amount of additional shares of common stock which will dilute the ownership interest of our shareholders. The conversion of these Convertible Notes, exercise of warrants and new stock issued during the year resulted in an increase in the number of the Company’s issued and outstanding shares of common stock from 39,256,550 as of December 31, 2009 to 1,021,482,054 shares issued and outstanding as of December 31, 2010 to 1,750,000,000 shares issued and outstanding as of the date of this report. In addition, we recently completed financings described in this report with St. George Investments, LLC pursuant to which we issued a convertible note and warrants which, if exercised, would result in a significant amount of additional shares of common stock outstanding. Further, we anticipate the need to raise additional capital which would also result in the issuance of additional shares of common stock and/or securities convertible into our common stock. We also have outstanding warrants to purchase common stock the exercise of which could potentially result in the Company issuing a significant number of additional shares of common stock. The Company may seek shareholder approval to amend its articles of incorporation to increase the number of authorized shares of common stock, and if amended, continue to issue a significant number of additional shares of common stock. Accordingly, a common shareholder has a significant risk of having its interest in our Company being significantly diluted.

The large number of shares eligible for immediate and future sales may depress the price of our stock.

Our Articles of Incorporation authorize the issuance of 1,750,000,000 shares of common stock, $0.0001 par value per share and 5,000,000 shares of preferred stock, $0.0001 par value per share. As discussed above, we had 1,750,000,000 shares of common stock outstanding as of the date of this report, and the Company has contractual obligations to issue a significant amount of additional shares issuable upon exercise and conversion of our outstanding warrants, stock options and convertible notes.

Because we have exhausted all of our authorized shares of common stock, we may amend our articles of incorporation to authorize the issuance of additional shares for a variety of reasons which would have a dilutive effect on our shareholders and on your investment, resulting in reduced ownership in our company and decreased voting power, or may result in a change of control.

The Company recently entered into financing documents with St. George Investments, LLC (see Item 7 below) pursuant to which the Company agreed to seek shareholder approval to amend its articles of incorporation to increase the number of authorized shares of common stock to 5,000,000,000. The amendment of our articles of incorporation to create additional shares of common stock and the issuance of any such shares may result in a reduction of the book value or market price of the outstanding shares of our common stock. If we do issue any such additional shares, such issuance also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change of control of the company. The Company believes it will be difficult or impossible to raise additional funding without amending its Articles of Incorporation to increase its authorized shares.

Additional financings may dilute the holdings of our current shareholders.

In order to provide capital for the operation of the business, we may enter into additional financing arrangements. These arrangements may involve the issuance of new shares of common stock, preferred stock that is convertible into common stock, debt securities that are convertible into common stock or warrants for the purchase of common stock. Any of these items could result in a material increase in the number of shares of common stock outstanding, which would in turn result in a dilution of the ownership interests of existing common shareholders. In addition, these new securities could contain provisions, such as priorities on distributions and voting rights, which could affect the value of our existing common stock.

There is currently a limited public market for our common stock. Failure to develop or maintain a trading market could negatively affect its value and make it difficult or impossible for you to sell your shares.

There has been a limited public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.

“Penny Stock” rules may make buying or selling our common stock difficult.

If the market price for our common stock is below $5.00 per share, trading in our common stock may be subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules would require that any broker-dealer that would recommend our common stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations would require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market price and liquidity of our common stock.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

The Company maintains its principal office at 13125 Danielson Street, Suite 101, Poway, CA 92064, pursuant to a Revocable License Agreement entered into effective April 19, 2010, basic monthly rent is $3,230 per month. Helix Wind’s current office space consists of approximately 3,400 square feet and is believed to be suitable and adequate to meet current business requirements. The lease term is month-to-month through May 31, 2011. The Company will negotiate with the landlord as appropriate upon expiration of the license agreement.

The Company also leases a test site for its wind turbines in California for $450 per month. The initial term of this lease was November 1, 2008 through October 31, 2009, with a one-year renewal option for each of the next five years with no increase in rent during the renewal period. The lease matured on October 31, 2010 and the company is currently leasing the site on a month to month basis.

ITEM 3. LEGAL PROCEEDINGS

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods.

On March 5, 2010, the Company received a summons to appear in the Supreme Court of the State of New York, in a lawsuit filed by Crystal Research Associates, LLC (“Crystal”) alleging the Company failed to pay for services rendered by Crystal in the amount of $33,750. On July 19, 2010 the Company received notice that it had defaulted in responding to the lawsuit.

On March 23, 2010, the Company received a Writ of Summons issued from the Superior Court of the State of New Hampshire, Rockingham County, to respond to a lawsuit by Alternative Energies, LLC (“Waterline”) relating to claims against the Company under its distribution contract with Waterline. The lawsuit does not specify an amount of damages claimed. As previously announced, the Company did receive a claim from Waterline seeking damages of approximately $250,000. The Company’s legal counsel responded to the Writ of Summons on May 4, 2010 and the Company is defending itself in the lawsuit. Waterline is currently a distributor of the Company’s products. The Company has not accrued any amount as it expects that it will not have any obligation to pay any amounts under this law suit.

Effective April 1, 2010, the Company completed a Settlement Agreement and Mutual Release with Kenneth O. Morgan pursuant to which the Company paid Kenneth O. Morgan the amount of $150,000 in settlement of the previously announced litigation between the parties. Pursuant to the terms of the Settlement Agreement, Kenneth O. Morgan agreed to dismiss his lawsuit against the Company and Scott Weinbrandt, and the Company agreed to dismiss its counterclaims against Kenneth O. Morgan. The Company has expensed the $150,000 in the financial statements and fully paid this amount as of June 30, 2010.

On May 21, 2010, a complaint was filed by Ian Gardner, the Company's former CEO and a director, against the Company and a director and officer of the Company asserting causes of action against the defendants for breach of certain contracts, breach of the covenants of good faith and fair dealing, fraud in the inducement, intentional and negligent misrepresentation, alter ego and declaratory relief. Mr. Gardner's suit seeks approximately $150,000 in stated damages as well as additional unstated damages. The Company has accrued its anticipated obligation of approximately $95,000 in the financial statements as of June 30, 2010. The Company has denied these allegations. This case is currently pending as the parties have discussed alternative settlement options to resolve this case.

On September 29, 2010, the Company received a summons to appear in the Superior Court in the State of California, County of San Diego, in a lawsuit filed by Gordon & Rees LLP alleging the Company failed to pay for legal services rendered in the amount of $107,110. On March 8, 2011, the Superior Court of California, County of San Diego granted Gordon & Rees LLP’s request for a default judgment in the amount of $110,938.18. The Company does not have the cash to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

On January 21, 2011, the Company received notice from legal counsel for Squar, Milner, Peterson, Miranda & Williamson, LLP (“Squar Milner”), the Company’s former independent auditor, that Squar Milner has requested a default judgment in its lawsuit against the Company. The Company previously received notice from legal counsel representing Squar Milner that it had filed a lawsuit in Orange County Superior Court regarding the alleged unpaid balanced owed by the Company to Squar Milner in the amount of approximately $73,000. Any judgment against the Company resulting from the lawsuit would have a material adverse effect on the Company and its assets.

On March 11, 2011, East West Consulting, Ltd. and Steve Polaski (the “East West Parties”) filed a complaint in the Superior Court of the State of California, County of San Diego, against the Company and Kevin Claudio relating to a professional services agreement and employment agreement between the parties, and the conversion of certain accounts receivable into shares of Company stock. The East West Parties are seeking damages in the sum of over $4,000,000. Any judgment against the Company resulting from the lawsuit would have a material adverse effect on the Company and its assets.

The Company is not aware of any other pending or threatened legal proceedings to which it is a party.

ITEM 4. (REMOVED AND RESERVED)

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is currently listed on the OTC Bulletin Board under the symbol “HLXW.” Prior to April 24, 2009, the Company’s stock was listed on the OTC Bulletin Board under the symbol “CVAC.” The high and low bid quotations of our common stock as reported by NASDAQ and/or Yahoo Finance for the periods indicated are shown below:

Period	High			Low
Quarters Ended:

March 31, 2008		$	0.21		$	0.06
June 30, 2008		$	0.25		$	0.07
September 30, 2008		$	0.25		$	0.05
December 31, 2008		$	10.00		$	0.01
March 31, 2009		$	2.10		$	1.50
June 30, 2009		$	3.03		$	1.60
September 30, 2009		$	3.08		$	2.26
December 31, 2009		$	3.30		$	2.19
March 31, 2010		$	2.25		$	0.11
June 30, 2010		$	0.17		$	0.01
September 30, 2010		$	0.02		$	0.00
December 31, 2010		$	0.01		$	0.00

The foregoing reflects inter-dealer prices without retail mark-up, markdown or commissions or may not represent actual transactions.

Dividend Policy

The Company has never paid any cash dividends on its capital stock and does not anticipate paying any cash dividends on the Common Stock in the foreseeable future. The Company intends to retain future earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

Holders of Record

As of March 31, 2011, 1,750,000,000 shares of our common stock were issued and outstanding, and held by more than 4,500 stockholders of record.

Recent Sales of Unregistered Securities

None, other than as previously reported in our Forms 10Q and Forms 8-K.

ITEM 6. SELECTED FINANCIAL DATA

As a smaller reporting company we are not required to provide the information required by this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements and Factors Affecting Future Results

Helix Wind, Corp., and its wholly-owned subsidiary, Helix Wind, Inc. (collectively, “Helix Wind,” we,” “our,” “us” or the “Company”) may from time to time make written or oral “forward-looking statements,” including statements contained in our filings with the Securities and Exchange Commission (the “SEC”) (including this Quarterly Report on Form 10-Q and the exhibits hereto), in our reports to shareholders and in other communications by us.

These forward-looking statements include statements concerning our beliefs, plans, objectives, goals, expectations, anticipations, estimates, intentions, operations, future results and prospects, including statements that include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “will,” “shall,” “anticipate,” “estimate,” “propose,” “continue,” “predict,” “intend,” “plan” and similar expressions. These forward-looking statements are based upon current expectations and are subject to risk, uncertainties and assumptions, including those described in this quarterly report and the other documents that are incorporated by reference herein. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected, projected, intended, committed or believed.

Company provides the following cautionary statements identifying important factors (some of which are beyond our control) which could cause the actual results or events to differ materially from those set forth in or implied by the forward-looking statements and related assumptions. Such factors include, but are not limited to, the following:

●

The factors described in Item 1A-Risk Factors in the Quarterly Report on Form 10-Q;

●

Our ability to attract and retain management and field personnel with experience in the small wind turbine industry;

●

Our ability to raise capital when needed and on acceptable terms and conditions;

●

The intensity of competition; and

●

General economic conditions.

All written and oral forward-looking statements made in connection with this Quarterly Report on Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.

Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on academic and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources, and we cannot assure you of the accuracy or completeness of the data included in this Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size and market penetration. We have no obligation to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those statements. See the section entitled “Risk Factors” for a more detailed discussion of uncertainties and risks that may have an impact on future results.

The following discussion and analysis is intended as a review of significant factors affecting the Company’s financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with the Company’s consolidated financial statements and the notes presented herein. See "ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA" below. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contain forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed in this report. See "Forward-Looking Statements," above.

Basis of Presentation

The following management’s discussion and analysis is intended to provide additional information regarding the significant changes and trends which influenced our financial performance for the year ended December 31, 2010. This discussion should be read in conjunction with the audited financial statements and notes as set forth in this Report.

The comparability of our financial information is affected by our acquisition of Helix Wind, Inc. in February of 2009. As a result of the acquisition, financial results reflect the combined entity beginning February 11, 2009. For further discussion of the acquisition see note 1 of the financial statements.

Certain statements contained in this Form 10-K are forward-looking in nature and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results.

Overview

Helix Wind is a small wind solutions company focused on the renewable alternative energy market. We develop or acquire small wind products and solutions for different vertical markets worldwide. The Company’s headquarters are located in Poway, California (San Diego area).

Helix Wind provides energy independence utilizing wind, a resource that never runs out. Wind power is an abundant, renewable, emissions free energy source that can be utilized on large and small scales. At the soul of Helix Wind lies the belief that energy self sufficiency is a responsible and proactive goal that addresses the ever-increasing consequences of legacy energy supply systems.

There is substantial doubt about our ability to continue as a “going concern” because the Company has incurred continuing losses from operations; has a significant working capital deficit; and has outstanding liabilities which significantly exceed its existing cash resources.

Plan of Operations

Helix Wind’s strategy is to pursue selected opportunities that are characterized by reasonable entry costs, favorable economic terms, high reserve potential relative to capital expenditures and the availability of existing technical data that may be further developed using current technology.

Revenues

We generate substantially all of our net sales from the sale of small wind turbines. Helix Wind uses a mix of a direct and indirect distribution model. Direct sales personnel were employed to offer extra coverage of the United States as a vast majority of our lead generation is from this area. Our distribution network structure is built on a non-exclusivity of territory but exclusivity of leads. Therefore, we define a reasonable territory the distributors can cover from a sales and service point of view. We demand no reselling of our products as well as define a retail price which must be adhered to by all distributors, as a condition of their agreement with Helix Wind. Pricing in the Euro zone is subject to the fluctuation of the exchange rate between the euro and U.S. dollar. Distributors must adhere to the price guidelines which are based on our U.S. retail price, subject to adjustment each quarter to take into account the currency exchange on the last day of the previous quarter. Confirmation of an order is given on receipt of a signed purchase agreement with a 50% deposit in U.S. dollars. Sales are recognized and title and risk is passed on delivery to customers in the United States and by delivery CIF to international locations. Our customers do not have extended payment terms or rights of cancellation under these contracts. Two customers accounted for more than 15% of our revenue for the year ended December 31, 2010.

Cost of Sales

Our cost of sales includes the cost of raw material and components such as blades, rotors, invertors, mono poles and other components. Other items contributing to our cost of sales are the direct assembly labor and manufactured overhead from our component suppliers and East West, a Thailand company that managed the manufacturing and distribution of our products. Overall, we currently expect our cost of sales per unit to decrease as we ramp production lots in the future to meet the product demands from our customers.

Gross Profit

Gross profit is affected by numerous factors, including our average selling prices, distributor discounts, foreign exchange rates, and our manufacturing costs. Another factor impacting gross profits is the ramp of production going forward. As a result of the above, gross profits may vary from quarter to quarter and year to year.

Research and development.

Research and development expense consists primarily of salaries and personnel-related costs and the cost of products, materials and outside services used in our process and product research and development activities.

Selling, general and administrative

Selling, general and administrative expense consists primarily of salaries and other personnel-related costs, professional fees, insurance costs, travel expense, other selling expenses as well as share based compensation expense relating to stock options. We expect these expenses to increase in the near term, both in absolute dollars and as a percentage of net sales, in order to support the growth of our business as we expand our sales and marketing efforts, improve our information processes and systems and implement the financial reporting, compliance and other infrastructure required by a public company. Over time, we expect selling, general and administrative expense to decline as a percentage of net sales as our net sales increase.

Other Expenses

Interest expense, net of amounts capitalized, is incurred on various debt financings as well as the amount recorded for the derivative liability associated with convertible notes and warrants. Any interest income earned on our cash, cash equivalents and marketable securities is netted in other expenses as it is immaterial.

Use of estimates

Our discussion and analysis of our financial condition and results of operations are based upon our audited consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, intangible assets, income taxes, warranty obligations, marketable securities valuation, derivative financial instrument valuation, end-of-life collection and recycling, contingencies and litigation and share based compensation. 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.

Recent Developments

Effective as of March 11, 2011, Kevin Claudio resigned from the Company’s Board of Directors. Mr. Claudio remains the Chief Financial Officer of the Company.

Effective as of March 11, 2011, James Tilton was appointed as our sole director and our Chief Operating Officer.

Effective as of March 21, 2011, the Company executed a Purchase and Exchange Agreement (the “First Exchange Agreement”) with St. George Investments, LLC, an Illinois limited liability company (the “Investor”) pursuant to which, among other things, the Company agreed to exchange 4 outstanding convertible promissory notes in the aggregate amount of $1,176,347 for a secured convertible promissory note in the amount of $1,176,347 (the “First Note”), and the Company executed a Purchase and Exchange Agreement (the “Second Exchange Agreement”) with the Investor pursuant to which, among other things, the Company agreed to exchange 14 outstanding convertible promissory notes in the aggregate amount of $1,430,441 for a secured convertible promissory note in the amount of $1,430,441 (the “Second Note”). The First Note and Second Note are both secured by all of the assets of the Company pursuant to the terms of a Security Agreement for each of the First Note and Second Note. The Company’s obligations under the First Note and Second Note are also guaranteed by the Company’s subsidiary, Helix Wind, Inc., pursuant to the terms of a Guaranty for each of the First Note and Second Note.

The First Exchange Agreement, Second Exchange Agreement, First Note, Second Note, Security Agreements and Guaranties are referred to herein as the “Exchange Agreements”. The Exchange Agreements also contain representations, warranties and indemnifications by the Company and the Investor.

As consideration for the Exchange Agreements, Investor agreed to pay the Company the sum of $100,000 (which sum was not added to the balance of the notes), all existing defaults under the First Note and Second Note were waived and all covenants thereunder were reset according to the terms thereof. Additionally, the First Note and Second Note have certain terms that are more favorable to the Company than the current terms of the original 18 notes which were exchanged, including a two-year term, an interest rate of 6% per annum, and an ability to extinguish the First Note and Second Note for the Company’s payment of $1,500,000 if paid within 90 days.

In connection with the Exchange Documents, the Company and Investor also entered into a Forbearance Agreement pursuant to which, among other things:

Investor agreed to refrain and forbear from exercising and enforcing any of its remedies under the Convertible Secured Promissory Note dated March 30, 2010 (the “March 2010 Note”) in the original principal amount of $779,500, or under applicable laws, with respect to the defaults, for a period of 90 days from the date of the Forbearance Agreement;

Provided that the Company pays the Investor the sum of $1,500,000 in cash on or before the 90th day from the date of the Forbearance Agreement, the Investor agrees that, upon receipt of the payment, each of the First Note, Second Note and March 2010 Note (collectively, the “Notes”) shall be terminated and the Company shall be released from all obligations and liabilities thereunder; and

Notwithstanding anything to the contrary in the Exchange Agreements or in that certain Note Purchase Agreement between the Company and Borrower dated January 18, 2011 (the “January 2011 Purchase Agreement”), so long as (1) no Event of Default (as defined in the First Note and Second Note) (and in the case of the March 2010 Note, no new Event of Default after the date of the Forbearance Agreement) has occurred under any of the Notes, (2) each of the representations and warranties of Borrower in the Exchange Agreements and the January 2011 Purchase Agreement remain true and correct as of the date of purchase of each Additional Note (as defined below), (3) the Company has increased its authorized shares of common stock to not less than 5,000,000,000 shares as of the date of purchase of such Additional Note, and (4) the Company has complied with all of its obligations and covenants herein, in the Notes, in the Exchange Agreements and in the January 2011 Purchase Agreement as of such date, the Company agrees to deliver to Borrower the sum of $50,000 (the “Additional Note Purchase Price”) on or around each of April 1, 2011, April 15, 2011, May 1, 2011, May 15, 2011 and June 1, 2011 as consideration for those certain Additional Notes (the “Additional Notes”) as defined in the January 2011 Purchase Agreement.

In connection with the financing, Dominick & Dominick, the placement agent, received a cash payment of $8,000, and will receive an additional $4,000 upon the issuance of each of the Additional Notes.

The description contained herein is a brief summary of each of the Exchange Agreements and the Forbearance Agreement. These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that are attached as exhibits to this Current Report on Form 8-K. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction. The description contained herein is a brief summary of each of the January 2011 Purchase Agreement and the Additional Notes. These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that are attached as exhibits to the Company’s Current Report on Form 8-K filed with the Securities & Exchange Commission on January 25, 2011. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.

Purchase and Exchange Agreements

Pursuant to the Purchase and Exchange Agreements, the Company has agreed it will not (i) incur any new indebtedness for borrowed money without the prior written consent of the Investor; provided, however the Company may incur obligations under trade payables in the ordinary course of business consistent with past practice without the consent of the Investor; (ii) grant or permit any security interest (or other lien or other encumbrance) in or on any of its assets; and (iii) enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that are no less favorable, in any material respect, than those obtainable from any person who is not an affiliate.

The Purchase and Exchange Agreements also contain certain negative covenants regarding the Company and its operation, including, without limitation that the Company may not arrange or facilitate the sale or exchange of any existing securities of the Company, including without limitation warrants, options, convertible debt instruments, or other securities convertible into or exchangeable for shares of Common Stock or other equity of the Company (“Existing Securities”), held by any party other than the Investor, and the Company may not to enter into any debt settlement agreement or similar agreement or arrangement with any party other than the Investor to settle or exchange Existing Securities for share of Common Stock or other equity of the Company.

The Purchase and Exchange Agreements also contain numerous affirmative covenants on the Company, including, without limitation, a requirement for the Company to maintain its SEC reporting status, timely file all SEC reports, and increase its authorized shares of common stock to 5,000,000,000 within 45 days of the date of the Purchase and Exchange Agreements.

First Note and Second Notes

The First Note and Second Note each mature 2 years from the date of issuance and accrue interest at the rate of 6% per annum. However, if there is a default, the First Note and Second Note will accrue interest at the rate of 15% per annum. At any time or from time to time after the date of the First Note and Second Note and prior to payment in full of the outstanding balance under the notes, Investor has the right, at its option, to convert the Outstanding Balance, in whole or in part (the “Conversion Amount”), into Company Common Stock. The number of shares of Common Stock to be issued upon such conversion shall be determined by dividing (i) the Conversion Amount by (ii) the lower of (1) 100% of the average volume-weighted average price of the Common Stock (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty (20) trading days immediately preceding the date set forth on the Notice of Conversion (defined below), or (2) 50% of the lower of (A) the average VWAP over the five (5) trading days immediately preceding the date set forth in the Notice of Conversion or (B) the VWAP on the day immediately preceding the date set forth in the Notice of Conversion. The shares deliverable to the Investor must be delivered electronically, via DWAC or DTC, if the Company is eligible. If the Company does not deliver shares issuable upon conversion of the notes within three days of a conversion notice, the Company must pay the Investor a penalty of 1.5% of the conversion amount added to the balance of the note per day. The number of shares the notes is convertible into is subject to customary anti-dilution provisions.

Each of the First Note and Second Note provides that upon each occurrence of any of the triggering events described below (each, a “Trigger Event”), the outstanding balance under the First Note shall be immediately and automatically increased to 125% of the outstanding balance in effect immediately prior to the occurrence of such Trigger Event, and upon the first occurrence of a Trigger Event, (i) the outstanding balance, as adjusted above, shall accrue interest at the rate of 15% per annum until the note is repaid in full, and (ii) the Investor shall have the right, at any time thereafter until the note is repaid in full, to (a) accelerate the outstanding balance under the note, and (b) exercise default remedies under and according to the terms of the note; provided, however, that in no event shall the balance adjustment be applied more than two (2) times. The Trigger Events include the following: (i) a decline in the five-day average daily dollar volume of the Company Common Stock in its primary market to less than $25,000 of volume per day for any five consecutive day period; (ii) a decline in the average VWAP for the Common Stock during any consecutive five (5) day trading period to a per share price of less than one half of one cent ($0.0005); (iii) the Company’s failure to increase its authorized shares of Common Stock available for issuance to not less than 5,000,000,000 shares within 45 days of the date of the notes; or (iv) the occurrence of any Event of Default under the notes (other than an Event of Default for a Trigger Event which remains uncured or is not waived) that is not cured for a period exceeding ten (10) business days after notice of a declaration of such Event of Default from Investor, or is not waived in writing by the Investor.

An Event of Default under the First Note and Second Note includes (i) a failure to pay any amount due under the note when due; (ii) a failure to deliver shares upon conversion of the note; (iii) the Company breaches any covenant, representation or other term or condition in the Exchange Agreements, note or other transaction document; (iv) having insufficient authorized shares within 45 days after the date of the note; (v) an uncured Trigger Event; or (vi) upon bankruptcy events.

Other Terms

The Exchange Agreements and First Note and Second Note contain certain limitations on conversion and exercise. They provide that no conversion or exercise may be made if, after giving effect to the conversion and/or exercise, the Investor would own in excess of 9.99% of the Company’s outstanding shares of Common Stock.

Other than Excepted Issuances (described below), if the First Note and Second Note are outstanding, the Company agrees to issue shares or securities convertible for shares at a price (including an exercise price) which is less than the conversion price of the First Note or Second Note, then the conversion price and exercise price, as the case may be, shall be reduced to the price of any such securities. The only Excepted Issuances are (i) the Company’s issuance of securities to strategic licensing agreements or other partnering agreements which are not for the purpose of raising capital and no registration rights are granted and (ii) the Company’s issuance to employee, directors and consultants pursuant to plans outstanding.

The First Note and Second Note were offered and sold in reliance on the exemption from registration afforded by Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the Investor in connection with the offering.

Recent Financing

Effective as of January 19, 2011, the Company closed a financing transaction under a Note Purchase Agreement (the “Purchase Agreement”) with St. George Investments, LLC, an Illinois limited liability company (the “Investor”) pursuant to which, among other things, the Company issued a convertible secured promissory note in the aggregate principal amount of $72,500 (the “First Note”). The Purchase Agreement also contains representations, warranties and indemnifications by the Company and the Investor.

The Purchase Agreement also provides that, subject to meeting certain conditions, and no Event of Default has occurred under any of the notes, the Investor may, in its sole and absolute discretion, loan to the Company an additional principal amount of up to $455,000 pursuant to seven additional notes in the principal amount of $65,000 each (the “Additional Notes”) on or about each two week anniversary of the issuance of the First Note during the seven consecutive two week periods immediately following such issuance of the First Note, for a total aggregate additional net amount of $350,000 (after deducting the original issue discount amounts of $15,000 for each Additional Note).

In connection with the financing, Dominick & Dominick, the placement agent, received a cash payment of $4,000, and will receive an additional $4,000 upon the issuance of each Additional Note.

The following is a brief summary of each of those agreements. These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that are attached as exhibits to this Current Report on Form 8-K. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.

Purchase Agreement

Pursuant to the Purchase Agreement, so long as the First Note is outstanding, the Company will not (i) incur any new indebtedness for borrowed money without the prior written consent of the Investor; provided, however the Company may incur obligations under trade payables in the ordinary course of business consistent with past practice without the consent of the Investor; (ii) grant or permit any security interest (or other lien or other encumbrance) in or on any of its assets; and (iii) enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that are no less favorable, in any material respect, than those obtainable from any person who is not an affiliate.

First Note and Additional Notes

The First Note has an original issue discount of $15,000 and an obligation to pay $7,500 of the Investor’s transaction fees. Accordingly, the amount provided under the First Note is $50,000. The First Note matures 6 months from the date of issuance. If there is a default the Note will accrue interest at the rate of 15% per annum. The number of shares of Common Stock to be issued upon such conversion of the First Note shall be determined by dividing (i) the conversion amount under the First Note by (ii) the lower of (1) 100% of the volume-weighted average price of the Company’s Common Stock (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty (20) trading days immediately preceding the date set forth on the notice of conversion, or (2) 50% of the lower of (A) the average VWAP over the five (5) trading days immediately preceding the date set forth in the notice of conversion or (B) the VWAP on the day immediately preceding the date set forth in the notice of conversion. The shares deliverable to the Investor must be delivered electronically, via DWAC or DTC, if the Company is eligible. If the Company does not deliver shares issuable upon conversion of the Note within three days of a conversion notice, the Company must pay the Investor a penalty of 1.5% of the conversion amount added to the balance of the First Note per day. The number of shares the Note is convertible into is subject to customary anti-dilution provisions

The First Note provides that upon each occurrence of any of the triggering events described below (each, a “Trigger Event”), the outstanding balance under the First Note shall be immediately and automatically increased to 125% of the outstanding balance in effect immediately prior to the occurrence of such Trigger Event,, and upon the first occurrence of a Trigger Event, (i) the outstanding balance, as adjusted above, shall accrue interest at the rate of 15% per annum until the First Note is repaid in full, and (ii) the Investor shall have the right, at any time thereafter until the First Note is repaid in full, to (a) accelerate the outstanding balance under the First Note, and (b) exercise default remedies under and according to the terms of the First Note; provided, however, that in no event shall the balance adjustment be applied more than two (2) times. The Trigger Events include the following: (i) a decline in the five-day average daily dollar volume of the Company Common Stock in its primary market to less than $10,000.00 of volume per day; (ii) a decline in the average VWAP for the Common Stock during any consecutive five (5) day trading period to a per share price of less than one half of one cent ($0.0005); (iii) the occurrence of any Event of Default under the First Note (other than an Event of Default for a Trigger Event which remains uncured or is not waived) that is not cured for a period exceeding ten (10) business days after notice of a declaration of such Event of Default from Investor, or is not waived in writing by the Investor.

An Event of Default under the First Note includes (i) a failure to pay any amount due under the First Note when due; (ii) a failure to deliver shares upon conversion of the First Note; (iii) the Company breaches any covenant, representation or other term or condition in the Purchase Agreement, Note or other transaction document; (iv) having insufficient authorized shares; (v) an uncured Trigger Event; or (vi) upon bankruptcy events.

Each of the seven Additional Notes in the principal amount of $50,000 have substantially similar terms to the terms of the First Note. The amount to be provided under each Additional Note is $50,000 after the original issue discount.

Other Terms

The First Note and the Additional Notes contain certain limitations on conversion and exercise. They provide that no conversion or exercise may be made if, after giving effect to the conversion and/or exercise, the Investor would own in excess of 9.99% of the Company’s outstanding shares of Common Stock.

Other than Excepted Issuances (described below), if the First Note and Additional Notes are outstanding, the Company agrees to issue shares or securities convertible for shares at a price (including an exercise price) which is less than the conversion price of the First Note or Additional Notes, then the conversion price and exercise price, as the case may be, shall be reduced to the price of any such securities. The only Excepted Issuances are (i) the Company’s issuance of securities to strategic licensing agreements or other partnering agreements which are not for the purpose of raising capital and no registration rights are granted and (ii) the Company’s issuance to employee, directors and consultants pursuant to plans outstanding.

The Purchase Agreement also contains certain negative covenants regarding the Company and its operation, including, without limitation that the Company may not arrange or facilitate the sale or exchange of any existing securities of the Company, including without limitation warrants, options, convertible debt instruments, or other securities convertible into or exchangeable for shares of Common Stock or other equity of the Company (“Existing Securities”), held by any party other than the Investor, and the Company may not to enter into any debt settlement agreement or similar agreement or arrangement with any party other than the Investor to settle or exchange Existing Securities for share of Common Stock or other equity of the Company.

The First Note and Additional Notes were offered and sold in reliance on the exemption from registration afforded by Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the Investor in connection with the offering.

Revenues

Revenue decreased by $1,134,417 from $1,239,374 for the year ended December 31, 2009 to $104,957 for the year ended December 31, 2010, primarily as a result of shipping 66 S322 models and 60 S594 models to customers during 2009 compared with 1 S322 model and 7 S594 models during 2010.

Cost of Revenues

The cost of revenues of $950,046 for the year ended December 31, 2009 represented the direct product costs from the manufacturer associated with the bill of material for the S-322 and the S-594 units received by customers for the year ended December 31, 2009. Due to the decrease in sales, the cost of revenues decreased $876,248 to $73,798 for the year ended December 31, 2010.

Gross profit

Gross profit decreased by $258,169 from $289,328 for the year ended December 31, 2009 to $31,159 for the year ended December 31, 2010, reflecting a decrease in revenue. The Company’s first product shipments to customers occurred in 2009.

Research and development

Cost incurred for research and development are expensed as incurred. Research and development expense decreased by $1,064,984 from $1,343,052 for the year ended December 31, 2009 to $278,068 for the year ended December 31, 2010, primarily as a result of a decrease of $463,011 relating to product development and testing as well as a $601,973 decrease in the amount recorded for share based compensation expense related to stock options.

Selling, general and administrative

Selling, general and administrative expense decreased by $15,735,318 from $18,666,568 for the year ended December 31, 2009 to $2,931,250 for the year ended December 31, 2010, primarily as a result of the decrease of $14,542,199 recorded for share based payments related to stock options, compensation to management and employees decreasing by $563,200, rent decreasing by $30,575, insurance decreasing by $42,501, shipping decreasing by $257,151, marketing and advertising decreasing by $52.309, warranty expenses decreasing by $109,460, outside services decreasing by $450,178, travel decreasing by $107,705, depreciation decreasing by $23,835 and other various expenses decreasing by $10,342. These decreases were offset by an increase in professional fees of $454,137

Other income (expense)

Other expenses decreased by $48,474,758 from an expense of $33,377,206 for the year ended December 31, 2009 to net income of $15,097,552 for the year ended December 31, 2010 primarily as a result of of the change in fair value of the derivative liability decreasing by $24,888,310, loss on debt extinguishment decreasing by $12,038,787, and interest expense relating to the fair value of the convertible notes and other expenses decreasing by $11,547,661.

Provision for income taxes

We made no provision for income taxes for the years ended December 31, 2010 and 2009 due to net losses incurred except for minimum tax liabilities. We have determined that due to our continuing operating losses as well as the uncertainty of the timing of profitability in future periods, we should fully reserve our deferred tax assets.

Net income

The net income increased by $65,016,891 from a net loss of $53,098,298 for the year ended December 31, 2009 to net income of $11,918,593 for the year ended December 31, 2010, primarily as a result of the decrease for the change in the fair value of the derivative liability of $24,888,310, a decrease in interest expense relating to the fair value of the convertible notes and other expenses of $11,547,661, a decrease in share based compensation of $15,144,172 and a decrease in the loss of debt extinguishment of $12,038,787, all non-cash items. The remaining amount of net income relates to operating revenues, offset by various operating expenses.

Going Concern

There is substantial doubt about our ability to continue as a “going concern” because the Company has incurred continuing losses from operations, has negative working capital of $2,405,360, excluding the derivative liability of $4,120,046 and an accumulated deficit of approximately $43,990,692 at December 31, 2010.

Liquidity and Capital Resources

As of December 31, 2010 and December 31, 2009, the Company had a working capital deficit of $6,525,406 and $33,495,333 respectively. The negative working capital in 2010 results primarily from the derivative liability relating to the convertible notes and fair value of the warrants of $4,120,046, short term debt of $543,164, accounts payable of $936,858 and other changes to various accounts totaling $925,338 and the negative balance in 2009 results primarily from the derivative liability relating to the convertible notes and fair value of the warrants of approximately $30,854,755, short term debt of $930,528, accounts payable of $1,120,020 and other charges to various accounts totaling $590,030. The income of $11,918,593 for the year ended December 31, 2010 was comprised of expenses of $185,968 for research and development, $86,032 for sales and marketing, $153,928 for share based compensation expense for stock options, and offset by a net decrease of $15,097,552 resulting from the change in fair value of derivative liability relating to the convertible notes and fair value of the warrants and interest, and the balance for working capital relating to general and administrative expenses. The net loss of $53,098,298 for the year ended December 31, 2009 was comprised of $921,392 for research and development, $756,676 for sales and marketing, $15,298,100 for share based compensation expense for stock options, $33,377,206 of interest, loss on debt extinguishment and change in fair value of derivative liability relating to the convertible notes and fair value of the warrants and the balance for working capital relating to general and administrative expenses. Cash received from financing activities for the year ended December 31, 2010 and 2009 totaled $2,217,000 and $3,490,229 respectively, resulting primarily from funding from the issuance of convertible notes payable.

The Company has funded its operations to date through the private offering of debt and equity securities.

The Company expects significant capital expenditures during the next 12 months, contingent upon raising capital. We currently anticipate that we will need substantial cash and liquidity for operations for the next 12 months and we do not have sufficient cash on hand to meet this requirement. These anticipated expenditures are for manufacturing of systems, infrastructure, overhead, integration of acquisitions and working capital purposes.

The Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.

The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of the Company’s common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company issues additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of the Company’s common stock. If additional financing is not available or is not available on acceptable terms, the Company will have to curtail its operations.

Contractual Obligations

The Company exchanged 12% convertible notes of the Company for its own 9% convertible notes during the first quarter of 2009 as a part of the merger transaction with the Company. The new notes are convertible into common shares of the Company’s stock at a conversion price $0.50 per share, as such conversion price is subject to adjustment as provided in the convertible notes. In addition, for each share of common stock into which such notes can convert, the note holder received one warrant at an exercise price of $0.75, as such exercise price is subject to adjustment as provided in the warrants. In addition, subsequent to the reverse merger transaction on February 11, 2009, the Company issued new 9% convertible notes and warrants in 2009 with the same terms and conditions described above.

Though out the year ended December 31, 2010, the Company issued eighteen convertible notes to St. George Investments, LLC, an Illinois limited liability company in the amount of $2,750,000. The notes are convertible anytime after the date of the note at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. Full text of these agreements are attached as exhibits on the Forms 8K filed after the close of the transactions. Readers should review those agreements for a more complete understanding of the terms and conditions associated with these transactions.

Effective as of January 19, 2011, the Company closed a financing transaction under a Note Purchase Agreement with St. George Investments, LLC, an Illinois limited liability company which, among other things, the Company issued a convertible secured promissory note in the aggregate principal amount of $72,500. The Purchase Agreement also provides that, subject to meeting certain conditions, and no Event of Default has occurred under any of the notes, the Investor may, in its sole and absolute discretion, loan to the Company an additional principal amount of up to $455,000 pursuant to seven additional notes in the principal amount of $65,000 each on or about each two week anniversary of the issuance of the first note during the seven consecutive two week periods immediately following such issuance of the First Note, for a total aggregate additional net amount of $350,000 (after deducting the original issue discount amounts of $15,000 for each additional note).

These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that are attached as exhibits on Forms 8-K for these transactions. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.

Critical Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include those related to the debt discount, valuation of derivative liabilities and stock based compensation, and those associated with the realization of long-lived assets.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are reviewed on an asset-by-asset basis. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of each asset to future net cash flows expected to be generated by such asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount which the carrying amount of the assets exceeds the fair value of the assets. The Company has appropriately evaluated its equipment and patents for impairment as of December 31, 2010 and 2009 and through each period and does not believe that the assets are impaired as of each reporting date. Management will continue to assess the valuation of its equipment and patents as it restructures.

Derivative Liabilities and Classification

We evaluate free-standing instruments (or embedded derivatives) indexed to the Company’s common stock to properly classify such instruments within equity or as liabilities in our financial statements. Accordingly, the classification of an instrument indexed to our stock, which is carried as a liability, must be reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.

Stock Based Compensation

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

Recent Accounting Pronouncements

See “Note 1 – Description of Business and Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" of Part II of this report.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of the year ended December 31, 2010, nor do we have any as of the date of this Form 10K.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company we are not required to provide the information required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The following consolidated financial statements are included beginning on page F-1 of this report:

	Page
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2009 and 2008	F-3
Consolidated Statements of Operations for the years ended December 31, 2009 and 2008	F-4
Consolidated Statements of Stockholders' Deficit for the years ended December 31, 2009 and 2008	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2009 and 2008	F-6
Notes to Consolidated Financial Statements	F-7

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Pursuant to Rule 13a-15(b) under the Exchange Act, our management, under the supervision and with the participation of our Chief Operating Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of December 31, 2010, the end of the period covered by this Form 10-K. Based upon that evaluation, our Chief Operating Officer and Chief Financial Officer concluded that, as of December 31, 2010, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosures.

Management’s Annual Report on Internal Control over Financial Reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) for the Company. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Because of its inherent limitations, internal control over financial reporting may not prevent nor detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and includes those policies and procedures that: (i) Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and (iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Based on such criteria, our management, with the participation of our Chief Operating Officer and Chief Financial officer, evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 and concluded that, as of December 31, 2010, our internal control over financial reporting was not effective.

We have identified material weaknesses in our internal control over financial reporting related to the following matters:

●	We identified a lack of sufficient segregation of duties. Specifically, this material weakness is such that the design over these areas relies primarily on detective controls and could be strengthened by adding preventative controls to properly safeguard company assets.

●	Management has identified a lack of sufficient personnel in the accounting function due to our limited resources with appropriate skills, training and experience to perform the review processes to ensure the complete and proper application of generally accepted accounting principles, particularly as it relates to valuation of share based payments, the valuation of warrants, and other complex debt /equity transactions. Specifically, this material weakness lead to segregation of duties issues and resulted in audit adjustments to the annual consolidated financial statements and revisions to related disclosures, share based payments, valuation of warrants and other equity transactions.

Our plan to remediate those material weaknesses is as follows:

●	Improve the effectiveness of the accounting group by continuing to augment our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions. We plan to mitigate the segregation of duties issues by hiring additional personnel in our accounting department once we generate significantly more revenue, or raise significant additional working capital.

●	Improve segregation procedures by strengthening cross approval of various functions including quarterly internal audit procedures where appropriate.

For the year ended December 31, 2010, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following table sets forth certain information regarding the members of our board of directors and our executive officers as of the date of this report:

Name	Age	Positions and Offices Held
James Tilton	50	Chief Operating Officer
Kevin K. Claudio	54	Chief Financial Officer and Vice President

The business address of our officers and directors is c/o Helix Wind, Corp., 13125 Danielson Street, Suite 101, Poway CA 92064. Set forth below is a summary description of the principal occupation and business experience of each of our directors and executive officers for at least the last five years.

James Tilton has been Chief Operating Officer and a member of the Board of Directors since March 11, 2011. Mr. Tilton has served as the President, Treasurer, Secretary and director of SEA Tiger, Inc., an information technology company, since its inception in January 1999 until his resignation in 2005. Mr. Tilton was reappointed to these positions in 2009. Mr. Tilton has also served as Chief Executive Officer, President, Secretary, Treasurer and sole director of NuMobile, Inc., a mobile computing technology company, since its formation in November 1999. From 1995 to 1996, Mr. Tilton was a stockbroker at Morgan Keegan. From 1997 to 1999, Mr. Tilton worked independently in the securities industry, specializing in corporate finance and investment banking. Mr. Tilton also serves as a director of Girasolar, Inc. and World Series of Golf, Inc. Since February 2010 Mr. Tilton has also served as chief operating officer of Savanna East Africa, Inc. Mr. Tilton has a B.A. in Political Science with an emphasis in Accounting/Business from the University of Louisville. The Company believes Mr. Tilton's experience as founder of SEA Tiger, Inc., in the securities industry and as a director of other public companies qualifies him to serve as a director of the Company.

Kevin K. Claudio has been Vice President and Chief Financial Officer of Helix Wind since December 1, 2008, and was a director of the Company from December 2, 2010 until March 11, 2011. For two years beginning in 2006, Mr. Claudio was the CFO of Remote Surveillance Technologies, a full service electronic security company with remote video monitoring. From 2004 through 2005, he was the acting CFO for cVideo, a spin off of Cubic Corporation that developed software-based integrated digital video applications and surveillance and loss prevention systems solutions for commercial and security applications. Mr. Claudio, was previously the Vice President & CFO of a Titan subsidiary from 1999-2003. Mr. Claudio graduated from Fairmont State College in Fairmont, West Virginia with a Bachelor of Science Degree in Accounting and is a Certified Public Accountant (California-inactive).

Ian Gardner was the Chief Executive Officer and a director of the Company until his resignation effective March 8, 2010. Scott Weinbrandt was the Chief Executive Officer and a director of the Company, after Mr. Gardner’s departure, until his resignation effective December 2, 2010.

During the past five years none of our officers and directors has been involved in any legal proceedings that are material to an evaluation of their ability or integrity as director or an executive officer of us, and none of them have been affiliated with any company that been involved in bankruptcy proceedings.

Section 16(a) beneficial reporting compliance

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, and the rules issued thereunder, our directors and executive officers and any persons holding more than 10% of our common stock are required to file with the SEC reports of their initial ownership of our common stock and any changes in ownership of such common stock. Copies of such reports are required to be furnished to us. We are not aware of any instances in fiscal year ended December 31, 2010 when an executive officer, director or any owner of more than 10% of the outstanding shares of our common stock failed to comply with the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934.

ITEM 11. EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth information concerning the compensation paid or earned during the fiscal years ended December 31, 2010, and 2009 for services rendered to our Company in all capacities by all individuals who served as the principal executive officer or was acting in a similar capacity during the fiscal year ended December 31, 2010, regardless of compensation level. Other than such persons, there are no individuals who served as officers at December 31, 2010 or at any time during the year and whose total compensation exceeded $100,000 during the fiscal year ended December 31, 2010.

Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earning ($)	All Other Compensation ($)	Total ($)

Ian Gardner(1)	2010 2009	33,333(2) 191,667(3)			4,338,325			31,250	64,583 4,529,992

Scott Weinbrandt (4)	2010 2009	207,292(5) 217,780(6)			7,245,176			46,533	253,825 7,462,956

Kevin Claudio	2010 2009	197,917(7) 167,708(8)			2,087,273			100,000	297,917 2,254,981

(1)	Ian Gardner was the Chief Executive Officer and a director of the Company until his resignation effective March 8, 2010.
(2)	Mr. Gardner was paid $33,333 in 2010 and $31,250 accrued in 2010 for vacation and board of director fees.
(3)	Mr. Gardner was paid $191,667 in 2009 and $29,166 accrued in 2009, a portion of which was paid on March 8, 2010 in connection with his Settlement Agreement.
(4)	Scott Weinbrandt was the Chief Executive Officer and a director of the Company until his resignation effective December 2, 2010.
(5)	Mr. Weinbrandt was paid $207,292 in 2010 and $46,533 accrued in 2010 for prior unpaid compensation and board of director fees.
(6)	Mr. Weinbrandt was paid $217,780 in 2009 which included payment of a past accrual of $26,114 and accrued $29,166 which was not paid.
(7)	Mr. Claudio was paid $197,917 in 2010 and $100,000 accrued for bonuses from prior and current year.
(8)	Mr. Claudio was paid $167,708 in 2009 and accrued $7,292 which was not paid.

We have no pension, annuity, insurance, equity incentive, non-equity incentive, stock options, profit sharing or similar benefit plans, other than the Share Employee Incentive Stock Option Plan for 13,700,000 shares of common stock of the Company.

Except as otherwise may be provided in their individual agreements, each of the officers is appointed by the Board of Directors to a term of one (1) year and serves until his successor is duly elected and qualified, or until he is removed from office.

Employment Agreements with Executive Officers

As of December 31, 2010, and as a result of the resignation of Ian Gardner and Scott Weinbrandt during 2010, the Company only had an employment agreement with Kevin Claudio.

The Company has an employment agreement with Mr. Claudio to serve as Chief Financial Officer, effective December 1, 2008, as amended January 26, 2009. Pursuant to the agreement, Mr. Claudio will receive compensation of $14,583.33 per month. In addition, Mr. Claudio is entitled to participate in certain benefit plans in effect for the Company employees, along with vacation, sick and holiday pay in accordance with policies established and in effect from time to time. Mr. Claudio has also been granted an option to purchase 610,000 shares of the Company’s common stock pursuant to the Company’s new stock option plan upon the Company’s successful completion of $2 million in financing and a bonus of up to $50,000. The Company has entered into a new employment agreement with Kevin Claudio effective as of April 22, 2010. The employment agreement has an initial term of three years, and supersedes his previous employment agreement. Pursuant to the agreement, Mr. Claudio’s current base salary was $200,000 annually, subject to annual increases as provided in the agreement. Mr. Claudio is also entitled to participate in the Company’s incentive compensation plan, if any, and to receive an annual bonus of $50,000 upon completion of phase three of the Company’s operational plan within 2010, and to receive annual bonuses thereafter at the discretion of the Board of Directors. In addition, Mr. Claudio is entitled to participate in certain benefit plans in effect for the Company employees, as well as vacation, sick and holiday pay in accordance with policies established and in effect from time to time. In connection with the agreement, Mr. Claudio was granted an option to purchase 1,400,000 shares of the Company’s common stock under the Company’s stock option plan at an exercise price equal to the closing price of the Company’s shares on April 22, 2010 and has vesting terms consistent with other senior management terms. Mr. Claudio is also entitled to a severance payment if employment with the Company is terminated with or without cause, or if Mr. Claudio voluntarily terminates his employment.

The Company does not have an employment agreement at this time with Mr. Tilton.

Director Compensation

Messrs. Gardner and Weinbrandt each entered into Board of Directors Service and Indemnification Agreements with the Company, pursuant to which, each of them were entitled to receive an annual stipend of $10,000 annually to be paid on a quarterly basis of $2,500 and an option to purchase 25,000 shares of the common stock of the Company for their service on the Board of Directors. Under their respective agreement, each of them was also entitled to additional stipends of $5,000 per year if serving as Chairman of the Board of Directors, $2,500 per year if serving as Chairman of any committee of the Board of Directors and further compensation upon an initial public offering. The Company’s compensation obligations under Mr. Gardner’s Board of Directors and Service and Indemnification Agreement were terminated as of March 8, 2010 in connection with the Settlement Agreement. The Company’s compensation obligations under Mr. Weinbrandt’s Board of Directors and Service and Indemnification Agreement were terminated as of December 2, 2010 in connection with his resignation from the Company

The following table sets forth summary information concerning compensation paid or accrued for services rendered to us in all capacities by our non-employee directors for the fiscal year ended December 31, 2010. Other than as set forth below and the reimbursement of actual and ordinary out-of-pocket expenditures, we did not compensate any of our directors for their services as directors during the fiscal year ended December 31, 2010.

2010 Director Compensation

Name

Fees Earned or

Paid in Cash

($)

Stock Awards

($)

Options Awards

($) (1)

Non-Equity

Incentive Plan Compensation

($)

Change in Pension Value and Nonqualified Deferred Compensation Earnings

($)

All Other Compensation

($)

Total

($)

Gene Hoffman (3)

246,518(2)

246,518

______________________

(1) This column represents the aggregate grant-date fair value of the awards computed in accordance with FASB ASC Topic 718. These amounts reflect our accounting value for these awards and do not necessarily correspond to the actual value that may be realized by the named executive officer. The assumptions used in the calculation of these amounts are described in note 8 to our consolidated financial statements included in this annual report on Form 10-K.

The table below discloses for each non-employee director the aggregate number of shares of our common stock subject to option awards outstanding at 2009 fiscal year end:

Gene Hoffman

300,000(2)

(2)	As of December 31, 2009, 75,000 of these options were vested. On March 8, 2010, the remaining 225,000 options expired in connection with his resignation.

(3)	Mr. Hoffman’s Board of Directors and Service and Indemnification Agreement was terminated as of March 8, 2010 in connection with his resignation from the Board of Directors.

Our Board of Directors

Our directors hold office until the next annual meeting of our shareholders or until their successors are duly elected and qualified. There have been no material changes to the procedures by which stockholders can nominate directors.

The Company has not adopted a written code of ethics.

Director Independence

We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our Board comprised of a majority of “independent directors,” nor is our sole director considered to be independent under the definition of independence used by any national securities exchange or any inter-dealer quotation system.

Leadership Structure

The chairman of our board of directors also served as our chief operating officer. Our board of directors does not have a lead independent director. Our board of directors has determined that its leadership structure is appropriate and effective in light of the limited number of individuals in our management team and that we currently only have one director. Our board of directors believes having a single individual serve as both chairman and chief operating officer provides clear leadership, accountability and promotes strategic development and execution as our company executes our strategy. Our board of directors also believes that there is a high degree of transparency among the board of directors and company management.

Risk Management

Our board of directors oversees the risk management of our company and each of our subsidiaries. Our board of directors regularly reviews information provided by management in order for our board of directors to oversee the risk identification, risk management and risk mitigation strategies. Our board considers, as appropriate, risks among other factors in reviewing our strategy, business plan, budgets and major transactions.

Meetings

Our board of directors held regularly scheduled monthly meetings during fiscal year 2010 and special BOD meetings as appropriate throughout 2010 to address business issues as they arose. No director who served as a director during the past year attended fewer than 75% of the aggregate of the total number of meetings of our board of directors.

Committees of Our Board of Directors

The Board of Directors has no nominating, or compensation committee, and does not have an “audit committee financial expert”. Our board of directors currently acts as our audit committee. There are no family relationships among members of management or the Board of Directors of the Company.

Director Nomination Process

The formal process used during fiscal year 2010 was for existing Board of Directors members and executive management including officers of the company to nominate and elect Board of Director members. In evaluating director nominees, our board of directors will consider, among others, the following factors:

	Integrity
	Independence
	Diversity of viewpoints and backgrounds
	Extent of experience
	Length of service
	Number of other board and committee memberships
	Leadership qualities
	Ability to exercise sound judgment

The Company is currently seeking additional members for its board of directors.

Compensation Committee Interlocks and Insider Participation

The Company does not currently have a compensation committee.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial ownership of Common Stock (1) by each person who is known by us to beneficially own more than 5% of Common Stock, (2) by each of the named executive officers and directors; and (3) by all of the named executive officers and directors as a group, as of March 31, 2011.

Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is c/o Helix Wind, Corp., 13125 Danielson Street, Suite 101, Poway, CA 92064.

NAME OF OWNER	TITLE OF CLASS	NUMBER OF SHARES OWNED (1)	PERCENTAGE OF COMMON STOCK (2)

Kevin Claudio	Common Stock	1,766,710(3)	0.001%

All Officers and Directors	Common Stock	1,766,710	0.001%
As a Group (1 person)

(1) Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 31, 2011 are deemed outstanding for computing the percentage of the person holding such option or warrant but are not deemed outstanding for computing the percentage of any other person.

(2) Each percentage is based upon the total number of shares outstanding at March 31, 2011, which is 1,750,000,000, and the total number of shares beneficially owned and held by each individual at March 31, 2011, plus the number of shares that such individual has the right to acquire within 60 days of March 31, 2011.

(3) Includes 438,710 shares as to which Mr. Claudio has sole voting and investment power; and 1,328,000 shares that may be acquired through exercise of stock options.

DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue up to 1,750,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share.

The outstanding shares of Common Stock are validly issued, fully paid and non-assessable. There are currently 1,750,000,000 shares of Common Stock issued and outstanding.

The holders of our Common Stock (i) have equal ratable rights to dividends from funds legally available therefore, when, as and if declared by our Board of Directors; (ii) are entitled to share ratably in all of our assets available for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs; (iii) do not have pre-emptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights; and (iv) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote.

The shares of our Common Stock are not subject to any future call or assessment and all have equal voting rights. There are no special rights or restrictions of any nature attached to any of the shares of our Common Stock and they all rank at equal rate or “pari passu”, each with the other, as to all benefits, which might accrue to the holders of the shares of our Common Stock. All registered shareholders are entitled to receive a notice of any general annual meeting to be convened.

At any general meeting, subject to the restrictions on joint registered owners of shares of our Common Stock, on a showing of hands every shareholder who is present in person and entitled to vote has one vote, and on a poll every shareholder has one vote for each share of our Common Stock of which he is the registered owner and may exercise such vote either in person or by proxy. Holders of shares of our Common Stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.

Preferred Stock

Our Board of Directors is authorized to issue preferred stock in one or more series, from time to time, with each such series to have such designation, relative rights, preferences or limitations, as shall be stated and expressed in the resolution or resolutions providing for the issue of such series adopted by the Board of Directors, subject to the limitations prescribed by law and in accordance with the provisions of our Articles of Incorporation, the Board of Directors being expressly vested with authority to adopt any such resolution or resolutions.

Shares of voting or convertible preferred stock could be issued, or rights to purchase such shares could be issued, to create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of our Company. The ability of the Board to issue such additional shares of preferred stock, with rights and preferences it deems advisable, could discourage an attempt by a party to acquire control of our Company by tender offer or other means. Such issuances could therefore deprive shareholders of benefits that could result from such an attempt, such as the realization of a premium over the market price for their shares in a tender offer or the temporary increase in market price that such an attempt could cause. Moreover, the issuance of such additional shares of preferred stock to persons friendly to the Board could make it more difficult to remove incumbent managers and directors from office even if such change were to be favorable to shareholders generally. There are currently no shares of Preferred Stock issued and outstanding.

Securities Authorized for Issuance under Equity Compensation Plans

On February 9, 2009, the Company adopted the 2009 Equity Incentive Plan authorizing the Board of Directors or a committee to issue options exercisable for up to an aggregate of 13,700,000 shares of common stock. The table below sets forth information as of December 31, 2010, with respect to compensation plans under which our common stock is authorized for issuance:

Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options	Number of securities remaining available for future issuance under equity compensation plans
7,700,000	$0.01	6,000,000

Other than as described above, we do not currently have any long-term compensation plans or stock option plans. No individual grants of stock options, whether or not in tandem with stock appreciation rights known as SARs or freestanding SARs, have been made to any executive officer or any director since our inception; accordingly, no stock options have been granted or exercised by any of the officers or directors since we were founded.

Warrants

As of December 31, 2010, the Company has issued warrants to investors to purchase an aggregate of 12,994,028 shares of common stock. The warrants expire five years after their issuance and are each exercisable into a share of common stock at an exercise price of ranging from $0.75 to $1.25 per share, which exercise prices are subject to adjustment as provided in the warrants.

Convertible Securities

As of December 31, 2010, the Company has outstanding an aggregate principal balance of $959,560 of 9% Convertible Notes. The Notes mature in January of 2012 and are convertible at the option of the Company or the holder at a conversion rate of $0.50, which conversion rate is subject to adjustment as provided in the Notes. There was also one convertible note payable related party at December 31, 2010 totaling $144,837 that matures on August 22, 2012 and has a conversion rate of $0.50.

In addition, the Company issued convertible notes to St. George Investments, LLC throughout the year 2010 that have an outstanding aggregate principal balance of $2,095,522 as of December 31, 2010. In addition, as described above in “ITEM 7. Managements Discussion and Analysis of Financial Condition and Results of Operations—Recent Financings,” the Company as issued additional convertible notes to St. George during first quarter 2011.

Transfer Agent

The transfer agent for the Common Stock is Island Stock Transfer. The transfer agent’s address is 100 2nd Avenue South, St. Petersburg, FL 33701, and its telephone number is 727-289-0010.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

The Nevada Revised Statutes permits indemnification of directors, officers, and employees of corporations under certain conditions subject to certain limitations. The indemnification provided by the Company’s bylaws is intended to be to the fullest extent permitted by the laws of the State of Nevada.

The Company’s bylaws provide that the Company will indemnify any of its officers or directors who is a party or is threatened to be made a party to any suit by reason of his being a director or officer, if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. However, indemnification will not be made for any claims to which such a person has been adjudged by a court of competent jurisdiction to be liable to the Company, unless and only to the extent that the court determines the person is fairly and reasonably entitled to indemnity for such expenses.

The Company has entered into indemnification agreements with Mr. Ian Gardner (the Company’s former CEO – resigned March 8, 2010) and Mr. Scott Weinbrandt (the Company’s former CEO – resigned December 2, 2010) which provide that the Company will indemnify each of them to the fullest extent permitted by law, and as soon as practicable, against all expenses, judgments, fines, penalties and amounts paid in settlement of any claim to which such party was or is a party or other participant in because of his role as a director, officer or other agent of the Company, and which may be indemnified under applicable Nevada law.

The foregoing summaries are necessarily subject to the complete text of the statute, articles of incorporation, bylaws and agreements referred to above and are qualified in their entirety by reference thereto.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Review of Related Party Transactions

It is our policy and procedure to have all transactions with a value above $120,000, including loans, between us and our officers, directors and principal stockholders and their affiliates, reviewed and approved by a majority of our board of directors, including a majority of the independent and disinterested members of our board of directors, and that such transactions be on terms no less favorable to us than those that we could obtain from unaffiliated third parties. We believe that all of the transactions described below were reviewed and approved under the foregoing policies and procedures.

Related Party Transactions

Other than as disclosed below, since January 1, 2009 there have been no transactions, or proposed transactions, which have materially affected or will materially affect us in which any director, executive officer or beneficial holder of more than 10% of the outstanding common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest. We have no policy regarding entering into transactions with affiliated parties.

Ian Gardner and Scott Weinbrandt have entered into Board of Directors Service and Indemnification Agreements with the Company, which terms include the payment of compensation to them for their service as directors. See the “Director Compensation” section. Ian Gardner, Kevin Claudio and Scott Weinbrandt have also entered into employment agreements with the Company, which terms include the payment of compensation to them for their employment with the Company. See the “Executive Compensation” section. Mr. Gardner’s Board of Directors Service and Indemnification Agreement and Employment Agreement were both terminated as of March 8, 2010 in connection with his resignation and Separation Agreement and Release. Mr. Weinbrandt’s Board of Directors Service and Indemnification Agreement and Employment Agreement were both terminated as of December 2, 2010 in connection with his resignation from the Company.

Scott Weinbrandt entered into an agreement with the Company regarding his service on the Company’s board of advisors, which has since been terminated. Mr. Weinbrandt received 205,463 shares of the Company’s Common Stock under this agreement. Mr. Weinbrandt resigned from the Company effective December 2, 2010.

The Company has a Lease dated September 19, 2008 for the Company’s headquarters in San Diego with Brer Ventures, LLC (“Brer”). The monthly lease payment is $7,125. Ian Gardner, the former CEO and a director of the Company, owns 50% of Brer. The Company terminated the lease as of April 30, 2010.

As of December 31, 2009, the Company had a related party receivable from a Company director for $3,356. The receivable carried no interest and is due on demand. As of December 31, 2010, this balance is $0.

At December 31, 2008, convertible notes payable to related parties were $567,633. Such notes were held by the Company’s former Chief Executive Officer and director, Ian Gardner, and certain shareholder founders and co-founders of the Company. During the quarter ended March 31, 2009, $392,268 of such convertible notes payable were converted to the newly issued 9% convertible debt. The remaining $175,365 of such notes did not convert and remain as part of the 12% convertible debt.

In January 2009, the Company received $37,000 from a trust controlled by Ian Gardner; said sum to be repaid pursuant to the terms of the Settlement Agreement.

The Company has an outstanding indebtedness to East West Consulting, Ltd. in the amount of $237,505,as of March 31, 2011. The president of East West Consulting was the vice president of manufacturing of the Company.

On March 8, 2010, the Company entered into the Separation Agreement with Ian Gardner, the Company’s former CEO and a director, described above in above in “ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.”

We have purchased a policy of directors' and officers' liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances.

ITEM 14. PRINCIPAL ACCOUNTING SERVICES AND FEES

Squar, Milner, Peterson, Miranda and Williamson, LLP (“Squar Milner”) served as our independent registered public accounting firm for fiscal year 2009 and 2008. On April 1, 2010, we dismissed Squar Milner as our public accounting firm and engaged Anton & Chia, LLP (“Anton & Chia”) to serve as our public accounting firm.

The following table presents the fees billed for professional services rendered by each of Squar Milner and Anton & Chia, for the audits of our annual financial statements and audit-related matters for the years ended December 31, 2010 and December 31, 2009, respectively. All fees related to fiscal year 2010 were paid to Anton & Chia.

		FY2010 ($)				FY2009 ($)
Audit fees and professional services		$	51,527			$	189,396

(1)	Audit fees include fees and expenses for professional services rendered for the audits of our annual financial statements for the year indicated and for the review of the financial statements included in our quarterly reports for that year.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Documents filed as part of this Report:

(1) Financial Statements—all consolidated financial statements of the Company as set forth under Item 8, on page 22 of this Report.

(2) Financial Statement Schedules— As a smaller reporting company we are not required to provide the information required by this item.

(3) Exhibits

Exhibit Number	Description
2.1	Agreement dated as of January 28, 2009, by and among Clearview Acquisitions, Inc., Helix Wind Acquisition Corp. and Helix Wind, Inc. (1)
2.2	Articles of Merger. Plan of Merger by and among Terrapin Enterprises, Inc. and Black Sea Oil, Inc.dated December 6, 2006
3.1	Articles of Incorporation of the Company(2)
3.2	Amendment to Articles of Incorporation of the Company effective April 16, 2009. (3)
3.2	Bylaws of the Company (4)
3.3	Plan and Agreement of Merger of Helix Wind Acquisition Corp. and Helix Wind, Inc.(5)
3.4	Amended and Restated Articles of Incorporation dated November 3, 2008*
4.1	Form of Registration Rights Agreement among the Company and the investors signatory thereto in the 9% Convertible Note offering.(5)
4.2	Form of Warrant for the 9% Convertible Note offering.(5)
10.1	Company Share Employee Incentive Stock Option Plan. (5)
10.2	Form of Lock-Up Letter delivered to the Company by each of Ian Gardner, Scott Weinbrandt, Kevin Claudio, Paul Ward and Steve Polaski.(5)
10.3	Employment Agreement, dated as of June 1, 2008, as amended January 26, 2009, by and between Helix Wind, Inc. and Ian Gardner.(5)
10.4	Employment Agreement, dated as of June 1, 2008, as amended January 26, 2009, by and between Helix Wind, Inc. and Scott Weinbrandt. (5)
10.5	Employment Agreement, dated as of December 1, 2008, as amended January 26, 2009, by and between Helix Wind, Inc. and Kevin Claudio.(5)
10.6	Form of 9% Convertible Note. (5)
10.7	Board of Directors Service and Indemnification Agreement dated as of March 12, 2008, by and between Helix Wind, Inc. and Ian Gardner, as amended March 13, 2008. (5)
10.8	Board of Directors Service and Indemnification Agreement dated as of March 13, 2008, by and between Helix Wind, Inc. and Scott Weinbrandt, as amended March 13, 2008. (5)
10.9	Lease dated September 19, 2008, between Helix Wind, Inc. and Brer Ventures, LLC (5)
10.10	Assignment and Assumption Agreement dated February 11, 2009, by and between Helix Wind, Inc., and the Company (6)
10.11	Subscription Agreement dated March 31, 2009, between the Company and Whalehaven Capital Fund Limited. (6)
10.12	Convertible Promissory Note dated March 31, 2009, issued by the Company to Whalehaven Capital Fund Limited. (6)
10.13	Service and Indemnification Agreement dated as of June 16, 2009 with Gene Hoffman (7)
10.14	Form of Subscription Agreement dated July 8, 2009 (8)
10.15	Form of Convertible Promissory Note dated July 8, 2009 (8)
10.16	Form of Common Stock Purchase Warrant dated July 8, 2009 (8)
10.17	Placement Agency Agreement dated August 4, 2009 between Helix Wind, Corp. and Dominick & Dominick LLC (9)
10.18	Purchase Agreement, dated September 2, 2009, by and among Helix Wind Corp., Venco Power GmbH, Fiber-Tech Products GmbH, Weser Anlagentechnik Beteiligungs GmbH, CLANA Power Systems GmbH, Reinhard Caliebe, Andreas Gorke and Matthias Pfalz (10)
10.19	Form of Secured Promissory Note (10)
10.20	Form of Lock Up Agreement (10)
10.21	Form of Put Right Agreement (10)
10.22	Purchase Agreement, dated as of September 9, 2009, by and among Helix Wind, Corp., Helix Wind, Inc., Abundant Renewable Energy, LLC, Renewable Energy Engineering, LLC, Robert W. Preus and Helen M. Hull (11)
10.23	Form of Lock Up Agreement (11)
10.24	Note and Warrant Purchase Agreement, dated as of January 27, 2010, is entered into by and between Helix Wind, Corp., a Nevada corporation and St. George Investments, LLC, an Illinois limited liability company (12)
10.25	Convertible Secured Promissory Note dated as of January 27, 2010, in the aggregate principal amount of $780,000 issued to St. George Investments, LLC (12)
10.26	Warrant to purchase shares of common stock of Helix Wind, Corp. (12)
10.27	Stock Pledge Agreement is entered into as of the 27th day of January, 2010 by and between St. George Investments, LLC and Ian Gardner (12)
10.28	Amendment to Note and Warrant Purchase Agreement, dated as of February 4, 2010, by and between the Company and St. George Investments, LLC (13)

10.29	Note Purchase Agreement dated March 5, 2010 (14)
10.30	Convertible Secured Promissory Note dated March 5, 2010 (14)
10.31	Separation Agreement dated March 8, 2010 (14)
10.32	Convertible Note dated February 28, 2010 (14)
10.33	Amendment No. 3 to Placement Agent Agreement dated March 8, 2010 (14)
10.34	Note and Warrant Purchase Agreement dated March 30, 2010 (15)
10.35	Convertible Secured Promissory Note dated March 30, 2010 (15)
10.36	Warrant to Purchase Shares of Common Stock dated March 30, 2010 (15)
10.37	Form of Additional Note (15)
10.38	Form of Additional Warrant (15)
10.39	Registration Rights Agreement dated March 30, 2010 (15)
10.40	Consent to Entry of Judgment by Confession dated March 30, 2010 (15)
10.41	Irrevocable Transfer Agent Instruction Letter dated March 30, 2010 (15)
10.42	Pledge Agreement dated March 30, 2010 (15)
10.43	Settlement Agreement and Mutual Release dated March 30, 2010 (15)
10.44	Escrow Agreement dated March 30, 2010 (15)
10.45	Employment Agreement with Scott Weinbrandt (16)
10.46	Employment Agreement with Kevin Claudio (16)
10.47	Amendment No. 4 to Placement Agency Agreement (17)
10.48	Note and Warrant Purchase Agreement dated August 10, 2010 (18)
10.49	Convertible Secured Promissory Note dated August 10, 2010 (18)
10.50	Consent to Entry Judgment by Confession dated August 10, 2010 (18)
10.51	Irrevocable Transfer Agent Instruction Letter dated August 10, 2010 (18)
10.52	Note and Warrant Purchase Agreement dated January 11, 2011 (19)
10.53	Form of First Note and Additional Note (19)
10.54	Consent to Entry Judgment by Confession dated January 11, 2011 (19)
10.55	Irrevocable Transfer Agent Instruction Letter dated January 11, 2011 (19)
10.56	Purchase and Exchange Agreement dated March 21, 2011 (20)
10.57	Purchase and Exchange Agreement dated March 21, 2011 (20)
10.58	Secured Convertible Promissory Note dated March 21, 2011 (20)
10.59	Secured Convertible Promissory Note dated March 21, 2011 (20)
10.60	Security Agreement dated March 21, 2011 (20)
10.61	Security Agreement dated March 21, 2011 (20)
10.62	Guaranty Agreement dated March 21, 2011 (20)
10.63	Guaranty Agreement dated March 21, 2011 (20)
10.64	Forebearance Agreement dated March 21, 2011 (20)

31.1	Certification by Principal Executive Officer pursuant to Rule 13a- 14 and Rule 15d-14 of the Securities Exchange Act of 1934.*
31.2	Certification by Principal Financial Officer pursuant to Rule 13a- 14 and Rule 15d-14 of the Securities Exchange Act of 1934.*
32.1	Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1350).*
32.2	Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 USC 1350).*

___________________

(1)	Incorporated by reference from Exhibit 10.1 to the Company’s Form 8-K filed on January 28, 2009.

(2)	Incorporated by reference from Exhibit 3.1 to the Company’s Registration Statement on Form SB-2 filed on June 1, 2006.

(3)	Incorporated by reference from the Company’s Form 8-K filed April 24, 2009

(4)	Incorporated herein by reference to Exhibit 3.2 to the Company’s Registration Statement on Form SB-2 2 filed on June 1, 2006.

(5)	Incorporated by reference from the Company’s Form 8-K filed February 11, 2009

(6)	Incorporated by reference from the Company’s Form 8-K filed April 3, 2009

(7)	Incorporated by reference from the Company’s Form 8-K filed June 17, 2009

(8)	Incorporated by reference from the Company’s Form 8-K filed July 15, 2009

(9)	Incorporated by reference from the Company’s Form 8-K filed August 6, 2009

(10)	Incorporated by reference from the Company’s Form 8-K filed September 3, 2009

(11)	Incorporated by reference from the Company’s Form 8-K filed September 15, 2009

(12)	Incorporated by reference from the Company’s Form 8-K filed February 8, 2010

(13)	Incorporated by reference from the Company’s Form 8-K filed February 10, 2010

(14)	Incorporated by reference from the Company’s Form 8-K filed March 11, 2010

(15)	Incorporated by reference from the Company’s Form 8-K filed April 6, 2010

(16)	Incorporated by reference from the Company’s Form 8K filed April 27, 2010

(17)	Incorporated by reference from the Company’s Form 8K filed August 5, 2010

(18)	Incorporated by reference from the Company’s Form 10Q filed August 11, 2010

(19)	Incorporated by reference from the Company’s Form 8K filed January 25, 2011

(20)	Incorporated by reference from the Company’s Form 8K filed March 23, 2011

* Filed herewith.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

	Helix Wind, Corp. (Registrant)

Date: July 26, 2011	/s/ Kevin Claudio
	By:	Kevin Claudio
	Title:	Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS , that each of the undersigned, being a director or officer of Helix Wind, Corp., a Nevada corporation, hereby constitutes and appoints Kevin Claudio, acting individually, as his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead in any and all capacities, to sign any and all amendments to this annual report on Form 10-K/A and to file the same, with all exhibits thereto and all other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done that such annual report and its amendments shall comply with the Securities Act, and the applicable rules and regulations adopted or issued pursuant thereto, as fully and to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them or their substitute or resubstitute, may lawfully do or cause to be done by virtue hereof.

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date

/s/ JAMES TILTON James Tilton	Chief Operating Officer, and Director (Principal Executive Officer)	July 26, 2011

/s/ KEVIN CLAUDIO Kevin Claudio	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	July 26, 2011

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-2

Consolidated Balance Sheets	F-3

Consolidated Statements of Operations	F-4

Consolidated Statements of Stockholders’ Deficit	F-5

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Helix Wind, Corp.

We have audited the accompanying consolidated balance sheets of Helix Wind, Corp. (the "Company"), as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Helix Wind, Corp. as of December 31, 2010 and 2009, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements have been restated as discussed in Note 2.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a loss from operations and an accumulated deficit of $43,990,692 at December 31, 2010. As discussed in Note 2 to the financial statements, a significant amount of additional capital will be necessary to advance operations to the point at which Company is profitable. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Anton & Chia, LLP

Newport Beach, California

March 31, 2011, except for Note 2, which is dated as of July 26, 2011

F-2

HELIX WIND, CORP.

CONSOLIDATED BALANCE SHEETS

December 31, 2010 and 2009

	2010			2009
	(As restated)
ASSETS

CURRENT ASSETS
Cash	$	87,395		$	-
Accounts receivable, net		-			44,861
Related party receivable		-			3,356
Inventory		-			202,119
Prepaid expenses and other expenses		2,475			10,600
Total current assets		89,870			260,936

EQUIPMENT, net		291,981			414,668
PATENTS		79,916			63,930

Total assets	$	461,767		$	739,534

LIABILITIES AND STOCKHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable	$	936,858		$	1,120,020
Accrued compensation		291,117			350,264
Accrued interest		380,977			401,057
Accrued other liabilities		94,404			11,493
Accrued taxes		16,114			-
Deferred revenue		34,494			28,244
Related party payable		-			59,904
Short term debt		543,164			930,528
Convertible notes payable to related party, net of discount		144,837			-
Convertible notes payable, net of discount		53,265			4
Derivative liability		4,120,046			30,854,755
Total current liabilities		6,615,276			33,756,269

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued or outstanding
Common stock, $0.0001 par value, 1,750,000,000 shares authorized, 1,021,482,054 and 39,256,550, shares issued and outstanding as of December 31, 2010 and 2009, respectively		102,148			3,926
Additional paid in capital		37,735,035			22,888,624
Accumulated deficit		(43,990,692	)		(55,909,285	)
Total stockholders’ deficit		(6,153,509	)		(33,016,735	)

Total liabilities and stockholders’ deficit	$	461,767		$	739,534

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

F-3

HELIX WIND, CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2010 and 2009

	2010			2009
	(As restated)
REVENUE	$	104,957		$	1,239,374

COST OF SALES		73,798			950,046

GROSS MARGIN		31,159			289,328

OPERATING EXPENSES
Research and development		278,068			1,343,052
Selling, general and administrative		2,931,250			18,666,568
Total operating expenses		3,209,318			20,009,620

LOSS FROM OPERATIONS		(3,178,159	)		(19,720,292	)

OTHER INCOME (EXPENSE)
Interest income		436			81
Interest expense		(8,583,331	)		(22,344,073	)
Loss on debt extinguishment		-			(12,038,787	)
Change in fair value of derivative liability		25,893,884			1,005,573
Loss on acquisition termination		(2,158,591	)		-
Lawsuit settlement costs		(54,846	)		-
Total other income (expense)		15,097,552			(33,377,206	)

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES		11,919,393			(53,097,498	)

PROVISION FOR INCOME TAXES		(800	)		(800	)

NET INCOME (LOSS)	$	11,918,593		$	(53,098,298	)

NET INCOME (LOSS) PER SHARE - BASIC	$	0.05		$	(1.58	)
NET INCOME (LOSS) PER SHARE - DILUTED	$	0.01		$	(1.58	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		237,584,603			33,523,571
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		1,750,000,000			33,523,571

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

F-4

HELIX WIND, CORP.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Years Ended December 31, 2010 and 2009

	Common Stock				Additional Paid-In			Accumulated			Total Stockholder’s
	Shares		Par Value		Capital			Deficit			Deficit
	(As restated)		(As restated)		(As restated)			(As restated)			(As restated)

BALANCE – December 31, 2008 (1)		20,546,083	$	2,055	$	273,045		$	(2,810,987	)	$	(2,535,887	)
Stock issued upon reverse merger		16,135,011		1,614		(68,028	)		-			(66,414	)
Share based payments		-		-		15,298,100			-			15,298,100
Stock issued upon note conversion		753,632		75		1,654,491			-			1,654,566
Stock issued upon note conversion and warrant exercise		1,718,217		172		5,731,026			-			5,731,198
New stock issuance		103,607		10		(10	)		-			-
Net loss		-		-		-			(53,098,298	)		(53,098,298	)
BALANCE – December 31, 2009		39,256,550	$	3,926	$	22,888,624		$	(55,909,285	)	$	(33,016,735	)
Share based payments		-		-		153,928			-			153,928
Stock issued upon note conversion and warrant exercise		921,071,430		92,107		11,347,272			-			11,439,379
New stock issuance		61,154,074		6,115		3,345,211			-			3,351,326
Net income		-		-		-			11,918,593			11,918,593

BALANCE – December 31, 2010		1,021,482,054	$	102,148	$	37,735,035		$	(43,990,692	)	$	(6,153,509	)

(1)	The December 31, 2008 capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction. See note 2.

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

F-5

HELIX WIND, CORP

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2010 and 2009

	2010			2009
	(As restated)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	11,918,593		$	(53,098,298	)
Adjustments to reconcile net income (loss) to net cash used in operations:
Depreciation		122,687			146,522
Allowance for doubtful accounts		39,036			36,607
Reserve for inventory obsolescence		88,564			-
Loss on ARE agreement termination		2,158,591			-
Gain on issuance of stock for company expenses		(416	)		-
Amortization of debt discount		54,562			-
Write off of debt discount on converted debt		3,840,082			700,232
Stock based compensation expense		153,928			15,298,100
Change in fair value of derivative warrant liability		(25,893,884	)		(1,005,600	)
Interest recorded in relation to the derivative liability		2,467,433			21,614,066
Loss on debt extinguishment		-			12,038,787
Issuance of a note in lieu of expenses incurred on behalf of the Company		-			28,164
Issuance of stock for accounts payable		178,970			-
Issuance of stock for consulting services		360,000			-
Issuance of stock for note amendment		4,000			-
Issuance of stock for fund raising		577,000			-
Issuance of stock for payment of debt		1,887,000			-
Changes in operating assets and liabilities:
Accounts receivable		5,825			(81,468	)
Related party receivable		3,356			-
Inventory		113,555			203,976
Prepaid NRE tooling		-			21,734
Other current assets		5,517			40,992
Accounts payable		(110,462	)		926,080
Accrued compensation		102,357			201,170
Accrued interest		316,138			245,740
Deferred revenue		6,250			(345,354	)
Accrued other liabilities		4,616			(1,299	)
Accrued taxes		-			(10,156	)
Related party payable		(59,904	)		37,471
Net cash used in operating activities		(1,656,606	)		(3,002,534	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment		-			(373,673	)
Patents		(13,378	)		(45,002	)
Cash used in investing activities		(13,378	)		(418,675	)

CASH FLOWS FROM FINANCING ACTIVITIES
Cash from merger with Clearview		-			270,229
Proceeds from short term notes payable		130,000			790,000
Principal payments on short term notes		(459,621	)		(75,000	)
Proceeds from convertible notes		2,087,000			2,430,000
Net cash provided by financing activities		1,757,379			3,415,229

NET INCREASE (DECREASE) IN CASH		87,395			(5,980	)

CASH BALANCE – beginning of year		-			5,980

CASH BALANCE – end of year	$	87,395		$	-

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for taxes	$	800		$	800

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Exchange of 12% notes to 9% notes	$	-		$	2,047,214
Conversion of convertible debt to non-convertible debt	$	-		$	187,365
Convertible notes in lieu of payables	$	-		$	291,057
Debt discount on embedded conversion features	$	-		$	4,893,033
Conversion of accrued interest to convertible debt	$	-		$	199,439
Common stock issued upon merger with Clearview	$	-		$	1,614
Net liabilities assumed in Clearview merger	$	-		$	66,414
Accrued interest on convertible notes payable converted to additional paid in capital	$	316,218		$	-
Financing charge for violation of St. George note	$	960,500		$	-
Issuance of convertible note in lieu of liabilities owned to former CEO	$	144,837		$	-
Interest charge for penalty in violation of short term debt	$	20,000		$	-
Reclass of derivative liability to additional paid in capital due to conversion of notes payable	$	4,072,146		$	-
Escrow of shares for former employee related to St. George bridge financing	$	480		$	-
Conversion of convertible notes payable to additional paid in capital	$	3,603,457		$	-
Conversion of warrants to additional paid in capital	$	738,012		$	-
Conversion of convertible notes and warrants into common stock and new issues	$	98,222		$	214

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

F-6

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

1.	ORGANIZATION

Helix Wind, Corp. (“Helix Wind”) was incorporated under the laws of the State of Nevada on January 10, 2006 (Inception) and has its headquarters located in Poway, California. Helix Wind was originally named Terrapin Enterprises, Inc. On February 11, 2009, Helix Wind's wholly-owned subsidiary, Helix Wind Acquisition Corp. was merged with and into Helix Wind, Inc. (“Subsidiary”), which survived and became Helix Wind’s wholly-owned subsidiary (the “Merger”). On April 16, 2009, Helix Wind changed its name from Clearview Acquisitions, Inc. to Helix Wind, Corp., pursuant to an Amendment to its Articles of Incorporation filed with the Secretary of State of Nevada. Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Subsidiary prior to the Merger, and Helix Wind, Corp. and the Subsidiary combined thereafter.

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the Company’s consolidated financial statements. Such financial statements and accompanying notes are the representation of the Company’s management, who is responsible for their integrity and objectivity.

Restatement

The Company is restating its financial statements for the year ended December 31, 2010 for a correction of an error reported for that period. The Company had previously recorded an increase in its derivative liability and a charge to interest expense for potential shares outstanding if all common stock equivalents were converted that would be in excess of the Company’s authorized amount. These potential shares, however, were already accounted for in the derivative liability calculation. The effects of the restated amounts, net of income taxes, are as follows:

	AS FILED	AS RESTATED
Derivative liability	$7,652,022	$4,120,046
Total current liabilities	$10,147,252	$6,615,276
Total stockholders’ deficit	($9,685,485)	($6,153,509)
Interest expense	$12,115,307	$8,583,331
Total other income	$11,565,576	$15,097,552
Net income	$8,386,617	$11,918,593
Earnings per share - basic	$0.04	$0.05
Earnings per share - diluted	$0.00	$0.01

Reverse Merger Accounting

Since former Subsidiary security holders owned, after the Merger, approximately 80% of Helix Wind’s shares of common stock, and as a result of certain other factors, including that all members of the Company’s executive management are from Subsidiary, the Subsidiary is deemed to be the acquiring company for accounting purposes and the Merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). These consolidated financial statements reflect the historical results of Subsidiary prior to the Merger and that of the combined Company following the Merger, and do not include the historical financial results of Helix Wind (formerly Clearview Acquisitions, Inc.) prior to the completion of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger. In conjunction with the Merger, the Company received cash of $270,229 and assumed net liabilities of $66,414.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) as promulgated in the United States of America.

F-7

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Consolidated Financial Statements

The accompanying audited consolidated financial statements primarily reflect the financial position, results of operations and cash flows of Subsidiary (as discussed above). The accompanying audited consolidated financial statements of Subsidiary have been prepared in accordance with GAAP pursuant to the instructions to Form 10-K and Article 10 of Regulation S-X of the Securities and Exchange Commission.

Use of Estimates

In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the recognition of revenues, the estimate of the allowance for doubtful accounts, the estimate of inventory reserves, estimates of loss contingencies, valuation of long-lived assets, deferred revenues, accrued other liabilities, and valuation assumptions related to share based payments and derivative liabilities.

Going Concern

The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has an accumulated deficit of approximately $44,000,000 and $56,000,000 at December 31, 2010 and 2009 respectively, with recurring losses from operations and negative cash flow from operating activities from inception to December 31, 2010. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitability. During 2009 and for the year ended December 31, 2010, the Company raised funds through the issuance of convertible notes payable to investors and through a private placement of the Company’s securities to investors to provide working capital to finance the Company’s operating and investing activities. As disclosed in the Form 8K filed with the SEC on January 25, 2011, the Company closed a financing transaction under a note and purchase agreement with St. George Investments, LLC. Currently, the transaction has resulted in funding of $150,000 with the potential to receive an additional $250,000 over the next 90 days. In addition, as disclosed in the Form 8K filed with the SEC on March 23, 2011, the Company closed a financing transaction under a note and purchase agreement with St. George Investments, LLC that resulted in funding of $100,000. The Company plans to obtain additional financing through the sale of debt or equity securities. There can be no assurance that such financings will be available on acceptable terms, or at all.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and wholly-owned Subsidiary. All intercompany transactions and balances have been eliminated in consolidation.

Trade Accounts Receivable

The Company records trade accounts receivable when its customers are invoiced for products delivered and/or services provided. Management develops its estimate of this allowance based on the Company’s current economic circumstances and its own judgment as to the likelihood of ultimate payment. Actual collections may differ from these estimated amounts. Actual receivables are written off against the allowance for doubtful accounts when the Company has determined the balance will not be collected. The balance in the allowance for doubtful accounts is $72,643 and $36,607 as of December 31, 2010 and 2009, respectively.

F-8

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The Company does not require collateral from its customers, but performs ongoing credit evaluations of its customers’ financial condition. Credit risk with respect to the accounts receivable is limited because of the large number of customers included in the Company’s customer base and the geographic dispersion of those customers.

Patents

Patents represent external legal costs incurred for filing patent applications and their maintenance, and purchased patents. Amortization for patents is recorded using the straight-line method over the lesser of the life of the patent or its estimated useful life. No amortization has been taken on these expenditures in accordance with Company policy not to depreciate patents until the patent has been approved and issued by the United States Patent Office or by the various international patent authorities.

Inventory

The Company has historically contracted with East West Consulting, Ltd. (“East West”) in Thailand to manage the outsourcing of manufacturing for the Company’s wind turbines. East West directly places orders with suppliers based on a demand schedule provided by the Company. Each supplier holds various quantities in their finished goods inventory for a specified period before it is shipped on behalf of the Company. For finished goods, inventory title passes to the Company when payments have been made to East West for these items. Payments that the Company makes to East West for inventory that is still in process are recognized as prepaid inventory. The suppliers bear the risk of loss during manufacturing as they are fully insured for product within their warehouse. The Company records its finished goods inventory at the lower of cost (first in first out) or net realizable value. At December 31, 2010, the Company’s inventory totaled $0 as an inventory reserve for $88,564 was recorded for the inventory at various suppliers. At December 31, 2009, inventory at various suppliers or at the Company totaled $202,119. In addition, the Company makes progress payments to East West for inventory being manufactured but not yet completed in the form of prepaid inventory. There was no prepaid inventory at December 31, 2010 or 2009. On January 23, 2011, the Company received notice from East West that East West deems the Professional Services Agreement dated June 14, 2008 between the Company and East West to be “null and void” due to the Company's past due amounts owed to East West and not being able to resolve at this time.

Impairment of Long-Lived Assets

Long-lived assets must be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. No impairment losses were recognized at December 31, 2010 or 2009.

Equipment

Equipment is stated at cost, and is being depreciated using the straight-line method over the estimated useful lives of the related assets ranging from three to five years. Non Recurring Equipment (NRE) tooling that was placed in service and paid in full as of December 31, 2010 and 2009 is recognized as fixed assets and being depreciated over 5 years. Tooling that has been partially paid for as of December 31, 2010 and 2009 is recognized as a prepaid expense. Costs and expenses incurred during the planning and operating stages of the Company’s website are expensed as incurred. Costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website’s estimated useful life or period of benefit. Expenditures for repairs and maintenance are charged to expense in the period incurred. At the time of retirement or other disposition of equipment and website development, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in results of operations.

Advertising

The Company expenses advertising costs as incurred. During the year ended December 31, 2010 and 2009, the company expensed $9,615 and $44,896, respectively, in advertising expenses, which are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

F-9

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Research and Development Costs

Costs incurred for research and development are expensed as incurred. Purchased materials that do not have an alternative future use and the cost to develop prototypes of production equipment are also expensed. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets. For the year ended December 31, 2010 and 2009, research and development costs incurred were $278,068 and $1,343,052, respectively.

Deferred Revenue

The Company receives a deposit for up to 50% of the sales price when the purchase order is received from a customer, which is recorded as deferred revenue until the product is shipped. The Company had deferred revenue of $34,494 and $28,244 as of December 31, 2010 and 2009, respectively, relating to deposits received for unshipped units.

Derivative Liabilities and Classification

Income Taxes

In July 2009, ASC 740, Income Taxes, establishes single model to address accounting for uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted the provisions of ASC-740. Upon adoption, the Company recognized no adjustment in the amount of unrecognized tax benefits.

Share Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718-20 (formerly SFAS 123-R, Share Based Payment). Share-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

The Company estimates the fair value of employee stock options granted using the Black-Scholes Option Pricing Model. Key assumptions used to estimate the fair value of stock options include the exercise price of the award, the fair value of the Company’s common stock on the date of grant, the expected option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on the Company’s common stock.

Revenue Recognition

The Company’s revenues are recorded in accordance with the FASB ASC No. 605, “Revenue Recognition.” The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

F-10

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

The fair value accounting guidance defines fair value as “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.” The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows:

●	Level 1: Observable inputs such as quoted prices in active markets;

●	Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

●	Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

FINANCIAL INSTRUMENTS The estimated fair values of our financial assets and liabilities that are recognized at fair value on a recurring basis, using available market information and other observable data are as follows:

	December 31, 2010								December 31, 2009
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	Quoted Prices in Active Markets or Identical Assets		Significant Other Observable Inputs		Significant Unobservable Input				Quoted Prices in Active Markets or Identical Assets		Significant Other Observable Inputs		Significant Unobservable Input
Assets:
Cash	$	87,395	$	-	$	-	$	87,395	$	-	$	-	$	-	$	-
Total assets	$	87,395	$	-	$	-	$	87,395	$	-	$	-	$	-	$	-

Liabilities:
Derivative liability		-		7,652,022		-		7,652,022				30,854,755		-		30,854,755
Total liabilities	$	-	$	7,652,022	$	-	$	7,652,022	$	-	$	30,854,755	$	-	$	30,854,755

The carrying value of the derivative liability is considered to approximate fair market value, as the input and assumptions used in its valuation are based on significant other observable inputs of variable reference rates and volatilities.

Basic and Diluted Loss per Share

The Company calculates basic and diluted net income (loss) per share using the weighted average number of common shares outstanding during the periods presented.

Potentially dilutive common stock equivalents would include the common stock issuable upon the exercise of warrants, stock options and convertible debt. As of December 31, 2010, the diluted common stock equivalents totaled 1,750,000,000 which equals the total authorized common shares for the Company. We incurred a net loss for year ended December 31, 2009, and as such, did not include the effect of potentially dilutive common stock equivalents in the diluted net loss per share calculation, as the effect would be anti-dilutive for the period. As of December 31, 2009, all potentially dilutive common stock equivalents not included in diluted loss per share as they would be anti-dilutive amount to 26,257,314.

F-11

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

Recently Adopted Accounting Pronouncements

In October 2009, The FASB issued authoritative guidance that amends earlier guidance addressing the accounting for contractual arrangements in which an entity provides multiple products or services (deliverables) to a customer. The amendments address the unit of accounting for arrangements involving multiple deliverables and how arrangement consideration should be allocated to the separate units of accounting, when applicable, by establishing a selling price hierarchy for determining the selling price of a deliverable. The selling price used for each deliverable will be based on vendor-specific objective evidence if available, third-party evidence if vendor-specific objective evidence is not available, or estimated selling price if neither vendor-specific objective evidence nor third-party evidence is available. The amendments also require that arrangement consideration be allocated at the inception of an arrangement to all deliverable using the relative selling price method. The guidance is effective for fiscal years beginning on or after June 15, 2010, with earlier application permitted. The adoption of this guidance did not have a material effect to our consolidated financial statements.

In October 2009, the FASB issued authoritative guidance that amends earlier guidance for revenue arrangements that include both tangible products and software elements. Tangible products containing software components and non-software components that function together to deliver the tangible product’s essential functionality are no longer within the scope of guidance for recognizing revenue from the sale of software, but would be accounted for in accordance with other authoritative guidance. The guidance is effective for fiscal years beginning on or after June 15, 2010, with earlier application permitted. The adoption of this guidance did not have a material effect to our consolidated financial statements.

In January 2010, the FASB issued revised authoritative guidance that requires more robust disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2 and 3. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009 (which is January 1, 2010 for the Company) except for the disclosures about purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years (which is January 1, 2011 for the Company). Early application is encouraged. The revised guidance was adopted as of January 1, 2010. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position, results of operations and cash flows.

F-12

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

3.	RELATED PARTY TRANSACTIONS AND CONVERTIBLE NOTES PAYABLE TO RELATED PARTIES

As of December 31, 2010, there was no related party receivable. At December 31, 2009, the Company had a related party receivable from a Company director for $3,356. The receivable carried no interest and is due on demand.

At December 31, 2009, the Company had an unsecured related party payable to Fidelis Charitable Trust bearing no interest, payable on demand, in the amount of $59,904. The Company’s former Chief Executive Officer is a 50% trustee of the trust.

As of December 31, 2010, the Company had a convertible note payable to a related party for $144,837. Such note is held by the Company’s former Chief Executive Officer. At December 31, 2009, convertible notes payable to related parties were $175,365. Such notes were held by the Company’s Chief Executive Officer and a shareholder founder of the Company. Such notes did not convert and remained as part of the 12% convertible debt.

EQUIPMENT

Equipment consisted of the following as of December 31, 2010 and December 31, 2009:

	2010			2009

Equipment	$	49,260		$	49,260
NRE tooling		424,903			424,903
Test facility		83,477			100,560
Leasehold improvements		10,254			10,254
Web site development costs		13,566			13,566
		581,460			598,543
Accumulated depreciation		(289,479	)		(183,875	)

	$	291,981		$	414,668

DEBT

Short Term Debt

Short term debt was $543,164 as of December 31, 2010 and $930,528 at December 31, 2009.

At December 31, 2010, this included two promissory notes from non-related parties totaling $95,000. The promissory notes have an interest rate of 20% and were extended in the first quarter 2010. In addition, short term debt includes $348,164 and $100,000 received from two non-related parties during 2009. The two promissory notes have a term of 1 year and accrue interest at prime (3.25% at December 31, 2010) plus 1%.

At December 31, 2009, short term debt represents a Subsidiary 12% related party note totaling $115,365, and two non-related party Subsidiary 12% note holders totaling $72,000 that elected not to convert as part of the note exchange offered with the Merger. In addition, short term debt included $568,163 and $100,000 received from two non-related parties during 2009. The two promissory notes have a term of 1 year and accrue interest at prime (3.25% at December 31, 2009) plus 1%. Also included in short term debt was the receipt of $37,500 each from each of the two non related parties in fourth quarter 2009. The promissory notes had a term of 90 days and an interest rate of 20%.

F-13

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

5.	DEBT (Continued)

Convertible Notes Payable and Convertible Notes Payable to Related Party

Convertible notes payable totaled $3,199,919 as of December 31, 2010 as described below. In connection with the convertible notes payable issued, the Company issued an aggregate of 15,797,888 warrants. As of December 31, 2010, the outstanding warrants were 12,994,028. All of the convertible notes payable and warrants contain an anti-dilution provision which “re-set” the related conversion rate and exercise price, if any subsequent equity linked instruments are issued with rates lower than those of the outstanding equity linked instruments. The accounting literature related to the embedded conversion feature and warrants issued in connection with the convertible notes payable is discussed under note 6 below.

	Amount		Discount			Convertible Notes Payable, net of discount		Convertible Notes Payable Related Party, net of discount

Exchange Notes	$	859,560	$	(809,656	)	$	49,904	$	-
Reverse Merger Notes		100,000		(96,639	)		3,361		-
New Convertible Notes		2,240,359		(2,095,522	)		-		144,837
	$	3,199,919	$	(3,001,817	)	$	53,265	$	144,837

Exchange Notes – Convertible Notes Payable and Convertible Notes Payable to Related Party, net of discount

During the year ended December 31, 2010, $1,451,582 of the Exchange Notes was converted into common stock (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). The Company is amortizing the remaining portion of debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the year ended December 31, 2010, there was $49,904 amortized under this amortization method.

Reverse Merger Notes-Convertible Notes Payable, net of discount

During the year ended December 31, 2010, $100,000 of the Reverse Merger Notes was converted into common stock (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). The Company is amortizing the debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the year ended December 31, 2010, there was $3,361 amortized under this amortization method.

New Convertible Notes-Convertible Notes Payable, net of discount

During the year ended December 31, 2010, $1,978,175 of the New Convertible Notes were converted into common stock (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the note was converted). The Company is amortizing the remaining portion of debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the year ended December 31, 2010 there was $24,886 amortized under this amortization method. All of the new convertible notes, with the exception of those issued to St. George Investments and the convertible note issued to a related party, have been converted and the remaining unamortized discount has been charged to interest expense on the accompanying statement of operations. There has been no amortization under the effective interest method related to the St. George notes.

F-14

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

5.	DEBT (Continued)

During the year ended December 31, 2010, the Company’s activity related to convertible notes payable issued to St. George Investments is as follows:

During the period ended March 31, 2010, the Company issued two convertible notes to St. George Investments in the amount of $1,998,250. The note issued to St. George on January 27, 2010 was convertible six months after the date of the note. The note issued to St. George on March 30, 2010 was convertible anytime after the date of the note.

The first convertible note payable was issued to St. George on January 27, 2010 for $780,000, convertible into common stock, six months after the date of the note at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. The Company determined that the embedded conversion feature should not be calculated at fair value on issuance due to the six month contingency that had not been met. The Company recorded a discount on the convertible note of $195,000 based on the initial issuance cost (discussed below).

The Company received $585,000 in cash, the difference was considered an issuance cost (or prepaid interest) in which the Company recorded a discount to the note and amortized this discount to interest expense under the effective interest method over the life of the note. The Note did not bear interest as long as certain covenants were maintained. The note was secured by 4,800,000 registered shares of common stock of the Company that was pledged by Ian Gardner, a former officer of the Company.

If the Company was in violation of any of the related covenants, a “triggering event”, as defined by the agreement, would occur. The agreement is limited to a maximum of two triggering events. The triggering event would cause the principal balance of the note to increase by 25% for each event and the note would start to accrue interest at a rate of 18% per annum and if the triggering event caused a default, the Note holder had the option to call the pledged shares of common stock to satisfy the outstanding principal balance.

The Company violated the note’s covenants and incurred two triggering events on February 16, 2010 and February 17, 2010. The violation was a failure to maintain a minimum volume weighted average stock price. As a result of the violation, the principal balance increased by $195,000 and $243,750 on February 16, 2010 and February 17, 2010, respectively. The principal balance was increased to $1,218,750. The Company increased both the principal balance and related discount as an additional finance costs that would be amortized using the effective interest method over the life of the note.

The note was also in default on the above dates due to the covenant violations. As a result of the default, the Note holder was issued the 4,800,000 shares of Company common stock. The Company’s stock price on the violation dates was $0.51 and $0.52. The noteholder took possession of the pledged shares, 2,400,000 on each of the violation dates. The Company also issued 4,800,000 shares of common stock to Ian Gardner, a former officer of the Company, to replenish the shares that were pledged. The fair value of the shares issued was $2,472,000. The Company used the covenant violation dates as the measurement dates to value the common stock issued to satisfy the convertible note payable. The excess of the fair value of the common stock issued over the principal note payable balance was charged to the statement of operations to interest expense as an additional finance cost. The Company charged all unamortized debt discount to interest expense upon satisfaction of the outstanding balance.

The second convertible note payable was issued to St. George on March 30, 2010 for $779,500, convertible at anytime after the date of the note into common stock at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. The Company determined that the embedded conversion feature was a derivative liability based on its variable conversion terms. See Note 6 for disclosure on derivative liabilities. The Company recorded a discount on the convertible note of $779,500 based on the initial issuance cost (discussed below) and the fair value of the embedded conversion feature. The fair value of the embedded conversion feature at issuance was $1,016,257. The Company recorded a discount to the note to the extent of the note balance and charged the remainder of the fair value of the embedded conversion feature to interest expense.

F-15

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

5.	DEBT (Continued)

The Company received $592,000 in cash, the difference was considered an issuance cost (or prepaid interest) in which the Company recorded a discount to the note and will amortize this discount to interest expense under the effective interest method over the life of the note. The Note did not bear interest as long as certain covenants were maintained. The note was secured by 4,800,000 registered shares of common stock of the Company that was pledged by Ken Morgan, a former officer of the Company. If the Company was in violation of any of the related covenants, a “triggering event”, as defined by the agreement, would occur. The agreement is limited to a maximum of two triggering events. The triggering event would cause the principal balance of the note to increase by 25% for each event and the note would start to accrue interest at a rate of 15% per annum and if the triggering event caused a default, the Note holder had the option to call the pledged shares of common stock to satisfy the outstanding principal balance. As of March 31, 2010, the outstanding balance was $779,500. As part of the covenant compliance, the Company’s common stock must maintain a minimum volume of trading of no less than $100,000 per day on a five day average. The Company must also maintain a minimum volume weighted average price of its common stock of $0.11. The Company does not expect the stock volume and stock price to be able to maintain these minimum requirements. As such, the Company expects the note holder to take possession of the pledged shares and has put 4,800,000 shares of its common stock into an escrow account to replenish shares to Ken Morgan, a former officer of the Company.

During the period ended June 30, 2010, the Company issued three convertible notes to St. George Investments in the amount of $390,000. The notes issued in the current period are convertible anytime after the date of the note at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. The Company determined that the embedded conversion feature was a derivative liability based on its variable conversion terms. See Note 6 for disclosure on derivative liabilities. The Company recorded a discount on the convertible note of $90,000 based on the initial issuance cost (discussed below).

The Company received $300,000 in cash, the difference was considered an issuance cost (or prepaid interest) in which the Company recorded a discount to the note and amortized this discount to interest expense under the effective interest method over the life of the note. The Note did not bear interest as long as certain covenants were maintained. If the Company was in violation of any of the related covenants, a “triggering event”, as defined by the agreement, would occur. The agreement is limited to a maximum of two triggering events. The triggering event would cause the principal balance of the note to increase by 25% for each event and the note would start to accrue interest at a rate of 15% per annum.

During the period ended June 30, 2010, the Company violated the March 30, 2010 note covenants and incurred a triggering event on April 23, 2010. The violation was a failure to maintain a minimum volume weighted average stock price. As a result of the violation, the principal balance increased by $194,875. The Company increased both the principal balance and related discount as an additional finance costs that would be amortized using the effective interest method over the life of the note.

During the period ended September 30, 2010, the Company issued six convertible notes to St. George Investments in the amount of $410,500. The notes issued in the current period are convertible anytime after the date of the note at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. The Company determined that the embedded conversion feature was a derivative liability based on its variable conversion terms. See Note 6 for disclosure on derivative liabilities. The Company recorded a discount on the convertible note of $100,500 based on the initial issuance cost (discussed below).

The Company received $310,000 in cash, the difference was considered an issuance cost (or prepaid interest) in which the Company recorded a discount to the note and amortized this discount to interest expense under the effective interest method over the life of the note. The Note did not bear interest as long as certain covenants were maintained. If the Company was in violation of any of the related covenants, a “triggering event”, as defined by the agreement, would occur. The agreement is limited to a maximum of two triggering events. The triggering event would cause the principal balance of the note to increase by 25% for each event and the note would start to accrue interest at a rate of 15% per annum.

During the period ended September 30, 2010, the Company violated note covenants and incurred a triggering events on July 22, 2010. The violation was a failure to maintain a minimum volume weighted average stock price. As a result of the violation, the principal balance increased by $162,500. The principal balance of these notes was increased from $520,000 to $682,500. The Company increased both the principal balance and related discount as an additional finance costs that would be amortized using the effective interest method over the life of the note.

F-16

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

5.	DEBT (Continued)

During the period ended December 31, 2010, the Company issued five convertible notes to St. George Investments in the amount of $390,000. The notes issued in the current period are convertible anytime after the date of the note at the lower of (i) average volume-weighted average price (the “VWAP”) for the three (3) trading days with the lowest average VWAP of the twenty trading days immediately preceding the date set forth on the Conversion Notice or (ii) 50% of the VWAP over the five (5) trading days immediately preceding the date set forth in the Conversion Notice. The Company determined that the embedded conversion feature was a derivative liability based on its variable conversion terms. See Note 6 for disclosure on derivative liabilities. The Company recorded a discount on the convertible note of $90,000 based on the initial issuance cost (discussed below).

During the period ended December 31, 2010, the Company violated the August and September note covenants as well as the October, November and December note covenants and incurred two triggering events on October 12, 2010 and December 16, 2010. The violation was a failure to maintain a minimum volume weighted average stock price. As a result of the violation, the principal balance increased by $66,875 and $97,500 on October 12, 2010 and December 16, 2010, respectively. The Company increased both the principal balance and related discount as an additional finance costs that would be amortized using the effective interest method over the life of the note.

As of December 31, 2010, the St. George notes had a balance of $2,095,522.

Other Convertible Notes-Convertible Notes Payable, net of discount

During the year ended December 31, 2010, $75,000 of the Other Convertible Notes was converted into common stock (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). The Company amortized the debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the year ended December 31, 2010, all notes under this category were converted. As of December 31, 2010, the balance of other notes was $0.

Convertible Notes Payable, Related Party, net of discount

During the year ended December 31, 2010, the Company issued a convertible note payable to Ian Gardner, a former officer of the Company. The note has a principal balance of $144,837 and is convertible into common stock of the Company at a rate of $0.50. The note accrues interest at a rate of 9% per annum and all principal and accrued interest is due on August 22, 2012. The convertible feature on this convertible note payable does not contain any re-set features and is convertible at fixed rates.

The Company analyzed this note for possible discounts on the conversion feature and concluded there is no beneficial conversion feature since the stock price on the date of issuance is less than the conversion rate of $0.50. The stock price on the date of issuance was $0.20.

Warrants

At December 31, 2010, the fair value of all warrants issued in connection with convertible notes payable is estimated to be $0. Management estimated the fair value of the warrants based upon the application of the Black-Sholes option-pricing model using the following assumptions: expected life of three to five years; risk free interest rate of (1.32% - 2.69%); volatility of (75%) and expected dividend yield of zero. At the date of issuance of the exchange notes, the related Black-Sholes assumptions were: expected life of three years; risk free interest rate of 1.32%; volatility of 59% and expected dividend yield of zero.

F-17

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

6.	DERIVATIVE LIABILITIES

The Company issued financial instruments in the form of warrants and convertible notes payable with embedded conversion features. All of the convertible notes payable and warrants contain an anti-dilution provision which “re-set” the related conversion rate and exercise price if any subsequent equity linked instruments are issued with rates lower than those of the outstanding equity linked instruments. The Company also issued convertible notes payable with variable conversion rates.

The conversion features of both the convertible notes payable and warrants were analyzed for derivative liabilities under GAAP and the Company has determined that they meet the definition of a derivative liability due to the contracts obligations. Derivative instruments shall also be measured at fair value at each reporting period with gains and losses recognized in current earnings. The Company calculated the fair value of these instruments using the Black-Scholes pricing model. The significant assumptions used in the calculation of the instruments fair value are detailed in the table below.

Derivative Liability - Embedded Conversion Features

During the year ended December 31, 2010, the Company recorded derivative liabilities for embedded conversion features related to convertible notes payable of $3,219,766. During the year ended December 31, 2010, $3,604,757 of convertible notes payable was converted into common stock of the Company. The Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes and the carrying amount of the derivative liability related to the conversion feature of $4,070,148 was re-classed to additional paid in capital on the date of conversion in the accompanying statements of shareholders’ deficit. During the year ended December 31, 2010, the Company recognized a gain of $11,231,285 based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations. The value of the derivative liability associated with the embedded conversion features was $4,120,059 at December 31, 2010.

Derivative Liability - Warrants

During the year ended December 31, 2010, the Company recorded a derivative liability of $747,669 for the issuance of warrants. During the year ended December 31, 2010, 1,468,660 warrants were exercised on a cashless basis. The Company performed a final mark-to-market valuation for the derivative liability associated with the exercised warrants and the fair value carrying amount of the derivative liability on the date of exercise of $738,112 was reclassified to additional paid in capital in the accompanying statement of shareholders’ deficit. During the year ended December 31, 2010, the Company recognized a gain of $14,662,585 based on the change in fair value (mark-to-market adjustment) of the derivative liability associated with the warrants in the accompanying statement of operations. The value of the derivative liability associated with the warrants was $0 at December 31, 2010.

F-18

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

6.	DERIVATIVE LIABILITIES (Continued)

These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP.

The following table represents the Company’s derivative liability activity for both the embedded conversion features and the warrants:

December 31, 2009	$	30,854,755
Issuance of derivative financial instruments		3,967,435
Conversion or cancellation of derivative financial instruments		(4,808,260)
Mark-to-market adjustment to fair value at December 31, 2010		(25,893,884)
December 31, 2010	$	4,120,046

These instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes in the fair value will be recognized currently in earnings until such time as the instruments are exercised, converted or expire. The following assumptions were used to determine the fair value of the derivative liabilities as of December 31, 2010:

	December 31, 2010
Weighted- average volatility		59% - 75%
Expected dividends		0.0%
Expected term	3 to 5 years
Risk-free rate	1.32% to 2.95%

7.	INCOME TAXES

The items accounting for the difference between income taxes computed at the federal statutory rate and the provision for income taxes were as follows:

	For the Year Ended December 31
	2010		2009
Federal Statutory Rate		34.00%		34.00%
State Tax, Net of Federal Benefit		9.00%		8.96%
Valuation Allowance		(43.00%)		(43.00%)
Effective Income Tax Rate		0.00%		0.00%

Significant components of deferred tax assets and (liabilities) using the Company’s effective tax rate are as follows:

	For the Year Ended December 31
	2010			2009
Loss Carryforwards	$	47,522,668		$	54,197,000
Less – Valuation Allowance		(47,522,668	)		(54,197,000	)
State Tax, Net of Federal Benefit	$	-		$	-

F-19

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

7.	INCOME TAXES (Continued)

The Company periodically evaluates the likelihood of the realization of deferred tax assets, and adjusts the carrying amount of the deferred tax assets by a valuation allowance to the extent the future realization of the deferred tax assets is not judged to be more likely than not. The Company considers many factors when assessing the likelihood of future realization of our deferred tax assets, including recent cumulative earnings experience by taxing jurisdiction, expectations of future taxable income or loss, the carry-forward periods available to us for tax reporting purposes, and other relevant factors.

At December 31, 2010 and 2009, based on the weight of available evidence, including cumulative losses in recent years and expectations of future taxable income, the Company determined that it was more likely than not that its deferred tax assets would not be realized. Accordingly, the Company has recorded a valuation allowance equivalent to 100% of its cumulative deferred tax assets.

As a result of the implementation of certain provisions of ASC 740, Income Taxes, (formerly FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109), the Company performed an analysis of its previous tax filings and determined that there were no positions taken that it considered uncertain. Therefore, there was no provision for uncertain tax positions for the years ended December 31, 2010 and 2009.

Future changes in uncertain tax positions are not expected to have an impact on the effective tax rate due to the existence of the valuation allowance. The Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in its statements of operations. The Company has incurred no interest or penalties as of December 31, 2010 and 2009.

8.	STOCK BASED COMPENSATION

On February 9, 2009, the Company’s Board of Directors adopted the 2009 Equity Incentive Plan authorizing the Board of Directors or a committee to issue options exercisable for up to an aggregate of 13,700,000 shares of common stock. The Company's Share Employee Incentive Stock Option Plan was approved by the shareholders of the Company and the definitive Schedule 14C Information Statement was filed with the SEC on July 14, 2009.

The following weighted average assumptions were used in estimating the fair value of certain share-based payment arrangements:

	December 31, 2010
Annual dividends	0
Expected volatility		59% -75%
Risk-free interest rate		1.76% - 2.70%
Expected life	5 years

Since there is insufficient stock price history that is at least equal to the expected or contractual terms of the Company’s options, the Company has calculated volatility using the historical volatility of similar public entities in the Company’s industry. In making this determination and identifying a similar public company, the Company considered the industry, stage, life cycle, size and financial leverage of such other entities. This resulted in an expected volatility of 59% to 75%.

F-20

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

8.	STOCK BASED COMPENSATION (Continued)

The expected option term in years is calculated using an average of the vesting period and the option term, in accordance with the “simplified method” for “plain vanilla” stock options allowed under GAAP.

The risk free interest rate is the rate on a zero-coupon U.S. Treasury bond with a remaining term equal to the expected option term. The expected volatility is derived from an industry-based index, in accordance with the calculated value method.

The Company is required to estimate the number of forfeitures expected to occur and record expense based upon the number of awards expected to vest. At December 31, 2010, the Company expects all remaining awards issued will be fully vested over the expected life of the awards. During the year ended December 31, 2010, 6,351,240 employee options were forfeited. The Company made no adjustment for compensation previously recognized on these forfeitures as these awards were vested on the forfeiture date.

During the year ended December 31, 2010, the Company modified its stock option awards by re-pricing the options exercise price on April 22, 2010 from $0.50 to $0.10 and on June 14, 2010 from $0.10 to $0.01. The Company accounted for these re-pricing modifications by measuring the difference between the fair value of the modified awards and the fair value of the original awards on the modification date. The Company then recognized, over the remaining requisite service period, the incremental compensation cost as well as the remaining unrecognized compensation cost for the original award on the modification dates.

Stock Option Activity

A summary of stock option activity for the year ended December 31, 2010 is as follows:

	Number Shares			Weighted Average Exercise Price
Options outstanding at December 31, 2009		11,051,240		$	0.58
Granted		3,000,000			0.01
Exercised		-			-
Forfeited		(6,351,240	)		0.37
Options outstanding at December 31, 2010		7,700,000		$	0.01

The following table summarizes information about stock options outstanding and exercisable as of December 31, 2010:

	Outstanding		Exercisable

Number of shares		7,700,000		6,568,263
Weighted average remaining contractual life		3.52		3.41
Weighted average exercise price per share	$	0.01	$	0.01
Aggregate intrinsic value (December 31, 2010 closing price of $0.0011)	$	-	$	-

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price as of December 31, 2010 and the weighted average exercise price multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on December 31, 2010. This intrinsic value will vary as the Company’s stock price fluctuates.

Compensation expense arising from stock option grants was $153,928 for the year ended December 31, 2010.

The amount of unrecognized compensation cost related to non-vested awards at December 31, 2010 was $331,232. The weighted average period in which this amount is expected to be recognized is 3.12 years.

F-21

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

8.	STOCK BASED COMPENSATION (Continued)

Stock options outstanding and exercisable at December 31, 2010, and the related exercise price and remaining contractual life are as follows:

		Options Outstanding					Options Exercisable
Exercise Price		Number of Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life of Options Outstanding	Number of Options Exercisable		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life of Options Exercisable

$	0.01 $0.50		7,700,000	$	0.01	3.52 yrs		6,568,263	$	0.01	3.41 yrs

			7,700,000	$	0.01	3.52 yrs		6,568,263	$	0.01	3.41 yrs

9.	COMMON STOCK

Common Stock Issued

We are authorized to issue up to 1,750,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.0001 per share. Although the Company does not know the exact amount of dilution which may occur, the weighted average number of common shares outstanding on a diluted basis which would result from the conversion or exercise of all outstanding convertible notes, warrants and options is 1,750,000,000 as reported in the December 31, 2010 financial statements.

10.	COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company signed a revocable license agreement with Apex Telecom, LLC to rent office space at 13125 Danielson Street, Poway, California, 92064. The license period is on a month-to-month basis beginning effective April 19, 2010 through March 31, 2011, subject to certain provisions, at a current rate of $3,230 per month. The Company has extended the license period on a month to month basis at the same rate through May 31, 2011 with the landlord.

Prior to the office relocation, the Company leased its corporate office space at 1848 Commercial Street, San Diego, California, 92113 under a lease agreement with a partnership that is affiliated with a principal stockholder, who was also an executive officer, founder and a director of the Company. The lease expired on October 31, 2008, monthly rent was $200 per month for the period January 1, 2007 through February 29, 2008, and then increased to $2,000 per month for the period March 1, 2008 through October 31, 2008. The Company entered into a new lease effective November 1, 2008. The initial term of this lease for the period November 1, 2008 through October 31, 2009, specifies monthly base rent of $7,125. This lease also includes a scheduled base rent increase of 3.0% – 6.0% per year over the term of the lease based on the Consumer Price Index / All Urban Consumers – San Diego, California.

The Company leases a test facility in California for $300 per month under a lease which expired on October 31, 2008. Under a new lease effective November 1, 2008, the rent increased to $450 per month. The initial term of this lease is November 1, 2008 through October 31, 2009, with a one-year renewal option for each of the next five years with no increase in rent during the renewal periods. The lease was renewed November 1, 2009 and is currently on a month to month basis.

F-22

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

10.	COMMITMENTS AND CONTINGENCIES (Continued)

Manufacturing Agreement

The Company entered into a three year contract with East West of Thailand on June 14, 2008 to manage the manufacturing and distribution of its products. The contract can be cancelled due to gross nonperformance from East West or the failure to meet milestones. Milestones disclosed in the contract include: development of supply chain, understanding of design package of product to be manufactured, identifying approved suppliers, placing orders based on production planning and managing the implementation of a logistics warehouse for customer orders. If the contract is cancelled due to nonperformance or failure to meet the documented milestones, the Company is not obligated to pay the remainder of the contract. The monthly management fee payable to East West of $16,270 expired in June 2010. The Company paid $0 and $130,160 in management fees to East West during the year ended December 31, 2010 and 2009, respectively. The East West accounts payable was $0 and $89,485 at December 31, 2010 and 2009, respectively and the Company had a commitment to pay East West $237,505 for cost related to the prospective manufacturing of inventory and tooling. The Company will record the $237,505 as part of its inventory, tooling and other expenses when legal title transfers from East West to the Company consistent with the Company’s policy for inventory as described in Note 2. On January 23, 2011, the Company received notice from East West that East West deems the Professional Services Agreement dated June 14, 2008 between the Company and East West to be “null and void” due to the Company's past due amounts owed to East West and not being able to resolve at this time.

Legal Matters

Effective April 1, 2010, the Company completed a Settlement Agreement and Mutual Release with Kenneth O. Morgan pursuant to which the Company paid Kenneth O. Morgan the amount of $150,000 in settlement of the previously announced litigation between the parties. Pursuant to the terms of the Settlement Agreement, Kenneth O. Morgan agreed to dismiss his lawsuit against the Company and Scott Weinbrandt, and the Company agreed to dismiss it counterclaims against Kenneth O. Morgan. The Company has expensed the $150,000 in the financial statements and fully paid this amount as of June 30, 2010.

On May 21, 2010, a complaint was filed by Ian Gardner, the Company's former CEO and a director, against the Company and a director and officer of the Company asserting causes of action against the defendants for breach of certain contracts, breach of the covenants of good faith and fair dealing, fraud in the inducement, intentional and negligent misrepresentation, alter ego and declaratory relief. Mr. Gardner's suit seeks approximately $150,000 in stated damages as well as additional unstated damages. The Company has accrued its anticipated obligation of approximately $95,000 in the financial statements as of December 31, 2010. The Company has denied these allegations. This case is currently pending.

F-23

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

10.	COMMITMENTS AND CONTINGENCIES (Continued)

On September 29, 2010, the Company received a summons to appear in the Superior Court in the State of California, County of San Diego, in a lawsuit filed by Gordon & Rees LLP alleging the Company failed to pay for legal services rendered in the amount of $107,110. The Company did not respond to the lawsuit within the 30 day period required to respond. On March 8, 2011, the Superior Court of California, County of San Diego granted Gordon & Rees LLP’s request for a default judgment in the amount of $110,938 in the previously announced lawsuit against the Company. The Company does not have the cash to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

On October 6, 2010, the Company received notice issued from the Superior Court of the State of California, County of Orange, of a lawsuit filed by Bluewater Partners, S.A. (“Bluewater”) against the Company seeking damages in the amount of $647,254 relating to allegations that the Company breached its obligations to repay Bluewater under promissory notes issued by the Company. The Company has promissory notes due to Bluewater recorded on its financials in the amount of $348,164 (before accrued interest), but does not believe any additional amounts are owed to Bluewater. The Company does not have sufficient capital resources as of the date of this report to repay any amounts to Bluewater, and the Company has not responded to the lawsuit as of the date of this report. On March 2, 2011, the Company received notice that the Superior Court of the State of California, County of Orange (the “Court”) had granted Bluewater Partners, S.A. (“Bluewater”) request for a default judgment in the amount of $647,254.18 in the previously announced litigation involving the Bluewater promissory notes with the Company. The Company does not have the cash to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

Executive Compensation

An employment agreement executed with the Company’s Chief Financial Officer (CFO) on April 22, 2010 calls for a base salary of $200,000 per annum May 1, 2010 through December 31, 2010; $225,000 per annum January 1, 2011 through December 31, 2011; and $250,000 per annum beginning January 1, 2012. In addition to the salaries, the CFO has earned and is entitled to $100,000 in total bonuses from 2009 and 2010, which is accrued in the Company’s financials as of December 31, 2010.

11.	SUBSEQUENT EVENTS

Recent new accounting standards require that management disclose the date to which subsequent events have been evaluated and the basis for such date. Accordingly, management has evaluated subsequent events through March 31, 2011, the date upon which the financial statements were issued. Other than as disclosed below, management noted no subsequent events which it believes would have a material effect on the accompanying consolidated financial statements.

F-24

HELIX WIND, CORP

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended December 31, 2010 (as restated) and 2009

11.	SUBSEQUENT EVENTS (Continued)

On January 26, 2011, the Company was awarded a Notice of Allowance relating to a United States patent application that was filed in 2007. The application broadly covers segmented, helical rotors used in wind-driven turbines and will prevent competitors from making, using, or selling wind turbines similar to the company's S322 and S594 products.

On January 20, 2011, the Company’s purchase order with its distributor SWG Energy, Inc. to provide twenty-four (24) S594 wind turbines for the Oklahoma Medical Research Foundation has been cancelled due to the Company’s inability to raise sufficient capital to perform under the purchase order at this time.

On January 21, 2011, the Company received notice from legal counsel for Squar, Milner, Peterson, Miranda & Williamson, LLP (“Squar Milner”), the Company’s former independent auditor, that Squar Milner has requested a default judgment in its lawsuit against the Company. The Company previously received notice from legal counsel representing Squar Milner that it had filed a lawsuit in Orange County Superior Court regarding the alleged unpaid balanced owed by the Company to Squar Milner in the amount of approximately $73,000. The Company did not respond to the lawsuit within the 30 day period required to respond. Any judgment against the Company resulting from the lawsuit would have a material adverse effect on the Company.

On January 23, 2011, the Company received notice from East West Consulting, Ltd. (“East West”) that East West deems the Professional Services Agreement dated June 14, 2008 between the Company and East West to be “null and void” due to the inability of the Company to pay past due amounts to East West. The notice also states that East West will entertain other business arrangements which may be proposed by the Company that are in the best interest of East West.

On March 2, 2011, the Company received notice that the Superior Court of the State of California, County of Orange (the “Court”) had granted Bluewater Partners, S.A. (“Bluewater”) request for a default judgment in the amount of $647,254 in the previously announced litigation involving the Bluewater promissory notes with the Company. The Company does not sufficient funds to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

On March 8, 2011, the Superior Court of California, County of San Diego granted Gordon & Rees LLP’s request for a default judgment in the amount of $110,938 in the previously announced lawsuit against the Company. The Company does not have the cash to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

On March 11, 2011, the Company appointed James Tilton as its Chief Operating Officer and a member of the Board of Directors.

On March 21, 2011, the Company executed a Purchase and Exchange Agreement with St. George Investments, LLC, an Illinois limited liability company pursuant to which, among other things, the Company agreed to exchange 4 outstanding convertible promissory notes in the aggregate amount of $1,176,347.27 for a secured convertible promissory note in the amount of $1,176,347.27, and the Company executed a second Purchase and Exchange Agreement with the St George Investments, LLC pursuant to which, among other things, the Company agreed to exchange 14 outstanding convertible promissory notes in the aggregate amount of $1,430,441.91 for a secured convertible promissory note in the amount of $1,430,441.91. Both notes are secured by all of the assets of the Company pursuant to the terms of a Security Agreement for each of the notes. The Company’s obligations under the notes are also guaranteed by the Company’s subsidiary, Helix Wind, Inc., pursuant to the terms of a Guaranty for each of the notes. As consideration for both Exchange Agreements, St. George Investments, LLC agreed to pay the Company the sum of $100,000.00 (which sum was not added to the balance of the notes), all existing defaults under the notes were waived and all covenants thereunder were reset according to the terms of the new notes.

F-25

Attached files

Helix Wind, Corp. Reports

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