10-Q 1 g6854a.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2013 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition from __________ to __________. Commission File Number: 0-54036 CIRALIGHT GLOBAL, INC. (Exact name of registrant as specified in its charter) Nevada 26-4549003 (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 670 E. Parkridge Ave, Suite 112, Corona, CA 92879 (Address of principal executive offices) (Zip code) (877) 520-5005 (Registrant'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 [ ] No [X] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.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 [X] 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] APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of June 20, 2013 there were 15,469,193 outstanding shares of the Registrant's Common Stock, $0.001 par value. Report on Form 10-Q For the Quarter Ended March 31, 2013 INDEX Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Condensed Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012 3 Condensed Statements of Operations for the Three Months Ended March 31, 2013 and 2012 (Unaudited) 4 Condensed Statements of Cash Flows for the Three months ended March 31, 2013, and 2012 (Unaudited) 5 Notes to Condensed Unaudited Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosures about Market Risk 19 Item 4. Controls and Procedures 20 PART II - OTHER INFORMATION Item 1. Legal Proceedings 20 Item 1A. Risk Factors 20 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20 Item 3. Defaults Upon Senior Securities 21 Item 4. Mine Safety Disclosures 21 Item 5. Other Information 21 Item 6. Exhibits 21 SIGNATURES 23 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. CIRALIGHT GLOBAL, INC CONDENSED BALANCE SHEETS (Unaudited)

The accompanying notes are an integral part of these condensed financial statements 3 CIRALIGHT GLOBAL, INC CONDENSED STATEMENTS OF OPERATIONS (Unaudited)

The accompanying notes are an integral part of these condensed financial statements 4 CIRALIGHT GLOBAL, INC CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

The accompanying notes are an integral part of these condensed financial statements 5 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) 1. Background: Ciralight Global, Inc. (the "Company") was incorporated in the State of Nevada on February 26, 2009. The Company is in the business of designing, developing, and distributing proprietary advanced day lighting systems for traditional non-residential markets that benefit from natural lighting. In April 2009, we entered into an Exchange of Stock for Assets Agreement with Mr. George Adams, Sr. ("Adams Agreement") to acquire certain assets including, but not limited to, a U.S. patent, patent applications pending in Canada, Europe, Mexico and the United States, artwork, trademarks, equipment, furniture, databases, technical drawings, promotional materials, trade names and inventory parts and marketing rights related to the SunTracker One(TM) and SunTracker Two(TM) daylighting products previously owned and distributed by Ciralight, Inc., a Utah corporation, such assets having been foreclosed on by Mr. Adams, who was the secured creditor of Ciralight, Inc. Ciralight, Inc. is a predecessor to the Company, although we have no affiliation, contractual or otherwise, with Ciralight, Inc. or any of its employees, officers or directors. Ciralight, Inc., the company whose assets were foreclosed on by Mr. Adams, was also in the business of designing, developing, and distributing proprietary advanced day lighting systems for traditional non-residential markets that benefit from natural lighting. Ciralight, Inc. ceased operations on March 14, 2009, following the foreclosure by Mr. Adams. Since the acquisition of the assets was through a foreclosure, the former company and its officers remain liable for the Ciralight Inc.'s debts and the Company has no financial responsibility for those debts. None of the employees or management of Ciralight Inc. are involved in the Company. The business operations of our Company are located in Irvine, California and the Company operates with four employees, the Chief Executive Officer, the Chief Financial Officer / Chief Operations Officer, a warehouse manager and an executive assistant. In April 2009, we acquired all of the above described assets from Mr. Adams, except for the U.S. patent and the patent applications pending in Canada, Europe, Mexico and the United States, in exchange for 3,200,000 shares of our common stock and 1,000,000 shares of our Series A Preferred Stock. On December 15, 2009, we acquired the U.S. patent and patent applications pending in Canada, Europe, Mexico and the United States from Mr. Adams in exchange for the issuance by us of an additional 400,000 shares of our common stock and a convertible promissory note in the amount of $250,000. The note is convertible into shares of our common stock at a conversion rate of one share per $.25 of outstanding principal and interest. As a result of this transaction, Mr. Adams is our largest shareholder. Aside from our U.S. patent and our four pending patent applications, we have no other patent rights. 6 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) 2. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and in conformity with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with the financial statements and related notes contained in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). The unaudited condensed financial statements included in this document have been prepared on the same basis as the annual condensed financial statements and in management's opinion, reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the interim periods presented. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading. The results of operations for the three month period ended March 31, 2013 is not necessarily indicative of the results that the Company will have for any subsequent quarter or full fiscal year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. Reclassifications Certain reclassifications have been made to prior period amounts to conform to the current period presentations. 3. Liquidity and Operations: The Company had a net loss of $206,322 for the three months ended March 31, 2013. As of March 31, 2013, the Company had cash of approximately $15,881. In addition, the Company had accounts receivable of approximately $80,284, inventory on hand at a cost valuation of approximately $141,721, and accounts payable of approximately $231,434. 7 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) The Company has experienced losses primarily attributable to research, development, marketing and other costs associated with the strategic plan to develop as a world class supplier of sustainable lighting technologies. Cash flows from operations have not been sufficient to meet our obligations. Therefore, we have had to raise funds through several financing transactions. At least until we reach breakeven volume in sales and develop and/or acquire the capability to manufacture and sell our products profitably, we will need to continue to rely on cash from external financing sources. Our operations during the quarter ended March 31, 2013 and the year ended December 31, 2012 were financed by product sales contracts, common stock issuances, as well as from working capital reserves. In addition, on March 23, 2012, the company entered into a revolving line of credit with the Adams family, a related party, in the amount of up to $500,000. The line of credit is for a period of six months at an interest rate of prime plus 2%. In the event that the loan balance is not fully repaid at the end of the six month term, then the outstanding balance plus accrued interest may be convertible to common stock at the option of the Creditors at the rate of $0.10 per share. The due date on the line of credit was extended indefinitely by the Adams with the understanding that they could call the note due anytime thereafter at their option. In addition they have advanced amounts in excess of the initial limit of $500,000. In addition the company was recently approved by the XM Bank (by the Dept. Of Commerce) to insure and finance transactions for international Distributors and Dealers. This provides up to $270,000 in financing. Under this XM Bank program, the company will receive 90% of an international sale at the time the order ships thus improving the company's cash flow. The international Distributor and Dealer than have 90 days, instead of 21 days to pay back the XM Bank which is a good incentive for our Distributors and Dealers to sell more product. When the Distributor or Dealer pays back EX Bank, the balance of the order is remitted to the Company. In addition, The company will continue to obtain working capital by accessing capital markets. On May 24, 2013 the Company signed an agreement with BCC Valuation Advisors, an investment Banking Company to raise $5,000,000 for Ciralight Global, Inc. This is expected to take approximately two to six months to raise. To provide the needed working capital in the meantime a letter making a call to the existing shareholders to advance their prorata share of a $300,000 bridge loan was distributed on June 14th. This would be a one year loan with interest at 5% per year, convertible to stock between months six and twelve at $0.35/share. Management believes that with the increased level of sales, the call to the shareholders, the working capital funding to be provided by BCC and the XM Bank financing the company will have sufficient liquidity to carry on operations for the next twelve months. However, there can be no assurance that management will be able to fully deliver on its business plans. 4. Advances Payable-related party - On March 23, 2012, the company entered into a revolving line of credit with the Adams family, a related party, in the amount of up to $500,000. The line of credit is for a period of six months at an interest rate of prime plus 2%. In 8 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) the event that the loan balance is not fully repaid at the end of the six month term, then the outstanding balance plus accrued interest may be convertible to common stock at the option of the creditors at the rate of $0.10 per share. The principle balance owed as of March 31, 2013 was $508,684. As of March 31, 2013 the Related party line of credit due to George and Terry Adams was $203,684 and $305,000, respectively. These proceeds have been used for short term working capital purposes. Interest payable of $20,679 has been recorded as of March 31, 2013, making a total amount due of $529,363. In addition, Fred Feck Executed a note for $33,000 on June 30, 2012 in exchange for rent for the warehouse occupied the company. Fred Feck is a board member and Secretary of the company. As of March 13, 2013 the accrued interest on Mr. Fecks note is $1,309. The total related party accrued interest of $21,988 is included in the Other Payables amount on the Company's financial statements. Other Payables - Related Party - As of March 31, 2013, the Company had Other Payables consisting of the following: Other Payables - Related Party Royalty fees - Related Party $52,184 Accrued Interest - Related Party 21,988 ------- Total Other Payables - Related Party $74,172 ======= Royalty Fees Payable - The Adams Agreement described in Note 1 above, granted Mr. Adams a royalty fee of $20.00 for each SunTracker One(TM) and SunTracker Two(TM) unit or any future units that are based on the patent rights we acquired from him. The maximum royalty fees payable under the Adams Agreement is $2,000,000 based on the sale of 100,000 units. At March 31, 2013 accrued royalties in the amount of $52,184, related to our sale of 2,609 units. The Company leases warehouse space from one of our directors, Frederick Feck. In January 2010, we entered into a nonexclusive distributorship agreement with Chaparral Green Energy Solutions, LLC, an entity in which our securities attorney, David E. Wise, Esq., owns a 50% equity interest. This non-exclusive dealer agreement with the Company is to sell products in Texas and is on the same terms, conditions and pricing as other dealer agreements. Thus, Mr. Wise's company will not receive any beneficial or special treatment over our other dealers or distributors. The terms and conditions of the dealer agreement with Chaparral Green Energy Solutions, LLC are the same as for the other dealer and distributorship agreements. Therefore, the agreement with Chaparral Green Energy Solutions, LLC does not contain preferential or more favorable terms or conditions than agreements with our other dealers or distributors. 9 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) On April 1, 2011, in consideration of the Adams notes to offer the Company, the Company agreed to grant the Adams 300,000 stock options at an exercise price of $.50 per option that will be exercisable over five years. The options will vest over one year at 75,000 options per quarter. Additionally, the company executed a note payable to Vera Cruz Properties, which is owned by a related party, Fred Feck agreed to accrue the monthly rent in order to assist the company with its cash flow. The note was executed on June 30, 2012, with interest at prime plus two, all due and payable in one year. The note is convertible to common stock at option of the holder at the price of $.50 per share. During the three months ending March 31, 2013 there were 133,336 shares issued to the Board of Directors for their services and to Smokey Robinson for his services related to Marketing and Public Relations. Each of the six Board Members receives 50,000 common stock shares per year with the shares accrued monthly and issuable quarterly. In addition, Smokey receives 50,000 shares for his marketing and public relation services. These are also accrued monthly and issuable quarterly. In April 2012 Jarett Fenton was hired to serve as a contract Chief Financial Officer. In May 2012, the Board added Terry Adams, Larry Eisenberg, Richard Katz and William "Smokey" Robinson Jr. to the Board of Directors. Terry Adams was appointed by the Board to serve as the Chairman of the Board. At the June 25, 2012 Shareholder meeting all of the Board of Directors were elected to new terms. The Board thereafter confirmed the officers to be Terry Adams, as Chairman of the Board, Jeff Brain as CEO, President and Chief Operating Officer, Jarett Fenton as Chief Financial Officer and Fred Feck as Secretary. In December 2012, Jarrett Fenton stepped down to pursue other opportunities. 5. Stockholders' Equity: Common stock: The Company is authorized to issue up to 50,000,000 shares of common stock with a par value of $0.001, under terms and conditions established by the Board of Directors. During the three month period ended March 31, 2013, a total of 402,624 shares of common stock were issued. In January 2013, 33,334 shares of common stock were issued to Directors Eisenberg, Katz, Brain and Adams each, for a total of 133,336 shares for services rendered, at $.55 per share. In addition, George Adams converted $67,322 of his line of credit at the rate of $.25/share for a total of 269,288 shares of common stock. Preferred stock: The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share. Currently, we have 1,000,000 shares of preferred stock issued and outstanding. As part of the purchase contract for the acquisition of 10 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) assets, we issued 1,000,000 shares of Series A Preferred Stock to the seller of those assets, Mr. George Adams, Sr. The Series A Preferred Stock has the following rights and references: 6. Stock Options and Warrants: The following table summarizes the activity of stock options for the three months ended March 31, 2013: Number of Shares Weighted Average Outstanding Exercise Price ----------- -------------- Balance, December 31, 2012 1,352,900 $ .464 Options vested 75,000 $ .464 Options Exercised -- -- Options forfeited or expired -- -- Balance, March 31, 2013 1,427,900 $ .464 The weighted average fair values of options vested during the quarter ended March 31, 2013 was $.25 per option. The value recorded for the options granted during the first quarter was $25,687. The following table summarizes the activity of warrants for the three months ended March 31, 2013: Number of Warrants Weighted Average Outstanding Exercise Price ----------- -------------- Balance, December 31, 2012 400,000 $ .50 Warrants granted -- -- Warrants Exercised -- -- Warrants forfeited or expired -- -- Balance, March 31, 2013 400,000 $ .50 During the three months ended March 31, 2013, the company granted no stock purchase warrants. 7. Commitments and Contingencies: Operating Leases -- The Company has not entered into any long term leases. The Company is currently leasing approximately 3,500 square feet of warehouse space in Corona, California, on a verbal month to month basis from one of our Directors, Frederick Feck. Commencing October 1, 2009, the Company paid $3,000 per month for the Corona, California warehouse space. In the second quarter of 11 CIRALIGHT GLOBAL, INC NOTES TO THE CONDENSED FINANCIAL STATEMENTS March 31, 2013 (Unaudited) 2012, the company moved its executive offices and accounting functions to operate out of the warehouse in Corona. The Company has chosen to rent a small office space in Sherman Oaks, California, on a month to month basis for $625 per month plus $30 for monthly utilities. Prepaid Inventory - Ciralight has agreements with several inventory component suppliers generally provide that between 50% and 60% of the purchase order price is due upon the placement of an order, with the remaining balance due upon completion and shipment of the order, normally within 30 days. Purchase order prepaid deposits are included in the balance sheet as Prepaid expenses and other current assets. As of March 31, 2013, purchase order prepaid deposits totaled $18,678 with several of our major suppliers. 8. Legal Matters: We have no legal matters pending against us. On August 15, 2011 we filed a collection action against Nature's Lighting for their failure to pay for product purchased from us. The amount owed to us is $39,000 plus legal fees and costs. On January 30, 2012 we were successful in obtaining a default judgment and now are proceeding to collect the balance owed to us. In the first quarter of 2013, this legal matter was resolved with a settlement agreement that provides Ciralight with the sum of $23,000 paid over 10 months. Through June 20, 2013 the company has received payments totaling $18,000 pursuant to the settlement. Ciralight Global, Inc. has potential litigation against Suntron Corporation for issues related to faulty work done during production in 2011 and 2012. Ciralight has notified Suntron regarding our damages and losses and hopes to reach a settlement. Ciralight has notified Suntron that our damages exceed any balance we owe them and therefore do not consider that we owe them any money. Our potential damages include our payment for faulty product, for reimbursement of engineering fees to investigate the problems, rework costs, recall costs, lost sales and damage to our reputation. 9. Subsequent Events: The Company has performed an evaluation of subsequent events pursuant to ASC 855 and is not aware of any subsequent events which would require recognition or disclosure in the financial statements other than as follows: During May 2013, The company entered into an agreement with BCC Valuation Advisors, an investment banking company to raise a target of $5,000,000 in working capital. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. CAUTIONARY FORWARD - LOOKING STATEMENT The following discussion should be read in conjunction with our financial statements and related notes. Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following: * the volatile and competitive nature of our industry, * the uncertainties surrounding the rapidly evolving markets in which we compete, * the uncertainties surrounding technological change of the industry, * our dependence on its intellectual property rights, * the success of marketing efforts by third parties, * the changing demands of customers and * the arrangements with present and future customers and third parties. Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated. THE FOLLOWING DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL CONDITION OF CIRALIGHT GLOBAL, INC., FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2013 (UNAUDITED) SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS, AND THE NOTES TO THOSE FINANCIAL STATEMENTS THAT ARE INCLUDED IN ITEM 1 ELSEWHERE IN THIS FILING. REFERENCES TO "WE," "OUR," OR "US" IN THIS SECTION REFERS TO THE COMPANY AND ITS SUBSIDIARIES. OUR DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. ACTUAL RESULTS AND THE TIMING OF EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING THOSE SET FORTH UNDER THE RISK FACTORS, FORWARD-LOOKING STATEMENTS AND BUSINESS SECTIONS IN THIS PROSPECTUS. WE USE WORDS SUCH AS "ANTICIPATE," "ESTIMATE," "PLAN," "PROJECT," "CONTINUING," "ONGOING," "EXPECT," "BELIEVE," "INTEND," "MAY," "WILL," "SHOULD," "COULD," AND SIMILAR EXPRESSIONS TO IDENTIFY FORWARD-LOOKING STATEMENTS. 13 OVERVIEW We are a manufacturer and wholesaler of "advanced skylights" for use in warehouses, schools, retail stores, airports, military installations and residential buildings. We renamed our products as of January 1st, 2011. Our products are no longer referred to as SunTrackerOne, SunTrackerTwo, and SunTrackerThree. Instead, our 4'x4' SunTracker is now called the SunTracker 400, (with an option of a single or triple mirror), and our 4'x8' SunTracker is now called the SunTracker 800. When our smaller model for homes and classrooms is released, it will be called the SunTracker 200. These new model names are simple, intuitive, and reinforce the brand name and image. We were incorporated in the state of Nevada on February 26, 2009, under the name "Ciralight West, Inc." On March 13, 2009, we changed our name to "Ciralight Global, Inc." In April 2009, we entered into an Exchange of Stock for Assets Agreement with Mr. George Adams, Sr. to acquire certain assets including, but not limited to, a United States patent, patent applications pending in Canada, Europe, Mexico and the United States, artwork, trademarks, equipment, furniture, databases, technical drawings, promotional materials, trade names and inventory parts and marketing rights related to the Suntracker One(TM) and Suntracker Two(TM) daylighting products previously owned and distributed by Ciralight, Inc., a Utah corporation, such assets having been foreclosed on by Mr. Adams, who was the secured creditor of Ciralight, Inc. We did not acquire any equity securities, debts, liabilities or financial obligations of Ciralight, Inc., the Prior Company. Ciralight, Inc. is a predecessor to Ciralight Global, Inc., although we have no affiliation, contractual or otherwise, with Ciralight, Inc. or any of its employees, officers or directors. Ciralight, Inc. ceased operations on January 27, 2009. In April 2009, we acquired all of the above described assets from Mr. Adams, except for the United States patent and the patent applications pending in Canada, Europe, Mexico and the United States, in exchange for 3,200,000 shares of our common stock and 1,000,000 shares of our Series A Preferred Stock. In December 2009, we acquired the United States patent and the patent applications pending in Canada, Europe, Mexico and the United States from Mr. Adams in exchange for the issuance by us of an additional 400,000 shares of our common stock and a convertible promissory note in the amount of $250,000. The promissory note we issued to Mr. Adams is convertible into shares of our common stock at a conversion rate of one share per $.25 of outstanding principal and interest. As a result of this transaction, Mr. Adams is our largest shareholder and has voting control over us. As described in the above paragraphs, Ciralight, Inc. is a predecessor to Ciralight Global, Inc., since the major portion of the business and assets of Ciralight, Inc. were acquired by Ciralight Global, Inc. in a series of related successions in each of which the acquiring person or entity acquired the major portion of the business and assets of Ciralight, Inc. 14 In order to provide working capital, Ciralight Global, Inc. sold common stock through a private placement that raised $1,300,000 with the sale of 5,200,000 shares at a price of $0.25 per share from April 30, 2009 to January 15, 2010. During the third and fourth quarters of 2010, the Company sold common stock through a private placement that raised $222,000 with the sale of 444,000 shares at a price of $0.50 per share. During 2011, the Company sold common stock through a private placement that raised $475,680 with the sale of 951,360 shares at a price of $0.50 per share. RISKS, UNCERTAINTIES AND TRENDS RELATING TO THE COMPANY AND INDUSTRY The industrial lighting industry is intensely competitive. We have numerous competitors in the United States and elsewhere. Several of these competitors have already successfully marketed and commercialized products that compete with our products. Our success is dependent up our ability to effectively and profitably produce, market and sell our products. Our business strategy and success is dependent on the skills and knowledge of our management team and consultants. The marketability and profitability of our products is subject to unknown economic conditions, which could significantly impact our business, financial condition, the marketability of our products and our profitability. We are vulnerable to the current economic crisis which may negatively affect our profitability. Our success depends, in part, on the quality of our products. Our SunTracker(TM) products provide natural daylighting that is a key component in many current construction and existing structures. SunTrackers(TM) are maintenance free, powered by the sun and completely self-contained. We are currently marketing our SunTracker(TM) products to warehouse owners, roofing companies, shopping centers, schools and military installations in the United States. We are working on establishing sales in Canada, Mexico and overseas. The market for advanced skylights is growing year over year due to pressures on building owners, tenants, schools and government agencies to reduce energy consumption and expense. The "green" movement, carbon footprint ideology and other environmental initiatives should provide increased growth in our market segment. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our management's discussion and analysis of our financial condition and results of operations are based on our condensed financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and in conformity with the instructions to Form 10-Q and Article 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and footnotes required by GAAP for complete financial statements and, therefore, should be read in conjunction with the financial statements and related notes contained in the Company's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC"). 15 The unaudited condensed financial statements included in this document have been prepared on the same basis as the annual condensed financial statements and in management's opinion, reflect all adjustments, including normal recurring adjustments, necessary to present fairly the Company's financial position, results of operations and cash flows for the interim periods presented. In the opinion of management, the disclosures included in these financial statements are adequate to make the information presented not misleading. The results of operations for the three month period ended March 31, 2013 is not necessarily indicative of the results that the Company will have for any subsequent quarter or full fiscal year. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2013 COMPARED TO THREE MONTHS ENDED MARCH 31, 2012 NET SALES. Net sales increased from $159,405 for the three months ended March 31, 2012 to $234,192 for the three months ended March 31, 2013. This increase in sales was due to the resolution of the manufacturing problem with the production of our GPS Controller. Ciralight terminated its relationship in mid-September, 2012, with the manufacturer and elected to move production of its GPS Controllers to a new supplier. The new manufacturer has been able to reach full production and we have been able to fill back orders that had accumulated, as well as proceed with new orders. COST OF SALES. Cost of sales increased slightly from $157,154 for the three months ended March 31, 2012 to $173,312 for the three months ended March 31, 2013, due to increased sales. GROSS PROFIT. Gross profit increased from $2,251 for the three months ended March 31, 2012 to $60,880 for the three months ended March 31, 2013. This increase in gross profit was due to increased sales and due to decreased warranty expenses. OPERATING EXPENSES. Our operating expenses consist of research and development expenses, selling and marketing expenses and general and administrative expenses. Total operating expenses increased from $251,099 for the three months ended March 31, 2012 to $259,925 for the three months ended March 31, 2013. This slight increase was due to the compensation to the Board of Directors which increased from two members to six members being recorded quarterly, while in the past it was recorded at the end of each year. General and administrative expenses increased from $211,366 for the three months ended March 31, 2012 to $236,100 for the three months ended March 31, 2013. This 16 increase was due to compensation to the Board of Directors which increased from two members to six members being recorded quarterly, while in the past it was recorded at the end of each year. The compensation to the Board of Directors is in the form of stock and options and not cash payments. Selling and marketing expenses decreased from $38,120 for the three months ended March 31, 2012 to $19,521 for the three months ended March 31, 2013. This was due largely to fulfillment of backordered sales. Research and Development expenses increased from $1,613 for the three months ended March 31, 2012 to $4,304 for the three months ended March 31, 2013, due to the increase in sales. INCOME TAXES. For the three months ended March 31, 2013, management has decided not to record the tax benefit. LIQUIDITY AND CAPITAL RESOURCES CASH FLOWS - FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2013 and 2012. Net cash used in operating activities was $(102,815) for the three months ended March 31, 2013 and resulted primarily from a net loss of $206,322 partially offset by sales, collection of receivables, increases in other payables, collection of deferred revenue and increases in accounts payable. Net cash used in operating activities was $(66,199) for the three month period ended March 31, 2012 and resulted primarily from a net loss of $264,866 partially offset by decreases in accounts receivable and related party notes receivable and an increase in deferred revenues. Net cash was not used in investing activities for the three months ended March 31, 2013, nor was Net cash used in investing activities for the three months ended March 31, 2012. Net cash provided by financing activities was $30,000 for the three months ended March 31, 2013 and resulted primarily from net proceeds from related party notes payable. Net cash provided by financing activities was $40,000 for the three month period ended March 31, 2012 and resulted primarily from net proceeds from related party notes payable. The Company had net losses of $206,322, and $264,866 for the three months ended March 31, 2013 and 2012 respectively. As of March 31, 2013, the Company had cash of approximately $8,245. In addition, the Company had accounts receivable of approximately $80,284, inventory on hand at a cost valuation of approximately $141,721, and accounts payable of approximately $231,434. 17 The Company has experienced losses primarily attributable to an interruption in the product supply during the third and fourth quarters of 2012, as well as increased research, development, marketing and other costs associated with the strategic plan to position the company as a world class supplier of sustainable lighting technologies. Cash flows from operations have not been sufficient to meet our obligations. Therefore, we have had to raise funds through several financing transactions. At least until we reach breakeven volume in sales and develop and/or acquire the capability to manufacture and sell our products profitably, we will need to continue to rely on cash from external financing sources. Our operations during the quarter ended March 31, 2013 and the year ended December 31, 2012 were financed by product sales contracts, common stock issuances, as well as from working capital reserves. In addition, on March 23, 2012, the company entered into a revolving line of credit with the Adams family, a related party, in the amount of up to $500,000. The line of credit was initially for a period of six months at an interest rate of prime plus 2%. This line of credit has been extended through 2013. In addition the company was approved by the XM Bank (by the Dept. Of Commerce) to insure and finance transactions for international Distributors and Dealers. This provides up to $270,000 in financing. Under this XM Bank program, the company will receive 90% of an international sale at the time the order ships thus improving the company's cash flow. The international Distributor and Dealer than have 90 days, instead of 21 days to pay back the XM Bank which is a good incentive for our Distributors and Dealers to sell more product. When the Distributor or Dealer pays back EX Bank, the balance of the order is remitted to the Company. In addition, The company will continue to obtain working capital by accessing capital markets. On May 24, 2013 the Company signed an agreement with BCC Valuation Advisors, an investment Banking Company to raise $5,000,000 for Ciralight Global, Inc. This is expected to take approximately two to six months to raise. To provide the needed working capital in the meantime a letter making a call to the existing shareholders to advance their prorata share of a $300,000 bridge loan was distributed on June 14th. This would be a one year loan with interest at 5% per year, convertible to stock between months six and twelve at $0.35/share. Management believes that with the increased level of sales, the call to the shareholders, the working capital funding to be provided by BCC and the XM Bank financing the company will have sufficient liquidity to carry on operations for the next twelve months. However, there can be no assurance that management will be able to fully deliver on its business plans. CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS CONTRACTUAL OBLIGATIONS We have certain fixed contractual obligations and commitments that include future estimated payments. Changes in our business needs, cancellation provisions, changing interest rates, and other factors may result in actual payments differing from the estimates. We cannot provide certainty regarding the timing and amounts of payments. We have presented below a summary of the most 18 significant assumptions used in our determination of amounts presented in the tables, in order to assist in the review of this information within the context of our consolidated financial position, results of operations and cash flows. The following table summarizes our contractual obligations as of March 31, 2013, and the effect these obligations are expected to have on our liquidity and cash flows in future periods.

---------- (1) Advances payable - related parties bear interest at the rate of Prime Rate (as quoted in the Wall Street Journal) plus 2% per annum and estimated interest payments are expected to be paid upon payment or satisfaction of the advances. OFF-BALANCE SHEET ARRANGEMENTS We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as stockholders' equity or that are not reflected in our financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. Not applicable. 19 ITEM 4. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in the Securities Exchange Act Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, we have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (2) accumulated and communicated to our management, to allow timely decisions regarding required disclosure. Changes in Internal Control over Financial Reporting. There have not been changes in our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. We have no legal matters pending against us. On August 15, 2011 we filed a collection action against Nature's Lighting for their failure to pay for product purchased from us. On January 30, 2012 we were successful in obtaining a default judgment and now are proceeding to collect the balance owed to us. The final settlement amount owed to us is $23,000, of which $9,000 has been received by the company through June 14, 2013. The Company is not aware of any other threatened or pending litigation against the Company. ITEM 1A. RISK FACTORS. Not applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. During the three month period ended March 31, 2013, a total of 402,624 shares of common stock were issued. In January 2013, 33,334 shares of common stock were issued to Directors Eisenberg, Katz, Brain and Adams each, for a total of 133,336 shares for services rendered, at $.55 per share. In addition, George Adams converted $67,322 of his line of credit at the rate of $.25/share for a total of 269,288 shares of common stock. 20 The above shares were issued in reliance on the exemption from registration requirements of the 33 Act provided by Regulation S, promulgated there under. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. MINE SAFETY DISCLOSURES None. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS. See Exhibit Index below for exhibits required by Item 601 of regulation S-K. EXHIBIT INDEX List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K: Exhibit No. Description ----------- ----------- 3(i).1* Articles of Incorporation of Ciralight West, Inc. filed February 26, 2009, with the Secretary of State of Nevada 3(i).2* Certificate of Amendment to the Articles of Incorporation filed on March 13, 2009, with the Secretary of State of Nevada (changing name to Ciralight Global, Inc.). 3(i).3* Certificate of Amendment to the Articles of Incorporation filed on April 22, 2009, with theSecretary of State of Nevada. 3(ii)* By-Laws of Ciralight Global, Inc. 4.1* Certificate of Designation of Series A Preferred Stock filed on July 22, 2009, with the Secretaryof State of Nevada 10.1* Exchange of Stock for Assets Agreement dated as of April 1, 2009, by and between Ciralight Global, Inc. and George Adams, Sr. 10.2* Amendment to Exchange of Stock for Assets Agreement by and between Ciralight Global,Inc. and George Adams, Sr. dated December 15, 2009. 21 10.3* Assignment of Issued United States Patent and Pending United States Patent Application dated December 17, 2009 10.4* Domestic Non-Exclusive Dealer Agreement(undated and unsigned prototype) 10.5* Domestic Non-Exclusive Distribution Agreement(undated and unsigned prototype) 10.6* Domestic Non-Exclusive Dealer Agreement by and between Ciralight Global, Inc. and Chaparral Green Energy Solutions, LLC dated as of January 1, 2010 10.7* Domestic Non-Exclusive Dealer Agreement dated December 1, 2009, by and between Ciralight Global, Inc. and Green Tech Design-Build, Inc. 10.8* International Distribution Agreement dated January 15, 2010, by and between Ciralight Global, Inc. and ZEEV Shimon & Sons, Ltd. 10.9* International Dealership Agreement dated June 18, 2009, by and between Ciralight Global, Inc. and RSB Construction LTD. 10.10* Domestic Non-Exclusive Dealer Agreement dated April 1, 2010, by and between Ciralight Global, Inc. and J-MACS Consulting, LLC. 10.11* Domestic Non-Exclusive Dealer Agreement dated April 15, 2010, by and between Ciralight Global, Inc. and The Energy Solutions Group Worldwide, LLC. 10.12* Domestic Non-Exclusive Dealer Agreement dated April 15, 2010, by and between Ciralight Global, Inc. and Kemper & Associates, Inc., d/b/a Total Roofing & Reconstruction. 10.13* Domestic Non-Exclusive Dealer Agreement dated December 1, 2009, by and between Ciralight Global, Inc. and Eco-Smart, Inc. 10.14* Commercial Lease Agreement dated April 1, 2010, by and between Ciralight Global, Inc. and Frederick Feck. 10.15* Material Liability Agreement dated September 3, 2009, by and between Ciralight Global, Inc. and Suntron Corporation. 10.16* Material Terms and Conditions of Verbal Office Lease for Executive Offices in Irvine, California. 22 10.17* Material Terms and Conditions of Verbal Office Lease for Warehouse/Offices in Corona, California 14* Code of Business Conduct and Ethics 21* Subsidiaries. 31.1** Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350 32.1** 906 Certification of Principal Executive Officer and Principal Financial Officer 101*** Interactive data files pursuant to Rule 405 of Regulation S-T ---------- * Exhibits incorporated by reference to Registrant's Form S-1 Registration Statement, Registration No. 333-165638. ** Filed herewith. *** To be file by amendment. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CIRALIGHT GLOBAL, INC. Date: June 20, 2013 /s/ Jeffrey S. Brain --------------------------------------- Jeffrey S. Brain President, Chief Executive Officer 23

Ciralight Global, Inc. 10-Q