Solar Energy Initiatives, Inc. - FORM 10-Q/A

Attached files

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EX-31.2 - CERTIFICATION - Solar Energy Initiatives, Inc.	solar_10qa-ex3102.htm
EX-31.1 - CERTIFICATION - Solar Energy Initiatives, Inc.	solar_10qa-ex3101.htm
EX-32.1 - CERTIFICATION - Solar Energy Initiatives, Inc.	solar_10qa-ex3201.htm
EX-32.2 - CERTIFICATION - Solar Energy Initiatives, Inc.	solar_10qa-ex3202.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM 10-Q

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

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 2010

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

EXCHANGE ACT OF 1934

For the transition period from _______ to ________

COMMISSION FILE NUMBER 333-148155

Solar Energy Initiatives, Inc.

(Exact Name of Registrant as Specified in its Charter)

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

818 A1A North

Suite 202

Ponte Vedra Beach, Florida 32082

(Address of principal executive offices including zip code)

(904) 644-6090

Registrant’s telephone number, including area code:

Copies to:

Stephen M. Fleming, Esq.

Law Offices of Stephen M. Fleming PLLC

49 Front Street, Suite #206

Rockville Centre, New York 11570

516-833-5034 (Phone)

516-977-1209 (fax)

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

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

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

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

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

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: as of December 17, 2010 the Company had 43,528,884 shares of its common stock, par value per share $0.001, issued and outstanding.

EXPLANATORY NOTE

Solar Energy Initiatives, Inc., is filing this Amendment No. 1 to its Quarterly Report on Form 10-Q for the period ended October 31, 2010, as filed with the Securities and Exchange Commission on December 20, 2010, for the sole purpose of amending the accounting treatment of its interest in Martins Creek NC, LLC whereby we are now treating such investment as a variable interest entity as opposed to an equity investment resulting in changes to the balance sheet. This amendment does not reflect subsequent events occurring after the original filing date of the Form 10-Q or modify or update in any way the disclosures made in the Form 10-Q.

SOLAR ENERGY INITIATIVES, INC.

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

TABLE OF CONTENTS

PART I	FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS (unaudited)	4

ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS	22

ITEM 3.	QUANTITATIVE AND QUALITITATIVE DISCLOSURES ABOUT MARKET RISKS	25

ITEM 4	CONTROLS AND PROCEDURES	25

PART II	OTHER INFORMATION	26

ITEM 1.	LEGAL PROCEEDINGS	26

ITEM 1A	RISK FACTORS	26

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	33

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	34

ITEM 4.	(REMOVED AND RESERVED)	34

ITEM 5.	OTHER INFORMATION	34

ITEM 6.	EXHIBITS	35

	SIGNATURES	36

Cautionary Statement Regarding Forward-Looking Statements

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

Estimates of future financial results are inherently unreliable.

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

The following information should be read in conjunction with the Financial Statements filed on Form 10K as of July 31, 2010 and the condensed consolidated Financial Statements and the accompanying Notes to condensed consolidated Financial Statements included in this Report on Form 10-Q. Our fiscal year ends on July 31 of the applicable calendar year. All references to fiscal periods apply to our fiscal quarters or year which ends on the last day of the calendar month end.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS


	October 31, 2010			July 31, 2010
ASSETS	(unaudited)
	Restated			Restated
Current assets
Cash and cash equivalents	$	160,110		$	30,153
Accounts receivable, net		71,142			26,124
Project development costs		568,120			560,274
Inventory		220,760			208,417
Prepaid and other current assets		16,737			2,789
Total current assets		1,036,869			827,757

Intangible assets		50,480			-
Restricted Cash		874,222			-
Fixed assets, net		23,404			25,371
Deposits		3,598			3,598
Total assets	$	1,988,573		$	856,726

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
Accounts payable	$	1,159,058		$	1,158,588
Accounts payable, related parties		16,432			20,352
Commissions payable		2,382			1,882
Due to related parties		285,492			280,638
Accrued expenses		116,816			242,309
Deferred revenue		34,351			79,230
Note payable		1,222,000			-
Convertible debentures, net		279,779			144,310
Total current liabilities		3,116,310			1,927,309

Commitments and contingencies		-			-

Stockholders' deficit
Common stock, $0.001 par; 100,000,000 authorized 42,225,404 and 35,405,535 issued and outstanding, respectively		42,225			35,406
Paid-in capital		11,853,461			10,564,804
Deferred compensation		(696,948	)		(582,535	)
Common stock subscription		-			(20,000	)
Accumulated deficit		(12,276,645	)		(11,002,334	)
Total Solar Energy Initiative Inc shareholders' deficit		(1,077,907	)		(1,004,659	)
Non-controlling interest		(49,830	)		(65,923	)
Total stockholders' deficit		(1,127,737	)		(1,070,583	)
Total liabilities and stockholders' deficit	$	1,988,573		$	856,726

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	(Unaudited)

	For the Three Months Ended October 31,			For the Three Months Ended October 31,
	2010			2009

Revenues, net	$	482,410		$	1,011,950
Cost of sales		342,006			750,416
Gross profit		140,404			261,534

Operating expenses
Selling, general and administrative		1,396,768			1,208,378
Total operating expenses		1,396,768			1,208,378

Loss from operations		(1,256,364	)		(946,844	)

Other income (expense)		-			-
Interest expense		(96,532	)		(46,452	)
Total other income (expense)		(96,532	)		(46,452	)

Loss before provision for income taxes		(1,352,896	)		(993,296	)
Provision for income taxes		-			-
Net loss		(1,352,896	)		(993,296	)

Less: Loss attributable to non-controlling interest		(78,585	)		-
Loss attributable to Solar Energy Initiatives, Inc.	$	(1,274,311	)	$	(993,296	)

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

Weighted average shares outstanding – basic and diluted		37,629,095			23,771,299

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

							Additional Paid-in			Deferred			Common Stock			Accumulated			Non-Controlling			Total Stockholders
	Shares			Amount			Capital			Comp			Subscription			Deficit			Interest			Deficit

Balances, July 31, 2010		35,405,535		$	35,406		$	10,564,804		$	(582,535	)	$	(20,000	)	$	(11,002,334	)	$	(65,923	)	$	(1,070,583	)

Shares issued for cashless warrants		154,320			154			(154	)		-			-			-			-			-

Shares issued for payment of services, including accounts payable of $30,333		477,778			478			99,855			-			-			-			-			100,333

Shares issued for retroactive treament of share price		1,495,744			1,495			177,994			-			-			-			-			179,490

Shares cancelled		(90,000	)		(90	)		(19,910	)		-			20,000			-			-			-

Shares issued for employee compensation		500,000			500			77,500			-			-			-			-			78,000

Shares issued for deferred compensation		800,000			800			103,200			(104,000	)		-			-			-			-

Amortization of deferred compensation expense		-			-			-			296,627			-			-			-			296,627

Shares issued for private placement, net of offering costs		3,482,027			3,482			321,518						-			-			-			325,000

Discount on notes due to beneficial conversion feature		-			-			43,360						-			-			-			43,360

Acquisition and ownership changes in subsidiary		-			-			485,294			(307,040	)		-			-			94,678			272,932

Net loss		-			-			-			-			-			(1,274,311	)		(78,585	)		(1,352,895	)

Balances, Octoer 31, 2010 (unaudited)		42,225,404		$	42,225		$	11,853,461		$	(696,948	)	$	-		$	(12,276,645	)	$	(49,830	)	$	(1,127,736	)

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

Solar Energy Initiatives, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the three months ended October 31, 2010			For the three months ended October 31, 2009
	Restated

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,352,896	)		(993,296	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		1,965			1,862
Amortized discount on note payable		85,829			-
Stock based compensation		667,081			405,647
Stock issued for retroactive treatment on stock		179,490			-
Stock issued for loan fees		-			30,000
Changes in operating assets and liabilities:
Accounts receivable		(45,018	)		(119,364	)
Other receivables		-			168,932
Project development costs		(7,846	)		-
Inventory		(12,343	)		(98,995	)
Prepaid expenses and other current assets		(13,948	)		(3,219	)
Accounts payable		470			(219,197	)
Accounts payable, related party		26,413			-
Commissions payable		500			(54,766	)
Accrued expenses		(125,493	)		(90,794	)
Deferred revenue		(44,879	)		92,426
Due to related party		4,854			-
Net cash used by operating activities		(635,821	)		(880,764	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets		-			(5,892	)
Net cash used by investing activities		-			(5,892	)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from private placements		325,000			611,523
Proceeds from related parties		-			50,000
Proceeds from notes payable		1,222,000			-
Restricted Cash		(874,222	)
Proceeds paid to related parties		-			(137,175	)
Proceeds from convertible debentures		93,000			-
Principal payments on notes payable		-			(80,000	)
Proceeds received from shareholder		-			125,000
Net cash provided by financing activities		765,778			569,348

Net increase (decrease) in cash and cash equivalents		129,957			(317,308	)

Cash and cash equivalents at beginning of year		30,153			1,005,628
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	160,110		$	688,320

	For the three months ended October 31, 2010		For the three months ended October 31, 2009

SUPPLEMENTAL DISCLOSURES
Cash operating activities:
Interest paid	$	-	$	37,463
Taxes paid	$	-	$	-
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued for deferred compensation	$	411,040	$	517,000
Discounts from warrants and beneficial conversion feature	$	43,360		0
Subsidiary options granted for intangible assets	$	50,480
Stock issued for accounts payable	$	30,333
Common stock issued for loan fees	$	-	$	30,000

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

Solar Energy Initiatives, Inc.

Notes to Condensed Consolidated Financial Statements

October 31, 2010

(UNAUDITED)

Note 1 – Nature of Operations

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

Business Description

Solar Energy Initiatives, Inc. (OTCBB: SNRY), is a diversified provider of solar solutions with three principal operating groups focused on large-scale projects, solar education and distribution of solar products. These three business lines are described below:

The SNRY-Power business unit is a developer and manager of municipal and commercial scale solar projects. We will sell most of our projects and earn a developer fee. When it makes economic sense and we can find a financial institution that will provide adequate construction and long term financing, we will build the development and become an owner/operator of the solar array.

The Solar-EOS business unit is dedicated to the education and continuous improvement of solar energy trade professionals. Solar-EOS has expanded its operations and training facilities to include internet training and webinars, along with expanded training facilities in South Carolina. Working with the County of Williamsburg and the State of South Carolina, Solar-EOS is attempting to increase its training and education abilities.

The SNRY-Solar business unit is a wholesale distributor of branded photovoltaic and thermal (water heating) systems selling via a network of dealers throughout the United States and the Caribbean. The Company recently improved its ability to manage and increase its dealer network through hiring professional operating management within this network of dealers.

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

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

We are primarily focusing our sales efforts in regions where electricity prices and government incentives are attractive and have accelerated solar power adoption. The business segments we have identified to pursue can require a significant level of expertise and capital. Currently the Company has found a very good working business model, working with many states and counties and banks that understand how to make the solar projects successful. The executive management has currently been focusing on this working business model to improve profit margins, identify viable and bankable projects of significant size, and to install using all efforts towards those financially viable projects. We have obtained the expertise, and continue to seek the necessary capital to further develop our plan and focus on this improved business model. Our management has found the necessary expertise focusing on these strategies, however if we are unable to continue to acquire or develop such expertise or capital, we may not be able to fully develop our planned business and ultimately may be required to cease operations. We anticipate that the end customers of our sales processes will be homeowners, owners of large commercial and industrial buildings and facilities, municipalities and owners of large tracts of undeveloped land.

Note 2 – Going Concern

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

Since inception, our operations have primarily been funded through private equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing.

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

We anticipate our operations will be sufficient to provide adequate operating revenue to maintain the business. Adding at least $1,500,000 in funds will allow us to quickly move forward with projects in hand which, if successful, should provide cash flow allowing for advantageous inventory purchases and the securing of additional projects, potentially increasing our growth and profitability. With more capital, we would also add additional staff and start development of other projects. Currently we have approximately $160,110 in cash on hand. The current level of cash is not enough to cover the fixed and variable obligations of the Company, so increased sales performance and the addition of more capital are critical to our success.

Assuming we are successful in our sales/development effort, we believe that we will be able to raise additional funds through the sale of our stock to either current or new shareholders. There is no guarantee that we will be able to raise additional funds or to do so at an advantageous price.

Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Note 3 - Summary of Significant Accounting Policies

Restatement as of October 31, 2010 and July 31, 2010 for amounts shown for Martins Creek NC, LLC property classified on a consolidated basis as Project development costs of $568,120 and $560,274, respectively. Previously the assets were categorized as another receivable from equity method investee totaling $200,342 and an investment in equity method investee totaling $30,000 as of October 31, 2010, and an other receivable from equity method investee totaling $530,274 and an investment inequity method investee totaling $30,000 as of July 31, 2010. Previously the Company accounted for the investment in Marlins Creek NC, LLC under the equity method. Management later determined this investee should be consolidated as a variable interest entity. All intercompany transactions were eliminated upon consolidation. As part of the consolidation, cash increased $10,000, the Company consolidated restricted cash totling $874,222, and also consolidated a note payable totaling $1,222,000.

Basis of Presentation — Interim Financial Information

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles for interim financial information. They should be read in conjunction with the financial statements and related notes to the financial statements of Solar Energy Initiatives, Inc. for the years ended July 31, 20010 and 2009 appearing in the Company’s Form 10-K. The October 31, 2010 unaudited interim consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in the annual financial statements filed with the Annual Report on Form 10-K have been condensed or omitted pursuant to those rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring accruals, necessary for a fair statement of the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the entire year.

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

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

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

Revenue Recognition - The Company recognizes revenue in accordance with the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition”. The Company generates revenue from the sale of training, photovoltaic panels, photovoltaic roofing systems, solar thermal products, balance of system products, and management system products to our dealer network or other parties. The Company anticipates it will not perform any installations. SAB No. 104 requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services rendered; (3) the seller's price to the buyer is fixed and determinable; and (4) collectability is reasonably assured. Amounts billed or received from customers in advance of performance are recorded as deferred revenue.

Allowance for Doubtful Accounts - The Company provides an allowance for doubtful accounts equal to the estimated uncollectible amounts. Management believes there were no uncollectible amounts as of October 31, 2010.

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

Shipping and Handling Fees and Costs - Shipping and handling fees, if billed to customers, are included in net sales. Shipping and handling costs associated with inbound freight are expensed as incurred. Shipping and handling costs associated with outbound freight are classified as cost of sales.

Cash and Cash Equivalents - Cash and cash equivalents consist primarily of cash on deposit, and money market accounts that are readily convertible into cash.

Restricted Cash - During August 2010, we entered into a bank construction loan agreement with our agent bank to develop one of our projects. The restricted cash is invested in a secured cash bank account and approved for disbursement by the bank. As of October 31, 2010, we had restricted cash in the amount of $874,222 until specific project costs are paid for. Restricted cash is classified as non-current.

Investments in Companies Accounted for Using the Equity or Cost Method – Investments in equity method investees are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company’s ability to exercise significant influence over the operating and financial policies of the investee. Investments of this nature are recorded at original cost and adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the date of investment. When net losses from an investment accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero. The Company resumes accounting for the investment under the equity method if the entity subsequently reports net income and the Company’s share of that net income exceeds the share of the net losses not recognized during the period the equity method was suspended. Investments are written down only when there is clear evidence that a decline in value that is other than temporary has occurred. When an investment accounted for using the equity method issues its own shares, the subsequent reduction in the Company’s proportionate interest in the investee is reflected in income as a deemed dilution gain proportionate interest in or loss on disposition. The Company evaluates its investments in companies accounted for the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary.

Business Combinations and Consolidation

The Company’s project costs in Martins Creek NC, LLC are accounted for under the Consolidation method, and as a special purpose entity, due to the significant influence of the controlling and similar ownership. As of October 31, 2010 these project costs totaled $568,120 and $560,274 as of July 31, 2010.

On January 31, 2010, the Company adopted new accounting guidance on business combinations and non-controlling interests in consolidated financial statements. The guidance on business combinations impacts the accounting for any business combinations completed after January 31, 2010. The nature and extent of the impact will depend upon the terms and conditions of any such transaction. The guidance on non-controlling interests changes the accounting and reporting for minority interests, which have been recharacterized as non-controlling interests and classified as a component of equity. Prior period financial statements and disclosures for existing minority interests have been restated in accordance with this guidance. All other requirements of this guidance will be applied prospectively. The adoption of the guidance on non-controlling interests did not have a material impact on the Company’s financial statements.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for transfers of financial assets. This amendment removes the concept of a qualifying special-purpose entity and requires that a transferor recognize and initially measure at fair value all assets obtained and liabilities incurred as a result of a transfer of financial assets accounted for as a sale. This amendment also requires additional disclosures about any transfers of financial assets and a transferor’s continuing involvement with transferred financial assets. This amendment is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. As of December 20, 2010, the Company has approximately $40 million of trade receivables associated with factoring and securitization programs that are not recognized on the balance sheet. The Company is currently evaluating these arrangements as well as any other potential impact of adopting this amendment.

In June 2009, the FASB issued an amendment to the accounting and disclosure requirements for variable interest entities. This amendment changes how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. The determination of whether a reporting entity is required to consolidate another entity is based on, among other things, the purpose and design of the other entity and the reporting entity’s ability to direct the activities of the other entity that most significantly impact its economic performance. The amendment also requires additional disclosures about a reporting entity’s involvement with variable interest entities and any significant changes in risk exposure due to that involvement. A reporting entity will be required to disclose how its involvement with a variable interest entity affects the reporting entity’s financial statements. This amendment is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years.

Inventory - Inventories consist of photovoltaic solar panels, solar thermal panels and components, other component materials for specific customer orders and spare parts, and are valued at lower of cost (first-in, first-out) or market. Management provides a reserve to reduce inventory to its net realizable value. Certain factors could impact the realizable value of inventory, so management continually evaluates the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration expected demand, new product development; the effect new products might have on the sale of existing products, product obsolescence, and other factors. The reserve or write - down is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required. If actual market conditions are more favorable, reserves or write-downs may be reversed. As of October 31, 2010 inventory was $220,760. Inventory was acquired during the four most recent quarters, therefore there is no write-down.

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

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

Maintenance and repairs are expensed as incurred. Expenditures for significant renewals or betterments are capitalized. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in current operations.

Long-Lived Assets and Impairment - Statement of Financial Accounting Standards (SFAS) 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" requires that long-lived assets, including certain identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets in question may not be recoverable. As of October 31, 2010 and July 31, 2010, there were no long lived assets.

Stock-Based Compensation - We recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest over the requisite service period of the award. The Company issues stock as compensation for services at the current market fair value.

We account for equity instruments issued for services based on the fair value of the consideration received or the fair value of the equity instruments, whichever is more reliably measurable. Stock based compensation was determined using the fair value of the services performed due to the lack of historical fair value of the equity instruments.

Determining the appropriate fair value model and calculating the fair value of share-based payment awards require the input of highly subjective assumptions, including the expected life of the share-based payment awards and stock price volatility. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.

Income Taxes - Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. We must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. We measure the tax benefits recognized in the consolidated financial statements from such a position based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. As such, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax law and regulations change over time and may result in changes to our subjective assumptions and judgments which can materially affect amounts recognized in our consolidated financial statements.

Foreign Currency - Gains and losses from foreign exchange transactions will be included in the statements of operations. Currently there are none.

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

Concentrations of Credit Risk

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

Stock Options

The Company has estimated the fair value of its option awards granted after January 1, 2008 using a modified Black-Scholes option valuation model. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant.

Note 4 – Recent Accounting Pronouncements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Note 5 – Restricted Cash

During August 2010, we entered into a bank construction loan agreement with our agent bank to develop one of our projects. The restricted cash is invested in a secured cash bank account and approved for disbursement by the bank. As of October 31, 2010, we had restricted cash in the amount of $874,222 until specific project costs are paid for. Restricted cash is classified as non-current.

Note 6 – Inventory

Inventories consist of photovoltaic solar panels, solar thermal panels and components, other component materials for specific customer orders and spare parts, and are valued at lower of cost (first-in, first-out) or market. Management provides a reserve to reduce inventory to its net realizable value. Inventory consisted of the following as of October 31, 2010 and July 31, 2010.

	October 31, 2010		July 31, 2010
Photovoltaic Solar panels and components	$	178,367		166,024
Thermal Solar panels and components		42,393		42,393
Other components and materials		-		-
Total Inventory as of	$	220,760	$	208,417

Note 7 – Fixed Assets

Fixed assets consisted of the following as of October 31, 2010 and July 31, 2010:

Category	Useful Lives	October 31, 2010		July 31, 2010

Furniture fixtures and equipment	5-7 years	$	39,414	$	39,414
Less accumulated depreciation			16,010		14,045
Net fixed assets		$	23,404	$	25,369

During the three month period ended October 31, 2010 and October 31, 2009 depreciation, totaling $1,965 and $1,862, respectively, was charged to selling, general and administrative expenses.

Note 8 – Accrued Expenses

Accrued expenses consist of the following as of October 31, 2010 and July 31, 2010:October 31, July 31,

		2010		2010
Interest for notes and convertible debentures	$	6,834	$	1,408
Salaries and taxes payable		82,141		156,385
Supplies		2,230		25,182
Capital development costs		-		13,270
Legal and Professional Expenses		25,611		46,064
	$	116,816	$	242,309

Note 9 – Convertible Debentures

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

On June 29, 2010, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $100,000 (the "Note"). The financing closed on July 2, 2010.

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on June 30, 2011. The Note is convertible into common stock, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. The Note contains a prepayment option whereby the Company may make a payment to Asher equal to 150% of all amounts owed under the Note during the 90 day period beginning on the date of issuance of the Note and expiring on the 90 date anniversary.

Asher has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The total net proceeds the Company received from this Offering on July 2, 2010 was $97,000.

In addition, the Company compensated $3,000 to a company for legal services to complete the Note and Purchase Agreement.

On July 15, 2010, the Company entered into a Securities Purchase Agreement with JDF Capital, Inc. (“JDF”), for the sale of a 12% convertible note in the principal amount of $150,000 (the "Note"). The financing closed on July 16, 2010.

The Note bears interest at the rate of 12% per annum. All interest and principal must be repaid on July 15, 2011. The Note is convertible into common stock, at JDF’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the twenty (20) trading day period prior to conversion. The Note contains a prepayment option whereby the Company may make a payment to JDF equal to 150% of all amounts owed under the Note during the one hundred fifty (150) day period beginning on the date of issuance of the Note and expiring on the 150 date anniversary.

JDF has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The total net proceeds the Company received from this Offering on July 16, 2010 were $145,000 which is the gross proceeds less $5,000 paid to JDF’s counsel.

On August 9, 2010, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $53,000 (the "Note"). The financing closed on August 20, 2010.

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on August 11, 2011. The Note is convertible into common stock, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. The Note contains a prepayment option whereby the Company may make a payment to Asher equal to 150% of all amounts owed under the Note during the 90 day period beginning on the date of issuance of the Note and expiring on the 90 date anniversary.

In addition, the Company compensated $3,000 to a company for legal services to complete the Note and Purchase Agreement.

On October 26, 2010, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. ("Asher"), for the sale of an 8% convertible note in the principal amount of $40,000 (the "Note"). The financing closed on October 26, 2010.

The Note bears interest at the rate of 8% per annum. All interest and principal must be repaid on July 28, 2011. The Note is convertible into common stock, at Asher’s option, at a 39% discount to the average of the three lowest closing bid prices of the common stock during the 10 trading day period prior to conversion. The Note contains a prepayment option whereby the Company may make a payment to Asher equal to 150% of all amounts owed under the Note during the 90 day period beginning on the date of issuance of the Note and expiring on the 90 date anniversary.

Asher has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The total gross proceeds the Company received from this Offering on October 26, 2010 was $40,000.

Note payable as of October 31, 2010:	$	343,000
Discounts on note payable		( 63,221	)
Notes payable as of October 31, 2010	$	279,779

Note 10 -- Note Payable

On September 28, 2010 the project special purpose entity Martins Creek – NC, LLC signed a promissory note with Nantahala Bank for $1,222,000. The loan is being used for construction and project costs of the special purpose entity. The Company and related parties have provided loan guarantees for this loan to the special purpose entity. Interest on the Note is 7.5% plus closing fees amounted to $65,155, which is accounted for in project development costs.

Note 11 – Stockholders’ Equity

Common Stock - On July 30, 2008, the shareholders of the Company voted to increase its authorized capital stock from 15,000,000 common shares to 100,000,000 common shares, $0.001 par value per share.

During the three months ending October 31, 2010:

On August 6, 2010, Mark Lev resigned as director of the Company. In order to fill the vacancy after Mr. Lev’s resignation, Jack Zwick has been appointed to the Board of Directors of the Company effective August 6, 2010.

During August 2010 the Company retroactively increased the latest Private Placement Memorandum shares within the units purchased to be consistent with current PPM unit pricing. This retroactive pricing increased the number of shares outstanding by 1,495,744 with a fair market value of $179,490.

During August 2010 through November 2010, the Company completed a private equity offering (the “Offering”) of units (the “Units”) pursuant to securities purchase agreements (the “Purchase Agreements”) by and between the Company and various accredited investors. Pursuant to the Offering, the Company sold an aggregate of 3,482,027shares of common stock (the “Shares”) and common stock purchase warrants (the “Warrants”) to acquire 3,482,027 shares of common stock with an exercise price of $0.16 per share for aggregate net proceeds of $321,518.

The Warrants are exercisable on a cash or cashless basis for three years. The investors received, among other rights, full ratchet anti-dilution rights for lower priced issuances of securities. The Shares and the Warrants were issued in accordance with Rule 506 under Regulation D and, as a result, may only be resold in accordance with Rule 144, which provides a minimum holding period of six months.

In addition, the Company compensated four groups for assisting in the sale of Units by paying them commissions by issuing 409,103 Shares and Warrants to purchase 409,103 shares of the Company’s common stock.

The securities were offered and sold in connection with this Offering in reliance upon Section 4(2) of the Securities Act of 1933 or Regulation D promulgated there under. Each investor represented that they were acquiring the securities for investment only and not with a view toward resale or distribution. Neither we nor anyone acting on our behalf offered or sold these Units by any form of general solicitation or general advertising.

During September 2010, Solar Park Initiatives (“SOPV”) renegotiated the stock issuances with shareholders of Solar Park Initiatives including Solar Energy Initiatives. There were 7,427,972 shares cancelled during the renegotiation.

During October the Company entered into consulting arrangements with two companies for business consulting and other services, and issued 477,778 shares of common stock for a total of $100,333. The full amount is expensed in the financial statements as of October 31, 2010.

During October 2010, the Company announced that SOPV will file a registration statement during the fourth quarter of 2010 with the U.S. Securities and Exchange Commission (SEC), which will enable the Company to distribute SOPV shares upon being declared effective. Under the spin-off agreement, the Company’s shareholders as of market close on October 29, 2010, will receive one share of SOPV for every two shares of the Company’s stock that they own. Upon the Registration Statement being declared effective by the SEC, the Company will distribute the shares of SOPV common stock to the Company’s stakeholders.

During three month period ending October 31, 2010 the Company issued 500,000 shares to four directors as director fees for fiscal years 2010 and 2011 for a total value of $78,000.

In October 2010 the Company entered into consulting arrangements with two companies for business consulting and other services, and issued 800,000 shares of common stock for a total of $104,000. These agreements are for services over a period of 3 to 24 months and have expensed $8,083 of cost through October 31, 2010. Amortization for all deferred compensation agreements was $192,627 for the period ended October 31, 2010.

During the period ending October 31, 2010 the Company cancelled common shares of 90,000 for a value of $20,000.

In October 2010 warrant holders exercised cashless warrants for a net amount of 154,320 shares of common stock for $154.

On October 26, 2010, the Company entered into a Securities Purchase Agreement with Asher, for the sale of an 8% convertible note in the principal amount of $40,000 (the "Note"). The financing closed on October 26, 2010.

Asher has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The total gross proceeds the Company received from this Offering on October 26, 2010 were $40,000.

Note 12 – Commitments and Contingencies

Operating Leases

On October 1, 2008 we entered into two lease agreements for office and warehouse/assembly space. On September 11, 2009, we added to our corporate office space by leasing the adjacent office suite as our space needs grew. Our corporate headquarters is located at 818 A1A, Suite 201 and 202, and Ponte Vedra Beach, FL 32082. The annual least cost for 6,000 square feet of office space is $86,067.

We have entered into a 36 month lease. In addition, we have leased 6,000 square feet of warehouse/assembly and office space for the Company’s operations. Located at 10330 Chedoak Ct., Suite 101, Jacksonville, FL 32218, our annual lease cost will be $45,400 and we have entered into a 36 month lease.

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

For the remaining nine months ending July 31, 2011		96,600

Thereafter		87,288
Total	$	183,888

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

Rent expense was $30,690 and $32,946 for the three month period ending October 31, 2010 and 2009, respectively.

Note 13 – Non-Controlling Interest

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

In November 2009 SPI issued a total of 51,133,737 shares of common stock, of which 16,804,889 shares were issued to officers, employees and board members for services valued at $6,040. 34,996,769 shares were issued to the Company for services and cash of the initial share issuance by SPI, which has been eliminated upon consolidation.

During the period ended April 30, 2010, SPI closed a private placement for the sale of units at $0.15 per unit made up of one share of common stock and one common stock purchase warrant with an exercise price of $0.40. In December 2009, 667,921 units of common stock were issued in this private placement for $100,000. In addition, in March 2010 SPI closed a second private placement whereby it raised $200,000 on identical terms. During the period as part of an on going reverse merger SPI forward split shares of common stock on a [ 1 ]:[ 1.5812 ] and increased all shareholders on a pro-rata basis. SPI also granted 1,550,984 stock options exercisable at $0.40 with a five year vesting schedule. Value of these options: using a Black-Scholes valuation, with an exercise price of $0.40, a volatility based on public industry companies of 80% and with an average of a 2.5 year life, was $297,450.

On July 13, 2010, (the “Closing Date”), Critical Digital Data, Inc. (“CDD”) acquired SPI pursuant to an Agreement and Plan of Merger and Reorganization (the “Agreement”) with SPI and Solar Park Acquisition Corp., a Nevada corporation (“Acquisition Subsidiary”) (the “Merger”). SPI was organized under the laws of the State of Nevada on September 25, 2009. Acquisition Subsidiary was a wholly-owned subsidiary of SPI and on the Closing Date, merged with and into SPI and CDD acquired the business of SPI pursuant to the Merger and will continue the existing business operations of SPI, as a publicly- traded Nevada corporation under the name “Solar Park Initiatives, Inc.”

On the Closing Date, CDD acquired all of the issued and outstanding shares of common stock, $0.001 par value per share, of SPI from the holder’s of SPI (the “Solar Park Shareholders”) in exchange for an aggregate of 53,137,500 (post-split) newly issued shares (the “Exchange or Merger Shares”) of common stock, $0.001 par value per share (the “Common Stock”). As a result of the Merger, SPI Shareholders surrendered all of their issued and outstanding common stock of SPI in consideration for the Merger Shares and SPI became a wholly-owned subsidiary of the Registrant. The Agreement contains customary representations, warranties and covenants of the Registrant, SPI and the Acquisition Subsidiary, for like transactions. Breaches of representations and warranties are secured by customary indemnification provisions.

On July 13, 2010 in conjunction with the Exchange and Merger Shares the Registrant (Summerton) was issued 487,500 shares and valued at the then estimated fair value of $0.15 per share and expensed the value of $73,125 in the period ended July 31, 2010.

The parties have taken all actions necessary to ensure the Merger is treated as a “tax free exchange” under Section 368 of the Internal Revenue Code of 1986, as amended.

As of October 31, 2010, the Company retains ownership of 64.8% as the controlling interest in SPI, as reflected in our financials. In addition, SPI negotiated the spin-off of SPI during the three months ended October 31, 2010. During September 2010, SPI renegotiated the stock issuances with shareholders of SPI, including the Company. There were 7,427,972 shares cancelled during the renegotiation.

Note 14 – Special Purpose Entity

During June 2010 the Company initiated a subsidiary to hold the project costs of a 1MW solar project in Cherokee County, NC. The Company used cash or accounts payable to fund the project development costs. As of October 31, 2010 the project development costs are $568,120. The Company is currently proposing to either fully fund the project or sell the project to investors.

On September 28, 2010, Martins Creek Solar NC, LLC (the “Borrower”), a subsidiary that is 1/6th owned by the Company, entered into a Loan Agreement with Nantahala Bank & Trust Co. (the “Lender”) pursuant to which the Lender agreed to loan the sum of up to $1,222,000 (the “Loan”) in consideration for a promissory note from the Borrower in the amount of $1,222,000 (the “Note”). Pursuant to the terms of the Note, the Borrower promises to repay to the Lender the principal sum of the Loan together with all accrued but unpaid interest on or before January 1, 2011. The Note carries a simple interest rate of 6.99% per annum and interest only payments shall be due and payable monthly on the first day of each month beginning October 1, 2010 and continuing until January 1, 2011.

The Borrower’s obligation for payment of the Note is collateralized by a first secured interest in all of the Borrower’s rights, title and interest in and to all equipment and the project to develop the solar facility with Cherokee County Board of Education.

In connection with the Loan Agreement and the Note, SNRY Power, Inc., a wholly owned subsidiary of the Company, executed an unconditional guarantee of payment and performance for the full and prompt payment of the Loan to the Lender and performance of all obligations of the Borrower under the terms of the Loan Agreement and the Note. Further, David Fann, Kevin Cassell, James Roberson, and J. Everett Airington each, jointly and severally, executed limited guarantees of payment and performance limited to 20% of all amounts owing to the Lender under Note at the time demand for payment is made.

Note 15 - Related Party Transactions

In March 2007, NP Capital entered into an agreement to sell the convertible debenture for $152,500, with discounts if paid early, to 0784655 B.C. LTD (“B.C.”), a company controlled by Paul Cox, a shareholder and a former officer and board member of NP Capital. Mr. Cox remains a shareholder, officer and board member of Envortus Inc. In July 2007, the sale of the convertible debenture was completed with a payment of $55,000 to NP Capital and the receipt of a promissory note in the amount of $97,500 (the “Note”), from B.C. for the balance. The principal amount of the Note was immediately discounted to $90,800. In addition, if the Note was paid within the first 270 days of issuance, additional discounts could be available. Further, in the event that we do not commence trading on the OTC BB by January 2009, Paul Cox may return shares of common stock of our Company for cancellation in lieu of payment of the Note. The price per share shall be the greater of $0.35 or the last price to raise funds from third parties.

To account for the Note the Company determined the fair value of the Note on a discounted basis to be equal to $68,100, which represented the discounted balance to be paid by B.C. assuming early payments made within 90 days from closing as provided in the Note. Based on the fair value of the note of $68,100, a loss totaling $11,405 was recorded for the year ended July 31, 2007 as reflected in the table below:

Consideration for sale of debenture:
Cash	$	55,000
Note receivable		97,500
Total consideration		152,500

Immediate discount		(6,700	)
Bank fee		(5	)
Expected early payment discount		(22,700	)

Total net consideration		123,095

Investment in convertible debenture		134,500

Loss on sale of investment	$	(11,405	)

The Company had originally invested $134,500 in a convertible debenture with Envortus. The Company then took back a Note for $97,500 and cash paid back of $55,000. The Company reviewed the fair value of the $97,500 Note, which had an immediate discount of $6,700 and an early expected payment discount of $22,700. The Company decided to take a valuation allowance on the $22,700 and the $6,700 during July 2007, leaving a balance on the Note of $68,100. Comparing the consideration received of $55,000 and the remaining value of the Note at $68,100 or $123,095, net of a $5 fee, this resulted in a loss on sale of the original investment in convertible debenture of $11,405. The Company has allowed for the remaining balance of the Note and recorded bad debt related to note receivable, related party, in the amount of $68,100, due to concerns of collectability and non-payment of the scheduled payments. Per the terms of the Note, B.C. was required to pay principal in the amount of $10,000 in January 2008 and additional payments of $17,240 in July 2008, $31,780 in January 2009 and $31,780 in July 2009, together with interest, according to the payment schedule as defined by the Note when the early payments are not received. As of the date hereof, B.C. has not made the required principal and interest payment.

The Company is pursuing legal action against the Note’s obligor for non-payment

There is no continuing obligation on the Company under the terms of the Convertible Note.

As of October 31, 2010 and October 31, 2009, the Company has obligations to related parties for loans and related services totaling $274,925 and $101,216, respectively. Loans with accrued interest at 12% per annum were $10,567 as of October 31, 2010.

Note 16 – Income Taxes

Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. The Company has provided a full valuation of deferred taxes as of October 31, 2010. The company is estimating a net operating loss of over $12,000,000.

Note 17 – Subsequent Events

During December 2010 the Company retroactively increased the latest Private Placement Memorandum shares within the units purchased to be consistent with current PPM unit pricing. This retroactive pricing increased the number of shares outstanding by 1,993,997 with a fair market value of $79,750.

During December 2010 the Company assigned and transferred related party notes of $100,000 to companies for stock of 1,739,095 and cash of $100,000.

During December 2010, the Company renegotiated its lease in Ponte Vedra Beach, FL for 2300 sq. ft. for the remaining 19 months at a monthly cost of $2,800.

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

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

Limited Operating History

There is limited historical financial information about our Company upon which to base an evaluation of our future performance. Our company generated approximately $482,410 in revenues from operations for the quarter ended October 31, 2010. While we have experienced and anticipate future growth in revenues, we cannot guarantee that we will be successful in our business. We are subject to risks inherent in a developing enterprise, including; limited capital resources, possible delays or disruptions in establishing key vendor relationships and difficult financial markets remaining from the world-wide economic recession. In many cases these factors are out of our control. There is no assurance that future financing will be available to our Company on acceptable terms. Additional equity financing could result in dilution to existing shareholders.

Company Description and Overview

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

Summary Income Statement

	For the Three Months Ending Oct 31, 2010			For the Three Months Ending Oct31, 2009

Revenues, net	$	482,410		$	1,011,950
Gross profit (loss)		140,404			261,534
Selling, general and administrative expenses		1,396,768			1,208,378

Total operating expenses		1,396,768			1,208,378
Loss from operations		(1,256,364	)		(946,844	)
Other Income (Expense)		(96,532	)		(46,452	)
Loss from operations before income taxes		(1,352,896	)		(993,296	)
Income tax provision		-			-
Net loss		(1,352,896	)		(993,296	)
Less: Loss attributable to non-controlling interest		(78,585	)		-
Loss attributable to Solar Energy Initiatives, Inc.	$	(1,274,311	)		(993,296	)

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

Results of Operations

For the three months ended October 31, 2010, we generated $482,410 in revenues from operations and we incurred a loss of $1,274,311 attributable to Solar Energy Initiatives, Inc , of which $667,081 was non-cash stock compensation. Our operating expenses included significant legal, consulting and accounting expenses, as well as business development. We expect to continue to use cash in our operating activities as we ramp up operations and include greater levels of Inventory. We have financed our operations since inception primarily through private sales of securities. As of October 31, 2010, we had $150,110 in cash, and negative working capital of $(1,235,219).

Revenues

For the three months ended October 31, 2010, we had revenues of $482,410 compared to $1,011,950 for the three months ended October 31, 2009. Revenues for the three months ended October 31, 2010 reflect dealer training and sales of solar energy systems and equipment. For the three months ended October 31, 2009 revenues relate primarily to sales of solar energy systems and equipment.

Cost of sales and gross profit

For the three months ended October 31, 2010 our Cost of Goods Sold were $342,006 compared to $750,416 for the three months ended October 31, 2009, resulting in a gross profit from operations of $140,404 (29.1%) compared to $261,534 (25.8%) respectively. The increase in cost of sales is a result of increased sales of higher margin training and PV sales during the period compared to prior year and reduced sales of lower margin PV sales.

Selling, general and administrative

Selling, general and administrative (“S, G & A”) expenses for the three months ended October 31, 2010 were $1,396,768 compared with $1,208,378 for the same period ending October 31, 2009. Major changes in S, G & A expenses were;

●	Salaries and wages reduced to $209,084 in 2010 compared to $287,120 in 2009 primarily related to additions in staff.
●	Travel and entertainment reduced to $18,266 in 2010 compared with $74,445 in 2009 primarily related to lower travel and procurement related activities
●	Cash and stock based consulting and director’s costs increased to $667,081 in 2010 from $405,647 in 2009 resulting primarily of outside consulting firms compensated in stock.
●	Subsidiary costs of SG&A have increased to $261,147.19 in 2010 from $0 in 2009 results.

Other income (expense)

For the three months ended October 31, 2010 interest expense was $96,532, due to interest related to, loans from shareholders, and note interest, compared with $46,452 for the same period ending October 31, 2009.

Net Loss

Our net loss attributable to Solar Energy Initiatives, Inc. was $1,274,311 for the three months ended October 31, 2010 compared with $993,296 for the period ending October 31, 2009. The net loss primarily reflects our expenses relating to business activities that have been incurred ahead of our ability to recognize material revenues from our business plan.

Loss from non-controlling interest in Solar Park Initiatives, Inc was $78,585 for the three months ended October 31, 2010 and $0 for the period ending October 31, 2009.

Liquidity and Capital Resources

As of October 31, 2010, we had unrestricted cash of $160,100 and working capital deficit of $(2,079,441), compared with $688,320 in cash and working capital, of $34,497 as of October 31, 2009. During the quarter ended October 31, 2010, we funded our operations from private sales of equity securities and the revenue generated from operations on a limited basis. For the same period in 2009, we funded our operations from private sales of equity securities and revenue generated from operations on a limited basis.

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

As we continue to develop our business, we will be required to raise additional financing to supplement cash flows. Unless we can attain sufficient levels of revenues, we will need to raise additional funds during the next twelve month period. We have raised $325,000 since the July 31, 2010 period end and may require approximately $1,200,000 of additional capital funding to allow us to continue the execution of our business plan through July 31, 2011. If we are not successful in raising the required capital, or begin one or more of the projects in our business pipeline, we will need to reduce the breadth of our business. Management has put into place cost control actions that will be continually evaluated and adjusted as the business matures to self sustaining operations.

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

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

Significant Capital Expenditures

During the three months ended October 31, 2010, we acquired $0 of business assets, and furniture and equipment for office purposes. We use these assets in our business operations. As we continue to grow it will be necessary to purchase additional equipment.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

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

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

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

(b) Changes in Internal Controls.

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

PART 2. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

Item 1A. RISK FACTORS

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

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

We generated revenue of $482,410 for the quarter ended October 31, 2010. We have incurred significant losses from development and operations. As shown in our financial statements, as of the periods ended October 31, 2010 and July 31, 2010, we have incurred a cumulative net loss of $12,276,645 and $11,002,334 respectively from operations. We will continue to incur operating losses in the future, primarily due to the initiation and expansion of our operations. Negative cash flow from operations may also continue into future. Our ability to achieve profitability depends upon our ability to; continue to sell dealerships and technical training classes, significantly expand the solar component and system sell-through to our dealer network, convert opportunities to sell large municipal and commercial projects, and successfully begin development of one or more solar park(s).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

There are restrictions on the transferability of the securities.

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

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

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

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

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

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

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

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

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

●

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Common Stock - On July 30, 2008, the shareholders of the Company voted to increase its authorized capital stock from 15,000,000 common shares to 100,000,000 common shares, $0.001 par value per share.

During the three months ending October 31, 2010:

On August 9, 2010, the Company entered into a Securities Purchase Agreement with Asher, for the sale of an 8% convertible note in the principal amount of $53,000 (the "Note"). The financing closed on August 20, 2010.

In addition, the Company compensated $3,000 a company for legal services to complete the Note and Purchase Agreement.

During three month period ending October 31, 2010 the Company issued 500,000 shares to four directors as director fees for fiscal years 2010 and 2011 for a total value of $78,000.

During the period ending October 31, 2010 the Company cancelled common shares of 90,000 for a value of $20,000.

In October 2010 warrant holders exercised cashless warrants for a net amount of 154,320 shares of common stock for $154.

Asher has agreed to restrict its ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of common stock. The total gross proceeds the Company received from this Offering on October 26, 2010 were $40,000.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. REMOVED AND RESERVED

Not applicable

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

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

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

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

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

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

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

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

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

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

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

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

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

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

SIGNATURES

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

	SOLAR ENERGY INITIATIVES, INC.

Dated: December 15, 2011	By:	/s/ David Fann
		David Fann
		Chief Executive Officer
		(Principal Executive Officer)

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Solar Energy Initiatives, Inc. Reports

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