UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

~~For~~QUARTERLY ~~the~~REPORT ~~quarterly~~PURSUANT ~~period~~TO ~~ended~~SECTION ~~March~~13 ~~31,~~OR ~~2011.~~15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

~~o TRANSITION~~For ~~REPORT~~the ~~PURSUANT~~quarterly TOperiod ~~SECTION~~ended 13September OR30, ~~15(D) OF THE SECURITIES EXCHANGE ACT OF 1934~~ 2011.

~~For the transition period from to .~~o

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

For the transition period from

Commission file number: 000-52803

SONNEN CORPORATION

(Exact name of registrant as specified in its charter)

Nevada ~~(State or other jurisdiction of incorporation or organization) 98-0514037 (I.R.S. Employer Identification No.)~~

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)

(305) 529-4888

(Registrant’s telephone number, including area code)

nN/aA

(Former name, former address and former fiscal year, if changed since last report)

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 o

~~Indicate by check mark whether~~ the Securities Exchange ~~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~~ Act of ~~Regulation S-T (§232.405 of this chapter)~~ 1934 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 whether the registrant is a large accelerated filer~~was required to file such reports), ~~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 ) has been subject to such filing requirements for the past 90 days. ~~Exchange~~Yes ~~Act.~~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 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 o Accelerated filer o Non-accelerated filer o 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 o No þ~~

~~Indicate~~Yes ~~the~~þ No number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuer’s common stock, $0.0001 par value (the only class of voting stock), at May 16, 2011, was 67,893,000.o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest

practicable date. The number of shares outstanding of the issuer’s common stock, $0.0001 par value (the only class

of voting stock), at April 8, 2013, was 67,893,000.

TABLE OF CONTENTS PART 1- FINANCIAL INFORMATION
Item1.	Financial Statements:	3
	Condensed Consolidated Balance Sheets for March 31, 2011(Unaudited) and June 30, 2010	4
	Unaudited Condensed Consolidated Statements of Operations for the Three and nine months ended March 31, 2011 and 2010, and cumulative amounts from development stage activities (November 16, 2006 through March 31, 2011)	5
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine month ended March 31, 2011 and 2010, and cumulative amounts from development stage activities (November 16, 2006 through March 31, 2011)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
	PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	(Removed and Reserved)	25
Item 5.	Other Information	26
Item 6.	Exhibits	26
	Signatures	27
	Index to Exhibits	28

TABLE OF CONTENTS

PART 1- FINANCIAL INFORMATION

Item1.

Financial Statements:

Consolidated Balance Sheets as of September 30, 2011 (Unaudited) and June 30,

2011

Unaudited Consolidated Statements of Operations for the three months ended

September 30, 2011 and 2010, and cumulative amounts from development stage activities

(November 16, 2006 through September 30, 2011)

Unaudited Consolidated Statements of Cash Flows for the three months ended

September 30, 2011 and 2010, and cumulative amounts from development stage

activities (November 16, 2006 through September 30, 2011)

Notes to Unaudited Consolidated 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 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

(Removed and Reserved)

Item 5.

Other Information

Item 6.

Exhibits

Signatures

Index to

Exhibits

PART I – FINANCIAL INFORMATION

ITEM 1. ~~FINANCIAL STATEMENTS.~~

AsFINANCIAL ~~used herein, the terms “Company,” “we,” “our,” and “us,” refer to Sonnen Corporation, a Nevada corporation, unless otherwise indicated~~STATEMENTS. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

3As used herein, the terms “Company,” “we,” “our,” and “us,” refer to Sonnen Corporation, a Nevada

SONNEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
		March 31,			June 30,
		2011			2010
		(unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	83		$	840
Prepaid expenses (Note 5)		1,098			8,332
Total Current Assets		1,181			9,172
OTHER ASSETS
Office furniture and equipment, net (Note 4)		964			1,427
Total Other Assets		964			1,427
Total Assets	$	2,145		$	10,599
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable	$	128,192		$	96,490
Accounts payable - related parties		243,965			82,130
Accrued payroll		13,284			13,283
Accrued liabilities - related parties		4,500			8,500
Notes payable (including accrued interest of $25,977
- March 31, 2011 and $8,069 - June 30, 2010)		327,920			273,012
Total Current Liabilities		717,861			473,415
COMMITMENTS AND CONTINGENCIES (Note 10)		-			-
STOCKHOLDERS' (DEFICIT) (Note 7)
Preferred stock, $0.0001 par value, 50,000,000 shares authorized, none issued and outstanding		-			-
Common stock, par value $0.0001, 250,000,000 shares authorized, 67,893,000 issued and outstanding		6,789			6,789
Paid-in capital		2,431,162			1,981,071
Accumulated deficit during the development stage		(3,153,667	)		(2,450,678	)
Total Stockholders' (Deficit)		(715,715	)		(462,817	)
Total Liabilities and Stockholders' (Deficit)	$	2,145		$	10,599

corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited

~~SEE~~financial ~~ACCOMPANYING~~statements ~~CONDENSED~~included ~~NOTES~~in TOthis ~~CONSOLIDATED~~Form ~~FINANCIAL~~10-Q ~~STATEMENTS.~~reflect all adjustments (consisting only of normal

4recurring accruals) necessary for a fair presentation of the results of operations for the periods presented.

SONNEN CORPORATION & SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
														Cumulative
														amounts from
														development stage
														activities
		For the three months ended						For the nine months ended						(November 16, 2006 through
		March 31,						March 31,						March 31,
		2011			2010			2011			2010			2011	)
REVENUES	$	-		$	-		$	-		$	-		$	-
GENERAL & ADMINISTRATIVE EXPENSES
Organization costs		-			-			-			-			640
General and administrative		201			12,535			2,216			55,647			89,689
Professional fees		19,683			9,118			76,802			132,732			326,770
Consulting fees		-			118,366			-			278,693			280,727
Consulting and professional fees - related parties		54,000			84,000			154,000			247,500			444,250
Compensation and related taxes and benefits		150,030			257,842			450,091			470,322			1,185,378
Transfer fees		350			674			955			4,568			9,004
Depreciation		154			154			463			271			889
Research & development		-			111,930			107			176,910			167,666
Total General & Administrative Expenses		224,418			594,619			684,634			1,366,643			2,505,013
Loss before other income (expense)		(224,418	)		(594,619	)		(684,634	)		(1,366,643	)		(2,505,013	)
Interest income/ (expense)		(6,475	)		-			(18,356	)		(3,474	)		(25,103	)
Loss on foreign currency exchange		-			-			-			-			(1,551	)
Impairment loss on asset		-			(672,000	)		-			(672,000	)		(672,000	)
Other income		-			50,000			-			50,000			50,000
Loss before provision for income taxes		(230,893	)		(1,216,618	)		(702,990	)		(1,992,116	)		(3,153,667	)
Provision for income taxes		-			-			-			-			-
NET LOSS	$	(230,893	)	$	(1,216,618	)	$	(702,990	)	$	(1,992,116	)	$	(3,153,667	)
NET LOSS PER SHARE - BASIC AND DILUTED		nil		$	(0.02	)	$	(0.01	)	$	(0.03	)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING - BASIC AND DILUTED		67,893,000			67,874,111			67,893,000			66,917,927

The results of operations for the periods presented are not necessarily indicative of the results to be

~~SEE~~expected ~~ACCOMPANYING~~for ~~CONDENSED~~the ~~NOTES~~full ~~TO CONOLIDATED FINANCIAL STATEMENTS~~year.

SONNEN CORPORATION AND SUBSIDIARY
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
									Cumulative
									amounts from
									development stage
									activities
			For the nine months ended						(November 16, 2006 through
			March 31,						March 31,
			2011			2010			2011	)
CASH FLOWS FROM DEVELOPMENT STAGE ACTIVITIES
Net (loss) from development stage activities		$	(702,990	)	$	(1,992,116	)	$	(3,153,667	)
Adjustments to reconcile net loss to net
cash provided (used) by development stage activities:
Depreciation			463			271			889
Stock options vested			450,092			418,600			1,095,413
Stock issued for services			-			75,000			101,000
Impairment loss on asset			-			672,000			672,000
Changes in operating assets and liabilities:
	Increase in accounts receivable - related party		-			(50,000	)		-
	Increase in prepaid expenses		7,233			(5,029	)		(1,099	)
	Increase in accounts payable		31,702			90,657			165,554
	Increase in accounts payable - related parties		161,834			8,791			243,964
	Increase in accrued liabilities		-			9,865			13,283
	Increase in accrued liabilities - related parties		-			52,839			-
	Increase in accrued interest		17,908			3,408			25,978
Total adjustments			669,232			1,276,401			2,316,982
	NET CASH USED BY DEVELOPMENT STAGE ACTIVITIES		(33,757	)		(715,714	)		(836,684	)
CASH FLOWS FROM INVESTING ACTIVITIES
	Purchase of property and equipment		-			(1,853	)		(1,853	)
	NET CASH USED BY INVESTING ACTIVITIES		-			(1,853	)		(1,853	)
CASH FLOWS FROM FINANCING ACTIVITIES
	Proceeds from notes payable, net		37,000			198,660			280,660
	Proceeds from notes payable - related parties		-			30,000			38,500
	Repayments from notes payable - related party		(4,000	)		(6,079	)		(50,079	)
	Proceeds from sale of common stock, net of offering costs		-			500,000			569,540
	NET CASH PROVIDED BY FINANCING ACTIVITIES		33,000			722,581			838,621
	NET INCREASE IN CASH AND CASH EQUIVALENTS		(757	)		5,014			83
	CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		840			9,000			-
	CASH AND CASH EQUIVALENTS, END OF PERIOD	$	83		$	14,013		$	83
Supplemental Disclosures:
	Cash paid for income taxes	$	-		$	-		$	-
	Cash paid for interest		-			-			-
Non-cash Disclosures:
	Payments made by related party on behalf of the Company:
	Increase in notes payable - related parties		-			21,079			21,079
	Decrease in accounts payable - related parties		-			(11,079	)		(11,079	)
	Increase in prepaid expenses		-			(10,000	)		(10,000	)
	To apply balance owed to a related party to accounts receivable:
	Decrease in accounts receivable - related party		-			40,000			40,000
	Repayments of note payable - related party		-			(40,000	)		(40,000	)
	Stock issued for licensing agreement rights	$	-		$	672,000		$	672,000

SONNEN CORPORATION AND SUBSIDIARY

~~SEE~~(A ~~ACCOMPANYING~~DEVELOPMENT ~~CONDENSED~~STAGE ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.~~ENTERPRISE)

6CONSOLIDATED BALANCE SHEETS

~~SONNEN~~September ~~CORPORATION AND SUBSIDIARY~~30,

(AJune ~~DEVELOPMENT STAGE ENTERPRISE)~~30,

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~2011

~~For the nine months ended March 31,~~ 2011 ~~and 2010~~

~~NOTE 1 – BUSINESS~~ASSETS

~~Sonnen~~CURRENT Corporation was incorporated in the state of Nevada on November 16, 2006 as “Simple Tech, Inc.” Sonnen Corporation and its wholly-owned subsidiary, Sonnen One, Inc., are referred to herein as the “Company”. By June 2009, the Company had been unable to realize its original business objective. In July 2009, the Company entered into a licensing agreement to research, develop and market products that rely upon a novel process for energy generation consisting of specific materials and proprietary material combinations. ASSETS

OnCash ~~November 3, 2009, the Company amended its articles of incorporation to change its name from “Simple Tech, Inc.” to “Sonnen Corporation”~~ and tocash decrease the number of its authorized common stock from one billion five hundred million (1,500,000,000) shares (par value $0.0001) to two hundred fifty million (250,000,000) shares (par value $0.0001) without affecting the number of issued and outstanding shares. The Company’s subsidiary changed its name from “Sonnen Corporation” to “Sonnen One, Inc.”equivalents

On November 9, 2009, the Company formed a Scientific Advisory Board to support the Company with its research, development, and commercialization efforts through advice, counsel, and direct participation utilizing the industry expertise and professional and academic backgrounds of its Scientific Advisory Board members pursuant to its current business plan.$

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~101 $

~~Basis of Presentation~~159

InPrepaid ~~the~~expenses ~~opinion of management, the accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles~~ (~~GAAP)~~Note for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals4) considered necessary for a fair presentation of the Company’s financial position as of March 31, 2011, and the results of its operations and cash flows for the nine months ended March 31, 2011, have been made. Operating results for the nine months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ended June 30, 2011.

~~These consolidated financial statements should be read in conjunction with the financial statements and notes for the year ended June 30, 2010, thereto contained in the Company’s Form 10-K.~~856

~~Development Stage Enterprise~~1,099

AtTotal ~~March~~Current ~~31, 2011, the Company’s business operations had not fully developed and the Company is highly dependent upon funding and therefore is considered a development stage enterprise.~~Assets

~~Principles of Consolidation~~957

~~The accompanying consolidated financial statements include the accounts of Sonnen Corporation and Sonnen One~~1, ~~Inc., its wholly-owned subsidiary. All material intercompany accounts and transactions between the Companies for the periods presented have been eliminated in consolidation.~~258

7Total Other Assets

~~SONNEN CORPORATION AND SUBSIDIARY~~-

~~(A DEVELOPMENT STAGE ENTERPRISE)~~-

~~CONDENSED~~Total ~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~Assets

~~For the nine months ended March 31, 2011 and 2010~~$

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued~~957 $

~~Use of Estimates in the Preparation of Financial Statements~~1,258

~~The~~LIABILITIES ~~preparation~~AND ofSTOCKHOLDERS' financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates and assumptions.DEFICIT

~~NOTE~~CURRENT ~~3 – GOING CONCERN~~LIABILITIES

~~The~~Accounts accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a cumulative net loss for the period from inception (November 16, 2006) through March 31, 2011 of $3,153,667, a working capital deficit of $716,680 and negative cash flows from development stage activities of $33,757. These conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on its ability to meet its obligations, to obtain additional debt and/or equity financing as may be required and ultimately to attain profitability. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.payable

~~NOTE 4 - PROPERTY AND EQUIPMENT~~$

~~Property and equipment consists of the following at March 31~~135, ~~2011 and June 30, 2010:~~738 $

		March 31, 2011		June 30, 2010
Computer equipment and software	$	1,853	$	1,853
Less: Accumulated depreciation		(889)		(426)
Total property and equipment, net	$	964	$	1,427

131,505

InAccounts ~~the~~payable ~~period~~- ~~ended~~related December 31, 2009, the Company purchased two laptop computers and a scanner for our offices that will be depreciated over three years on a straight line basis. Depreciation expense for the nine months ended March 31, 2011 and 2010 was $463 and $271, respectively.parties

8381,548

~~SONNEN CORPORATION AND SUBSIDIARY~~319,379

(AAccrued ~~DEVELOPMENT STAGE ENTERPRISE)~~payroll

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~13,283

~~For the nine months ended March 31~~13, ~~2011 and 2010~~283

~~NOTE~~Notes 5payable –- ~~PREPAID~~related ~~EXPENSES~~parties (including accrued

~~Prepaid~~interest ~~expenses~~of ~~consist~~$238 of- ~~the~~September ~~following:~~30, 2011 and $93 - June 30, 2011)

			March 31, 2011
Haynes and Boone, LLP	Prepayment retainer for legal fees	$	1,098
	Total	$	1,098

11,838

			December 31, 2010
Hall, Lamb, and Hall	Prepayment retainer for legal fees	$	4,875
W.L. MacDonald Corp.	Prepayment retainer for legal fees		2,358
Haynes and Boone, LLP	Prepayment retainer for legal fees		1,099
	Total	$	8,332

11,693

~~NOTE~~Notes 6payable –(including ~~NOTES~~accrued ~~PAYABLE~~interest of $19,572

On- ~~July~~September 830, ~~2010, the Company received an advance on an interest bearing promissory note of $12,000 from an unrelated entity. The note is due and payable on July 8,~~ 2011, and ~~bears an interest rate of 8% per annum. Interest of~~ $~~709~~16,655 ~~for~~- ~~the~~June ~~nine months ended March 31~~30, 2011 ~~has been accrued.~~)

~~On September 20~~170, 2010, the Company received an advance on an interest bearing promissory note of $25,000 from an unrelated entity. The note is due and payable on September 20, 2011, and bears an interest rate of 8% per annum. Interest of $1,067 for the nine months ended March 31, 2011 has been accrued.856

~~NOTE 7 – STOCKHOLDERS' EQUITY~~167,763

~~Common~~Loans ~~Shares~~from –shareholder ~~Authorized~~(including accrued interest of $18,684

~~The~~- ~~Company~~September ~~has 250~~30,~~000,000~~ ~~common~~2011 ~~shares authorized at a par value of $0.0001 per share~~ and ~~50,000,000 shares of preferred stock, par value~~ $~~0.0001 per share. All common stock shares have equal voting rights~~15,604 ~~are non~~-~~assessable~~ ~~and~~June ~~have one vote per share. Voting rights are not cumulative and~~30, ~~therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all the directors of the Company. As of March 31,~~ 2011 ~~and 2010, none are issued and outstanding. As of March 31, 2011 and 2010, there are 67,893,000 and 67,893,000 shares issued and outstanding, respectively.~~)

~~Common Stock Issuances and Warrants Granted~~169,344

~~For the nine months ended March 31~~166, ~~2011 there were no share issuances.~~ 264

9Total Current Liabilities

~~SONNEN CORPORATION AND SUBSIDIARY~~882,607

~~(A DEVELOPMENT STAGE ENTERPRISE)~~809,887

~~CONDENSED~~COMMITMENTS ~~NOTES~~AND TOCONTINGENCIES ~~CONSOLIDATED FINANCIAL STATEMENTS~~ (~~UNAUDITED~~Note 11)

~~For the nine months ended March 31, 2011 and 2010~~-

~~NOTE 8 – STOCK – BASED COMPENSATION~~-

OnSTOCKHOLDERS' ~~August 31, 2009, the Company adopted the Company’s 2009, Stock Option Plan~~ DEFICIT (~~the~~Note ~~“Plan”~~8) in an effort to promote the interests of the Company by providing eligible persons and companies with the opportunity to acquire or increase a proprietary interest in the Company through the grant of up to five million (5,000,000) non-statutory stock options (the “Options”) as an incentive for the eligible persons to continue their employment or service. On August 31, 2009, the Company authorized the grant of an

~~aggregate~~Preferred ~~of one million eight hundred thousand (1~~stock,~~800,000)~~ ~~Options with an exercise price of~~ $10.000001 ~~per~~par ~~share pursuant to the Plan. This block of Options vest over a three year period through August 31~~value, ~~2012~~50,000,000 ~~in equal increments of one-third of potentially exercisable Options each year or in full if involuntarily terminated.~~shares

~~On November 9, 2009, the Company~~ authorized ~~the grant of an additional one hundred thousand (100~~,~~000)~~ ~~Options~~none ~~with~~issued anand exercise price of $1.25 per share pursuant to the Plan. This bock of Options vest over a one year period through November 9, 2010, in equal increments of one-half of potentially exercisable Options each year or in full if involuntarily terminated. outstanding

On January 1, 2010, the Company authorized the grant of an additional one hundred thousand (100,000) Options with an exercise price of $1.25 per share pursuant to the Plan. This block of Options vest over a two year period through January 1, 2011, in equal increments of 33.33% immediately upon signing of the agreement, and 33.33% will vest on the anniversary date of January 1, 2011, and the remaining 33.34% on the anniversary date of January 1, 2012, or in full if involuntarily terminated.-

~~The value of employee and non~~-~~employee stock Options granted since the Plan’s inception in August 2009 is estimated in blocks using the Black-Scholes model at the grant date, with the following assumptions:~~

	Aug. 31, 2009	Nov. 9, 2009	Jan. 1, 2010
Volatility	188.00%	188.00%	188.00%
Expected dividends	$ 0.00	$ 0.00	$ 0.00
Expected term in years	10	10	10
Risk-free rate	3.40%	3.49%	3.84%

Common stock, par value $0.0001, 250,000,000 shares

~~The~~authorized, ~~volatility~~67,893,000 ~~assumption~~issued is based upon comparable development stage companies in our standard industrial classification code. The risk-free interest rate assumption is based upon U.S. Treasury Bond interest rates appropriate for the terms of the Company’s granted Options. The dividend yield assumption is based on the Company’s history and ~~expectation of dividend payments.~~outstanding

106,789

~~SONNEN CORPORATION AND SUBSIDIARY~~6,789

(APaid-in ~~DEVELOPMENT STAGE ENTERPRISE)~~capital

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~2,942,325

~~For the nine months ended March 31~~2, ~~2011 and 2010~~841,575

~~NOTE~~Accumulated 8deficit –during ~~STOCK~~the –development ~~BASED COMPENSATION - continued~~stage

~~A summary of the Options granted to employees and others under the Plan and changes since inception of the Plan is presented below:~~(3,830,764)

	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance at July 1, 2009	-	$	-	$	-
Options Granted	2,000,000		1.03		2,038,908
Options Exercised	-		1.00		-
Options Forfeited or Expired	-		1.00		-
Balance at June 30, 2010	2,000,000	$	1.03	$	2,038,908
Exercisable at June 30, 2010	150,000	$	1.07	$	162,571
Weighted average fair value of Options granted through June 30, 2010		$	1.02

(3,656,993)

	Number of Options		Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance at July 1, 2010	2,000,000	$	1.03	$	2,038,908
Options Granted	-		1.00		-
Options Exercised	-		1.00		-
Options Forfeited or Expired	( 200,000)		1.00		( 201,499)
Balance at March 31, 2011	1,800,000	$	1.02	$	1,837,409
Exercisable at March 31, 2011	683,280	$	1.02	$	699,848
Weighted average fair value of Options granted through March 31, 2011		$	1.02

Total Stockholders' Deficit

11(881,650)

~~SONNEN CORPORATION AND SUBSIDIARY~~(808,629)

(ATotal ~~DEVELOPMENT~~Liabilities ~~STAGE~~and ~~ENTERPRISE)~~Stockholders' Deficit

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~$

~~For the nine months ended March 31, 2011 and 2010~~957 $

~~NOTE 8 – STOCK – BASED COMPENSATION - continued~~1,258

The ~~following~~accompanying ~~table~~notes ~~summarizes~~are ~~information~~an ~~about~~integral ~~stock~~part ~~Options~~of ~~under~~these ~~the~~consolidated ~~Plan~~financial ~~that were outstanding at March 31, 2011:~~statements.

Outstanding Options								Options Exercisable
	Exercise Price	Number Outstanding at March 31, 2010	Weighted Average Remaining Contractual Life in Years		Weighted Average Exercise Price		Intrinsic Value	Number Exercisable at March 31, 2010		Weighted Average Exercise Price		Aggregate Intrinsic Value
$	1.00	1,600,000	10.00	$	1.00	$	1,611,993	533,280	$	1.00	$	537,277
$	1.25	200,000	10.00	$	1.25	$	225,416	150,000	$	1.08	$	162,571
		1,800,000	10.00	$	1.02	$	1,837,409	683,280	$	1.02	$	699,848

~~The~~SONNEN ~~total~~CORPORATION ~~value~~AND ~~of all employee and non-employee stock Options granted from the inception of the plan was $1,837,409.~~SUBSIDIARY

~~During~~(A ~~the~~DEVELOPMENT ~~nine~~STAGE months ended March 31, 2011 and 2010 the Company recorded $450,091 and $418,600, respectively, in stock-based compensation which is included in salaries, payroll taxes, and expenses on the statements of operations.ENTERPRISE)

AtCONSOLIDATED ~~March~~STATEMENTS ~~31,~~OF 2011 there was $741,997 of total unrecognized compensation cost related to stock options granted under the Plan. That cost is expected to be recognized pro-rata according to the vesting schedules through August 31, 2012.OPERATIONS

12Cumulative

~~SONNEN~~amounts ~~CORPORATION AND SUBSIDIARY~~from

(Adevelopment ~~DEVELOPMENT STAGE ENTERPRISE)~~stage

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~activities

~~For~~(November ~~the nine months ended March 31~~16, ~~2011 and 2010~~

~~NOTE~~For 9the –three ~~RELATED~~months ~~PARTY TRANSACTIONS~~ended

~~Consulting~~through ~~Agreements~~2006

OnSeptember ~~October 1~~30, 2009, the Company entered into a consulting agreement with Prosper Financial, Inc., a company owned by the spouse of the Company’s President and Chief Executive Officer and 37% owner of the Company. The agreement calls for monthly payments of $2,500 for consulting services rendered and $1,200 per month in rental payments for the use of Prosper Financial, Inc.’s office space. The agreement extends through October 31, 2010. As of March 31, 2011, this agreement was not renewed and continues on a month to month basis, and this related party had a balance due of $18,449, and is reflected in accounts payable – related parties.

OnSeptember ~~August 1~~30, 2009, the Company entered into a consulting agreement with a director and officer that calls for monthly compensation of $7,500 and extends through December 31, 2009. As of March 31, 2011, this agreement was not renewed and continues on a month to month basis, and this related party had a balance due of $79,206, which is reflected in accounts payable – related parties.

On July 1, 2009, the Company entered into a consulting agreement with a shareholder, director and officer of the Company that calls for an annual base fee of $96,000 and extends through June 30, 2010. As of March 31, 2011~~, this agreement was not renewed and continues on a month to month basis, and this related party had a balance due of $113,350, which is reflected in accounts payable – related parties.~~

On October 1, 2009, the Company entered into a consulting agreement with the Head of Research that calls for monthly compensation of $6,000 and extends through December 31, 2009. As of March 31, 2011, this agreement was not renewed and expired, and this related party had a balance due of $1,840, and is reflected in accounts payable – related parties.2010

~~NOTE 10 – COMMITMENTS AND CONTINGENCIES~~2011)

~~Breach of Contract Claim~~REVENUES

On February 6, 2010, PT Group notified the Company of a purported breach of contract items including a breach of confidentiality, insufficient funding for research and development activities and failure to provide direct access to our patent attorneys. The licensing agreement allows for a ninety day period in which to cure purported breaches. The Company’s management and board of directors have reason to believe that PT Group may not be the rightful owner of the intellectual property licensed under this licensing agreement. $

~~On March 8, 2010, the Company filed a complaint in the Circuit Court of the 11th 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) damages for fraud that stem from reliance on PT Group's claim of ownership over certain proprietary information, (ii) the return of Company 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. The Company expects to succeed on the merits of its claims. As a result of this discovery, the Company impaired the entire $~~672,000 book value of the license agreement.~~

13- $

~~SONNEN CORPORATION AND SUBSIDIARY~~-

(AGENERAL ~~DEVELOPMENT~~& ~~STAGE~~ADMINISTRATIVE ~~ENTERPRISE)~~EXPENSES

~~CONDENSED~~General ~~NOTES~~and ~~TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~administrative

~~For the nine months ended March 31, 2011 and 2010~~153

~~NOTE 11– SUBSEQUENT EVENTS~~1,199

~~In accordance with Accounting Standards Codification (ASC) topic 855-10 “Subsequent Events”~~96, the Company has evaluated subsequent events through the date which the financial statements were available to be issued. The Company has determined that there were no such events that warrant disclosure or recognition in the financial statements.206

14Professional fees

~~Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL~~11,740

~~CONDITION AND RESULTS OF OPERATIONS.~~10,643

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates364,” “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 condensed consolidated financial statements and related notes included in this report. Information presented herein is based on the three and nine-month periods ended March 31, 2011. Our fiscal year-end is June 30.216

~~Discussion~~Consulting ~~and Analysis of the Company’s Plan of Operation~~fees

~~The Company’s plan of operation for the coming year is to resume research and development into improving catalysts for the utilization of fuel~~-~~cells and related catalysis fields such as emission abatement and ceramic technologies. We have not generated any revenue since inception.~~

~~Business Strategy~~-

The Company’s plan of operation begins with the resumption of intensive research and development activities during which time we will take steps to develop and lay the ground work to develop or acquire a portfolio of proprietary technology that can be commercialized over the near term.179,727

~~Research~~Consulting and ~~Development~~professional fees - related parties

~~The Company has suspended its development plan for the fuel cell technology licensed from PT Group~~54, Limited (“PT Group”). While awaiting resolution of the uncertainties surrounding the licensing agreement, the Company intends to identify, acquire and develop alternative innovative technologies that it might advance to commercial applications. 000

~~Management understands that new technologies must meet several critical milestones in advance of commercialization. Milestones include cost effectiveness~~46, energy efficiencies, convenience of use and practicability. We believe that our products will 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. Our anticipated time frame for meeting these objectives and initiating the commercialization of new technologies is three years. 000

~~Marketing~~ 552,250

InStock ~~the~~based event a commercially viable product or products is ready to be manufactured, we intend to implement a public awareness campaign to educate consumers, industry leaders and government representatives alike as to the benefits of our technology for a variety of applications. We expect to conduct such a campaign with the benefit of press releases, contributions to scientific publications, meetings with environmental groups and general advertising within mass media markets. We anticipate a response that will include extensive media coverage, scientific community scrutiny, and support from the environmental lobby. compensation

15-

~~Manufacturing~~-

We intend to manufacture future products at a pilot plant to be constructed for the purpose of meeting initial orders for fuel cells or like applications and proving our manufacturing processes. When proven we would expect to enter into a series of joint ventures to expand manufacturing facilities and to sublicense specific applications for any given technology to targeted industries. Our facilities and those of our joint venture partners and sublicenses will manufacture end user products that incorporate our fuel cells or like products. 101,000

~~Financing~~Compensation and related taxes and benefits

~~The Company intends to raise funds to meet its operational requirements through a combination of (i) private placements of equity to accredited investors~~100, ~~(ii) issuance of debt instruments to accredited investors, (iii) by government grant, and/or (iv) sub-license agreements.~~750

~~Revenues~~150,030

~~We expect to realize revenue from the direct sale of products derived from any technology we might develop~~1, ~~from revenues accrued from joint venture relationships and from royalties.~~ 696,541

~~Business~~Transfer ~~Strategy Risks~~ fees

The Company’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 anticipated development of advanced energy enhanced technology. Historically, the Company 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 the Company 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, the Company 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.350

~~Results of Operations~~300

~~Net Losses~~9,654

For the period from inception (November 16, 2006) until March 31, 2011, the Company incurred net losses of $3,153,667. Net losses for the three months ended March 31, 2011, were $230,893 as compared to $1,216,618 for the three months ended March 31, 2010. Net losses for the nine months ended March 31, 2011, were $702,990 as compared to net losses for the nine months ended March 31, 2010, of $1,992,116. The decrease in net losses over the comparative three and nine month periods can wholly be attributed to the decrease in general and administrative expenses in connection with the suspension of our development plan for a fuel cell technology based around a license from PT Group. Depreciation

~~We will continue to operate at a loss through fiscal 2011 and due to the suspension of our research and development operations cannot determine whether we will ever generate revenues from operations.~~-

16154

~~General and Administrative Expenses~~1,044

~~For~~Research ~~the~~& period from inception (November 16, 2006) until March 31, 2011, the Company incurred general and administrative expenses of $2,505,013. General and administrative expenses for the three months ended March 31, 2011, were $224,418 as compared to $594,619 for the three months ended March 31, 2010. General and administrative expenses for the nine months ended March 31, 2011, were $684,634 as compared to $1,366,643 for the nine months ended March 31, 2010. The decrease in general and administrative expenses over the comparative three and nine periods can be primarily attributed to decreases in consulting fees, compensation and related taxes and benefits, and research and development~~. General and administrative expenses primarily include professional fees, consulting fees, compensation, and research and development expenses.~~

~~We expect general and administrative expenses to continue to decrease until such time as the Company resumes technology development activities.~~ -

~~Income Tax Expense (Benefit)~~ 35

~~The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and start up costs that will offset future operating profit.~~167,666

~~Impact~~Total ofGeneral ~~Inflation~~& Administrative Expenses

~~The Company believes that inflation has not had a material affect on operations for the period from November 16~~166, ~~2006 (inception) to March 31, 2011.~~994

~~Capital Expenditures~~208,361

~~The Company has not spent significant amounts of capital for the period from November 16~~3, ~~2006 (inception) to March 31~~168, ~~2011.~~305

~~Liquidity~~Loss ~~and~~before ~~Capital~~other ~~Resources~~income (expense)

~~The Company had a working capital deficit of $716~~(166,680, current assets of $1,181, and total assets of $2,145 at March 31, 2011. The Company had current and total liabilities of $717,861 at March 31, 2011 that consisted of accounts payable, notes payable, accrued payroll and accrued liabilities. 994)

~~The Company’s shareholder deficit was $715~~(208,~~715 as of March 31, 2011.~~ 361)

~~For the period from inception~~ (~~November 16~~3, ~~2006) until March 31~~168, 2011, the Company’s cash flow used in development stage activities was $836,684. Cash flows used in development stage activities for the nine months ended March 31, 2011, were $33,757 as compared to $715,714 for the nine months ended March 31, 2010. Cash flow used in development stage activities over the nine months ended March 31, 2011 changed from the comparable nine month period due primarily to the decrease in net losses from operations. The Company expects that cash flow will continue to be used in operating activities in the near term.305)

~~For~~Interest ~~the~~income/ period from inception until March 31, 2011, the Company’s cash flow used in investing activities was $1,853. Cash flows used in investing activities for the nine months ended March 31, 2011, was $0 as compared to $1,853 for the nine months ended March 31, 2010. The Company expects that cash flow used in investing activities will increase in future periods.(expense)

17(6,778)

~~For the period from inception until March 31~~(5, 2011, the Company’s cash flow provided by financing activities was $838,621. Cash flows provided by financing activities for the nine months ended March 31, 2011 were $33,000 as compared to $722,581 for the nine months ended March 31, 2010. The Company expects that cash flow provided by financing activities will remain limited until such time as it resumes development activities. 708)

~~The Company’s current assets are insufficient to conduct its plan of operation over the next twelve~~ (~~12) months. We will have to realize at least $500~~38,000 in debt or equity financing over the next twelve months to fund our continued operations. The Company has no current commitments or arrangements with respect to, or immediate sources of, this funding. Furthermore, no assurances can be given that such funding is available. The Company’s shareholders are the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and the Company has no such agreement formal or otherwise. The Company’s inability to obtain funding will have a material adverse affect on its ability to remain a technology development company and affect its plan of operation. 100)

~~Cash~~Loss ~~dividends~~on ~~are~~foreign ~~not~~currency ~~expected to be paid in the foreseeable future.~~exchange

~~The Company had no lines of credit or other bank financing arrangements as of March 31, 2011.~~ -

~~Commitments for future capital expenditures were not material as of March 31, 2011.~~-

~~The Company had no current plans for the purchase or sale of any plant or equipment as of March 31~~(1, ~~2011.~~ 551)

~~The~~Loss ~~Company~~on ~~has~~disposal ~~no plans to make any changes in the number~~ of ~~employees as of March 31, 2011.~~ assets

~~Off Balance Sheet Arrangements~~-

~~As of March 31, 2011, the Company 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 is material to stockholders.

~~Going Concern~~ (809)

~~There~~Impairment isloss ~~substantial~~on doubt about the Company’s ability to continue as a going concern as a result of net losses of $2,380,655 as of June 30, 2010, which losses have increased to $3,153,667 as of March 31, 2011. The Company’s ability to continue as a going concern is subject to the ability of the Company to realize a profit and /or obtain funding from outside sources. Management’s plan to address the Company’s ability to continue as a going concern includes: (i) obtaining funding from the private placement of debt or equity; (ii) realizing revenues from the commercialization of new technologies; and (iii) obtaining loans and grants from financial or government institutions. Management believes that it will be able to obtain funding to allow the Company to remain a going concern through the methods discussed above, though there can be no assurances that such methods will prove successful.asset

18-

~~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”~~(672, with the exception of historical facts, are forward looking statements. A safe-harbor provision may not be 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:000)

~~· our~~Other ~~anticipated financial performance;~~ income

~~· uncertainties related to the research and development of 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;~~ 50,000

~~· the~~Loss ~~volatility~~before ofprovision ~~the~~for ~~stock~~income ~~market; and~~ taxes

~~· general economic conditions.~~ (173,771)

We 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 including the factors set forth in the section entitled “Risk Factors” included elsewhere in this report. We advise readers not to place any undue reliance on the forward-looking statements contained in this report(214, 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 than as required by law. 070)

~~Stock-Based Compensation We have adopted Accounting Standards Codification~~(3, ~~ASC 718~~830, ~~formerly SFAS No. 123R, Share-Based Payments, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a~~764) ~~equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments.~~

WeProvision ~~account~~ for ~~equity~~income instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable based on the Black-Scholes model. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.taxes

~~Recent Accounting Pronouncements~~-

~~We have examined all recent accounting pronouncements and believe that none of them will have a material impact on the financial statements of the Company.~~-

19-

~~Critical~~NET ~~Accounting Policies~~ LOSS

In the notes to the audited consolidated financial statements the Company for the years ended June 30, 2010 and 2009, included in the Company’s Form 10-K filed with the Securities and Exchange Commission, the Company discussed those accounting policies that are considered to be significant in determining the results of operations and financial position. The Company’s management believes that their accounting principles conform to accounting principles generally accepted in the United States of America.$

~~The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets~~(173, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.771) $

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~(214,070) $

~~Not required.~~(3,830,764)

~~ITEM~~NET 4.LOSS ~~CONTROLS~~PER SHARE - BASIC AND ~~PROCEDURES.~~DILUTED

~~Evaluation of Disclosure Controls and Procedures~~$

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (~~as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”))~~0. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.00) $

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures(0.00)

~~Changes~~WEIGHTED inAVERAGE ~~Internal~~NUMBER ~~Control~~OF ~~over Financial Reporting~~COMMON

~~There~~SHARES ~~have~~OUTSTANDING ~~been no changes in internal control over financial reporting (as defined in Rule 13a~~-~~15(f)~~ ofBASIC ~~the~~AND ~~Exchange Act) during the three months ended March 31, 2011, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.~~DILUTED

2067,893,000

~~PART II – OTHER INFORMATION~~67,893,000

~~ITEM~~The 1.accompanying ~~LEGAL~~notes ~~PROCEEDINGS.~~are an integral part of these consolidated financial statements

On March 8, 2010, the Company filed a complaint in the Circuit Court of the 11th 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) damages for fraud that stem from reliance on PT Group's claim of ownership over certain proprietary information, (ii) the return of Company 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. The Company expects to succeed on the merits of its claims.5

~~ITEM~~SONNEN ~~1A.~~CORPORATION ~~RISK~~AND ~~FACTORS.~~SUBSIDIARY

~~The~~(A ~~Company’s~~DEVELOPMENT ~~operations~~STAGE and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our operations, business, financial condition and/or operating results as well as the future trading price and/or the value of our securities.ENTERPRISE)

~~Risks~~CONSOLIDATED ~~Related~~STATEMENTS toOF ~~the~~CASH ~~Company’s Business~~FLOWS

~~We have a history of significant operating losses and such losses may continue in the future.~~Cumulative

~~Since~~amounts November 16, 2006, our expenses have resulted in continuing losses and an accumulated deficit of $3,153,667 at March 31, 2011. We expect operating losses to diminish in the near term until such time as we resume research and development efforts. Further we expect losses to continue over the long term until such time, if ever, that we are able to build our business to the point of commercializing a technology. Our only expectation of future profitability is dependent upon this result and there is no assurance that even in the event we are able to commercialize a technology that revenue from ~~sales related to that success will be sufficient to satisfy operating costs and produce a profit.~~

~~We need to continue as a going concern if our business is to succeed.~~development

~~Our~~stage independent registered public accounting firm’s report on our audited financial statements for the period ended June 30, 2010, includes an explanatory paragraph that notates that there are a number of factors that raise substantial doubt as to our ability to continue as a going concern. Such factors identified in the report include our ability to meet our obligations, to obtain additional financing as may be required, and ultimately to attain profitability. If we are not able to continue as a going concern, it is likely that the Company will cease operations and our shareholders will lose their investments.activities

21For the three months

~~Risks~~(November ~~Related to the Development of Technologies~~16,

~~General~~ended ~~economic~~September ~~conditions will affect the Company’s operations.~~30

~~Changes~~2006 in the general domestic and international climate may adversely affect the Company’s financial performance. Factors that may contribute to a change in the general economic climate include industrial disputes, interest rates, inflation, international currency fluctuations and political and social reform. Further, the delayed revival of the global economy is not conducive to rapid growth, particularly of technology companies though we believe that as the world becomes more environmentally conscious, that governments are under increasing pressure to develop environmentally cleaner alternatives for generating electricity. Fuel cell technology is generally seen as a promising alternative. Despite this shift to environmental consciousness there is no assurance that governments will elect to develop cleaner energy alternatives such as fuel cell technology.through

~~Environmental~~September ~~laws and other governmental legislation may affect our business.~~ 30,

Should the technology we decide to develop not comply with applicable environmental laws or if the Company is exposed to liability claims, its business and financial results could be seriously harmed. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on our business, results of operations and financial condition. Furthermore, changes in legislation and government policy could also negatively impact us. The Company is currently unaware of any introduced or proposed bills, or policy, that may cause any specific changes to its operations. However, no assurance can be given that we will be able to obtain any necessary license required in the future, or that future changes in laws or government policies affecting any technology we might develop, or products we might market, will not impose additional regulatory requirements on the Company, intensify competition in the fuel cell technology industry or otherwise have a material adverse effect on our business, financial condition and results of operations.2011

~~There are significant commercialization risks related to technological businesses.~~2010

The industry in which we operate is characterized by the continual search for technological advances that deliver improved reliability, lower emission levels and reduced cost. Our growth and future financial performance will depend on the Company’s ability to enhance the licensed technology for the purpose of developing and introducing products that keep pace with technological developments and evolving industry requirements. Should we be unable to keep pace with outside technological developments such failure will have a material adverse effect on its business. The research and development required to commercialize products requires significant investment and innovation to keep pace with technological developments. Should the Company fail to anticipate or respond adequately to technological developments, or if the Company experiences significant delays in product development, its products may become obsolete. Should the Company’s products not keep pace with technological developments or fail to gain widespread market acceptance there is a significant likelihood that we may not be able to sustain our business. 2011)

WeCASH ~~face~~FLOWS ~~competition.~~FROM DEVELOPMENT STAGE ACTIVITIES

WeNet ~~may~~(loss) ~~face competition~~ from ~~both conventional electricity generating technology and fuel cell technology companies, including competitors which may have greater research and~~ development, ~~management,~~stage financial, technical, manufacturing, marketing, sales, and other resources than those currently available to us. There can be no assurance that we will be able to compete successfully against our current and future competitors.activities

22$

~~We may face liability claims on our future products.~~(173,771) $ (214,070) $

~~Although we intend to implement exhaustive testing programs to identify potential material defects in technology we might develop~~(3, ~~any undetected defects could harm our reputation~~830, ~~diminish our customer base, shrink revenues and expose us to product liability claims.~~ 764)

WeAdjustments ~~may~~to ~~rely~~reconcile ~~upon~~net ~~patents~~loss ~~and~~to ~~other intellectual property~~net

Wecash ~~may~~provided ~~rely~~(used) onby adevelopment ~~combination~~stage of patent applications, trade secrets, trademarks, copyrights and licenses, together with non-disclosure and confidentiality agreements, to establish and protect proprietary rights to technologies we may decide to develop. Should we be unable to adequately protect intellectual property rights or become subject to a claim of infringement, our business may be materially adversely affected. activities:

We expect to prepare patent applications in accordance with our worldwide intellectual property strategy on acquiring new technologies. However, we cannot be certain that any patents will be issued with respect to future patents pending or future patent applications. Further, we do not know whether any future patents will be upheld as valid, proven enforceable against alleged infringers or be effective in preventing the development of competitive patents. The Company believes that it has implemented a sophisticated internal intellectual property management system to promote effective identification and protection of its inventions and know-how in connection with the technologies it may develop in the future.Depreciation

~~We will rely upon co~~-~~development partners.~~

We expect to derive a large portion of our future revenues from entering into co-development partnership agreements though we have not yet entered into any such agreements. Should we be unable to negotiate co-development partnership agreements on favorable terms or at all, such failure will negatively impact our results of operations.154

~~We will rely upon manufacturing joint venture agreements.~~1,044

~~Our~~Stock ~~plan~~options of operation contemplates entering into manufacturing joint venture agreements with one or more external parties to manufacture products based on proprietary technology. Should we be unable to secure manufacturing joint venture agreements on favorable terms or at all, such failure will negatively impact our ability to manufacture our anticipated products.vested

~~We may not be able to effectively manage our growth.~~100,750

~~We expect considerable future growth in our business. However~~150, to achieve this growth in an efficient and timely manner, we will have to maintain strict controls over our internal management, technical, accounting, marketing, and research and development departments. We believe that we have retained sufficient quality personnel to manage our anticipated future growth and have adequate reporting and control systems in place. Should we be unable to successfully manage our anticipated future growth by adherence to these strictures, costs may increase, growth could be impaired and our ability to keep pace with technological advances may be impaired which failures could result in a loss of future customers. 030

231,606,575

WeStock ~~rely~~issued onfor ~~key personnel.~~services

Our success depends to a large degree on the continued services of its senior management and key personnel. We believe that responsible management processes, an emphasis on people management, and restraint of trade clauses within employment contracts reduce the likelihood of such personnel becoming competitors. Nonetheless, the loss of services provided by senior management, particularly to a competitor, could disrupt operations and harm our business. -

~~Risks Related to the Company’s Stock~~-

~~Capital funding requirements may result in dilution to existing shareholders.~~101,000

WeLoss ~~must~~on ~~realize~~disposal significant capital funding over the next three years to acquire and develop proprietary technologies. We intend to raise this capital through equity offerings, debt placements or joint ventures. Should we secure a commitment to provide us with capital such commitment may obligate us to issue shares of ~~our common stock, warrants or create other rights to acquire our common stock. New issuances of our common stock will result in a dilution of our existing shareholders interests.~~ assets

~~The market for our stock is limited and our future stock price may be volatile.~~ -

The market for our common stock on the Over the Counter Bulletin Board is limited to sporadic trading which may result in future volatility in the market price of our stock. Due to these factors our shareholders may face extraordinary difficulties in selling the Company’s shares in an orderly and timely manner. -

~~We do not pay cash dividends.~~809

~~The~~Impairment ~~Company~~loss does not pay cash dividends. We have not paid any cash dividends since inception and have no intention of paying any cash dividends in the foreseeable future. Any future dividends would be at the discretion of our board of directors and would depend on, among other things, future earnings, our operating and financial condition, our capital requirements, and general business conditions. Therefore, shareholders should not expect any type of cash flow from their investment.asset

~~FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.~~-

The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that relate to the application of the Commission’s penny stock rules in trading our securities and require that a broker/dealer have reasonable grounds for believing that the investment is suitable for that customer, prior to recommending the investment. Prior to recommending speculative, low priced securities to their non-institutional customers, broker/dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative, low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker/dealers to recommend that their customers buy our common stock, which may have the effect of reducing the level of trading activity and liquidity of our common stock. Further, many brokers charge higher transactional fees for penny stock transactions. As a result, fewer broker/dealers may be willing to make a market in our common stock, reducing a shareholder’s ability to resell shares of our common stock.

24672,000

WeChanges ~~incur~~in ~~significant~~operating ~~expenses~~assets asand ~~a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.~~liabilities:

WeIncrease incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in ~~the~~prepaid ~~following risk factor, has substantially increased our~~ expenses~~, including legal and accounting costs, and made some activities more time-consuming and costly.~~

Our internal controls over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.243

~~Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain~~(2, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. If we are unable to continue to assert that our internal controls are effective, our shareholders could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.627)

~~The Company’s shareholders may face significant restrictions on their stock.~~(856)

~~Our~~Increase common stock is and will be subject to the “penny stock” rules adopted under section 15(g) of the Exchange Act. The penny stock rules apply to companies whose common stock is not listed on the NASDAQ Stock Market or other national securities exchange and trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in ~~the~~accounts security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If the Company remains subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If the Company’s securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.payable

~~ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.~~4,237

~~None.~~(8,777)

~~ITEM 3. DEFAULTS ON SENIOR SECURITIES.~~173,103

~~None.~~Increase in accounts payable - related parties

~~ITEM 4. (REMOVED AND RESERVED)~~62,169

~~Removed and reserved.~~36,033

25381,548

~~ITEM~~Increase 5.in ~~OTHER~~accrued ~~INFORMATION.~~liabilities

~~None.~~-

~~ITEM 6. EXHIBITS.~~-

~~Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 28 of this Form 10‑Q~~13, ~~and are incorporated herein by this reference.~~283

26Increase in accrued interest

~~SIGNATURES~~6,318

~~Pursuant to the requirements of the Securities Exchange Act of 1934~~5, ~~the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.~~696

Sonnen Corporation Registrant
May 16, 2011 Date		/s/ Robert H. Miller Robert H. Miller Chief Executive Officer and Director
May 16, 2011 Date		/s/ Costas Takkas Costas Takkas Chief Financial Officer, Principal Accounting Officer and Director

38,495

27Total adjustments

~~EXHIBITS~~173,714

~~Exhibit Description~~180,509

~~3.1(i)* Articles of Incorporation, incorporated by reference to the Company’s Form SB-~~2 ~~filed with the Commission on August 6~~, ~~2007.~~ 968,998

~~3.1(ii)* Amendment~~NET toCASH ~~the~~PROVIDED ~~Articles~~BY ofDEVELOPMENT ~~Incorporation,~~STAGE ~~incorporated by reference to the Company’s Definitive 14C filed with the Commission on October 14, 2009.~~ACTIVITIES

~~3.2* Bylaws, incorporated by reference to the Company’s Form SB-2 filed with the Commission on August 6, 2007.~~ (57)

~~10(i)* Licensing Agreement between the Company~~33, ~~the Company’s wholly owned subsidiary, and P.T. Group, Ltd., dated July 27, 2009, incorporated by reference to the Company’s Form 10-K filed with the Commission on August 3, 2009.~~ 560

10(~~ii)* Consulting Agreement between the Company and Costas Takkas~~843, ~~dated July 27, 2009, incorporated by reference to the Company’s Form 10-K filed with the Commission on August 3, 2009.~~766)

~~10(iii)* Employment~~CASH ~~Agreement~~FLOWS ~~between~~FROM ~~the~~INVESTING ~~Company and Paul Leonard dated July 27, 2009, incorporated by reference to the Company’s Form 10-K filed with the Commission on August 3, 2009.~~ACTIVITIES

~~10(iv)* Employment~~Purchase ~~Agreement~~of ~~between~~property ~~the Company~~ and ~~David Greenbaum dated August 1, 2009, incorporated by reference to the Company’s Form 10-Q filed with the Commission on November 23, 2009.~~equipment

~~10(v)* Consulting Agreement between the Company and Carol Laws dated August 1, 2009, incorporated by reference to the Company’s Form 10~~-~~Q filed with the Commission on November 23, 2009.~~

~~10(vi)* Consulting Agreement between the Company and Backend Technologies, LLC dated August 5, 2009, incorporated by reference to the Company’s Form 10~~-~~Q filed with the Commission on November 23, 2009.~~

10(~~vii)* Employment Agreement between the Company and Robert H. Miller dated January~~ 1, ~~2010, incorporated by reference to the Company’ Form 10-Q filed with the Commission on November 23, 2010.~~853)

~~21* Subsidiaries~~NET ofCASH ~~the~~USED ~~Company,~~BY ~~incorporated~~INVESTING ~~by reference to the Company’s Form 10-K filed with the Commission on August 3, 2009.~~ACTIVITIES

~~31(i) Certification of the Chief Executive Officer pursuant to Rule 13a~~-~~14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

~~31(ii) Certification of the Chief Financial Officer pursuant to Rule 13a~~-~~14 of the Securities and Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32(i1,853) ~~Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32(ii) Certification~~CASH ofFLOWS ~~the~~FROM ~~Chief~~FINANCING ~~Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~ACTIVITIES

* IncorporatedProceeds ~~by reference~~ from ~~previous~~notes ~~filings~~payable, ~~of the Company~~net

28-

37,000

280,660

Proceeds from notes payable - related parties

45,600

Repayments from notes payable - related party

(4,000)

(50,079)

Proceeds from sale of common stock, net of offering costs

569,540

NET CASH PROVIDED BY FINANCING ACTIVITIES

33,000

845,721

NET INCREASE/ (DECREASE) IN CASH AND CASH EQUIVALENTS

(57)

(560)

101

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

159

840

CASH AND CASH EQUIVALENTS, END OF PERIOD

101 $

280 $

101

Supplemental Disclosures:

Cash paid for income taxes

- $

Cash paid for interest

- $

Non-cash Disclosures:

Payments made by related party on behalf of the Company:

Increase in notes payable - related parties

- $

21,079

Decrease in accounts payable - related parties

- $

(11,079)

Increase in prepaid expenses

- $

(10,000)

To apply balance owed to a related party to accounts receivable:

Decrease in accounts receivable - related party

- $

40,000

Repayments of note payable - related party

- $

(40,000)

Stock issued for licensing agreement rights

- $

672,000

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

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 1 – BUSINESS

Sonnen Corporation was incorporated in the state of Nevada on November 16, 2006 as “Simple Tech,

Inc.” Sonnen Corporation and its wholly-owned subsidiary, Sonnen One, Inc., are referred to herein as the

“Company”. By June 2009, the Company had been unable to realize its original business objective. In July

2009, the Company entered into a licensing agreement to research, develop and market products that rely

upon a novel process for energy generation consisting of specific materials and proprietary material

combinations.

On November 3, 2009, the Company amended its articles of incorporation to change its name from “Simple

Tech, Inc.” to “Sonnen Corporation” and to decrease the number of its authorized common stock from one

billion five hundred million (1,500,000,000) shares (par value $0.0001) to two hundred fifty million

(250,000,000) shares (par value $0.0001) without affecting the number of issued and outstanding shares.

The Company’s subsidiary changed its name from “Sonnen Corporation” to “Sonnen One, Inc.”

On November 9, 2009, the Company formed a Scientific Advisory Board to support the Company with its

research, development, and commercialization efforts through advice, counsel, and direct participation

utilizing the industry expertise and professional and academic backgrounds of its Scientific Advisory Board

members pursuant to its current business plan.

On February 6, 2010, the licensor of the licensing agreement notified the Company of a purported breach of

contract terms, including a breach of confidentiality, insufficient funding for research and development

activities and failure to provide direct access to our patent attorneys. The license agreement allowed for a

ninety day period in which to cure purported breaches. The Company subsequently learned that the licensor

was not the rightful owner of the license and had no rights to grant the license to the Company.

Since the licensor failed to remedy the breach of the licensing agreement, the Company filed a legal

complaint on March 8, 2010 and impaired the entire $672,000 book value of the licensing agreement.

The Company has since been seeking to litigate an outcome of the dispute.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements have been

prepared in accordance with generally accepted accounting principles (GAAP) for interim financial

information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information

and footnotes required by GAAP for complete financial statements. In the opinion of management, all

adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the

Company’s financial position as of September 30, 2011, and the results of its operations and cash flows for

the three months ended September 30, 2011, have been made. Operating results for the three months ended

September 30, 2011 are not necessarily indicative of the results that may be expected for the year ended

June 30, 2012.

These consolidated financial statements should be read in conjunction with the financial statements and

notes for the year ended June 30, 2011, thereto contained in the Company’s Form 10-K.

Development Stage Enterprise

At September 30, 2011, the Company’s business operations had not fully developed and the Company is

highly dependent upon funding and therefore is considered a development stage enterprise.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Sonnen Corporation and

Sonnen One, Inc., its wholly-owned subsidiary. All material intercompany accounts and transactions

between the Companies for the periods presented have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the

United States of America requires management to make estimates and assumptions that affect the reported

amounts of assets, the disclosure of contingent assets and liabilities at the date of the financial statements

and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ

from those estimates and assumptions.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 3 – GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will

continue as a going concern. The Company has a cumulative net loss for the period from inception

(November 16, 2006) through September 30, 2011 of $3,830,764, a working capital deficit of $881,650 and

negative cash flows from development stage activities of $57. These conditions raise substantial doubt

about the Company's ability to continue as a going concern. The Company's continuation as a going concern

is dependent on its ability to meet its obligations, to obtain additional debt and/or equity financing as may

be required and ultimately to attain profitability. The consolidated financial statements do not include any

adjustments that might result from the outcome of this uncertainty.

NOTE 4 – PREPAID EXPENSES

Prepaid expenses comprise of the following at:

September 30,

2011

Haynes and Boone, LLP Prepayment retainer for legal fees

856

Total

856

June 30, 2011

Haynes and Boone, LLP Prepayment retainer for legal fees

1,099

Total

1,099

NOTE 5 – LICENSING AGREEMENT

The Company entered into a licensing agreement (the “Agreement”) with PT Group, Limited (“PT Group”),

an unrelated entity, on July 27, 2009, that grants the Company an exclusive, non-transferable license to use

PT Group’s intellectual property of a certain technology and licensed products to be used in achieving the

Company’s business objectives. The terms of the agreement would have continued until the expiry of

protections afforded for the intellectual property, provided that the Company was not in breach or default of

any of the terms or conditions contained in the Agreement. During the term of the licensing agreement, the

PT Group retained sole and beneficial propriety of the intellectual property including any improvements

made to any licensed products or future products, regardless of the source.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 5 – LICENSING AGREEMENT - CONTINUED

In exchange for use of the license, the PT Group was issued common shares equal to 5% of the issued and

outstanding common shares, 3,360,000 shares of the Company at a value of $0.20 per share on the

execution date, which was estimated to be $672,000. Additionally, upon the Company cumulatively raising

$50 million in equity financing, the Company guaranteed that PT Group would own no less than 2.5% of

the issued and outstanding shares of its common shares.

Breach of Contract Claim

On February 6, 2010, PT Group notified the Company of a purported breach of contract terms, including a

breach of confidentiality, insufficient funding for research and development activities and failure to provide

direct access to our patent attorneys. The license agreement allowed for a ninety day period in which to cure

purported breaches. During the quarter ended March 31, 2010, the Company learned that PT Group was not

the rightful owner of the license and had no rights to grant the license to the Company. Since PT Group has

not remedied the breach in accordance with the Agreement, the Company filed a legal complaint. (Note 11)

As a result of this discovery, the Company impaired the entire $672,000 book value of the license

agreement.

NOTE 6 – NOTES PAYABLE

On January 5, 2010, the Company received an advance on an interest bearing promissory note of $100,000

from an unrelated entity. The note is due and payable on January 11, 2011, and bears an interest rate of 8%

per annum. Interest of $2,044 for both periods ended September 30, 2011 and 2010 has been accrued and is

outstanding as of September 30, 2011. Subsequent to September 30, 2011, this note was extended to

December 12, 2014.

On August 29, 2009, the Company received an advance on an interest bearing promissory note of $10,000

from an unrelated third party. The note was due and payable on February 28, 2010, and bears an interest rate

of 1% per month. On November 17, 2009, we made a principal payment of $5,000. On March 1, 2010, the

Company executed a new note for $5,000 to the same unrelated third party. The new note is due and

payable on March 1, 2011, and bears an interest rate of 8% per annum. Interest of $102 for both periods

ended September 30, 2011 and 2010, respectively, has been accrued and is outstanding as of September 30,

2011. Subsequent to September 30, 2011, this note was extended to January 3, 2015.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 6 – NOTES PAYABLE - CONTINUED

On June 10, 2010, the Company received an advance on an interest bearing promissory note of $5,983 for a

payment made on behalf of the Company from an unrelated entity. The note is due and payable on June 10,

2011, and bears an interest rate of 8% per annum. Interest of $122 for both periods ended September 30,

2011 and 2010, respectively, has been accrued and is outstanding as of September 30, 2011. On June 18,

2010, the Company received another advance on an interest bearing promissory note of $10,000 in cash

from the same unrelated entity. The note is due and payable on June 18, 2011, and bears an interest rate of

8% per annum. Interest of $204 for both periods ended September 30, 2011 and 2010, respectively, has been

accrued and is outstanding as of September 30, 2011. On June 30, 2010, the Company received an advance

on an interest bearing promissory note of $5,300 for a payment made on behalf of the Company from the

same unrelated entity. The note is due and payable on June 30, 2011, and bears an interest rate of 8% per

annum. Interest of $108 for both periods ended September 30, 2011 and 2010, respectively, has been

accrued and is outstanding as of September 30, 2011. Subsequent to September 30, 2011, each of these

notes was extended to January 3, 2015.

On September 20, 2010, the Company received an advance on an interest bearing promissory note of

$25,000 from an unrelated entity. The note is due and payable on September 20, 2011, and bears an interest

rate of 8% per annum. Interest of $511 and $56 for the periods ended September 30, 2011 and 2010,

respectively, has been accrued and is outstanding, as of September 30, 2011. Subsequent to September 30,

2011, this note was extended to January 3, 2015.

NOTE 7 – LOANS FROM SHAREHOLDERS

On February 17, 2010, the Company received an advance on an interest bearing promissory note of $93,660

in cash and a payment made on behalf of the Company of $5,000 for a total of $98,660 from an

unrelated shareholder. The note is due and payable on February 17, 2011, and bears an interest rate of 8%

per annum. Interest of $2,017 for both periods ended September 30, 2011 and 2010, respectively, has been

accrued and is outstanding as of September 30, 2011. On May 6, 2010, the Company received another

advance on an interest bearing promissory note of $35,000 in cash and a payment made on behalf of the

Company of $5,000 for a total of $40,000 from the same shareholder. The note is due and payable on May

6, 2011, and bears an interest rate of 8% per annum. Interest of $818 for both periods ended September 30,

2011 and 2010, respectively, has been accrued and is outstanding as of September 30, 2011. On July 8,

2010, the Company received another advance on an interest bearing promissory note of $12,000 from the

same shareholder. The note is due and payable on July 8, 2011, and bears an interest rate of 8% per annum.

Interest of $245 and $224 for the periods ended September 30, 2011 has been accrued and is outstanding.

Subsequent to September 30, 2011, each of these notes was extended to January 3, 2015.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 8 – STOCKHOLDERS' EQUITY

Common Shares – Authorized

The Company has 250,000,000 common shares authorized at a par value of $0.0001 per share and

50,000,000 shares of preferred stock, par value $0.0001 per share. All common stock shares have equal

voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and,

therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all the

directors of the Company. As of September 30, 2011, there are no classes of preferred stock designated

and none are outstanding. As of September 30, 2011 and 2010, there are 67,893,000 shares issued and

outstanding, respectively.

Common Stock Issuances and Warrants Granted

For the three months ended September 30, 2011 there were no share issuances.

NOTE 9 – STOCK – BASED COMPENSATION

On August 31, 2009, the Company adopted the Company’s 2009, Stock Option Plan (the “Plan”) in an

effort to promote the interests of the Company by providing eligible persons and companies with the

opportunity to acquire or increase a proprietary interest in the Company through the grant of up to five

million (5,000,000) non-statutory stock options (the “Options”) as an incentive for the eligible persons to

continue their employment or service.

On August 31, 2009, the Company 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 pursuant to the Plan. This block of

Options vest over a three year period through August 31, 2013, in equal increments of one-third of

potentially exercisable Options each year or in full if involuntarily terminated. During the three months

ended September 30, 2011 and 2010, the Company recognized option expense of $100,750 and $150,030,

respectively, in connection with the above options.

During the three months ended September 30, 2011, there have been no additional grants of stock options

under the plan.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 9 – STOCK – BASED COMPENSATION - CONTINUED

A summary of the Options granted to employees and others under the Plan and changes since inception of

the Plan is presented below:

Weighted

Average

Number of

Exercise

Aggregate

Options

Price

Intrinsic Value

Balance at July 1, 2010

2,000,000 $

1.03 $

2,038,908

Options Granted

Options Exercised

Options Forfeited or Expired

(50,000) $

1.25

(62,844)

Balance at June 30, 2011

1,950,000 $

1.01 $

1,976,064

Exercisable at June 30, 2011

1,149,960 $

1.01 $

1,170,027

Weighted average fair value of Options

granted through June 30, 2011

1.01

Weighted

Average

Number of

Exercise

Aggregate

Options

Price

Intrinsic Value

Balance at July 1, 2011

1,950,000 $

1.01 $

1,976,064

Options Granted

Options Exercised

Options Forfeited or Expired

Balance at September 30, 2011

1,950,000 $

1.01 $

1,976,064

Exercisable at September 30, 2011

1,549,920 $

1.01 $

1,572,985

Weighted average fair value of Options

granted through September 30, 2011

1.01

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 9 – STOCK – BASED COMPENSATION - CONTINUED

The following table summarizes information about stock Options under the Plan that were outstanding at

September 30, 2011:

Outstanding Options

Weighted

Average

Number

Remaining

Weighted

Outstanding

Contractual

Average

Exercise

at June 30,

Life in

Exercise

Intrinsic

Price

2011

Years

Price

Value

1.00

1,800,000

8.00 $

1.00 $ 1,813,493

1.25

150,000

8.15 $

1.25 $

162,572

1,950,000

8.07 $

1.01 $ 1,976,064

Options Exercisable

Number

Weighted

Exercisable

Average

Aggregate

Exercise

at June 30,

Exercise

Intrinsic

Price

2011

Price

Value

1.00

1,399,920 $

1.00 $ 1,410,413

1.25

150,000 $

1.25 $

162,572

1,549,920 $

1.01 $ 1,572,985

During the three months ended September 30, 2011 and 2010, the Company recorded $100,750 and

$150,030, respectively, in stock-based compensation which is included in salaries, payroll taxes, and

expenses on the statements of operations.

At September 30, 2011 there was $369,489 of total unrecognized compensation cost related to stock options

granted under the Plan. That cost is expected to be recognized pro-rata according to the vesting schedules

through August 1, 2012.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 10 – RELATED PARTY TRANSACTIONS

Notes payable – related parties

On April 29, 2010, the Company received an advance on a non-interest bearing promissory note of $8,500

from a related entity. The note is due and payable on demand. On July 15, 2010, the Company repaid

$4,000 of the balance of this note. The remaining balance of $4,500 is outstanding as of September 30, 2011

for which the Company has not yet received a demand.

On May 2, 2011, the Company received an advance on an interest bearing promissory note of $7,100 from a

related entity. The note is due and payable on June 2, 2012, and bears an interest rate of 8% per annum.

Interest of $145 for the three months ended September 30, 2011 has been accrued and is outstanding .

Subsequent to September 30, 2011, this note was extended to January 3, 2015.

Consulting Agreements

On October 1, 2009, the Company entered into a consulting agreement with Prosper Financial, Inc., a

company owned by the spouse of the Company’s President and Chief Executive Officer and 37% owner of

the Company. The agreement calls for monthly payments of $2,500 for consulting services rendered and

$1,200 per month in rental payments for the use of Prosper Financial, Inc.’s office space. The agreement

extends through October 31, 2010, and was extended after that on a month to month basis for the consulting

services. As of September 30, 2011 and June 30, 2011, this related party had a balance due of $33,564 and

$26,064, respectively, and is reflected in accounts payable – related parties.

On August 1, 2009, the Company entered into a consulting agreement with a director and officer that calls

for monthly compensation of $7,500 and extended through December 31, 2009, after which became a

month to month basis. As of September 30, 2011 and June 30, 2011, this related party had a balance due of

$124,875 and $101,706, respectively, which is reflected in accounts payable – related parties.

On July 1, 2009, the Company entered into a consulting agreement with a shareholder, director and officer

of the Company that calls for an annual base fee of $96,000 and extends through June 30, 2010, after which

was continued on a month to month basis. As of September 30, 2011, this related party had a total balance

due of $174,969, comprised of $161,350 due for consulting fees, and $13,619 for business expenses, all of

which is reflected in accounts payable – related parties. As of June 30, 2011, this related party had a total

balance due of $150,969, comprised of $137,350 due for consulting fees, and $13,619 for business

expenses, all of which is reflected in accounts payable – related parties.

On October 1, 2009, the Company entered into a consulting agreement with its head of research that calls

for monthly compensation of $6,000 and extends through December 31, 2009, this contract was not

renewed or extended. As of September 30, 2011 and June 30, 2011, this related party had a balance due of

$1,840, which is reflected in accounts payable – related parties.

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 10 – RELATED PARTY TRANSACTIONS - CONTINUED

On October 1, 2009, the Company entered into an agreement with a consultant to provide bookkeeping

services, the monthly compensation is $5,000 and extended through October 1, 2010, in addition, the

consultant shall be entitled to 100,000 incentive stock options upon signing, and extended through October

1, 2010. On April 1, 2010, we entered into a new agreement with the same consultant, the monthly

compensation was amended to be $2,500 per month, all other terms remained the same, and extended

through April 1, 2011, this contract was not renewed or extended. As of September 30, 2011 and June 30,

2011, this related party had a balance due of $32,500 and $25,000, respectively, which is reflected in

accounts payable – related parties.

On December 1, 2009, the Company entered into a consulting agreement with the son of our chief executive

officer to provide business consulting services that calls for monthly compensation of $2,000 and extends

through November 30, 2010, this contract was not renewed or extended. As of September 30, 2011 and June

30, 2011, this related party had a balance due of $9,000, which is reflected in accounts payable – related

parties.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Contingencies

On February 6, 2010, PT Group notified the Company of a purported breach of contract terms including a

breach of confidentiality, insufficient funding for research and development activities and failure to provide

direct access to our patent attorneys. The licensing agreement allows for a ninety day period in which to

cure purported breaches. The Company’s management and board of directors have reason to believe that PT

Group may not be the rightful owner of the intellectual property licensed under the licensing agreement.

(Note 5)

On March 8, 2010, the Company 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) damages for fraud that stem from

reliance on PT Group's claim of ownership over certain proprietary information, (ii) the return of Company

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. The Company has been unable to serve PT Group to date.

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

SONNEN CORPORATION AND SUBSIDIARY

(Formerly known as Simple Tech Inc and Subsidiary)

(A DEVELOPMENT STAGE ENTERPRISE)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

September 30, 2011

NOTE 12– SUBSEQUENT EVENTS

In accordance with Accounting Standards Codification (ASC) topic 855-10 “Subsequent Events”, the

Company has evaluated subsequent events through the date which the financial statements were available to

be issued. The Company has determined that there were no such events that warrant disclosure or

recognition in the financial statements, other than these below:

Note payables extensions

Subsequent to September 30, 2011, all of the Company’s notes payable’s due dates were extended as

discussed above in Notes 6 and 7.

Stock options

On December 31, 2012, all outstanding vested options had expired in accordance with the terms of their

respective stock option agreements or rescinded by mutual agreement between the Company and the

respective holders.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

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

parts of this quarterly 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

consolidated financial statements and related notes included in this report. Information presented herein is

based on the three month period ended September 30, 2011. Our fiscal year-end is June 30.

Discussion and Analysis of the Company’s Plan of Operation

Our plan of operation over the next twelve months is to prosecute the Company’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, the Company 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.

The Company’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, the Company 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 the Company 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, the Company 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 three months ended September 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 the

Company’s shareholders.

Net Losses

For the period from inception (November 16, 2006) until September 30, 2011, the Company incurred net

losses of $3,830,764. Net losses for the three months ended September 30, 2011 were $173,771 as

compared to net losses of $214,070 for the three months ended September 30, 2010. The decrease in net

losses over the comparative three month periods can be primarily attributed to a decrease in general and

administrative expenses in the three months ended September 30, 2011.

We expect to continue to realize net losses as operating costs accrue and management considers

alternative technologies to succeed that technology subject to litigation.

General and Administrative Expenses

For the period from inception until September 30, 2011, the Company incurred general and administrative

expenses of $3,168,305. General and administrative expenses for the three months ended September 30,

2011 were $166,994 as compared to $208,361 for the three months ended September 30, 2010. The

decrease in general and administrative expenses over the comparative periods can be primarily attributed

to a decrease in compensation to $100,750 from $150,030 for the three months ended September 30,

2011, offset by an increase in professional fees to $54,000 from $46,000 in the three months ended

September 30, 2010.

We expect that our general and administrative expenses will continue to decrease as the Company’s

operations slow in response to ongoing litigation with PT Group and the suspension of our research and

development operations.

Income Tax Expense (Benefit)

The Company has 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

The Company has not spent significant amounts of capital for the period from November 16, 2006

(inception) to September 30, 2011.

Liquidity and Capital Resources

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

in liquidity, capital resources, and stockholders’ equity.

The Company had current assets of $957 consisting of cash and prepaid expenses, and total assets of $957

as of September 30, 2011.

The Company had current and total liabilities of $882,607, 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 September 30, 2011.

The Company had a stockholders’ deficit of $881,650 and a working capital deficit of $881,650 at

September 30, 2011.

For the period from inception until September 30, 2011, the Company’s net cash used in development

stage activities was $843,776. Net cash used in development stage activities for the three month period

ending September 30, 2011 was $57 as compared to $33,560 provided by development stage activities for

the three months ended September 30, 2010. Net cash used in development stage activities in the current

three month period can be attributed primarily to stock option expense which is a book expense item

which does not affect the total amount relative to actual cash used. Actual cash items used in the current

three 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 September 30, 2011, the Company’s net cash used in investing

activities was $1,853. Net cash used in investing activities for the three months ended September 30, 2011

and September 30, 2010, was zero. We expect to generate negative cash flow in investing activities on

resuming operations in technology development.

For the period from inception until September 30, 2011, the Company’s net cash provided by financing

activities was $845,721. Net cash provided by financing activities for the three months ended September

30, 2011 was zero as compared to $33,000 for the three months ended September 30, 2010. Net cash flow

provided by financing activities in the prior period is attributable to proceeds from notes payable, offset

by repayments on notes payable to a related party. We expect to generate positive cash flow from

financing activities as the Company 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 the Company will require additional debt or equity financing. We had no

commitments or arrangements for financing at September 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.

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

The Company has a defined stock option plan and contractual commitments with all of its officers and

directors.

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

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

Off Balance Sheet Arrangements

As of September 30, 2011, the Company 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 is material to stockholders.

Going Concern

The Company’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 the Company’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 the

Company 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 may not be

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 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 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 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 than as required by law.

Stock-Based Compensation

We have adopted Accounting Standards Codification, ASC 718, formerly SFAS No. 123R, Share-Based

Payments, which addresses the accounting for stock-based payment transactions in which an enterprise

receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that

are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of

such equity instruments.

We account for equity instruments issued in exchange for the receipt of goods or services from other than

employees in accordance with ASC 505. Costs are measured at the estimated fair market value of the

consideration received or the estimated fair value of the equity instruments issued, whichever is more

reliably measurable based on the Black-Scholes model. The value of equity instruments issued for

consideration other than employee services is determined on the earliest of a performance commitment or

completion of performance by the provider of goods or services.

Recent Accounting Pronouncements

In May 2011, the FASB issued ASU No. 2011-04 which relates to fair value measurement (FASB ASC

Topic 820), which amends current guidance to achieve common fair value measurement and disclosure

requirements in U.S. GAAP and International Financial Reporting Standards. The amendments generally

represent clarification of FASB ASC Topic 820, but also include instances where a particular principle or

requirement for measuring fair value or disclosing information about fair value measurements has

changed. The guidance also expands the disclosures for fair value measurements that are estimated using

significant unobservable (Level 3) inputs. This guidance is effective during interim and annual periods

beginning after December 15, 2011 and is to be applied prospectively. The adoption of this standard will

not materially impact the Company's financial statement statements.

In June 2011, the FASB issued Accounting Standards Update No. 2011-5, Presentation of Comprehensive

Income. This standard requires presentation of the items of net income and other comprehensive income

in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but

consecutive, statements of net income and other comprehensive income. The new requirements are

effective for fiscal years beginning after December 15, 2011. Early adoption is permitted and full

retrospective application is required. The Company does not expect a significant impact on the

Company's financial positions as a result of adoption of these new requirements.

Critical Accounting Policies

In the notes to the audited consolidated financial statements the Company for the years ended June 30,

2011 and 2010, included in the Company’s Form 10-K filed with the Securities and Exchange

Commission, the Company discussed those accounting policies that are considered to be significant in

determining the results of operations and financial position. The Company’s management believes that

their accounting principles conform to accounting principles generally accepted in the United States of

America.

The preparation of financial statements requires management to make significant estimates and judgments

that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these

judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our

estimates, including those related to bad debts, inventories, intangible assets, warranty obligations,

product liability, revenue, and income taxes. We base our estimates on historical experience and other

facts and circumstances that are believed to be reasonable, and the results form the basis for making

judgments about the carrying value of assets and liabilities. The actual results may differ from these

estimates under different assumptions or conditions.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by

management, with the participation of the chief executive officer and the chief financial officer, of the

effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and

15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)). Disclosure controls and

procedures are designed to ensure that information required to be disclosed in reports filed or submitted

under the Exchange Act is recorded, processed, summarized, and reported within the time periods

specified in the Commission’s rules and forms and that such information is accumulated and

communicated to management, including the chief executive officer and the chief financial officer, to

allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded, as of the end of the period covered by

this report, that the Company’s disclosure controls and procedures were not effective in recording,

processing, summarizing, and reporting information required to be disclosed, within the time periods

specified in the Commission’s rules and forms, and that such information was not accumulated and

communicated to management, including the chief executive officer and the chief financial officer, to

allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of

the Exchange Act) during the three months ended September 30, 2011, that materially affected, or are

reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

On March 8, 2010, the Company 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 the

Company’s 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. The Company has been unable to

serve PT Group to date. Should the relief sought be adjudicated, the Company expects to succeed on the

merits of its claims.

ITEM 1A.

RISK FACTORS.

Not required of smaller reporting companies.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3.

DEFAULTS ON SENIOR SECURITIES.

None.

ITEM 4.

(REMOVED AND RESERVED)

Removed and reserved.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page

26 of this Form 10-Q, and are incorporated herein by this reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this

report to be signed on its behalf by the undersigned, thereunto duly authorized.

Sonnen Corporation

Registrant

April 8, 2013

/s/ Robert Miller

Date

Robert Miller

Chief Executive Officer and Director

April 8, 2013

/s/ Costas Takkas

Date

Costas Takkas

Chief Financial Officer, Principal Accounting Officer and Director

INDEX TO EXHIBITS

Exhibit

Description

3.1.1*

Articles of Incorporation, incorporated by reference to the Company’s Form SB-2 filed with the

Commission on August 6, 2007.

3.1.2*

Amendment to the Articles of Incorporation, incorporated by reference to the Company’s

Definitive 14C filed with the Commission on October 14, 2009.

3.2*

Bylaws, incorporated by reference to the Company’s Form SB-2 filed with the Commission on

August 6, 2007.

10.1*

Licensing Agreement between the Company, the Company’s wholly owned subsidiary, and P.T.

Group, Ltd., dated July 27, 2009, incorporated by reference to the Company’s Form 10-K filed

with the Commission on August 3, 2009.

10.2*

Consulting Agreement between the Company and Costas Takkas, dated July 27, 2009,

incorporated by reference to the Company’s Form 10-K filed with the Commission on August 3,

2009.

10.3*

Employment Agreement between the Company and Paul Leonard dated July 27, 2009,

incorporated by reference to the Company’s Form 10-K filed with the Commission on August 3,

2009.

10.4*

Employment Agreement between the Company and David Greenbaum dated August 1, 2009,

incorporated by reference to the Company’s Form 10-Q filed with the Commission on November

23, 2009.

10.5*

Consulting Agreement between the Company and Carol Laws dated August 1, 2009, incorporated

by reference to the Company’s Form 10-Q filed with the Commission on November 23, 2009.

10.6*

Consulting Agreement between the Company and Backend Technologies, LLC dated August 5,

2009, incorporated by reference to the Company’s Form 10-Q filed with the Commission on

November 23, 2009.

10.7*

Employment Agreement between the Company and Robert H. Miller dated January 1, 2010,

incorporated by reference to the Company’ Form 10-Q filed with the Commission on November

23, 2010.

21*

Subsidiaries of the Company, incorporated by reference to the Company’s Form 10-K filed with

the Commission on August 3, 2009.

31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14 of the Exchange Act as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).

31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14 of the Exchange Act as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).

32.1

Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

32.2

Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (attached).

101. INS

XBRL Instance Document^†

101. PRE

XBRL Taxonomy Extension Presentation Linkbase^†

101. LAB

XBRL Taxonomy Extension Label Linkbase^†

101. DEF

XBRL Taxonomy Extension Label Linkbase^†

101. CAL

XBRL Taxonomy Extension Label Linkbase^†

101. SCH

XBRL Taxonomy Extension Schema^†

Incorporated by reference to previous filings of Allied.

^†

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and

not “filed” or part of a registration statement or prospectus for purposes of Section 11 or 12 of the

Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the

Securities and Exchange Act of 1934, and otherwise is not subject to liability under these

sections.

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