UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

———————

FORM 10-Q

———————

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2009

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from __________ to _____________

———————

GWS Technologies, Inc.

(Exact name of small business issuer as specified in its charter)

———————

Delaware

20-2721447

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

15455 N. Greenway-Hayden Loop, Suite C4

Scottsdale, Arizona 85260

(Address of Principal Executive Offices)

(480) 619-4747

(Issuer’s Telephone Number)

———————

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 þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an 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 ¨ (Do not check if a smaller reporting company)	Smaller reporting company þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES ¨ NO þ

APPLICABLE ONLY TO CORPORATE ISSUERS

The number of shares of the issuer’s common equity outstanding as of September 8, 2009 was approximately 7,849,897 shares of common stock, par value $.001.

INDEX TO FORM 10-Q FILING

FOR THE PERIOD ENDED JULY 31, 2009

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Balance Sheets as of July 31, 2009

Statements of Operations for the three month periods ended July 31, 2009 and July 31, 2008

Statements of Stockholders' Equity (Deficit)

Statements of Cash Flows for the three month periods 2009 and July 31, 2008

Condensed Notes to the Financial Statements

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Item 4. Controls and Procedures

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Item 3. Defaults Upon Senior Securities

Item 6. Exhibits

SIGNATURES

PART I- FINANCIAL INFORMATION

Item 1.

Financial Statements

GWS TECHNOLOGIES, INC.

Balance Sheets

(Unaudited)


	July 31, 2009			October 31, 2008

ASSETS
CURRENT ASSETS
Cash	$	44,271		$	7,101
Accounts receivable, net		968			5,945
Inventory		119,258			127,044

Total Current Assets		164,497			140,090

PROPERTY AND EQUIPMENT, net		25,396			32,702

TOTAL ASSETS	$	189,893		$	172,792

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued expenses	$	378,158		$	384,411
Bank overdraft		222			—
Accrued interest payable		144,070			60,470
Note payable, net of discount		521,947			200,000
Note payable, related party		1,010,500			1,025,500

Total Current Liabilities		2,054,897			1,670,381

LONG-TERM DEBT		—			—

TOTAL LIABILITIES		2,054,897			1,670,381

STOCKHOLDERS' EQUITY (DEFICIT)

Preferred stock: $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding		—			—
Common stock: $0.001 par value; 100,000,000 shares authorized; 6,584,897 and 609,897 shares issued and outstanding, respectively		6,585			610
Additional paid-in capital		8,651,534			3,954,923
Accumulated Deficit		(10,523,123	)		(5,453,122	)

Total Stockholders' Equity (Deficit)		(1,865,004	)		(1,497,589	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	189,893		$	172,792

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

GWS TECHNOLOGIES, INC.

Statements of Operations

(Unaudited)


	For the Three Months Ended July 31,						For the Nine Months Ended July 31,
	2009				2008			2009		2008
REVENUES	$	968		$	138,432		$	98,949		$	483,827

COST OF GOODS SOLD		361			72,277			19,846			304,845

GROSS PROFIT		607			66,155			79,103			178,982

OPERATING EXPENSES

Depreciation and amortization		2,435			2,451			7,306			7,353
Consulting fees		2,647,850			158,327			4,799,382			225,237
Professional fees		—			11,234			14,840			40,944
General and administrative		108,568			221,331			244,024			816,034

Total Operating Expenses		2,758,853			393,343			5,065,552			1,089,568

LOSS FROM OPERATIONS		(2,758,246	)		(327,188	)		(4,986,449	)		(910,586	)

OTHER INCOME (EXPENSES)

Interest expense		(22,762	)		(38,815	)		(83,599	)		(96,555	)

Interest income		—			39			47			170

Total Other Income (Expenses)		(22,762	)		(38,776	)		(83,552	)		(96,385	)

NET LOSS BEFORE INCOME TAXES		(2,781,008	)		(365,964	)		(5,070,001	)		(1,006,971	)
INCOME TAX EXPENSE		—			—			—			—

NET LOSS	$	(2,781,008	)	$	(365,964	)	$	(5,070,001	)	$	(1,006,971	)

BASIC AND DILUTED LOSS PER SHARE	$	(0.52	)	$	(0.73	)	$	(1.34	)	$	(2.06	)

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING		5,379,897			501,348			3,789,897			489,501

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

GWS TECHNOLOGIES, INC.

Statements of Stockholders' Equity (Deficit)

(Unaudited)


	Common Stock				Additional Paid-in Capital			Stock Subscriptions Receivable			Accumulated Deficit			Total
	Shares		Amount		Additional Paid-in Capital			Stock Subscriptions Receivable			Accumulated Deficit			Total
Balance, October 31, 2007		463,807	$	464	$	3,688,172		$	(325,000	)	$	(3,842,345	)	$	(478,709	)

Common stock issued for cash at $20.00 per share		2,750		3		54,997			—			—			55,000

Beneficial conversion feature of convertible debt		—		—		15,397			—			—			15,397

Common stock issued for debt at $6.00 per share		8,333		8		49,992			—			—			50,000

Common stock issued for services at $2.40 per share		60,000		60		146,440			––			—			146,500

Fractional shares issued pursuant to reverse stock split		75,007		75		(75	)		—			—			—

Net loss for the year ended October 31, 2008		—		—		—			325,000			(1,610,777	)		(1,285,777	)

Balance, October 31, 2008		609,897		610		3,954,923			—			(5,453,122	)		(1,497,589	)

Common stock issued for services at $0.58 per share		2,200,000		2,200		1,273,800			—			—			1,276,000

Common stock warrants exercised for services at $0.58 per share		770,000		770		445,830			—			—			446,600

Common stock issued for debt at $0.30 per share		50,000		50		14,950			—			—			15,000

Common stock issued for services at $0.30 per share		545,000		545		162,955			—			—			163,500

Options granted as compensation		—		—		211,286			—			—			211,286

Common stock issued services at $1.07 per share		2,410,000		2,410		2,587,790			—			—			2,590,200

Net loss for the nine months ended July 31, 2009		—		—		—			—			(5,070,001	)		(5,070,001	)

Balance, July 31, 2009		6,584,897		6,585		8,651,534			—			(10,523,123	)		(1,865,004	)

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

GWS TECHNOLOGIES, INC.

Statements of Cash Flows

(Unaudited)


	For the Nine Months Ended July 31,
	2009			2008
OPERATING ACTIVITIES
Net loss	$	(5,070,001	)	$	(1,006,971	)
Adjustments to reconcile net loss to net cash used by operating activities:
Amortization of discount on convertible debt		—			14,664
Common stock issued for services		4,476,300			171,500
Common stock purchase options granted for services		211,286			15,397
Depreciation expense		7,306			7,353
Changes in operating assets and liabilities:
(Increase) decrease in inventory		7,786			(53,675	)
(Increase) decrease in accounts receivable		4,977			84,941
Increase (decrease) in accounts payable and accrued expenses		77,347			181,874

Net Cash Used in Operating Activities		(284,999	)		(584,917	)

INVESTING ACTIVITIES
Property and equipment purchased		—			(1,139	)

Net Cash Used in Investing Activities		—			(1,139	)

FINANCING ACTIVITIES
Repayment to related parties		(41,500	)		(50,000	)
Bank overdraft		222			—
Borrowings from related parties		363,447			529,000
Common stock issued for cash		—			55,000

Net Cash Provided by Financing Activities		322,169			534,000

NET INCREASE (DECREASE) IN CASH		37,170			(52,056	)

CASH AT BEGINNING OF PERIOD		7,101			65,663

CASH AT END OF PERIOD	$	44,271		$	13,607

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash Paid For:
Interest	$	—		$	34,026
Income taxes		—			—
Non Cash Financing Activities:
Common stock issued for debt	$	15,000		$	50,000

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

GWS TECHNOLOGIES, INC.

Condensed Notes to the Financial Statements

July 31, 2009 and October 31, 2008

NOTE 1 –

FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at July 31, 2009, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s October 31, 2008 financial statements. The results of operations for the periods ended July 31, 2009 and 2008 are not necessarily indicative of the operating results for the full years.

NOTE 2 –

GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 3 –

SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2009, the FASB issued FAS 165, “Subsequent Events”. This pronouncement establishes standards for accounting for and disclosing subsequent events (events which occur after the balance sheet date but before financial statements are issued or are available to be issued). FAS 165 requires and entity to disclose the date subsequent events were evaluated and whether that evaluation took place on the date financial statements were issued or were available to be issued. It is effective for interim and annual periods ending after June 15, 2009. The adoption of FAS 165 did not have a material impact on the Company’s financial condition or results of operation.

GWS TECHNOLOGIES, INC.

Condensed Notes to the Financial Statements — (continued)

July 31, 2009 and October 31, 2008

NOTE 3 –

SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In June 2009, the FASB issued FAS 166, “Accounting for Transfers of Financial Assets” an amendment of FAS 140. FAS 140 is intended to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements about a transfer of financial assets: the effects of a transfer on its financial position, financial performance , and cash flows: and a transferor’s continuing involvement, if any, in transferred financial assets. This statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of FAS 166 to have an impact on the Company’s results of operations, financial condition or cash flows.

In June 2009, the FASB issued FAS 167, “Amendments to FASB Interpretation No. 46(R) ”. FAS 167 is intended to (1) address the effects on certain provisions of FASB Interpretation No. 46 (revised December 2003), Consolidation of Variable Interest Entities, as a result of the elimination of the qualifying special-purpose entity concept in FAS 166, and (2) constituent concerns about the application of certain key provisions of Interpretation 46(R), including those in which the accounting and disclosures under the Interpretation do not always provided timely and useful information about an enterprise’s involvement in a variable interest entity. This statement must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009. The Company does not expect the adoption of FAS 167 to have an impact on the Company’s results of operations, financial condition or cash flows.

In June 2009, the FASB issued FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”. FAS 168 will become the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009.The Company does not expect the adoption of FAS 168 to have an impact on the Company’s results of operations, financial condition or cash flows.

Reverse Stock Split

Effective November 1, 2008, the Company’s common stock was reverse split on a 1 share for 20 shares basis. The Company’s financial statements have been restated to reflect the reverse stock split on a retroactive basis. Pursuant to this reverse stock split, an additional 75,007 fractional shares were issued.

NOTE 4 –

COMMON STOCK

During the first quarter, the Company issued 2,970,000 shares of common stock for services for $0.58 per share.

During the second quarter, the Company issued 545,000 shares of common stock for services for $0.30 per share.

During the second quarter, the Company issued 50,000 shares of common stock for debt for $0.30 per share.

During the third quarter, the Company issued 2,410,000 shares of common stock for services for an average of $1.07 per share.

GWS TECHNOLOGIES, INC.

Condensed Notes to the Financial Statements — (continued)

July 31, 2009 and October 31, 2008

NOTE 5 –

WARRANTS AND OPTIONS

The Company has determined the estimated value of the options granted by the Company using the Black-Scholes pricing model and the following assumptions: expected term of 3 years, a risk free interest rate of 3.94% in 2009, a dividend yield of 0%, and volatility of 200% in 2009. The amount of the expense charged to option expense for options granted was $211,286 and $-0- during the periods ended June 31, 2009 and October 31, 2008.

NOTE 6 –

SUBSEQUENT EVENTS

On July 31, 2009, the Company adopted SFAS 165, which requires an entity to evaluate subsequent events through the date that the financial statements are issued or are available to be issued and disclose in the notes the date through which the entity has evaluated subsequent events and whether the financial statements were issued or were available to be issued on the disclosed date. SFAS 165 defines two types of subsequent events as follows: the first type consists of events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet (that is, recognized subsequent events) and the second type consists of events or transactions that provide additional evidence about conditions that did not exist at the date of the balance sheet but arose after that date (that is, non-recognized subsequent events).

The Company has evaluated subsequent events through September 18, 2009, the date the financial statements were issued, and has concluded that no recognized or non-recognized subsequent events have occurred since the quarter ended July 31, 2009.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

For a description of our significant accounting policies and an understanding of the significant factors that influenced our performance during the period ended July 31, 2009, this “Management’s Discussion and Analysis” should be read in conjunction with the Financial Statements, including the related notes, appearing in Item 1 of this Quarterly Report. The preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results reported in the future will not differ from those estimates or that revisions of these estimates may not become necessary in the future.

Forward Looking Statements

This portion of this Quarterly Report on Form 10-Q includes statements that constitute "forward-looking statements." These forward-looking statements are often characterized by the terms "may," "believes," "projects," "expects," or "anticipates," and do not reflect historical facts. Specific forward-looking statements contained in this portion of the Quarterly Report include, but are not limited to the Company's expectation that it will begin generating significant revenues from the sale of its products rather than from equity or debt financings. Forward-looking statements involve risks, uncertainties and other factors, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by such forward-looking statements. Factors and risks that could affect our results and achievements and cause them to materially differ from those contained in the forward-looking statements include, but are not limited to the risks and uncertainties set forth below in the section titled "Risk Factors," as well as other factors that we are currently unable to identify or quantify, but may exist in the future.

The foregoing factors may affect generally our business, results of operations and financial position. Forward-looking statements speak only as of the date the statement was made. We do not undertake and specifically decline any obligation to update any forward-looking statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

We provide wind turbines and other wind and solar products and alternative energy through direct marketing and also on an ecommerce portion of our website, www.greenwindsolar.com. During the past several quarters we have focused on the following two main areas to expand our business: (1) joint venturing with landowners to build solar farms; and (2) retrofitting commercial buildings with alternative energy equipment, concentrating on solar power installations in Arizona.

Solar Farms

We anticipate significant growth from construction of solar farms which generate electricity that can be sold to end-users and utility companies and which will allow us to participate in long-term power purchase agreement revenues (typically 20-25 year contracts). Our business model is to assist the landowner in the design, planning/zoning, and construction/installation of solar arrays on suitable properties throughout the Southwest, with the initial emphasis on projects in Arizona and Texas; we are also going to supply the materials (such as photovoltaic panels, inverters, racks, and tracking motors, as necessary) for these projects and thereby leverage our existing alternative energy product distribution relationships.

With new government incentives and enhanced tax credits for homes and businesses through the American Recovery and Reinvestment Act, Arizona is now poised to expand its solar power production dramatically. 28 states, including Arizona, have a Renewable Energy Standard which requires regulated utilities to buy a growing percentage of their electricity from renewable energy projects like solar farms and commercial retrofits.

We have partnered with Dominion Real Estate Partners, Inc. (DREP) to provide solutions and technology integration on alternative energy projects in Texas and Arizona. DREP is a real estate and development holding company; the principals of the company also are the Managing Partners and founders of Dominion Real Estate Partners LLS, a full service residential and commercial real estate company with over 160 associates in 15 offices in Arizona, Texas, and California.

DREP is currently planning a 118 acre solar farm in Lubbock, Texas which could provide power to a planned housing development and federal facilities continuous to Lubbock Airport. The initial project was designed in conjunction with Texas Tech University. The estimated cost of the entire project is approximately $250 million.

We are also submitting proposals to utilities in Arizona which are actively seeking renewable energy from small generation resources. Many of these proposals are subject to non-disclosure agreements.

Commercial Retrofitting for Solar Power

We have also partnered with building owners and managers to retrofit their commercial buildings with solar power. There are significant incentives from state and federal government and from utility companies for building owners to “go green”. There is also the threat of a “cap and trade” system to limit carbon production by businesses, which will force business owners to produce at least some of their own electricity through solar panel or wind turbine installations. We are currently working with the building owners and managers to obtain financing for these retrofits.

In addition to supply the solar panels and equipment to retrofit these buildings, we will assist the end-user to apply for certification under Arizona’s Commercial/Industrial Solar Energy Tax Credit Program. The primary goal of this program is to stimulate the production and use of solar energy in commercial and industrial applications by subsidizing the initial cost of solar energy devices. Tax credits can be used to offset Arizona income tax liability; any unused credit amounts can be carried forward for a five-year period.

Despite a new emphasis on solar farms and commercial retrofits, we are continuing to operate our alternative/renewable energy product distribution business. These product lines include both industrial and consumer products based on alternative energy technologies, including wind turbines and solar chargers ranging from handheld devices that can power an iPod to large vertical wind turbines that can power a building.

In the past we attempted entry into the carbon offset sector of the “green” industry by offering the public the ability to calculate their respective “carbon footprints” on our website, with the intent to ultimately offer and sell carbon offsets to both consumers and businesses; however, our entry into this market sector has been delayed, initially due to our lack of ability to finance the purchase of such carbon credits for inventory and sale, and now because (i) our existing staff is concentrating on the business areas specified above, and (ii) the market for these offsets has experienced significant volatility.

Liquidity and capital resources

Our material cash expenditures have been expenses relating to purchasing inventory; shipping and other costs associated with our sales and fulfillment activities; general and administrative expenses, including payroll expenses and office rent; and accounting and legal fees relating to our reporting obligations.

Our operating expenses had increased significantly during the last quarters of 2007 as we increased our office facilities, hired new employees and consultants, increased our ecommerce sales, and increased our competitive bidding activities; in 2008, due to a lack of operating capital and our inability to acquire purchase order and accounts receivables financing, as well as equity financing, we had a series of layoffs, dramatically decreasing our workforce. Beginning in early 2009, due to government incentives and a new emphasis on alternative energy production, we are now planning a significant expansion of our operations. We are seeking equity capital for this expansion. In the interim, we have again increased our workforce and engaged consultants and professionals (such as electrical engineers and photovoltaic installers) to provide the services necessary to move forward with our planning, design and bidding activities.

The domestic, and indeed global, financial crisis has negatively affected our ability to obtain purchase order, accounts receivable, and inventory financing, which has slowed our distribution activities.

We need to raise significant capital to continue as a going concern. We also have significant outstanding invoices from suppliers, some of which are overdue and which are negatively affecting our credit lines with our suppliers. There can be no assurance that we will raise sufficient funds to continue our business operations.

Cash at July 31, 2009 was $44,271, as compared with $13,607 at the end of the corresponding period in 2008. Our accounts receivable at July 31, 2009 were $968, with inventory of $119,258, as compared with accounts receivable of $94,458 and inventory of $93,666 at July 31, 2008. The significant decrease in our accounts receivable was

caused by our inability to finance our sales contracts in a timely manner. We currently do not have any significant cash resources, and our need for capital is our most significant business concern and the single most significant factor limiting our growth.

Our accounts payable and accrued expenses at July 31, 2009 were $378,158, as compared to $394,553 at July 31, 2008. Our total current liabilities at July 31, 2009 were $2,054,897, as compared to $1,430,491 at July 31, 2008.

We held property and equipment at July 31, 2009 which was valued, net of depreciation, at $25,396, as compared with property and equipment with a net valuation of $34,977 at July 31, 2008. Our total assets at July 31, 2009 were $189,893, as compared with total assets of $236,708 at July 31, 2008.

Results of Operations

Revenues for the three months ended July 31, 2009 were $968, as compared with revenues of $138,432 for the three months ended July 31, 2008. The significant decrease in revenues was due to our inability to finance many of our purchase orders, coupled with the shift in business focus from distributing products manufactured by other parties to joint venturing on proposed solar and wind farms. Our cost of goods sold for the three months ended July 31, 2009 were $361, for a gross profit of $607, as compared with cost of goods sold for the corresponding period in 2008 at $72,277, for a gross profit of $66,155, during the three months ended July 31, 2008.

We have incurred losses since our inception. Our net loss was $2,781,008 for the three-month period ended July 31, 2009, as compared to $365,964 for the same period for the prior year. The significant increase in losses was due to an increase in consulting fees, specifically the issuance of 2,410,000 shares of common stock for services.

Market Analysis Summary

In the first days of his administration, President Obama announced that he would seek to raise the amount of electricity generated from renewable energy to 10% of total U.S. capacity by 2012 (currently this figure is about 3%). As this goal requires significant capital, the administration has included $100 billion in the current stimulus package that is directly related to financing clean energy projects. This Clean Energy Financing Initiative provides loan guarantees and other measures to encourage the private sector to invest billions of dollars in green energy. According to National Public Radio, an even more comprehensive clean-energy financing package may become available in the Obama-Biden Energy Bill or Climate Bill, both rumored to be drafted later in the year.

Arizona is an Emerging Solar Producer. Until recently, the solar industry in Arizona has been stagnant. Arizona is approximately sixth among all 50 states in terms of solar installations per capita but has the highest solar exposure in the continental United States (in contrast, because of state tax incentives and rebates for commercial and residential solar installation, New Jersey ranks second after California in terms of solar capacity, but its solar exposure levels are among the bottom tier of US states). Until recently, Arizona has lacked any significant solar cell manufacturing and research and development. In the sunniest state in the country nearly 40% of the state’s energy is derived from coal. The solar industry in Arizona primarily consists of solar installers for homes and businesses, which are distributors of predominantly foreign photovoltaic (PV) or solar panels. With new government incentives and enhanced tax credits for homes and businesses adding solar components mandated by the U.S. Economic Recovery Act, Arizona is now poised to expand its solar power production dramatically.

On June 4, 2009 the Arizona Republic reported that “a modern-day land rush is under way in the deserts of Arizona and the Southwest as public utilities and speculators vie for vast tracts of public and private land on which to build massive solar-power plants.” The article went on to state that the “boom” is creating a market and boosting the price for outlying-subdivision land that had become seemingly unsalable after the housing market went bust. The land rush is being driven by rules in Arizona, California and other states that require utilities to generate more power from renewable resources: 15 percent in Arizona by 2025 and 33 percent in California by 2020.

Generous state and federal subsidies, plus billions in economic-stimulus money earmarked for solar power, create an additional incentive to tie up land. According to the National Renewable Energy Laboratory, Arizona has some of the richest solar land in the country, and the state has become a focal point for new solar farm development. Much of the prime land for solar use is along the Interstate 10 corridor between Buckeye and the California state line. Other hot spots can be found around Kingman and west of Wickenburg.

More than 40 solar projects have currently been proposed for Arizona. If built, they would tie up more than 725,000 acres and generate enough electricity to power 25 million homes, far more than Arizona needs. California has 60 applications that total 575,000 acres and Nevada 39 active applications for about 300,000 acres.

Solar manufacturing companies are expecting a combination of slowing demand and increasingly available supplies of both finished product and underlying manufacturing capacity, leading most analysts to predict solar panel prices to fall 10% to 20% in 2009. Additionally, prices for poly-silicon, a key solar panel component, could fall as supplies of this component improve. Some industry analysts claim that for a solar panel company to be successful over the long term, their products have to be able to create electricity in the range of 8 to 12 cents per kilowatt hour, without subsidies. This has created a condition in which landowners can cost-effectively build solar farms.

Recent Court Decision May Promote Solar Growth in Arizona. On September 2, 2009, a Maricopa County Superior Court judge ruled that the Arizona Corporation Commission (“ACC”) has the authority to set renewable energy standards and allow utilities to collect tariffs to meet them. The ACC instituted the standards in 2006 requiring all utilities that it oversees to provide 15 percent of their power from renewable sources by 2025. In order to do that, many of the utilities raised funds through special tariffs associated with renewable energy.

The ruling affirmed the ability of the ACC to set such standards, despite a lawsuit brought by the Goldwater Institute on behalf of several Arizona utility clients. The ruling is generally seen as a victory for the ACC and the state’s solar industry, as the pending lawsuit had been one of the roadblocks to the location of manufacturing and research facilities in the state. This was also an important ruling because it confirms that the renewable energy standards come under the ACC’s ratemaking authority, and that constitutional authority cannot be interfered with by the Legislature. The ruling was widely seen as a way to spur renewable energy development in Arizona.

The Growth of Wind Turbine Sales. Over the last decade worldwide wind turbine sales have an annual growth rate of approximately 29%. Renewable energy industry sources claim that wind power is the world's fastest growing source of energy, with expansion over the next two decades predicted at double-digit rates. The two main types of wind turbines currently dominating the market are the conventional, propeller-type "horizontal axis" wind turbines (HAWTs), and the new “vertical axis” wind turbines (VAWTs) that are touted as being more wildlife friendly and more efficient in lower wind speeds. At year end 2007, wind turbines producing over 90,000 megawatts of electrical power had been installed worldwide. This was forecast to increase by approximately 30% in 2008, a forecast which proved conservative according to recent figures.

The American Wind Energy Association (AWEA), a national trade association for the domestic wind power industry, recently announced that the U.S. wind energy industry had a record year in 2008 by installing 8,358 megawatts (MW) of new generating capacity, which is approximately enough energy to power 2 million homes. The significant growth in 2008 increased domestic wind power generating capacity by 50% and channeled an investment of approximately $17 billion into the economy. However, due to the current economic downturn, financing for new project and orders for wind turbine components slowed at year’s end and layoffs began affecting the wind turbine manufacturing sector.

The U.S. Dept. of Energy, the American Wind Energy Association and the National Renewable Energy Laboratory have all opined that 20% of the nation's electricity could come from renewable wind energy within the next twenty years. The growth in wind energy is being driven by several factors, including short supplies of fossil fuels like oil and natural gas. While nuclear power is an option that countries such as France have embraced, it is expensive, and disposing of radioactive byproducts is problematic and the source of widespread opposition to new nuclear plants.

The cost per kWh of energy produced by wind turbines is expected to be one of the cheapest sources of renewable energy. As costs increase for fossil fuel energy sources, wind energy will not need government subsidies to be competitive.

Green Companies Will Benefit From EPA Ruling, Proposed Climate Bill. A major focus of the new administration is energy independence and the expedited development of wind, solar, and other clean energy sources. We believe new legislation will have a significant impact on our industry and our business during the coming year. House Energy and Commerce Committee Chairman Henry Waxman has proposed a climate bill that would require businesses to reduce their greenhouse gas emissions by twenty percent by 2020. The bill began its opening round of debate in Congress during the week of April 21, 2009. The hearings followed the Environmental Protection Agency’s ruling on April 17, 2009 that greenhouse gases pose a danger to the public, a finding that opens the way for new regulation of cars, power plants and factories. Mr. Waxman also stated that he believes that most of

the estimated $646 billion in revenue raised from carbon permits under the proposed cap-and-trade system should be spent on green technologies. The Company believes that the recent finding by the EPA, and the requirements for greener building standards, will create a tremendous demand for green industrial parks nationwide.

Domestic Wind Turbine Market Trends. A recent report published by veteran research market firm BCC Research and titled Wind Turbines: The US Market forecasts that the domestic United States’ market size for wind turbine components and systems will reach $60.9 billion US in 2013.

Wind power was second only to natural gas plants in new capacity from 2005 through 2007, and provided 35% of all new generation added domestically in 2007. According to AWEA, the new wind projects completed in 2008 account for about 42% of the entire new power-producing capacity added nationally last year, and will avoid nearly 44 million tons of carbon emissions, the equivalent of taking over 7 million cars off of the road. Current wind energy generating capacity in the U.S. is about 25,170 MW, producing enough electricity to power the equivalent of close to 7 million homes. The top five states in terms of capacity installed are now:

Texas, with 7,116 MW

Iowa, with 2,790 MW

California, with 2,517 MW

Minnesota, with 1,752 MW

Washington, with 1,375 MW

Canadian Wind Turbine Market Trends. We have been actively pursuing the growing Canadian small wind turbine market. According to the Canadian Wind Energy Association (CanWEA), Canada has still only scratched the surface of its massive wind energy potential. Total spending on wind energy in North America is expected to double by 2010 to $7.5 billion annually, with microgeneration systems providing a significant portion of the overall electricity generated. The majority of small wind turbines installed in Canada originate from the United States.

In January 2009 the Government of Ontario announced that it had signed long-term contracts for six new wind energy projects in the province. The announcement brings Ontario's installed wind energy capacity to 1,500 MW. Currently, the province generates wind power with 782 MW of capacity, enough to power 230,000 homes. Canada's total installed capacity sits at 2,369 MW — Ontario is currently the wind technology leader in the country, accounting for roughly one-third of that number. CanWEA has set a goal of wind energy providing 20% of Canada's electricity needs.

Domestic Solar Installation Trends. A report issued by the California Public Utilities Commission stated that residential and commercial rooftop installations more than doubled in 2008 from the previous year to 158 megawatts of producing power. Reinforcing the perception that state and federal incentives have a major impact on new installations, the report noted that there was a surge in applications to participate in California’s $3 billion solar rebate program in the fourth quarter of 2008 after Congress lifted the $2,000 cap on the federal tax credit on solar arrays in October 2008 (allowing homeowners and businesses to take a 30% tax credit on systems installed after Dec. 31^st), which, coupled with an additional California state rebate, cut the real cost of a solar system in California in half. The report concluded that, in addition to environmental benefits such as cutting greenhouse gas emissions and other pollutants, it appears that solar energy is benefiting California by serving as an economic bright spot in the economy.

California regulators caution that many homeowners and business owners may leave the program and cancel their applications if the economy continues to deteriorate rapidly this year. The current dropout rate is 15%, according to the report. Municipal programs also are expected to have an effect on new alternative energy installations. Berkeley, California has launched a program that pays for residential and business solar arrays and lets owners pay the cost back over twenty years through an annual assessment on their property taxes.

Alternative Energy Trends – Global. According to an article dated February 2, 2009 in Reuters, the United States overtook Germany as the biggest producer of wind power last year and will likely take the lead in solar power this year. The article cited an expected "Obama bounce" from a new President who has vowed to boost clean energy, and additional impetus from political and business leaders worldwide who have urged "green growth" spending on clean energy to fight both recession and climate change.

German wind power capacity reached nearly 24 GW, placing it second ahead of Spain and fourth-placed China, which doubled its installed wind power for the forth year running, said the Brussels-based Global Wind Energy Council. Spanish wind power business group AEE said that it expected similar growth in 2009 as last year.

Generally, the wind sector is now suffering from a financial crisis which has dried up project finance and a sharp fall in oil prices which has weakened its competitiveness compared to gas, but it is aided by subsidies such as a guaranteed price premium in Germany and Spain.

A February 4, 2009 article in the International Herald Tribune noted that the credit crisis and broad economic downturn was causing pronounced slowing of wind and power projects worldwide, except in some isolated markets, like China, which has shown no signs of a slowdown. Wind and solar developers have been left hunting for capital because the number of banks and financial institutions willing to help installation of wind turbines and solar arrays has dropped significantly. The effects of the banking crisis were also being felt in Europe, although industry groups said it was too soon to tell what effect the credit freeze would have on the fast-growing sector. Solar experts also report that demand in Europe has softened, a combination of a seasonal slowdown for winter and a recent cap on solar installations in Spain.

Despite current financial conditions, European Union leaders agreed that the bloc should get a fifth of all its energy from renewable sources by 2020 compared with about 10 percent now.

Effect of existing or probable governmental regulations on our business. Our business is affected by a wide range of municipal, county, state and federal regulations and may be influenced by the announcement of proposed regulations by the new administration and Congress. A major focus of the new administration is energy independence and the expedited development of wind, solar, and other clean energy sources.

On February 8, 2009, the Chicago Tribune reported that President Obama is planning to replace imported oil and other fossil fuels with a "clean-energy economy" powered by the wind, the sun and biofuels. Energy Secretary Steven Chu was quoted as saying that we need a second Industrial Revolution that can generate energy cleanly, cheaply and sustainably. According to the article, by the end of 2009, the Energy Department's spending on 35 years of clean-energy research will exceed the total inflation-adjusted cost of the Apollo program which sent men to the moon, and the Manhattan Project, which developed the nuclear bomb, an estimated $117 billion combined. That research, economists say, has made wind, solar and other alternative sources of energy cheaper, but still not as inexpensive as fossil fuels. Renewable sources make up about the same sliver of America's energy portfolio as they did three decades ago, about 7 percent, while the nation's reliance on imported oil has doubled. We believe new legislation will have a significant impact on our industry and our business during the coming year.

Domestic Legislation

The American Recovery and Reinvestment Act of 2009 contains provisions which support alternative energy production. The act includes a new grant program, a three-year extension of the production tax credit, several provisions to promote transmission for renewable energy, and key changes to benefit small wind systems.

President Obama has outlined a range of policies that would encourage investments in renewable energy, including:

adjusting the federal production tax credit (PTC) to make it more effective in the current economic downturn and extending it for a longer term (it expires at the end of 2009);

establishing a national renewable electricity standard (RES) with a target of generating at least 25% of the nation’s electricity from renewables by 2025, and a near-term target of 10% by 2012 (a Washington Post poll in early December found that 84% of Americans support such a standard);

legislation and initiatives to develop a high-voltage interstate transmission “highway” for renewable energy; and

national climate change legislation that would promote the use of wind and solar power.

Production Tax Credit (PTC) Extension

In October 2008, Congress acted to provide a one-year extension of the Production Tax Credit through December 31, 2009.

Description: Under present law, an income tax credit of 2.1 cents/kilowatt-hour is allowed for the production of electricity from utility-scale wind turbines. This incentive, the renewable energy Production Tax Credit (PTC), was

created under the Energy Policy Act of 1992 (at the value of 1.5 cents/kilowatt-hour, which has since been adjusted annually for inflation).

Current Status: The PTC is scheduled to expire on December 31, 2009. Since its establishment in 1992, the PTC has undergone a series of short term extensions, and has been allowed to lapse in three different years: 1999, 2001 and 2003. Each time the PTC has been allowed to expire, the wind industry has seen a 73-93% drop in wind energy installations in the subsequent year.

Renewable Electricity Standard

Description: A national renewable electricity standard (RES) – also known as a renewable portfolio standard (RPS) – would, for the first time, mandate that public utilities in every state obtain a minimum percentage of their electricity from renewable sources by a certain date or be required to purchase tradable credits for renewable electricity produced elsewhere. Twenty-eight states already have renewable electricity standards, and these measures have proven effective incentives for the development of wind and other renewable energy sources. A national policy would streamline this uneven patchwork and drive greater investment in solar and wind industry manufacturing.

The Obama-Biden New Energy for America Plan calls for 10% of U.S. domestic electricity to be produced from renewable sources by 2012, and 25% by 2025. The President believes that this national requirement will spur significant private sector investment in renewable sources of energy and create thousands of new American jobs, especially in rural areas. Each large utility-scale wind turbine that goes on line generates over $1.5 million in economic activity. Each turbine also provides about $5,000 in lease payments per year for 20 years or more to a farmer, rancher or other landowner.

Current Status of National RES: Legislation to establish a national RES has been considered by the U.S. Congress since 1997. Since that time, the Senate has passed RES proposals on three separate occasions. In 2007, for the first time in history, the U.S. House of Representatives voted in favor of including an RES as part of its energy bill. This bill would have established a 15% RES by 2020 and allowed 4% of the standard to be met through efficiency improvements, should states so choose. The Senate energy bill did not include a RES due to the uncertainty that the 60 votes needed to overcome a likely filibuster would have been secured.

AWEA predicts that states will focus on RES, transmission for renewables: The American Wind Energy Association, which is the national trade association for the wind energy industry, expects one or more states to implement (Indiana) or strengthen (Wisconsin and New York) their RES, bringing the number of states with an RES from 28 to perhaps 30. The industry association also predicts that some states, including some without an RES (Oklahoma, Kansas, Nebraska) will develop a process to facilitate investment in transmission for electricity generated using renewables. Texas, Colorado, Minnesota, and California have already shown the way with pro-active transmission policies for renewable energy.

Increased incentives for “small wind”. Homeowners, farmers, and small-business owners now benefit from a federal incentive enacted in late 2008 for the purchase of small wind turbines for home, farm, or business use. Owners of small wind systems with 100 kilowatts (kW) of capacity and less can receive a credit for 30% of the total installed cost of the system, with no limit.

The Environmentally Preferable Purchasing Program. The Environmental Protection Agency's Environmentally Preferable Purchasing Program, or EPP, started in 1993 after the signing of Executive Order 12873, and continues today under Executive Order 13423. The program originally created by with the purpose of using the federal government's enormous buying power to stimulate market demand for green products and services. Environmentally preferable means "products or services that have a lesser or reduced effect on human health and the environment when compared with competing products or services that serve the same purpose.” This comparison applies to raw materials, manufacturing, packaging, distribution, use, reuse, operation, maintenance, and disposal.

The United States federal government is one of the world's largest consumers. Indeed, it is the single largest consumer of goods and services within the United States, with total spending estimated at $350 billion for goods and services each year. Therefore, the federal government’s purchasing power exerts a tremendous influence on which products and services are available in the national marketplace. The Environmentally Preferable Purchasing Program works to ensure that federal government's buying power is working to the greatest extent possible to increase availability of environmentally preferable products, which in turn minimizes environmental impacts.

Federal agencies are directed by federal laws, regulations and executive orders to make purchasing decisions with the environment in mind. Most recently, these requirements have included Executive Order 13423, titled “Strengthening Federal Environmental, Energy and Transportation Management”, which orders federal agencies to use sustainable practices when buying products and services. For the Federal government as a whole, the President's Office of Management and Budget has issued a series of scorecards to help track progress of Federal agencies in implementing this program. Green purchasing progress is measured in the Environmental Stewardship Scorecard. These scorecards are for internal government use.

This “green” movement has been spreading throughout all levels of government. For example, California law requires state government to practice EPP, and even the U.S. Army has its own 'green buying' initiative. We believe the adoption of EPP by states, counties and municipalities will result in increased opportunities for our “green” product lines.

Going Concern

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Since the inception of the company, we have relied on loans from shareholders and officers, the sale of our equity securities, debt financing, and limited revenues to fund our operations. We have incurred losses since our inception and we continue to incur legal, accounting, and other business and administrative expenses. Our auditor has therefore recognized that there is substantial doubt about our ability to continue as a going concern.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4.

Controls and Procedures

Disclosure controls and procedures are designed with an objective of ensuring that information required to be disclosed in our periodic reports filed with the Securities and Exchange Commission, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission. Disclosure controls also are designed with an objective of ensuring that such information is accumulated and communicated to our management, including our chief executive officer/chief financial officer, in order to allow timely consideration regarding required disclosures.

The evaluation of our disclosure controls by our principal executive officer/principal financial officer included a review of the controls’ objectives and design, the operation of the controls, and the effect of the controls on the information presented in this Quarterly Report. We do not expect that disclosure controls can or will prevent or detect all errors and all fraud, if any. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Also, projections of any evaluation of the disclosure controls and procedures to future periods are subject to the risk that the disclosure controls and procedures may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on his review and evaluation as of the end of the period covered by this Form 10-Q, and subject to the inherent limitations described above, our principal executive officer/principal financial officer has concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are effective as of the end of the period covered by this report; provided, however, that the company currently has only two directors, neither of whom is an outside director, which does not allow the company to have an outside director on its audit or compensation committees. The Board of Directors is currently considering qualified candidates for appointment to the Board as outside directors.

Our principal executive officer/principal financial officer is not aware of any significant changes in our disclosure controls or in other factors that could significantly affect these controls subsequent to the date of his evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. During the period covered by this Form 10-Q, there have not been any changes in our internal control over financial reporting that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.

Legal Proceedings

As we have previously reported, on May 27, 2008 the Company filed a lawsuit in the United States District Court, Central District of California, Case No. SACV08-00586 CJC (PLAx) alleging securities law violations and fraud against various defendants, most of whom filed counterclaims. Over the last quarter we have engaged in extensive settlement negotiations which recently reached an impasse. We are presently preparing to move the court for permission to file a Second Amended Complaint in this matter.

Item 1A.

Risk Factors

An investment in our common stock involves a substantial degree of risk. Before making an investment decision, you should give careful consideration to the following risk factors in addition to the other information contained in this report. The following risk factors, however, may not reflect all of the risks associated with our business or an investment in our common stock.

The following risk factors must be considered in light of the current worldwide financial crisis.

Despite passage of The American Recovery and Reinvestment Act of 2009, the U.S. Commerce Department announced that the U.S. economy shrank by 3.8 percent in the fourth quarter, the most since 1982, while consumer spending recorded the worst slide in the postwar era. According to a February 6, 2009 article in the Associated Press, the Labor Department reported that “recession-battered employers” eliminated 598,000 jobs in January, the most since the end of 1974, and “catapulted the unemployment rate to 7.6 percent.” The Associated Press cited these figures as “further proof that the nation's job climate is deteriorating at an alarming clip with no end in sight.” In August 2009, the national unemployment rate rose to 9.7 percent according to a report from the Bureau of Labor Statistics. The AP has predicted that, with fallout from the housing, credit and financial crisis (which they claimed was the worst since the 1930s) “ripping through the economy”, analysts predict 3 million or more jobs will vanish in 2009, despite the stimulus plan. In light of the broad consensus that financial markets are in the worst turmoil of a generation, there can be no assurance that the current financial crisis will not continue, or get worse.

The global financial crisis has negatively impacted general economic conditions, including the alternative energy industry.

The current global financial crisis has had significant negative effects on a broad range of businesses, including our business. The credit crisis and broad economic downturn has caused pronounced slowing of wind and power projects worldwide, except in some isolated markets. Our customers, who are typically wind and solar installers and developers, have experienced financing problems because the number of banks and financial institutions willing to fund installation of wind turbines and solar arrays has dropped significantly. We have also experienced difficulties in getting our customers and purchase orders financed. All of these factors have had a significant negative impact on our operations, and should the current financial crisis continue, there can be no assurance we, or our customers, will be able to continue operations.

We will need significant infusions of additional capital.

During the last fiscal year we have relied primarily on loans and our limited revenues to obtain the funding necessary to operate the business. Our revenues from operations for the quarter ended July 31, 2009 would have been significantly higher if we had financing available to support our sales and competitive bidding activities and were further negatively impacted by our decision to allocate resources to developing solar and wind farms. We do not have any cash reserves and we will need to obtain additional outside funding in the future in order to further satisfy our cash requirements. Our need for additional capital to finance our business strategy, operations, and growth will be greater should, among other things, revenue or expense estimates prove to be incorrect. We cannot predict the timing or amount of our capital requirements at this time. If we fail to arrange for sufficient capital on a timely basis in the future, we may be required to reduce the scope of our business activities further until we can obtain adequate financing. Debt financing must be repaid regardless of whether or not we generate profits or cash flows from our business activities. Equity financing may result in dilution to existing stockholders and may involve securities that have rights, preferences, or privileges that are senior to our common stock. Therefore, we may not be able to obtain financing in sufficient amounts or on acceptable terms when needed, which could adversely affect our operating results and prospects.

Many of our current and potential competitors have longer operating histories, larger customer or user bases, greater brand recognition, greater access to brand name suppliers, and significantly greater financial, marketing and other resources than we do.

Many of these current and potential competitors can devote substantially more resources to the development of their business operations than we can at present. In addition, larger, well-established and well-financed entities may acquire, invest in or form joint ventures with other established competitors or with specific product manufacturers, which will allow them pricing advantages due to economies of scale or pursuant to distribution agreements with suppliers. Some large product distributors may also have exclusive distribution agreements or protected territories in which they can sell specific brand name products at a significant discount, or territories in which they may seek to exclude us from selling a specific brand of product. These types of arrangements between our competitors and manufacturers and suppliers may limit our ability to distribute certain brand name products and could adversely affect our revenues.

We depend upon our executive officers and key personnel.

The rapid execution necessary for us to fully exploit the market for our products and services requires an effective planning and management process. We experienced rapid growth during 2007, rapid contraction in 2008, and are now facing the need to expand our operations. There is currently a significant strain on our managerial, operational and financial resources and one person, Richard Reincke, currently serves as both our President/CEO and Chief Financial Officer. Mr. Reincke has been deferring a significant percentage of his salary since July 2008 and there can be no guarantee that he will continue to work without sufficient compensation. We recognize that our ability to manage our business effectively will require us to attract, identify, train, integrate and retain additional qualified management and other key personnel, and that we currently have limited financial resources. The loss of services of Mr. Reincke or any of our remaining key personnel would have a material adverse effect on our business, revenues, results of operations and financial condition.

There can be no assurance that any new products we introduce will achieve significant market acceptance or will generate significant revenue.

The market for products in the renewable energy industry is characterized by rapid technological advances, evolving standards in technology and frequent new product and service introductions and enhancements. Possible short life cycles for products we sell may necessitate high levels of expenditures for continually selecting new products and discontinuing the sale of obsolete product lines. To obtain a competitive position, we must continue to introduce new products and new versions of existing products that will satisfy increasingly sophisticated customer requirements and achieve market acceptance. Our inability or failure to position and/or price our new or existing products competitively, in response to changes in evolving standards in technology, could have a material adverse effect on our business, results of operations or financial position.

Although we have implemented safeguards to prevent unauthorized access to our ecommerce sites, there always exists certain security risks, which may cause interruptions, delays or cessation in service.

Despite the implementation of security measures, our network infrastructure may be vulnerable to computer viruses or problems caused by third parties, which could lead to interruptions, delays or cessation in service to our clients. Inappropriate use of the Internet by third parties could also potentially jeopardize the security or deter certain persons from using our services. Such inappropriate use of the Internet would include attempting to gain unauthorized access to information or systems - commonly known as "cracking" or "hacking." Although we intend to continue to implement security measures, such measures have been circumvented in the past, and there can be no assurance that measures implemented will not be circumvented in the future. Alleviating problems caused by computer viruses or other inappropriate uses or security breaches may require interruptions, delays or cessation in service to our operations. There can be no assurance that customers or others will not assert claims of liability against us as a result of failures. Further, until more comprehensive security technologies are developed, the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet service industry in general and our customer base and revenues in particular.

There is a risk of credit card fraud.

Although we have encryption certificates, systems and software for the electronic surveillance and monitoring of fraudulent credit card use, should our business be subject to repeated fraudulent use of credit cards on our

ecommerce sites, it could effect the reputation of our ecommerce sites and the willingness of customers to continue to use our sites.

Shares of our common stock are "penny stocks”.

At all times when the current market price per share of our common stock is less than $5.00, our shares of common stock will be considered "penny stocks" as defined in the Securities Exchange Act of 1934, as amended. As a result, an investor may find it more difficult to dispose of or obtain accurate quotations as to the price of the shares of our common stock being issued under this prospectus. In addition, the penny stock rules adopted by the Securities and Exchange Commission under the Exchange Act would subject the sale of shares of our common stock to regulations which impose sales practice requirements on broker-dealers. For example, broker-dealers selling penny stocks must, prior to effecting the transaction, provide their customers with a document which discloses the risks of investing in penny stocks.

Furthermore, if the person purchasing penny stocks is someone other than an accredited investor, as defined in the Securities Act, or an established customer of the broker-dealer, the broker-dealer must also approve the potential customer's account by obtaining information concerning the customer's financial situation, investment experience and investment objectives. The broker-dealer must also make a determination whether the transaction is suitable for the customer and whether the customer has sufficient knowledge and experience in financial matters to be reasonably expected to be capable of evaluating the risk of transactions in penny stocks. Accordingly, the SEC's rules may limit the number of potential purchasers of shares of our common stock. Moreover, various state securities laws impose restrictions on transferring penny stocks, and, as a result, investors in our common stock may have their ability to sell their shares impaired.

The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the Commission, which (i) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (ii) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of Securities' laws; (iii) contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and significance of the spread between the "bid" and "ask" price; (iv) contains a toll-free telephone number for inquiries on disciplinary actions; (v) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (vi) contains such other information and is in such form (including language, type, size and format), as the Commission shall require by rule or regulation. The broker-dealer also must provide, prior to effecting any transaction in penny stock, the customer (i) with bid and offer quotations for the penny stock; (ii) the compensation of the broker-dealer and its salesperson in the transaction; (iii) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (iv) monthly account statements showing the market value of each penny stock held in the customer's account.

In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Our common stock is subject to the penny stock rules, and therefore holders of those securities may have difficulty selling those securities. Stockholders should be aware that, according to Securities and Exchange Commission Release No. 34-29093, dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. Such patterns include:

(i) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer

(ii) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases

(iii) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons

(iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers

(v) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

We have not paid and do not currently plan to pay dividends on our common stock.

Some investors favor companies that pay dividends on their common stock, particularly in general downturns in the stock market. We have not declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings for funding growth, and we do not currently anticipate paying cash dividends on our common stock in the foreseeable future.

Provisions in our corporate charter and under Delaware law are favorable to our directors.

Pursuant to our certificate of incorporation, members of our management and Board of Directors will have no liability for violations of their fiduciary duty of care as officers and directors, except in limited circumstances. This means that you may be unable to prevail in a legal action against our officers or directors even if you believe they have breached their fiduciary duty of care. In addition, our certificate of incorporation allows us to indemnify our officers and directors from and against any and all expenses or liabilities arising from or in connection with their serving in such capacities with us. This means that if you were able to enforce an action against our directors or officers, in all likelihood we would be required to pay any expenses they incurred in defending the lawsuit and any judgment or settlement they otherwise would be required to pay.

Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (“Act”), we will be required to furnish a report by our management on our internal control over financial reporting. The internal control report must contain (i) a statement of management's responsibility for establishing and maintaining adequate internal control over financial reporting, (ii) a statement identifying the framework used by management to conduct the required evaluation of the effectiveness of our internal control over financial reporting, (iii) management's assessment of the effectiveness of our internal control over financial reporting as of the end of our most recent fiscal year, including a statement as to whether or not internal control over financial reporting is effective, and (iv) a statement that the Company's independent auditors have issued an attestation report on management's assessment of internal control over financial reporting.

In order to achieve compliance with Section 404 of the Act within the prescribed period, we will need to engage in a process to document and evaluate our internal control over financial reporting, which will be both costly and challenging. In this regard, management will need to dedicate internal resources, engage outside consultants and adopt a detailed work plan to (i) assess and document the adequacy of internal control over financial reporting, (ii) take steps to improve control processes where appropriate, (iii) validate through testing that controls are functioning as documented and (iv) implement a continuous reporting and improvement process for internal control over financial reporting. We can provide no assurance as to our, or our independent auditors’, conclusions at the prescribed periods with respect to the effectiveness of our internal control over financial reporting under Section 404 of the Act. There is a risk that neither we nor our independent auditors will be able to conclude at the prescribed period that our internal controls over financial reporting are effective as required by Section 404 of the Act. Moreover, as our senior management and board of directors is extremely limited, we may not be able to adequately comply with these requirements unless we are able to augment both our senior management and our board of directors, and there can be no assurance that we will be able to do so in a timely manner, or at all.

During the course of our testing we may identify deficiencies which we may not be able to remediate in time to meet the deadline imposed by the Sarbanes-Oxley Act for compliance with the requirements of Section 404. In addition, if we fail to achieve and maintain the adequacy of our internal controls, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. Moreover, effective internal controls, particularly those related to revenue recognition, are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our stock could drop significantly.

Item 3.

Defaults Upon Senior Securities

One of our noteholders has agreed to forebear on the collection of a promissory entered into on September 1, 2007 with the company. As consideration for a six (6) month extension of the loan term, the parties agreed to the following: (i)The interest rate listed was changed from a fixed rate of 12% per annum to 15% per annum, with payments due on the 15^th of each month; (ii) the conversion rights of the principal and unpaid interest remained, but the conversion rate was repriced at thirty cents ($0.30) per share; and (iii) the company also agreed, in consideration of its appreciation of her assistance and cooperation in extending this loan, to grant the noteholder stock equivalent to the amount of shares which would be purchased by a 10% interest “payment” on her loan. This amount, $10,000.00 (or 10% of the loan) yielded 50,000 shares of stock at a price of $0.20 per share. This was a one time nonrefundable and additional “interest” on her loan. The $100,000 loan, with accrued unpaid interest of approximately $9,000, was due March 1, 2009 and has not yet been repaid.

Item 6.

Exhibits

The following exhibits are either attached hereto or incorporated herein by reference as indicated:


Exhibit Number	Description	Exhibit
3.1	Certificate of Incorporation dated February 15, 2005 *
3.2	Certificate of Amendment of Certificate of Incorporation dated April 21, 2005 *
3.3	Amended and Restated Certificate of Incorporation dated October 26, 2005*
3.4	Bylaws*
10.1	Software Development Agreement*
10.2	Consulting Agreement, dated as of December 1, 2006, between the Registrant and Joseph King *
10.3	Lease with Camidor Properties*
10.4	Amendment No. 1 to Lease with Camidor Properties**
10.5	Registrant and Cota LLC, a Delaware limited liability company	Filed herewith
14	Code of Ethics**
31	Certification pursuant to SEC Release No. 33-8238, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

Previously filed as exhibits to our registration statement on Form SB-2, file number 3333-139751, filed December 29, 2006.

Previously filed as exhibits to our Annual Report on Form 10-KSB filed February 12, 2008.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		GWS Technologies, Inc.


Date:	September 21, 2009	/s/ RICHARD REINCKE
			Richard Reincke Chief Executive Officer/Chief Financial Officer (Principal Financial Officer and Authorized Officer)

EXHIBIT INDEX


Exhibit Number	Description	Exhibit
3.1	Certificate of Incorporation dated February 15, 2005 *
3.2	Certificate of Amendment of Certificate of Incorporation dated April 21, 2005 *
3.3	Amended and Restated Certificate of Incorporation dated October 26, 2005*
3.4	Bylaws*
10.1	Software Development Agreement*
10.2	Consulting Agreement, dated as of December 1, 2006, between the Registrant and Joseph King *
10.3	Lease with Camidor Properties*
10.4	Amendment No. 1 to Lease with Camidor Properties**
10.5	Registrant and Cota LLC, a Delaware limited liability company	Filed herewith
14	Code of Ethics**
31	Certification pursuant to SEC Release No. 33-8238, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed herewith
32	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith

Previously filed as exhibits to our registration statement on Form SB-2, file number 3333-139751, filed December 29, 2006.

Previously filed as exhibits to our Annual Report on Form 10-KSB filed February 12, 2008.

GWS Technologies, Inc. 10-Q