UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2011.

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

___ to

Commission file number: 000-52803

SONNEN CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

98-0514037

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (305) 529-4888

Securities registered under Section 12(b) of the Act: none.

Securities registered under Section 12(g) of the Act: common stock (title of class), $0.0001 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes o No þ

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 o No þ

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 (§ 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 o No þ

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not

contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller

reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule

12b-2 of the Exchange Act. Smaller reporting company þ

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

The aggregate market value of the registrant’s common stock, $0.0001 par value (the only class of voting stock), held by non-

affiliates (26,893,000 shares) was $1,075,720 based on the average of the bid and ask price ($0.04) for the common stock on

March 19, 2013.

At March 19, 2013, the number of shares outstanding of the registrant’s common stock, $0.0001 par value (the only class of

voting stock), was 67,893,000.

TABLE OF CONTENTS

PART I

Item1.

Business

Item 1A.

Risk Factors

Item 1B.

Unresolved Staff Comments

Item 2.

Properties

Item 3.

Legal Proceedings

Item 4.

(Removed and Reserved)

PART II

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of

Equity Securities

Item 6.

Selected Financial Data

Item 7.

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

Item 7A.

Quantitative and Qualitative Disclosures about Market Risk

Item 8.

Financial Statements and Supplementary Data

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A.

Controls and Procedures

Item 9B.

Other Information

PART III

Item 10.

Directors, Executive Officers, and Corporate Governance

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder

Matters

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accountant Fees and Services

PART IV

Item 15.

Exhibits, Financial Statement Schedules

Signatures

PART I

ITEM 1.

BUSINESS

As used herein the terms “Sonnen,” “we,” “our,” and “us” refer to Sonnen Corporation, and its

subsidiary, Sonnen One, Inc., unless context indicates otherwise.

Corporate History

Sonnen was incorporated in the State of Nevada on November 16, 2006. We are a development stage

company that has not generated revenue since inception.

Our initial operations focused on the provision of a website for basic computer maintenance and

troubleshooting assistance. Our business plan was to develop a bridge that would allow customers to

contact computer technicians directly for assistance with basic computer needs. We were unable to realize

our objectives and discontinued these activities prior to the year ended June 30, 2009. Subsequently, we

initiated a search to identify other businesses for development, merger or acquisition.

On July 27, 2009, Sonnen entered into a licensing agreement with PT Group, Limited (“PT Group”) for

the development and marketing of proprietary technology related to improving catalysts for use in fuel-

cells utilizing a unique catalytic process in exchange for shares of our common stock and meeting certain

financial obligations. Development activities began almost immediately financed by Sonnen to meet

obligations. However, on February 6, 2010, PT Group notified Sonnen of purported breaches of the

licensing agreement including a breach of confidentiality, insufficient funding for research and

development activities, and failure to provide direct access to our patent attorneys. On receipt of the

notice of breach Sonnen’s own research determined that PT Group was not the rightful owner of the

licensed technology and had no right to grant it a license to develop or market the intended products.

Accordingly, on March 8, 2010, Sonnen filed a civil complaint against PT Group and Paul Leonard, one

of its principals, in connection with the licensing agreement, that sought money damages, the return of

shares, injunctive relief and attorney’s fees for acts of fraud, misrepresentation of prior research and

development efforts, and failure to provide sufficient technical information on which to prepare patents to

secure the technology.

Since we do not believe that PT Group is the rightful owner of the proprietary technology purportedly

licensed to us, Sonnen has recorded an impairment of its investment in the licensing agreement and has

suspended efforts to develop fuel cell technology pending the outcome of Sonnen’s civil complaint.

While further development efforts related to the technology purportedly licensed to us from PT Group is

unlikely, Sonnen’s plan of operation for the coming year is to investigate alternative technologies aimed

at improving catalysts for the utilization of fuel-cells and related catalysis fields while awaiting the

outcome of its civil complaint.

Our office is located at 2665 S. Bayshore Drive, Suite 450, Miami, Florida 33133, and our telephone

number is (305) 529-4888. Our registered agent is Eastbiz.com, Inc., located at 5348 Vegas Drive, Las

Vegas, Nevada, 89108.

Sonnen is quoted on OTC Link under the symbol “SONP.”

Business

Sonnen’s plan of operation over the next twelve months is to prosecute its civil complaint against PT

Group and certain of the principals thereof and to consider alternative technologies for merger or

acquisition that might create value for its shareholders. We intend to focus our efforts on identifying

projects that might improve catalysts for the efficient utilization of fuel-cells and related catalysis fields.

Towards this end, management has evaluated several different technology-based research projects that

might fit with Sonnen’s defined mission to wean the global economy off hydrocarbon-based energy

sources. Nonetheless, as of the date of this report Sonnen has not entered into any agreement or

commitment beyond those that remain dedicated to reaching some resolution of its dispute with PT

Group.

Fuel Cell Technologies

Sonnen’s intended business was to develop technology licensed from PT Group for initial application to

advances in fuel cells that would produce high power efficiencies at a cost lower than conventional fuel

cells. Fuel cells convert fuel into electricity and heat without combustion, or noise, more efficiently than

the internal combustion engine, using a variety of hydrocarbon fuel sources (gasoline, natural gas or

diesel) as well as hydrogen. The licensed technology was thought to have the potential to significantly

expand the operational parameters of fuel cells in general.

Most fuel cells use expensive rare earth or noble metals in their construction. These materials activate

well with pure hydrogen, but become corrupted in the presence of catalyst pollutants common to

hydrocarbon fuels. Expensive and bulky fuel reformers, scrubbers and complex pressurized systems,

which greatly increase the footprint and capital costs of a fuel cell system, must be employed before fuel

cells can utilize existing fossil fuel streams. The extra size, additional equipment and bulk make most fuel

cells too large and too expensive for transport, small stationary power and other applications.

The mass commercialization of existing fuel cells also relies on the development and implementation of a

hydrogen delivery infrastructure since the storage, compression, and safe delivery of hydrogen is a

primary inhibitor to commercialization. However, the cost associated with developing and building new

infrastructure to address this problem is thought of as prohibitive. Furthermore, all current fuel cell

technologies suffer from significant levels of degradation of materials over time. Electrical efficiencies

are high in early stages of use however degradation over relatively short periods of time requires

expensive replacement.

Sonnen had intended to produce a fuel cell based on a simple design that embodied materials with higher

efficiencies to simplify the manufacturing process and overcome the obstacles to mass commercialization.

Until such time as the complaint against PT Group is resolved Sonnen will look to the development of

like technologies with the potential to met energy needs through pioneering and innovative methods.

Competition

The fuel cell industry is highly fragmented by competing technologies employed by many companies

seeking to develop the standard for the industry. The industry’s competitors include public companies

focused on developing fuel cell technologies as well as a number of electronics manufacturers,

automotive manufacturers and conglomerates such as General Electric. While fuel cell research and

development has been ongoing for some time, in most cases fuel cell technology has not been able to

supplant existing technology due to higher fabrication costs and performance issues, and consequently up

to this point the industry in general has yielded little revenue.

Since the filing of a civil complaint against PT Group we have suspended research and development

activities related to fuel cells and cannot be certain at this time as to whether such activities will continue.

We can be certain however that whatever technology we ultimately pursue, we are certain to be involved

in intense competition with other business entities, many of which will have a competitive edge over us

by virtue of their stronger financial resources and prior business experience.

Marketability

When or if Sonnen develops a fuel cell or other alternative product for commercial application, the

success of that product will be based on market acceptance in its many forms. Factors that might

encourage market acceptance include cost, efficiency, convenience and application. Since Sonnen has not

yet developed a product for commercial distribution and may never do so, any more specific approach to

marketability at this time, cannot be certain.

Patents, Trademarks, Licenses, Franchises, Concessions,

Royalty Agreements and Labour Contracts

We have no patents, trademarks, licenses, franchises, concessions, or labour contracts and have suspended

the preparation of multiple patents that were to be submitted to the US Patent Office in connection with

the technology purportedly licensed from PT Group.

Governmental and Environmental Regulation

Our prospective operations will be subject to a variety of national, federal, state and local laws, rules and

regulations relating to, among other things, worker safety and the use, storage, discharge and disposal of

environmentally sensitive materials. We are in full compliance with the Resource Conservation Recovery

Act (“RCRA”), the key legislation dealing with hazardous waste generation, management and disposal.

Nonetheless, under some of the laws regulating the use, storage, discharge and disposal of

environmentally sensitive materials, an owner or lessee of real estate may be liable for the costs of

removal or remediation of certain hazardous or toxic substances located on or in, or emanating from, such

property, as well as related costs of investigation and property damage. Laws of this nature often impose

liability without regard to whether the owner or lessee knew of, or was responsible for, the presence of

hazardous or toxic substances. We do not generate dangerous waste products and are not aware of any

waste management concerns in connection with our operations. We believe that we are in compliance in

all material respects with all laws, rules, regulations and requirements that affect our business. Further, we

believe that compliance with such laws, rules, regulations and requirements does not impose a material

impediment on our ability to conduct business.

Climate Change Legislation and Greenhouse Gas Regulation

A majority of the climate change related studies over the past couple decades have indicated that

emissions of certain gases contribute to warming of the Earth’s atmosphere. In response to these studies,

many nations have agreed to limit emissions of “greenhouse gases” or “GHGs” pursuant to the United

Nations Framework Convention on Climate Change, and the “Kyoto Protocol.” Although the United

States did not adopt the Kyoto Protocol, several states have adopted legislation and regulations to reduce

emissions of greenhouse gases.

The United States Supreme Court ruled, in Massachusetts, et al. v. EPA, that the EPA abused its

discretion under the Clean Air Act by refusing to regulate carbon dioxide emissions from mobile sources.

As a result of the Supreme Court decision the EPA issued a finding that serves as the foundation under

the Clean Air Act to issue other rules that would result in federal greenhouse gas regulations and

emissions limits under the Clean Air Act, even without Congressional action. Finally, acts of Congress,

the decisions of lower courts, large numbers of states, and foreign governments could widely affect

climate change regulation. Greenhouse gas legislation and regulation could have a material adverse effect

on our business, financial condition, and results of operations.

Employees

We have no employees though our chief executive officer, chief financial officer, and principal

accounting officer serve at the discretion of Sonnen’s board of directors. We use consultants, attorneys,

and accountants as necessary in addition to professional engineers to assist in the development of our

business.

Reports to Security Holders

Sonnen’s annual report contains audited financial statements. We are not required to deliver an annual

report to security holders and will not automatically deliver a copy of the annual report to our security

holders unless a request is made for such delivery. We file all of our required reports and other

information with the Securities and Exchange Commission (the “Commission”). Since the requisite filing

deadline for this annual report, Sonnen has been delinquent in fulfilling its periodic reporting obligations

pursuant to the Securities and Exchange Act of 1934, as amended, and is currently in the process of

complying with its reporting obligations. The public may read and copy any materials that are filed by

Sonnen with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E.,

Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference

Room by calling the Commission at 1-800-SEC-0330. The statements and forms filed by us with the

Commission have also been filed electronically and are available for viewing or copy on the Commission

maintained Internet site that contains reports, proxy and information statements, and other information

regarding issuers that file electronically with the Commission. The internet address for this site can be

found at www.sec.gov.

ITEM 1A.

RISK FACTORS

Not required of smaller reporting companies.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

Not required of smaller reporting companies.

ITEM 2.

PROPERTIES

Sonnen currently maintains its corporate offices at 2665 S. Bayshore Drive, Suite 450, Miami, Florida

33133 in office space provided by one of our directors at no charge to us. Sonnen does not believe that it

will need to procure additional office at any time in the near future to carry out the plan of operation

described herein.

ITEM 3.

LEGAL PROCEEDINGS

On March 8, 2010, Sonnen filed a complaint in the Circuit Court of the 11^th Judicial Court In and For

Miami-Dade County, Florida against Paul R. Leonard and PT Group in connection with a breach of the

licensing agreement dated July 27, 2009. The complaint seeks: (i) money damages for fraud that stem

from reliance on PT Group's claim of ownership over certain proprietary information, PT Group’s

misrepresentation of efforts credited to prior research and development and PT Group’s failure to provide

sufficient technical information on which to prepare patents to secure the technology, (ii) the return of

Sonnen shares issued to PT Group as compensation for the rights licensed, (iii) injunctive relief sought to

prohibit Mr. Leonard’s use of confidential information to which he is not entitled, and (iv) reasonable

attorney’s fees. Mr. Leonard responded to the complaint in an answer dated November 19, 2012 asserting

that had no knowledge of the subject matter of the suit. Sonnen has been unable to serve PT Group to

date. Should the relief sought be adjudicated, Sonnen expects to succeed on the merits of its claims.

ITEM 4.

(REMOVED AND RESERVED)

Removed and reserved.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED

STOCKHOLDER MATTERS, AND BUSINESS ISSUER PURCHASES OF

EQUITY SECURITIES

Sonnen’s common stock is quoted on OTC Link, a service maintained by OTC Markets Group, LLC.

under the symbol “SONP”. Trading has been limited and sporadic and the quotations set forth below are

not necessarily indicative of actual market conditions. Further, these prices reflect inter-dealer prices

without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions.

The following table sets forth for the periods indicated the high and low bid prices for the common stock

as reported for each quarterly period.

High and Low Bid Prices Since Quotation on OTC Link

Year

Quarter Ended

High

Low

2011

June 30

$0.08

March 31

$0.20

$0.15

2010

December 31

$0.15

September 30

$0.22

$0.15

June 30

$0.80

$0.40

March 31

$1.00

$0.30

2009

December 31

$1.25

$1.00

September 30

$1.10

$0.30

Capital Stock

The following is a summary of the material terms of the Sonnen’s capital stock. This summary is subject

to and qualified by our articles of incorporation and bylaws.

Common Stock

As of March 19, 2013 there were fifty-six shareholders of record holding a total of 67,893,000 shares of

fully paid and non-assessable common stock of the 250,000,000 shares of common stock, par value

$0.0001, authorized. The board of directors believes that the number of beneficial owners is greater than

the number of record holders because a portion of our outstanding common stock is held in broker “street

names” for the benefit of individual investors. The holders of the common stock are entitled to one vote

for each share held of record on all matters submitted to a vote of stockholders. Holders of the common

stock have no pre-emptive rights and no right to convert their common stock into any other securities.

There are no redemption or sinking fund provisions applicable to the common stock.

Preferred Stock

As of March 19, 2013 there were no shares issued and outstanding of the 50,000,000 shares of preferred

stock authorized. The par value of the preferred stock is $0.0001 per share. Preferred stock may have such

rights, preferences and designations and may be issued in such series as determined by Sonnen’s Board.

Dividends

Sonnen has not declared any cash dividends since inception and does not anticipate paying any dividends

in the near future. The payment of dividends is within the discretion of the Board subject to earnings,

capital requirements, financial condition, and other relevant factors. Otherwise, outside of applicable

state law, there are no restrictions that currently limit Sonnen’s ability to pay dividends.

Securities Authorized For Issuance under Equity Compensation Plans

Sonnen adopted The Sonnen (formerly “Simple Tech) 2009 Stock Option Plan on August 31, 2009 in an

effort to promote the interests of Sonnen by providing eligible persons with the opportunity to acquire or

increase a proprietary interest in Sonnen with the facility to grant up to five million (5,000,000) non-

statutory stock options as an incentive for eligible persons to continue their employment or service.

Warrants

Sonnen issued warrants to purchase 312,500 shares of its common stock at an exercise price of $1.20 per

share on September 30, 2009 in connection with a private placement of common stock. The warrants had

to be exercised on or before September 30, 2011. None of the warrants were exercised and have since

expired.

Stock Options

Sonnen authorized the grant of an aggregate of one million eight hundred thousand (1,800,000) options

with an exercise price of $1.00 per share on August 31, 2009 pursuant to its stock option plan that vest

over a three year period ended August 31, 2012, in equal increments of one-third each year or in full if

involuntarily terminated. Since the initial grant 600,000 options vested on termination of services and

expired unexercised in accordance with the respective stock option agreements as of June 30, 2012. The

remaining 1,200,000 options were vested as of August 31, 2012 and have since been rescinded in full by

the mutual agreement of Sonnen and the respective grantees.

Sonnen authorized the grant of an additional one hundred thousand (100,000) options with an exercise

price of $1.25 per share on November 9, 2009 pursuant to its stock option plan that vest over a two year

period ended November 9, 2010, in equal increments of one-half on the date of grant and the remainder

on the anniversary of the following year or in full if involuntarily terminated. One half of the grant had

vested while the remainder were terminated at June 30, 2011. The vested options have since expired

unexercised in accordance with the stock option agreement.

Sonnen authorized the grant of an additional one hundred thousand (100,000) options with an exercise

price of $1.25 per share on January 1, 2010 pursuant to its stock option plan that vest over a three year

period ended January 1, 2012, in equal increments of one-third third on the date of grant and the

remainder on the anniversary of the following years or in full if involuntarily terminated. One third of the

grant had vested while the remainder were terminated at June 30, 2011. The vested options have since

expired unexercised in accordance with the stock option agreement.

Convertible Securities

Sonnen had no other securities convertible into shares of its common stock as of June 30, 2011 or as the

date of the filing of this annual report.

Transfer Agent and Registrar

Our transfer agent is Island Capital Management, LLC, d/b/a Island Stock Transfer, located at 100 Second

Avenue South, Suite 300, St. Petersburg, Florida, 33701. Their phone number is (727) 289-0010.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

None.

Purchases of Equity Securities made by the Issuer and Affiliated Purchasers

Sonnen has not repurchased any shares of its common stock during the fiscal year ended June 30, 2011 or

as of the date of the filing of this annual report.

ITEM 6.

SELECTED FINANCIAL DATA

Not applicable.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATION

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

parts of this current report contain forward-looking statements that involve risks and uncertainties.

Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,”

“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future

performance and our actual results may differ significantly from the results discussed in the forward-

looking statements. Factors that might cause such differences include but are not limited to those

discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future

Results and Financial Condition below. The following discussion should be read in conjunction with our

financial statements and notes thereto included in this current report. Our fiscal year end is June 30.

Plan of Operation

Our plan of operation over the next twelve months is to prosecute Sonnen’s civil complaint against PT

Group and certain of the principals thereof and to consider alternative technologies for merger or

acquisition that might create value for its shareholders. Meanwhile, we have suspended our development

plan for the technology licensed from PT Group. While awaiting resolution of the uncertainties

surrounding the licensing agreement, Sonnen intends to identify, acquire and develop alternative

innovative technologies that it might advance to commercial applications. Management understands that

new technologies must meet several critical milestones in advance of commercialization. Milestones

include cost effectiveness, energy efficiencies, convenience of use and practicability. Any products that

we should develop will have to be able to effectively compete with today’s accepted technologies by

optimizing low-cost manufacturing processes, ensuring enhanced energy efficiencies, and providing a

reliable product with the flexibility to rely on alternative fuel sources.

Sonnen’s business development strategy is prone to significant risks and uncertainties which could have

an immediate impact on its efforts to generate a positive net cash flow and could deter the development of

advanced energy enhanced technology. Historically, Sonnen has not generated sufficient cash flow to

sustain operations and has had to rely on debt or equity financing to remain in business. Therefore, we

cannot offer that future expectations that any technology Sonnen might develop will be commercially

developed or that it will be sufficient to generate the revenue required for its operations. Should we be

unable to generate cash flow, Sonnen may be forced to seek additional debt or equity financing as

alternatives to the cessation of operations. The success of such measures can in no way be assured.

We have not generated any revenue since inception.

Results of Operations

During the year ended June 30, 2011, our operations were focused on maintaining our civil complaint

against Paul R. Leonard and PT Group in connection with breaches of a licensing agreement and

considering alternative technologies for merger or acquisition that might create value for

Sonnen’s shareholders.

Net Losses

For the period from inception (November 16, 2006) until June 30, 2011, Sonnen incurred net losses of

$3,656,993. Net losses for the twelve months ended June 30, 2011 were $1,206,315 as compared to net

losses of $2,380,655 for the twelve months ended June 30, 2010. The decrease in net losses over the

comparative annual periods can be primarily attributed to a decrease in general and administrative

expenses in the twelve months ended June 30, 2011 and the recognition of an impairment loss of

$672,000 associated with the licensing agreement with PT Group in the twelve months ended June 30,

2010.

We expect to continue to realize nets losses as general and administrative expenses accrue and

management considers alternative technologies to succeed that technology subject to litigation.

Operating Expenses

For the period from inception until June 30, 2011, Sonnen incurred operating expenses of $3,001,311.

Operating expenses for the twelve months ended June 30, 2011 were $1,180,932 as compared to

$1,750,516 for the twelve months ended June 30, 2010. The decrease in operating expenses over the

comparative periods can be primarily attributed to a decrease in general and administrative expenses to

$7,940 for the twelve months ended June 30, 2011 from $83,155 for the twelve months ended June 30,

2010, a decrease in professional fees to $102,508 for the twelve months ended June 30, 2011 from

$188,243 for the twelve months ended June 30, 2010, a decrease in consulting fees to $0 for the twelve

months ended June 30, 2011 from $280,727 for the twelve months ended June 30, 2010 and a decrease in

research and development costs to $107 for the twelve months ended June 30, 2011 from $167,560 for

the twelve months ended June 30, 2010, offset by an increase in compensation and related taxes or

benefits of $860,504 for the twelve months ended June 30, 2011 from $735,287 for the twelve months

ended June 30, 2010.

We expect that operating expenses will continue to decrease as Sonnen’s operations slow in response to

ongoing litigation with PT Group and the suspension of our research and development operations.

Income Tax Expense (Benefit)

Sonnen may have a prospective income tax benefit resulting from a net operating loss carry-forward and

start up costs that will offset any future operating profit.

Capital Expenditures

Sonnen has not spent any significant amounts on capital expenditures for the period from inception to

June 30, 2011 and does not expect to do so in the near future.

Liquidity and Capital Resources

Sonnen has been in the development stage since inception, and has experienced significant changes in

liquidity, capital resources, and stockholders’ equity.

Sonnen’s had current assets of $1,258 consisting of cash and prepaid expenses, and total assets of $1,258

as of June 30, 2011.

Sonnen had current and total liabilities of $809,887, consisting of accounts payable, accounts payable to

related parties, accrued payroll, notes payable to related parties, notes payable and loans from a

shareholder as of June 30, 2011.

Sonnen had a stockholders’ deficit of $808,629 and a working capital deficit of $808,629 at June 30,

2011.

For the period from inception until June 30, 2011, Sonnen’s net cash used in development stage activities

was $843,709. Net cash used in development stage activities for the twelve month period ending June 30,

2011 was $40,781 as compared to $742,388 for the twelve months ended June 30, 2010. Net cash used in

development stage activities in the current twelve month period can be attributed primarily to a number of

items that are book expense items which do not affect the total amount relative to actual cash used

including depreciation, stock option expenses and loss on disposal of assets. Actual cash items used in the

current twelve month period, that are not income statement related items, include pre-paid expenses,

accounts payable, accounts payable to related parties, accrued liabilities, and accrued interest. We expect

to continue to generate negative cash flow in development stage activities.

For the period from inception until June 30, 2011 Sonnen’s net cash used in investing activities was

$1,853. Net cash used in investing activities for the twelve months ended June 30, 2011, was $0 as

compared to $1,853 for the twelve months ended June 30, 2010. Net cash used in investing activities in

the prior twelve month period can be attributed to the purchase of property and equipment. We expect to

continue to generate negative cash flow in investing activities.

For the period from inception until June 30, 2011, Sonnen’s net cash provided by financing activities was

$845,721. Net cash provided by financing activities for the twelve months ended June 30, 2011 was

$40,100 as compared to $736,081 for the twelve months ended June 30, 2010. Net cash flow provided by

financing activities in the current period is attributable to proceeds from notes payable to related and non-

related parties offset by repayments on notes payable to a related party. We expect to continue to generate

positive cash flow from financing activities as Sonnen seeks new rounds of financing to finance litigation

costs, regulatory compliance and daily operations.

Our current assets are insufficient to meet our current obligations or to satisfy our cash needs over the

next twelve months and as such Sonnen will require additional debt or equity financing. We had no

commitments or arrangements for financing at June 30, 2011 though we are pursuing a number of

prospective sources that include shareholder loans, the sale of equity, the procurement of long term debt

or the settlement of additional debt for equity. We face certain financial obstacles to attracting new

financing due to our historical and current record of net losses and working capital deficits. Therefore,

despite our efforts we can provide no assurance that we will be able to obtain the financing required to

meet our stated objectives or even to continue as a going concern.

Sonnen does not expect to pay cash dividends in the foreseeable future.

Sonnen has a defined stock option plan and contractual commitments with all of its officers and directors.

Sonnen has no current plans for any significant purchase or sale of any plant or equipment.

Sonnen has no current plans to make any changes in the number of employees.

Off Balance Sheet Arrangements

As of June 30, 2011, Sonnen had no off-balance sheet arrangements that have or are reasonably likely to

have a current or future effect on our financial condition, changes in financial condition, revenues or

expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to

stockholders.

Going Concern

Sonnen’s auditors have expressed an opinion as to its ability to continue as a going concern as a result of

continuing net operating losses. Our ability to continue as a going concern is dependent on realizing

funding from inside or outside sources. Management’s plan to address Sonnen’s ability to continue as a

going concern includes: (i) obtaining funding from the private placement of debt or equity; and (ii)

converting debt to equity. Management believes that it will be able to obtain funding to enable Sonnen to

remain a going concern through the methods discussed above, though there can be no assurances that

such methods will prove successful.

Forward Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled “Results of Operations” and “Description of Business”,

with the exception of historical facts, are forward looking statements. A safe-harbor provision is not

applicable to the forward looking statements made in this current report. Forward looking statements

reflect our current expectations and beliefs regarding our future results of operations, performance, and

achievements. These statements are subject to risks and uncertainties and are based upon assumptions and

beliefs that may or may not materialize. These statements include, but are not limited to, statements

concerning:

 our anticipated financial performance;

 uncertainties related to the research and development of the licensed technology;

 our ability to generate revenues through sales to fund future operations;

 our ability to raise additional capital to fund cash requirements for future operations;

 the volatility of the stock market; and

 general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that

could cause our actual results to differ materially from those discussed or anticipated. We also wish to

advise readers not to place any undue reliance on the forward looking statements contained in this report,

which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to

update or revise these forward looking statements to reflect new events or circumstances or any changes

in our beliefs or expectations, other that is required by law.

Recent Accounting Pronouncements

Please see Note 2 to our financial statements for recent accounting pronouncements.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK

Not required.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our audited consolidated financial statements for the years ended June 30, 2011 and 2010 are attached

hereto as F-1 through F-24.

SONNEN CORPORATION

(A Development Stage Company)

June 30, 2011 and June 30, 2010

INDEX

Page

Report of Independent Registered Public Accounting Firm

F-2

Report of Independent Registered Public Accounting Firm

F-3

Consolidated Balance Sheets

F-4

Consolidated Statements of Operations

F-5

Consolidated Statement of Stockholders’ Equity (Deficit)

F-6

Consolidated Statements of Cash Flows

F-7

Notes to Consolidated Financial Statements

F-8

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Sonnen Corporation

We have audited the accompanying consolidated balance sheet of Sonnen Corporation and Subsidiary as

of June 30, 2011 and the related statements of operations, stockholders’ equity, and cash flows for the

year ended June 30, 2011 and for the period from November 16, 2006 (inception) to June 30, 2011.

Sonnen Corporation’s management is responsible for these financial statements. Our responsibility is to

express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight

Board (United States). Those standards require that we plan and perform the audit to obtain reasonable

assurance about whether the financial statements are free of material misstatement. The company is not

required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

Our audit included consideration of internal control over financial reporting as a basis for designing audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on

the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no

such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and

disclosures in the financial statements, assessing the accounting principles used and significant estimates

made by management, as well as evaluating the overall financial statement presentation. We believe that

our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the

financial position of Sonnen Corporation and Subsidiary as of June 30, 2011, and the results of its

operations and its cash flows for the year ended June 30, 2011 and for the period from November 16,

2006 (inception) to June 30, 2011 in conformity with accounting principles generally accepted in the

United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a

going concern. As discussed in Note 1 to the financial statements, the Company’s significant operating

losses raise substantial doubt about its ability to continue as a going concern. Management’s plans

regarding the resolution of this issue are also discussed in Note 1. The financial statements do not include

any adjustments that might result from the outcome of this uncertainty.

/S/ MartinelliMick

MartinelliMick PLLC

Spokane, Washington

March 13, 2013

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM*

To the Board of Directors and

Stockholders of Sonnen Corporation

We have audited the accompanying balance sheet of Sonnen Corporation and Subsidiary as of June 30,

2010 and the related statements of income, stockholders’ equity, and cash flows for the year ended June

30, 2010 and for the period from November 16, 2006 (inception) to June 30, 2010. Sonnen Corporation’s

management is responsible for these financial statements. Our responsibility is to express an opinion on

these financial statements based on our audit.

SONNEN Corp 10-K