Form 10-12G SOLAR INTEGRATED ROOFING

As used in this registration statement, unless the context otherwise requires, the terms the “Company,” “Registrant,” “we,” “us,” “our,” or “SIRC” refer to Solar Integrated Roofing Corp., a Nevada corporation.

FORWARD-LOOKING STATEMENTS

Except for statements of historical fact, some information in this document contains “forward-looking statements” that involve substantial risks and uncertainties. You can identify these forward-looking statements by words such as “may,” “will,” “should,” “anticipate,” “estimate,” “plans,” “potential,” “projects,” “continuing,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend” or the negative of these words or other variations on these words or comparable terminology. The statements that contain these or similar words should be read carefully because these statements discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other forward-looking information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able accurately to predict or control. Further, we urge you to be cautious of the forward-looking statements which are contained in this registration statement because they involve risks, uncertainties and other factors affecting our operations, market growth, service, products and licenses. The factors listed in the sections captioned “Risk Factors” and “Description of Business,” as well as other cautionary language in this registration statement and events in the future may cause our actual results and achievements, whether expressed or implied, to differ materially from the expectations we describe in our forward-looking statements. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all of those risks, nor can we assess the impact of all of those risks on our business or the extent to which any factor may cause actual results to differ materially from those contained in any forward-looking statement. The forward-looking statements in this registration statement are based on assumptions management believes are reasonable. However, due to the uncertainties associated with forward-looking statements, you should not place undue reliance on any forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and unless required by law, we expressly disclaim any obligation or undertaking to publicly update any of them in light of new information, future events, or otherwise. The occurrence of any of the events described as risk factors or other future events could have a material adverse effect on our business, results of operations and financial position. Since our common stock is considered a “penny stock,” we are ineligible to rely on the safe harbor for forward-looking statements provided in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

WHERE YOU CAN FIND MORE INFORMATION ABOUT US

When this registration statement becomes effective, we will begin to file reports, proxy statements, information statements and other information with the United States Securities and Exchange Commission (the “SEC”). You may read and copy this information, for a copying fee, at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information on its Public Reference Room. Our SEC filings will also be available to the public from commercial document retrieval services, and at the Web site maintained by the SEC at http://www.sec.gov.

When this registration statement is effective, we will make available, through a link to the SEC’s Web site, electronic copies of the materials we file with the SEC (including our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, the Section 16 reports filed by our executive officers, directors and 10% stockholders and amendments to those reports). To receive paper copies of our SEC filings, please contact us by mail addressed to Investor Relations, Solar Integrated Roofing Corp., 1475 N. Cuyamaca St., El Cajon, CA 92020.

Item 1.Business. 

Summary

Solar Integrated Roofing Corp. is an integrated, single-source solar power, HVAC and roofing systems installation company providing services to both commercial and residential facilities and properties.

Our Corporate History and Background

Solar Integrated Roofing Corp. was incorporated in Nevada on May 1, 2007 under the name of Sterling Oil & Gas Company and originally operated as an oil and gas exploration company.

On February 21, 2014, the Company changed its name to Landstar Development Group in conjunction with a shift in operations towards managing and developing the Company’s real property interests.  

On November 9, 2015, and in conjunction with the anticipated acquisition of a wholly owned subsidiary, Secure Roofing and Solar, Inc., which was finalized in February 2016, the board of directors approved a corporate name change to Solar Integrated Roofing Corp. The Company has operated in the solar and roofing sales and installation industry since that time.

On August 19, 2019, the Company entered into an Interest Purchase Agreement whereby it acquired Narrate, LLC, a newly established company

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organized to provide telemarketing services (“Narrate”) as a wholly owned subsidiary. The Company intended to use Narrate’s telemarketing platform to increase and expand its sales efforts. However, due to unanticipated expenses required to maintain Narrate’s operations, the Company declined to further develop and fund Narrate’s operations. Narrate remains a subsidiary of the Company but is not currently operating.

On October 7, 2019, the Company entered into a Stock Purchase Agreement (as amended, the “McKay Agreement”) whereby it acquired McKay Roofing Company, Inc., a California based roofing company, as a wholly owned subsidiary. Pursuant to the McKay Agreement, the Company paid $1,000,000.00 consideration to the sellers.

On January 17, 2020, the Company acquired Milholland Electric, Inc., a California based solar and roofing company, as a wholly owned subsidiary in exchange for $1,200,000.00, 3,500,000 shares of Series B Preferred Stock, and a Put Option allowing the holder to put 15,000,000 shares of Common Stock (not to exceed 1,000,000 shares per month) back to the Company at a price of $0.10 per share during the two-year period immediately following Closing. As of the date of this filing, the holder has not exercised any put options.

On March 1, 2020, the Company entered into an Asset Purchase Agreement (as amended, the “Montrose Agreement”) whereby it acquired Montrose Companies, Inc., a California based roofing company, as a wholly owned subsidiary in exchange for $250,000.00 cash and 6,250,000 shares of Common Stock valued at $250,000.00.

Business Overview

Solar Integrated Roofing Corp. is striving to become the top provider of integrated, single-source solar power, HVAC and roofing systems and green energy throughout the USA. The Company’s current operations take place primarily in the State of California but our goal is to expand nationally. In addition to growth resulting from increased sales efforts, the Company is expanding its reach and increasing its growth potential by acquiring other established roofing and solar companies. We believe our continued execution of the Company’s business plan will result in our Company being recognized as a national leader in the solar and roofing industries.

In addition to our existing product line of affordable, high-quality integrated solar, roofing, and HVAC systems, the Company recently opened a division offering commercial and residential charging stations for electric vehicles. The Company has identified and is pursuing acquisition targets that will further facilitate expansion into this industry. This additional product offering brings us one step closer to fulfilling our mission of becoming the sole provider of our customers’ green energy needs.  

Since the first quarter of 2020, there has been a worldwide impact from the COVID-19 pandemic. Government regulations and shifting social behaviors have limited or closed non-essential transportation, government functions, business activities and person-to-person interactions. In some cases, the relaxation of such trends has recently been followed by actual or contemplated returns to stringent restrictions on gathers or commerce, including in parts of the U.S.

Global macroeconomic conditions and changes to levels of consumer outlook and spend in the future may further adversely impact the energy product and roofing industries. Sustaining our production trajectory will require the readiness and solvency of our suppliers and partners, a stable and motivated workforce, and ongoing government cooperation.

We cannot predict the duration or direction of current global trends, the sustained impact of which is largely unknown, is rapidly evolving, and has varied across geographic regions. Ultimately, we continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate, and we will have to accurately project demand and infrastructure requirements within our U.S. market and deploy our resources accordingly. If current domestic and global market conditions continue or worsen, or if we cannot or do not maintain operations at a scope that is commensurate with such conditions or are later required to or choose to suspend such operations, our business, prospects, financial condition, and operating results may be harmed.

If we are subject to Securities and Exchange Commission regulations relating to low-priced stocks, the market for our common stock could be adversely affected.

The SEC has adopted regulations concerning low-priced or “penny” stocks. The regulations generally define “penny stock” to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. If our shares are offered at a market price less than $5.00 per share, and do not qualify for any exemption from the penny stock regulations, our shares may become subject to these additional regulations relating to low-price stocks.  

The penny stock regulations require that broker-dealer who recommend penny stocks to persons other than institutional accredited investors make a special suitability determination for the purchase, receive the purchaser’s written agreement to the transaction prior to the sale and provide the purchaser with risk disclosure documents that identify risks associated with investing in penny stocks. Furthermore, the broker-dealer must obtain a signed and dated acknowledgment form the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before effecting a transaction in penny stock. These requirements have historically resulted in reducing the level of trading activity in securities that become subject to the penny stock rules.  

The additional burdens imposed upon broker-dealers by these penny stock requirements may discourage broker-dealers from effecting transactions in the common stock, which could severely limit the market liquidity of our common stock and our shareholders’ ability to sell our common stock in the secondary market.   

Going Concern

We had an accumulated deficit of $11,333,148 at November 30, 2020, had a net loss of $1,106,917 and net cash used in operating activities of $1,120,648 for the nine months ended November 30, 2020. Our ability to continue as a going concern is dependent upon our ability to repay or settle our current indebtedness, generate positive cash flow from an operating company, and/or raise capital through equity and debt financing or other means on desirable terms. If we are unable to obtain additional funds when they are required or if the funds cannot be obtained on favorable terms, we may be required to restructure the company or cease operations.  

If Photovoltaic (PV) technology is not suitable for widespread adoption at economically attractive rates of return, or if sufficient additional demand for solar modules does not develop or takes longer to develop than we anticipate, our net sales and profit may flatten or decline and we may be unable to reach or sustain profitability.

The solar energy market is at a relatively early stage of development, in comparison to fossil fuel-based electricity generation. If PV technology proves unsuitable for widespread adoption at economically attractive rates of return or if additional demand for solar modules and systems fails to develop or takes longer to develop than we anticipate, we may be unable to grow our business or generate sufficient net sales to sustain profitability. In addition, demand for solar modules and systems in our targeted markets may develop to a lesser extent than we anticipate. Many factors may affect the viability of widespread adoption of PV technology and demand for solar modules and systems, including the following:  

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·Cost-effectiveness of the electricity generated by PV power systems compared to conventional energy sources, such as natural gas and coal (which fuel sources may be subject to significant price swings from time to time), and other non-solar renewable energy sources, such as wind geothermal, and hydroelectric; 

·Changes in tax, trade remedies, and other public policy, as well as changes in economic, market, and other conditions that affect the price of, and demand for, conventional energy resources, non-solar renewable energy resources (e.g., wind and hydroelectric), and energy efficiency programs and products, including increases or decreases in the prices of natural gas, coal, oil, and other fossil fuels and in the prices of competing renewable resources;   

·Performance, reliability and availability of energy generated by PV systems compared to conventional and other non-solar renewable energy sources and products;  

·Fluctuations in capital expenditures by end-users of solar modules and systems which tend to decrease when the economy slows and when interest rates increase; and  

·Availability, substance, and magnitude of support programs including government targets, subsidies, incentives, and renewable portfolio standards to accelerate the development of the solar energy industry.  

Reduced growth in or the reduction, elimination, or expiration of government subsidies, economic incentives, renewable energy targets and other support for on-gird solar electricity applications, or increase in protectionist or other adverse public policies, could reduce demand and/or price levels for our solar modules, and limit our growth or lead to a reduction in our net sales, and adversely impact our operating results.

Although we believe that solar PV will experience widespread adoption in those applications where it competes economically with traditional forms of energy without any support programs, our net sales and profits nonetheless remain subject to variability based on the availability and size of government subsidies and economic incentives. Federal, state, and local governmental bodies in the jurisdictions we currently operate in and expect to in the future have provided subsidies in the form of rebates, tax incentives, and other incentives to end-users, distributors, systems integrators, and manufacturers of PV products. Many of these support programs expire, phase out over time, require renewal by the applicable authority, or may be amended. To the extent these support programs are reduced earlier than previously expected or are changed retroactively, such changes could negatively impact demand and/or price levels for our solar modules and systems design and installation services, lead to a reduction in our net sales, and adversely impact our operating results.  

Demand for our products and services may be impacted by the status of government and economic incentives supporting the development and adoption of such products.

There are many rebates, tax credits, and other financial incentives which are offered by federal, state and local government and regulatory bodies to owners, end user, distributors, system integrators, and manufacturers of solar energy systems. The Company relies on these programs to finance solar energy system installations, which enables the Company to lower the price charged to customers for energy from, and to lease or purchase, solar energy systems, helping to achieve acceptance of solar energy with those customers as an alternative to utility-provided power. However, these programs may expire, be reduced, or terminated on a certain date. These reductions or terminations often occur without warning. The value of these incentives could also decrease over time. If the Company overestimates the future value of these programs, it could adversely impact its financial results.

An increase in interest rates or tightening of the supply of capital in the global financial markets (including a reduction in total tax equity availability) could make it difficult for customers to finance the cost of a PV solar power system and could reduce the demand for our system design and installation services and/or lead to a reduction in the average selling price for such offerings.

Many of our customers depend on debt and/or equity financing to fund the initial capital expenditure required to purchase or install a PV solar power system. As a result, an increase in interest rates, or a reduction in the supply of project debt financing or tax equity investments, could reduce the number of solar projects that receive financing or otherwise make it difficult for our customers to secure the financing necessary to purchase or install a PV solar power system on favorable terms, or at all, and thus lower demand for our solar system design and installation service, which could limit our growth or reduce our net sales. 

Other Risks

We may not realize the anticipated benefits of past or future acquisitions, and integration of these acquisitions may disrupt our business and management.

We have made several acquisitions in the last several years, and in the future, we may acquire additional companies, project pipelines, products, or technologies or enter into join ventures or other strategic initiatives. We may not realize the anticipated benefits of an acquisition and each acquisition has numerous risks. These risks include the following:  

·difficulty in assimilating the operations and personnel of the acquired company;  

·difficulty in effectively integrating the acquired technologies or products with our current products and technologies;  

·difficulty in achieving profitable commercial scale from acquired technologies;  

·difficulty in maintaining controls, procedures, and policies during the transition and integration;  

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·disruption of our ongoing business and distraction of our management and associates from other opportunities and challenges due to integration issues;  

·difficulty integrating the acquired company’s accounting, management information, and other administrative systems;  

·inability to retain key technical and managerial personnel of the acquired business.  

Risks Related to the Ownership of Our Common Stock

The trading price of our common stock is likely to continue to be volatile.

The trading price of our common stock has been highly volatile and could continue to be subject to wide fluctuations in response to various factors, some of which are beyond our control. The stock market in general has, and likely will continue to experience substantial price and volume fluctuations that are often unrelated or disproportionate to the operating performances of companies. Our common stock may be traded by short sellers which may put pressure on the supply and demand for our company stock, further influencing volatility in its market price. Public perception and other factors outside of our control may additionally impact our stock price and volatility. The market price of our common stock will likely fluctuate significantly in response to the following or other factors, again some of which are beyond are control:  

·Significant delays in our supply channel;  

·Inability to raise additional capital or do so on favorable terms, if necessary, to maintain or grow our operations;  

·Additions or departures of key personnel;  

·Future sales of our common stock; 

·Stock market price and volume fluctuations attributable to inconsistent trading volume levels of our stock;  

·Commencement of or involvement in litigation; and  

·Our inability to effectively manage our current and future operations.  

Our largest stockholders have significant control over us and its interests may conflict with or differ from interests of other stockholders.

Our largest stockholders, consisting of Brian Milholland and David Massey (collectively, the “Significant Stockholder”) own 100% of our outstanding Preferred Class Series A and Series B stock. As a result, the Significant Stockholder has substantial influence over all matters requiring stockholder approval, including the election of our directors and the approval of significant corporate transactions such as mergers, tender offers, and the sale of all or substantially all of our assets. The interests of the Significant Stockholder could conflict with or differ from interests of other stockholders. For example, the concentration of ownership held by the Significant Stockholder could delay, defer or prevent a change of control of our company or impede a merger, takeover, or other business combination which a majority of stockholders may view favorably. 

We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline.

We may provide from time-to-time guidance regarding our expected financial and business performance. Correctly identifying key factors affecting business conditions and predicting future events is inherently an uncertain process, and our guidance may not ultimately be accurate. Our guidance is based on certain assumptions such as those relating to sales volumes (which generally are not linear throughout a given period), average sales prices, supplier and commodity costs, and planned cost reductions. If our guidance varies from actual results due to our assumptions not being met or the impact on our financial performance that could occur as a result of various risks and uncertainties, the market value of our common stock could decline significantly.  

Transactions relating to our convertible notes may dilute the ownership interest of existing stockholders, or may otherwise depress the price of our common stock.

The conversion of some or all of the convertible notes issued by us or our subsidiaries would dilute the ownership interests of existing stockholders to the extent we deliver shares upon conversion of any of such notes by their holders, and we may be required to deliver a significant number of shares. Any sales in the public market of the common stock issuable upon such conversion could adversely affect their prevailing market prices. In addition, the existence of the convertible senior notes may encourage short selling by market participants because the conversion of such notes could be used to satisfy short positions, or the anticipated conversion of such notes into shares of our common stock could depress the price of our common stock.  

We do not anticipate paying any dividends on our common stock.

We do not anticipate paying any dividends on our common stock for the foreseeable future. Rather, we intend to retain any future earnings for use in the operation and expansion of our business.  

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General Risk Factors

Unanticipated changed in our tax provisions, the adoption of a new U.S. tax legislation, or exposure to additional income tax liabilities could affect our profitability.

We are subject to income taxes, and are therefore subject to potential tax examinations, in the United States. Tax authorities may disagree with our tax positions and assess additional taxes. We regularly assess the likely outcome of these examinations in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these potential examinations, and the amounts ultimately paid upon resolution of examinations could be materially different from the amount previously included in our income tax expense and therefore, could have a material impact on our tax provision, net income, and cash flows. In addition, our future effective tax rate could be adversely affected by changes to our operating structure, changes in the valuation of deferred tax assets and liabilities, changes in tax laws, and the discovery of new information in the course of our tax return preparation process. In addition, recently announced proposals for new U.S. tax legislation could have a material effect on the results of our operations, if enacted.  

We are susceptible to changes in employment laws and regulations or to changes in employment classifications by government agencies.

As we expand our operations to new customer and market segments, and as government acceptance of renewable energy grows, we may become subject to additional federal and state employment laws through procuring contracts to render our services that are funded, in whole or in part, by federal or state governments. For example, the Davis-Bacon Act requires that a contractor pay all personnel assigned to the contract at least the prevailing wage and fringe benefits, as established by and in accordance with the regulations promulgated by the U.S. Department of Labor (“DOL”). Therefore, we may be required to allocate resources, including management’s time, to establishing a policy pursuant to which we evaluate Davis-Bacon Act requirements to ensure our compliance with these requirements. If the DOL were to ultimately determine that anyone working under such contracts were not properly classified, or were being paid the incorrect prevailing wage, we could incur additional liability with respect to such workers. In addition, other factors beyond our control, including increases in minimum wage requirements, overtime pay, healthcare reform, and other laws and regulations affecting employees, independent contractors, and other third-party service providers, could have a material adverse effect on our business, financial condition, and results of operation.

Any failure by us to comply with a variety of U.S. privacy and consumer protection laws may harm us.

Personal privacy and data security have become significant issues in the United States, Europe, and in many other jurisdictions in which we or our suppliers or third-party providers operate. The regulatory framework for privacy and security issues worldwide is rapidly evolving and is likely to remain uncertain for the foreseeable future. Furthermore, federal, state, or foreign government bodies or agencies have in the past adopted, and may in the future adopt, laws and regulations affecting data privacy, all of which may be subject to invalidation by relevant foreign judicial bodies. Industry organizations also regularly adopt and advocate for new standards in this area.

In the United States, these include rules and regulations promulgated or pending under the authority of federal agencies, state attorneys general, legislatures, and consumer protection agencies. For example, as of January 2020, the California Consumer Privacy Act imposes certain legal obligations on our use and processing of personal information related to California residents. In many jurisdictions, enforcement actions and consequences for noncompliance are also rising. In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us.

Any failure by us or our business partners to comply with our public privacy notice or with federal, state or international privacy, data protection or security laws or regulations relating to the processing, collection, use, retention, security and transfer of personally identifiable information could result in regulatory or litigation-related actions against us, legal liability, fines, damages, ongoing audit requirements and other significant costs. Substantial expenses and operational changes may be required in connection with maintaining compliance with such laws, and in particular certain emerging privacy laws are still subject to a high degree of uncertainty as to their interpretation and application. Notwithstanding our efforts to protect the security and integrity of our customers’ personal information, we may be required to expend significant resources to comply with data breach requirements if, for example, third parties improperly obtain and use the personal information of our customers or we otherwise experience a data loss with respect to customers’ personal information. A major breach of our network security may result in fines, penalties and damages and harm our brand, prospects and operating results.

Cyber-attacks or other breaches of our information systems, or those of third parties with which we do business, could have a material adverse effect on  our business, financial condition, and results of operations.

Our operations rely on our computer systems, hardware, software, and networks, as well as those of third parties with which we do business, to securely process, store, and transmit proprietary, confidential, and other information, including intellectual property. These information systems may be compromised by cyber-attacks, computer viruses, and other events that could be materially disruptive to our business operations and could put the security of our information, and that of the third parties with which we do business, at risk of misappropriation or destruction. In recent years, such cyber incidents have become increasingly frequent and sophisticated, targeting or otherwise affecting a wide range of companies. We can make no assurances that any security measures, if any, we take, or those of the third parties with which we do business, to minimize the likelihood and impact of a cyber incident will be adequate. If any of these risks occur, valuable information may be  

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lost, our operations may be disrupted, we may be unable to fulfill our customer obligations, and our reputation may suffer. These consequences could have a material adverse effect on our business, financial condition, and results of operations.

We depend on third-party providers for internet, other communication infrastructures and data management systems in which our operations critical rely upon.

We rely on third-party service providers for substantially all of our communication and information technology systems, including for product data management, procurement, inventory management, operations planning and execution, sales, service and logistics, financial, tax and regulatory compliance systems. We rely on our third-party service providers to protect our systems and databases against intellectual property theft, data breaches, sabotage and other external or internal cyber-attacks or misappropriation. No assurances can be made that third-party service providers will protect against those and other risks. Any disruption, either temporary or permanent, to our communication and technology systems would likely have a significant adverse material effect on our business, financial condition and operating results.

Our operations could be adversely affected by event outside of our control, such as natural disasters, wars, or health epidemics.

We may be impacted by natural disasters, wars, health epidemics, or other events outside of our control. For example, our corporate headquarters and primary region of operations is in the seismically active region of California, and the Western region of the United States, in general, is highly prone to extreme wildfires. If major disasters such as earthquakes, floods, fires, or other events occur, or our information system or communications breaks down or operates improperly, our headquarters and operations may be seriously damaged, or we may have to stop or delay our operations. In addition, the global COVID-19 pandemic has impacted economic markets, manufacturing operations, supply chains, employment and consumer behavior in nearly every geographic region and industry across the world, and we have been, and may in the future be, adversely affected as a result. We may incur expenses or delays relating to such event outside of our control, which could have a material adverse impact on our business, operating results and financial condition.  

The production and installation of solar energy systems depends heavily on suitable meteorological and environmental conditions. If meteorological or environmental conditions are unexpectedly unfavorable, the electricity production from our solar service offerings may be below our expectations, and our ability to timely deploy new systems may be adversely impacted.

The energy produced and revenue and cash flows generated by a solar energy system depend on suitable solar and weather conditions, both of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather or natural catastrophes, such as hailstorms, tornadoes, fires, or earthquakes. In these circumstances, we generally would be obligated to bear the expense of repairing the damaged solar energy systems that we own. Sustained unfavorable weather or environmental conditions also could unexpectedly delay the installation of our solar energy systems, leading to increased expenses and decreased revenue and cash flows in the relevant periods. Extreme weather conditions, as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze. Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed. This could make our solar service offerings less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition, and results of operations.

Item 2.Financial Information. 

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

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. These forward-looking statements generally are identified by the words believes, project, expects, anticipates, estimates, intends, strategy, plan, may, will, would, will be, will continue, will likely result, and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

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Business Development Plan

The primary components of our growth strategy are as follows:

·  Enhancing our Company's brand and reputation in solar design and integration and expanding our installation business.

·  Expanding our business into the energy management space.

Expansion of Installation Business

We are planning to expand our installation business. We will continue to execute our marketing and sales strategy in Southern California and, with additional capital, will be able to expand our business to cover Northern California, or other states. The planned expansion is expected to occur through acquiring smaller installation companies in these regions and/or through the establishment of subsidiaries in these states and boost our installation profits.

Expected Changes in Number of Employees, Plant, and Equipment

Results of Operations 

Year Ended February 29, 2020 Compared to Year Ended February 28, 2019; Nine-Month Interim period ending November 30, 2020

  Revenues 

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had total sales of $4,975,907, $9,122,685, and $13.135.183, respectively. For the twelve months ended February 29, 2020 and the interim period ended November 30, 2020, revenues increased due to increased solar/roofing sells and completed installations by the Company and/or its subsidiaries.

Gross Profits

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had total gross profits of $1,087,331, $2,415,398, and $3,099,525, respectively. For the twelve months ended February 29, 2020 and the interim period ended November 30, 2020, gross profits increased due to the increase in revenues.

Salary and Wage Expenses

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had salary and wage expenses of $435,935, $1,140,535, and $2,462,433, respectively.  For the twelve months ended February 29, 2020 and the interim period ended November 30, 2020, salary and wage expenses increased due to (i) increased office and middle management salaries; and (ii) an increased number of employees over the prior period.

Professional Fees

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had professional and consulting expenses of $146,233, $1,131,898, and $350,598, respectively.  For the twelve months ended February 29, 2020 professional and consulting expenses increased by $985,665 due to legal expenses incurred in conjunction with the Company’s various acquisitions completed during the period.

Marketing Expenses

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had marketing expenses of $288,852, $729,591, and $291,343, respectively.  For the twelve months ended February 29, 2020 marketing expenses increased by $440,739 due to increases in marketing efforts.

General and Administrative Expenses

For the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020, our business had general and administrative expenses of $914,298, $2,907,216, and $1,173,263, respectively.  For the twelve months ended February 29, 2020 and the interim

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period ended November 30, 2020, general and administrative expenses increased due to additional overhead attributable to the Company’s newly acquired subsidiaries.

Net cash used in operating activities for the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020 was $(737,001), $(201,384) and $(1,120,648), respectively, net of changes in operating assets and liabilities, primarily due to changes in accounts payable, accrued liabilities, and amounts due to related parties.

Net cash used in investing activities for the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020 was $(10,749), $(2,459,886), and $(407,795), respectively.  The change was primarily due to financing obtained in conjunction with completed acquisitions.

Net cash provided in financing activities for the years ended February 28, 2019 and 2020 and for the interim period ended November 30, 2020 was $781,649, $3,222,869, and $1,227,101, respectively.  The change was primarily due to proceeds from a debenture payable used in financing the acquisition of Milholland Electric, Inc.

For the interim period ended November 30, 2020, the Company recorded a net loss of $(1,106,917) and provided $(1,120,648) of cash in operating activities. For the year ended February 29, 2020 the Company recorded net loss of $(4,583,700) and provided $(201,384) of cash in operating activities.  For the year ended February 28, 2019, the Company recorded a net loss of $(1,069,127) and used $(737,001) of cash for operating activities.

As of November 30, 2020, the Company had $338,635 in cash to fund its operations.  The Company does not believe its current cash balance will be sufficient to allow the Company to fund its planned operating activities for the next twelve months.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations or substantially curtail some of its planned activities.  These conditions raise substantial doubt as to the Company's ability to continue as a going concern.  The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities should the Company be unable to continue as a going concern.

As the Company continues to incur losses, achieving profitability is dependent on achieving a level of revenues adequate to support the Company's cost structure.  The Company may never achieve profitability, and unless and until it does, the Company will continue to need to raise additional capital.  Management intends to fund future operations through additional private or public equity offering and may seek additional capital through arrangements with strategic partners of from other sources.  There can be no assurances, however, that additional funding will be available on terms acceptable to the Company, or at all.  Any equity financing may be dilutive to existing shareholders.

As of November 30, 2020, we do not have any 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 investors.

Liquidity and Capital Resources

As of February 29, 2020, we had current assets in the amount of $1,631,085 consisting of cash and cash equivalents in the amount of $639,977, accounts receivable of $880,323, prepaid and other current assets of $67,468, and inventory in the amount of $43,317. For the interim period ended November 30, 2020, we had current assets in the amount of $2,399,333 consisting of cash and cash equivalents in the amount of $338,635, accounts receivable of $1,563,691, prepaid and other current assets of $185,833, and inventory in the amount of $311.174.

As of February 29, 2020, we had current liabilities in the amount of $8,538,103. These consisted primarily of accounts payable in the amount of $2,088,952, notes payable of $226,730, debenture payable of $2,432,000, convertible notes payable of $578,833, and derivative liabilities of $1,440,532. During the year ended February 29, 2020, our operating activities used a net $(201,384) in cash.

As of November 30, 2020, we had current liabilities in the amount of $8,803,063. These consisted primarily of accounts payable in the amount of $2,060,346, notes payable of $1,456,331, debenture payable of $2,333,605, convertible notes payable of $238,708, derivative liabilities of $1,393,644, and amounts due related parties of $1,048,927. For the interim period ended November 30, 2020, our operating activities used a net $(1,120,648) in cash.

In order to move forward with our business development plan, set forth above, we will require additional financing, as allocated in the Use of Proceeds section above.

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We will require substantial additional financing, in order to execute our business expansion and development plans and we may require additional financing in order to sustain substantial future business operations for an extended period of time. We currently do not have any firm arrangements for financing and we may not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms which are economically feasible.

We are currently seeking additional financing. If we are unable to obtain the necessary capital to pursue our strategic plan, we may have to reduce the planned future growth of our operations.

Going Concern

We have experienced recurring net losses and had an accumulated deficit of $10,226,230 and $11,333,148 as of February 29, 2020 and November 30, 2020, respectively. To date, we have not been able to produce sufficient sales to become cash flow positive and profitable on a consistent basis. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient revenue to cover our costs of operations and/or upon obtaining additional financing. For these reasons, our auditor has raised substantial doubt about our ability to continue as a going concern.

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operation where such policies affect our reported and expected financial results. Note that our preparation of the consolidated financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.

Income taxes are one such critical accounting policy. Income taxes are recorded on an accrual basis of accounting based on tax positions taken or expected to be taken in a tax return. A tax position is defined as a position in a previously filed tax return or a position expected to be taken in a future tax filing that is reflected in measuring current or deferred income tax assets and liabilities. Tax positions are recognized only when it is more likely than not (i.e., likelihood of greater than 50%), based on technical merits, that the position would be sustained upon exami7.nation by taxing authorities. Tax positions that meet the more likely than not threshold are measured using a probability-weighted approach as the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement. Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our financial statements or tax returns. A valuation allowance is established to reduce deferred tax assets if all or some portion, of such assets will more than likely not be realized. Should they occur, our policy is to classify interest and penalties related to tax positions as income tax expense. Since our inception, no such interest or penalties have been incurred.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). In connection with the preparation of the financial statements, we are required to make assumptions and estimates about future events that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumption and estimate on historical experience and other factors that management believes are relevant at the time our financial statements are prepared. On a periodic basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the estimates and assumptions, and such differences could be material.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the estimated useful lives of property and equipment and the valuation of debt and equity transactions. Actual results could differ from those estimates.

Cash

The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. At times, the Company's cash balances may exceed the current insured amounts under the Federal Deposit Insurance Corporation.

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Accounts Receivable

Management reviews accounts receivable periodically to determine if any receivables will potentially be uncollectible. Management’s evaluation includes several factors including the aging of the accounts receivable balances, a review of significant past due accounts, economic conditions, and our historical write- off experience, net of recoveries. The Company includes any accounts receivable balances that are determined to be uncollectible, along with a general reserve, in its allowance for doubtful accounts. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.

Property, Plant and Equipment

Property and equipment are carried at cost less amortization and depreciation. Major betterments that extend the useful lives of assets are also capitalized. Normal maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in operations. Property and equipment consist of Motor Vehicle, Computer Equipment, Machinery and Equipment, Furniture and Equipment and Trucks which are depreciated on a straight-line basis over their expected useful lives as follows.

Leases

Effective March 1, 2019, the Company adopted the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASU 2016-02”), and additional ASUs issued to clarify and update the guidance in ASU 2016-02 (collectively, the “new leases standard”), which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements. The Company adopted the new leases standard utilizing the modified retrospective transition method, under which amounts in prior periods presented were not restated. For contracts existing at the time of adoption, the Company elected to not reassess (i) whether any are or contain leases, (ii) lease classification, and (iii) initial direct costs.

Advertising

The Company conducts advertising for the promotion of its services. In accordance with ASC Topic 720-35-25, advertising costs are charged to operations when incurred.

Revenue Recognition

The Company recognizes revenue from its contracts with customers in accordance with ASC 606 – Revenue from Contracts with Customers. The Company recognizes revenues when satisfying the performance obligation of the associated contract that reflects the consideration expected to be received based on the terms of the contract.

Revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration that an entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount:

(i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company's performance obligations are transferred to customers at a point in time, typically upon delivery.

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Fair Value Measurements

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3: Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments based upon management’s best estimate of interest rates that would be available to the Company for similar financial arrangements at February 29, 2020.

Income Taxes

The Company follows Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the fiscal year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the fiscal years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Income in the period that includes the enactment date.

The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”) with regards to uncertainty income taxes. Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.

Stock-based Compensation

The Company accounts for equity-based transactions with nonemployees under the provisions of ASC Topic No. 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). ASC 505-50 establishes that equity-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to nonemployees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize the fair value of the equity instruments issued as deferred stock compensation and amortize the cost over the term of the contract.

The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation—Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered.

Business Combinations

In accordance with ASC 805-10, “Business Combinations”, the Company accounts for all business combinations using the acquisition method of accounting. Under this method, assets and liabilities, including any remaining non-controlling interests, are recognized at fair value at the date of acquisition. The excess of the purchase price over the fair value of assets acquired, net of liabilities assumed, and non-controlling interests is

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recognized as goodwill. Certain adjustments to the assessed fair values of the assets, liabilities, or non-controlling interests made subsequent to the acquisition date, but within the measurement period, which is up to one year, are recorded as adjustments to goodwill. Any adjustments subsequent to the measurement period are recorded in income. Any cost or equity method interest that the Company holds in the acquired company prior to the acquisition is re-measured to fair value at acquisition with a resulting gain or loss recognized in income for the difference between fair value and the existing book value. Results of operations of the acquired entity are included in the Company’s results from the date of the acquisition onward and include amortization expense arising from acquired tangible and intangible assets.

Goodwill

The Company allocates goodwill to reporting units based on the reporting unit expected to benefit from the business combination. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated primarily through the use of a discounted cash flow methodology. This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit.

Impairment of long-lived assets

Tangible and intangible assets (excluding goodwill) are assessed at each reporting date for indications that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset's recoverable amount. The asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or a group of assets exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or the group of assets.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company used a Black Scholes valuation model to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

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Contractual Obligations

Recent Accounting Pronouncements

On June 20, 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. ASU 2018-07 is intended to reduce cost and complexity and to improve financial reporting for share-based payments to nonemployees (for example, service providers, external legal counsel, suppliers, etc.). Under the new standard, companies will no longer be required to value non-employee awards differently from employee awards. Meaning that companies will value all equity classified awards at their grant-date under ASC718 and forgo revaluing the award after this date. The guidance is effective for interim and annual periods beginning after December 15, 2018. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

Additional Company Matters

The Company has not filed for bankruptcy protection nor has it ever been involved in receivership or similar proceedings.

We may from time to time be involved in various claims and legal proceedings of a nature we believe are normal and incidental to our business. These matters may include product liability, employment, personal injury caused by our employees, and other general claims.

On January 2, 2020, Oscaleta Partners, LLC filed a complaint in the state of Connecticut against the Company and its officers, David Massey, CEO, and Robert N. Jones, CFO (former). The suit was filed in an effort to compel the Company and its officers to convert several convertible notes into common shares of the Company’s common stock. On July 10, 2020, the Parties entered into a Settlement and Release Agreement and amicably resolved the matter without the need of litigation. Oscaleta Partners, LLC subsequently withdrew its complaint shortly after a resolution was reached by the parties.

We are not presently a party to any legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 3.Properties. 

Our mailing address is 1475 N. Cuyamaca Street, El Cajon, California 92020. In conjunction with our operations, the Company, including its subsidiaries, has entered the following leases:

·1469 & 1475 N. Cuyamaca St., El Cajon, CA 92020; 5-year term commencing June 1, 2020; $96,000 per year, $8,000 per month. 

·10622 Kenny St., Santee, CA 92071; 10-year term commencing June 1, 2020; $78,000 per year, $6,500 per month. 

·968 E. Rancheros Dr, Suite R, San Marcos, CA 92609 ; Month-to-month lease term; $2,618 per month plus CAM expense. 

·12411 Poway Road, Suite 102, Poway, CA 92064; 5-year term commencing November 1, 2016; $3,860 per month plus NNN expense. 

Item 4.Security Ownership of Certain Beneficial Owners and Management. 

(a) Security ownership of certain beneficial owners.

The following table sets forth, as of December 28, 2020, the number of shares of common stock and preferred stock owned of record and beneficially by our executive officers, directors and persons who hold 5% or more of the outstanding shares of common stock of the Company.

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The amounts and percentages of our common stock beneficially owned are reported on the basis of SEC rules governing the determination of beneficial ownership of securities. Under the SEC rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares “voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days through the exercise of any stock option, warrant or other right. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest. Unless otherwise indicated, each of the shareholders named in the table below, or his or her family members, has sole voting and investment power with respect to such shares of our common stock. Except as otherwise indicated, the address of each of the shareholders listed below is: c/o Solar Integrated Roofing Corp., 1475 N. Cuyamaca St, El Cajon, CA 92020.

Applicable percentage ownership is based on 196,020,289 shares of Common Stock outstanding, 5,000,000 shares of Series A preferred stock outstanding, and 13,000,000 shares of Series B preferred stock outstanding, all as of March 11, 2021. In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership of that person, we deemed to be outstanding all shares of Common Stock as held by that person or entity that are currently exercisable or that will become exercisable within 60 days of March 11, 2021.

Changes in Control

We are not aware of any arrangements that may result in “changes in control” as that term is defined by the provisions of Item 403(c) of Regulation S-K.

The following table contains information with respect to our directors and executive officers. To the best of our knowledge, none of our directors or executive officers have an arrangement or understanding with any other person pursuant to which he or she was selected as a director or officer. There are no family relationships between any of our directors or executive officers. Directors serve one-year terms. Our executive officers are appointed by and serve at the pleasure of the Board of Directors.

Brian Milholland, age 55

Mr. Milholland combines over 30 years in the solar and roofing industry. The majority of Mr. Milholland’s professional career has been devoted to the growth and development of Milholland Electric Inc., which he established in January 1990 and which is now a wholly owned subsidiary of the Company. His extensive knowledge and understanding of the solar and roofing industries make him a valuable asset to the Company. In addition to his work with the Company and its subsidiaries, Mr. Milholland serves as board member of Twende Solar.

David Massey, age 57

Mr. Massey combines over 30 years of experience in the solar and roofing industry. At age 25, Mr. Massey established his first roofing company. Shortly thereafter, in the early 1990’s, he reconfigured his business model to include solar services. Mr. Massey focuses on ensuring customers enjoy a great value, the highest quality installation, and products that carry the best warranty in the business. He leads the Company’s plan for growth, which includes purchasing other solar and roofing companies to increase the Company’s national footprint and expanding into related industries. Mr. Massey does not currently possess any other board memberships, nor does he currently have any other affiliations.

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Jennifer Bees, age 35

Ms. Bees combines over 15 years of experience in finance and accounting. Her experience includes financial modeling and analysis, due diligence, risk management, contract review, tax and audit compliance, payroll, cost and variance accounting, GAAP and SOX compliance, asset management, process improvement, human resources, company-wide performance reviews, and staff management and development. From 2015 to 2017, Ms. Bees was employed by 3E Company (a Verisk Analytics company). From 2016 to the present date, Ms. Bees has worked for MEPS Real-Time, Inc. dba IntelliGuard. Ms. Bees earned her Bachelor of Science degree in Accounting from California State University San Marcos. She is a Certified Public Accountant and an active member of The California Society of CPAs (CalCPA), American Institute of Certified Public Accountants (AICPA), and Institute of Management Accountants (IMA) as well as being a licensed California Public Notary.

C. Scott Widdes, age 63

Mr. Widdes combines over 15 years of experience in the roofing industry. In January 2021, the Company hired Mr. Widdes as Vice President of the Company and as President over the division of Roofing Operations, overseeing roofing operations for the following subsidiaries: (i) Secure Roofing and Solar, Inc; (ii) McKay Roofing Company, Inc.; and (iii) Montrose Companies, Inc. Prior to his employment with the Company, Mr. Widdes worked as a Senior Territory Manager for CertainTeed (Vista, California), a leading manufacturer and supplier of roofing products, from 2005 through December 2020. Mr. Widdes does not currently possess any other board memberships, nor does he currently have any other affiliations.

Family Relationships.

There are no family relationships between any of our directors or executive officers.

Involvement in Certain Legal Proceedings.

Other than as disclosed below, there have been no events under any bankruptcy act, any criminal proceedings and any judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of the Company during the past five years.

On January 2, 2020, Oscaleta Parteners, LLC filed a complaint in the state of Connecticut against the Company and its officers, David Massey, CEO, and Robert N. Jones, CFO (former). The suit was filed in an effort to compel the Company and its officers to convert several convertible notes, into common shares of the Company’s common stock. On July 10, 2020, the Parties entered into a Settlement and Release Agreement and amicably resolved the matter without the need of litigation. Oscaleta Partners, LLC subsequently withdrew its complaint shortly after a resolution was reached by the parties.

Item 6.Executive Compensation. 

Summary Compensation Table

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the current fiscal year and the fiscal years ended February 28, 2020 and 2019.

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EXECUTIVE OFFICER COMPENSATION TABLE (FISCAL YEAR)

2.Issuance of 1,500,000 shares of Series B Preferred Stock 

3.Issuance of 5,000,000 shares of Series B Preferred Stock 

4.Issuance of 3,000,000 shares of Series B Preferred Stock 

5.Salary amounts for Mr. Milholland include salaries payable by the Company and our subsidiary, Milholland Electric, Inc. 

Outstanding Equity Awards at the End of the Fiscal Year

We do not have any equity compensation plans and therefore no equity awards are outstanding as of February 29, 2020.

None of the members of the Board of Directors of the Company were compensated for services in such capacity.

Bonuses and Deferred Compensation

We do not have any bonus, deferred compensation or retirement plan. All decisions regarding compensation are determined by our Board of Directors.

Options and Stock Appreciation Rights

As of December 29, 2020, no options have been issued.

Payment of Post-Termination Compensation

We do not have change-in-control agreements with our director or executive officer, and we are not obligated to pay severance or other enhanced benefits to our executive officer upon termination of his employment.

Employment Agreements

Mr. Milholland Employment Agreement

We entered into an employment agreement with Brian Milholland, our President, on January 17, 2020 (the “Milholland Employment Agreement”). The agreement is for an indefinite term, subject to periodic review by the Board of Directors, and stipulates a base salary (the “Base Salary”) of (i) $50,000 for the period January 17, 2020 through June 30, 2020, and thereafter (beginning July 1, 2020), an annual base salary of $180,000, prorated for any partial year; and (ii) $180,000 per year for Mr. Milholland’s continued service as President of Milholland Electric, Inc., a wholly-owned subsidiary of the Company (“MEI”). The Milholland Employment Agreement allows for an annual incentive bonus of (x) 20% of MEI’s annual net profits; (y) 10% of the aggregate net profits of the Company and each of its construction-based subsidiaries (excluding MEI); and (z) a commission on any sales generated by Mr. Milholland.

As a full-time employee of the Company, Mr. Milholland will be eligible to participate in any benefit programs offered by the Company.

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Mr. Milholland’s employment may be terminated by the Company for “Cause” or upon Mr. Milholland’s disability. “Cause” shall mean (i) conviction or entry of nolo contendere to any felony or a crime involving moral turpitude, fraud or embezzlement of Company property; (ii) dishonesty, gross negligence or gross misconduct that is materially injurious to the Company or material failure to perform her/his duties under this Agreement which has not been cured by Mr. Milholland within 60 days after he shall have received written notice from the Company stating with reasonable specificity the nature of such failure to perform; and (iii) illegal use or use of drugs, alcohol, or other related substances that is materially injurious to the Company.

Mr. Jones Employment Agreement

We entered into a consulting agreement with R. Nickolas Jones, on January 10, 2019 (the “Jones Consulting Agreement”) wherein Mr. Jones acted as the Company’s Principal Financial Officer. Mr. Jones was compensated based on a rate of $80.00 per hour. The Jones Consulting Agreement was terminated when Mr. Jones resigned on February 28, 2020.

Director Agreements

The Company has not currently entered into any formal written agreements with members of its Board of Directors.

Board of Directors

Our directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified. Our officers are elected by and serve at the discretion of the Board of Directors.

Item 7.Certain Relationships and Related Transactions, and Director Independence. 

During the year ended February 29, 2020, there was $182,220 of expenses incurred for payroll for David Massey.

During the year ended February 28, 2019, there was $178,511 of expenses paid for payroll for David Massey.

As of February 29, 2020 $586,719 was owed to related parties:

-$479,193 owed to Brian Milholland, amounts owed for purchase of Milholland Electric, Inc.  

-$107,525 owed to the former CFO Robert Jones, amounts paid to the Company for operating activities. 

As of February 28, 2019, amounts owing to related parties was and $25,739 due to David Massey, related to short-term amount paid to the Company.

Item 8.Legal Proceedings. 

Other than as described below, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our Company, our common stock, any of our subsidiaries or of our Company’s or our Company’s subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

On January 2, 2020, Oscaleta Parteners, LLC filed a complaint in the state of Connecticut against the Company and its officers, David Massey, CEO, and Robert N. Jones, CFO (former). The suit was filed in an effort to compel the Company and its officers to convert several convertible notes, into common shares of the Company’s common stock. On July 10, 2020, the Parties entered into a Settlement and Release Agreement and amicably resolved the matter without the need of litigation. Oscaleta Partners, LLC subsequently withdrew its complaint shortly after a resolution was reached by the parties.

Item 9.Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters. 

Market Information.

Our common stock is qualified for quotation on the OTC Markets-OTC Pink under the symbol “SIRC” and has been quoted on the OTC Pink since December 2015. Previously, our common stock was quoted on the OTC Markets-OTC Pink, under the symbol “LSDC.” The following table sets forth the range of the high and low bid prices per share of our common stock for each quarter of our fiscal year as reported in the over-the-counter markets. These quotations represent interdealer prices, without retail markup, markdown or commission, and may not represent actual transactions. There currently is a minimal liquid trading market for our common stock. There can be no assurance that a significant active trading market in our common stock will develop, or if such a market develops, that it will be sustained.

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The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer’s securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state. Further, our shares may be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock” rule. Section 15(g) sets forth certain requirements for transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.

The SEC generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is: registered and traded on a national securities exchange meeting specified criteria set by the SEC; authorized for quotation on The NASDAQ Stock Market; issued by a registered investment company; excluded from the definition on the basis of price (at least $5.00 per share) or the issuer’s net tangible assets; or exempted from the definition by the SEC. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally persons with assets in excess of $1,000,000 or annual income exceeding $200,000 by an individual, or $300,000 together with his or her spouse), are subject to additional sales practice requirements.

We have not previously filed a registration statement under the Securities Act. Shares sold pursuant to exemptions from registration are deemed to be “restricted” securities as defined by the Securities Act. As of November 30, 2020, out of a total of 500,000,000 shares authorized, 30,662,924 shares are issued as restricted securities and can only be sold or otherwise transferred pursuant to a registration statement under the Securities Act or pursuant to an available exemption from registration. Of such restricted shares, 5,000,000, (16.30%) shares are held by affiliates (directors, officers and 10% holders), with the balance of 25,662,924 (83.70%) shares being held by non-affiliates.

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned restricted shares of a reporting company for at least six months, including any person who may be deemed to be an “affiliate” of the company (as the term “affiliate” is defined under the Securities Act), is entitled to sell, within any three-month period, an amount of shares that does not exceed the

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greater of (i) the average weekly trading volume in the company’s common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale or (ii) 1% of the shares then outstanding. In order for a stockholder to rely on Rule 144, adequate current public information with respect to the company must be available. A person who is not deemed to be an affiliate of the company and has not been an affiliate for the most recent three months, and who has held restricted shares for at least one year is entitled to sell such shares without regard to the various resale limitations under Rule 144. Under Rule 144, the requirements of paragraphs (c), (e), (f), and (h) of such Rule do not apply to restricted securities sold for the account of a person who is not an affiliate of an issuer at the time of the sale and has not been an affiliate during the preceding three months, provided the securities have been beneficially owned by the seller for a period of at least one year prior to their sale. For purposes of this registration statement, a controlling stockholder is considered to be a person who owns 10% or more of the company’s total outstanding shares, or is otherwise an affiliate of the Company. No individual person owning shares that are considered to be not restricted owns more than 10% of the Company’s total outstanding shares.

Holders

As of November 30, 2020, we had 79 shareholders of common stock per transfer agent’s shareholder list.

Dividends

The Company has not paid any cash dividends to date and does not anticipate or contemplate paying any dividends in the foreseeable future. It is the present intention of management to utilize all available funds for the growth of the Registrant’s business.

Equity Compensation Plan Information

The Company has not yet adopted an equity compensation plan but plans to do so in the near future.

Item 10.Recent Sales of Unregistered Securities. 

Except where noted, all of the securities discussed below were issued in reliance on the exemption under Section 4(a)(2) of the Securities Act. All issuances are for common stock unless stated otherwise.

May 5, 2018 – 1,000,000 shares were issued in exchange for $10,000 total consideration. 

May 10, 2018 – 399,699 shares were issued at $0.03 per share in partial satisfaction of outstanding convertible notes. 

June 8, 2018 – 450,000 shares were issued at $0.03 per share as payment for consulting services. 

August 21, 2018 – 221,875 shares were issued at $0.03 per share in partial satisfaction of an outstanding convertible note.  

August 27, 2018 – 1,540,000 shares were issued in exchange for $23,800 total consideration. 

August 27, 2018 – 2,025,000 shares were issued at $0.03 per share as payment for consulting services. 

November 28, 2018 – 6,322,800 shares were issued in exchange for $65,068 total consideration. 

January 17, 2019 – 884,400 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

January 22, 2019 – 200,000 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

January 31, 2019 – 500,000 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

February 22, 2019 – 500,000 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

February 28, 2019 – 21,000,000 shares were issued in exchange for $210,000 total consideration.  

March 1, 2019 – 523500 shares were issued at $0.0285 per share in partial satisfaction of an outstanding convertible note. 

March 19, 2019 – 584,795 shares were issued at $0.0342 per share in partial satisfaction of an outstanding convertible note. 

April 3, 2019 – 651,042 shares were issued at $0.0307 per share in partial satisfaction of an outstanding convertible note. 

April 3, 2019 – 1,500,000 shares were issued at $0.06 per share in full satisfaction of an account payable. 

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April 12, 2019 – 1,000,000 shares were issued in exchange for $40,000 total consideration. 

June 21, 2019 – 714,286 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

July 10, 2019 – 631,465 shares were issued at $0.026 per share in partial satisfaction of an outstanding convertible note. 

August 27, 2019 – 3,500,000 shares were issued at $0.04 per share as payment for consulting services. 

October 1, 2019 – 6,250,000 shares were issued at $0.04 per share as partial consideration for the acquisition purchase price of Montrose Companies, Inc.

October 11, 2019 – 548,545 shares were issued at $0.02 per share in partial satisfaction of an outstanding convertible note.

October 28, 2019 – 2,000,444 shares were issued at $0.0374 per share in partial satisfaction of an outstanding convertible note. 

November 1, 2019 – 250,000 shares were issued at $0.0374 per share in satisfaction of an account payable. 

November 1, 2019 – 1,000,000 shares were issued in exchange for $37,400 total consideration. 

November 4, 2019 – 645,161 shares were issued at $0.02 per share in partial satisfaction of an outstanding convertible note. 

November 5, 2019 – 2,500,000 shares were issued at $0.0374 per share in partial satisfaction of outstanding convertible notes. 

November 12, 2019 – 1,166,666 shares were issued in exchange for $11,666.66 total consideration. 

November 4, 2019 – 645,161 shares were issued at $0.02 per share in partial satisfaction of an outstanding convertible note. 

December 4, 2019 – 1,450,000 shares were issued at $0.01 per share in partial satisfaction of an outstanding convertible note. 

December 19, 2019 – 1,479,591 shares were issued at $0.01 per share in partial satisfaction of an outstanding convertible note.

December 20, 2019 – 4,000,000 shares were issued at $0.012 per share in partial satisfaction of an outstanding convertible note.

December 30, 2019 – 3,500,000 shares were issued in exchange for $35,000 total consideration.

February 26, 2020 – 8,000,000 total shares of Series B Preferred were issued at $0.025 as share-based compensation to David Massey (5,000,000 shares) and Robert Jones (3,000,000 shares).

March 4, 2020 – 1,000,000 shares were issued at $0.012 per share in partial satisfaction of an outstanding convertible note.

March 5, 2020 – 3,500,000 shares of Series B Preferred were issued at $3.45 per share as partial consideration for the acquisition purchase price of Milholland Electric, Inc.

June 17, 2020 – 1,500,000 shares of Series B Preferred were issued at $0.025 as share-based compensation to David Massey.

June 29, 2020 – 1,000,000 shares were issued at $0.026 per share as payment for consulting services.

July 23, 2020 – 11,589,958 shares were issued at $0.01 per share in full satisfaction of outstanding convertible notes.

July 24, 2020 – 1,000,000 shares were issued at $0.0195 per share in partial satisfaction of an outstanding convertible note.

July 30, 2020 – 1,000,000 shares were issued at $0.0155 per share in partial satisfaction of an outstanding convertible note.

August 6, 2020 – 1,000,000 shares were issued at $0.0185 per share in partial satisfaction of an outstanding convertible note.

August 12, 2020 – 1,246,536 shares were issued at $0.018 per share in partial satisfaction of an outstanding convertible note.

August 12, 2020 – 500,000 shares were issued in exchange for $12,500 total consideration.

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August 31, 2020 – 500,000 shares were issued in exchange for $12,500 total consideration.

September 10, 2020 – 7,583,980 shares were issued at $0.01155 per share in partial satisfaction of an outstanding convertible note.

September 17, 2020 – 3,646,229 shares were issued at $0.0175 per share in partial satisfaction of an outstanding convertible note.

October 27, 2020 – 1,000,000 shares were issued as share compensation to employees and/or consultants.

October 27, 2020 – 2,502,476 shares were issued pursuant to a cashless exercise of warrants.

October 30, 2020 – 2.592.000 shares were issued at $0.0117 per share in partial satisfaction of an outstanding convertible note.

November 13, 2020 – 6,181,800 shares were issued at $0.011 per share in partial satisfaction of an outstanding convertible note.

December 2, 2020 – 2,538,900 shares were issued at $0.0122 per share in partial satisfaction of an outstanding convertible note.

December 3, 2020 – 7,000,000 shares were issued in exchange for $105,000 total consideration.

December 4, 2020 – 1,387,780 shares were issued at $0.02 per share in partial satisfaction of an outstanding convertible note.

December 8, 2020 – 10,233,334 shares were issued in exchange for $307,000 total consideration.

December 14, 2020 – 2,755,316 shares were issued at $0.01543 per share in partial satisfaction of an outstanding convertible note.

December 23, 2020 – 3,753,469 shares were issued at $0.02205 per share in partial satisfaction of an outstanding convertible note.

December 30, 2020 – 9,138,122 shares were issued at $0.0033 per share in partial satisfaction of an outstanding convertible note.

December 31, 2020 – 2,750,000 shares were issued as share compensation to employees and/or consultants.

January 6, 2021 – 1,000,000 shares were issued at $0.15 per share in partial satisfaction of an outstanding convertible note.

January 21, 2021 – 5,650,000 shares were issued at $0.0135 per share in partial satisfaction of an outstanding convertible note.

January 29, 2021 – 10,113,247 shares were issued at $0.0066 per share in partial satisfaction of an outstanding convertible note.

February 3, 2021 – 1,750,000 shares were issued as share compensation to employees and/or consultants.

February 3, 2021 – 13,800,000 shares were issued at $0.001 in full satisfaction of outstanding convertible promissory notes.

February 8, 2021 – 500,000 shares were issued in exchange for $15,000 total consideration.

February 10, 2021 – 306,148 shares were issued pursuant to a cashless exercise of warrants.

February 10, 2021 – 2,160,000 shares were issued at $0.0824 per share in partial satisfaction of an outstanding convertible note.

February 10, 2021 – 1,000,000 shares were issued in exchange for $100,000 total consideration.

March 5, 2021 – 600,000 shares were issued as share compensation to employees and/or consultants.

March 5, 2021 – 45,000,000 shares were issued as partial consideration for the acquisition of new subsidiary.

March 5, 2021 – 500,000 shares were issued in exchange for $25,000 total consideration.

Item 11.Description of Registrant’s Securities to be Registered. 

The following is a summary of the rights of our Common Stock. This summary does not purport to be complete and is qualified in its entirety by the provisions of our articles of incorporation, bylaws and the Certificates of Designation (as defined below) of our preferred stock, copies of which are filed as exhibits to the registration statement, and to the applicable provisions of Nevada law. The Company is

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authorized by its Certificate of Incorporation to issue an aggregate of 500,000,000 shares of common stock, $0.00001 par value per share (the “Common Stock”), and 25,000,000 shares of preferred. As of December 28, 2020, 196,020,289 shares of Common Stock were issued and outstanding.

Common Stock

Dividend Rights

Subject to preferences that may apply to any shares of preferred stock outstanding at the time, the holders of our Common Stock may, receive dividends out of funds legally available if our Board, in its discretion, determines to issue dividends and then only at the times and in the amounts that our Board may determine. We have not paid any dividends on our Common Stock and do not contemplate doing so in the foreseeable future.

Voting Rights

Each stockholder is entitled to one vote for each share of common stock held by such shareholder.

Right to Receive Liquidation Distribution

Holders of common stock are entitled to dividends when, and if, declared by the Board of Directors out of funds legally available therefore; and then, only after all preferential dividends have been paid on any outstanding Preferred Stock. The Company has not had any earnings and it does not presently contemplate the payment of any cash dividends in the foreseeable future.

Preferred Stock in General

The preferred stock of the Company may be issued from time to time by the Board of Directors in one or more series. The description of shares of each series of preferred stock will be set forth in resolutions adopted by the Board of Directors and a Certificate of Designation to be filed as required by Nevada law prior to issuance of any shares of the series. The Certificate of Designation will set the number of shares to be included in each series of preferred stock and set the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to distribution, qualifications, or terms and conditions of redemption relating to the shares of each series. However, the Board of Directors is not authorized to change the right of the common stock to vote one vote per share on all matters submitted for shareholder action. The authority of the Board of Directors with respect to each series of preferred stock includes, but is not limited to, setting or changing the following:

·The designation of the series and the number of shares constituting the series, provided that the aggregate number of shares constituting all series of preferred stock may not exceed 25,000,000 without amending the corporate by-laws; 

·The annual distribution rate on shares of the series, whether distributions will be cumulative and, if so, from which date or dates; 

·Whether the shares of the series will be redeemable and, if so, the terms and conditions of redemption, including the date or dates upon and after which the shares will be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; 

·The obligation, if any, of the Company to redeem or repurchase shares of the series pursuant to a sinking fund; 

·Whether shares of the series will be convertible into, or exchangeable for, shares of stock of any other class or classes and, if so, the terms and conditions of conversion or exchange, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; 

·Whether the shares of the series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of the voting rights; 

Transfer Agent and Registrar

The transfer agent and registrar for our Common Stock is Colonial Stock Transfer Co., Inc. with an address at 66 Exchange Place, STE 100, Salt Lake City, UT 84111. Their phone number is (801) 355-5740.

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Item 12.Indemnification of Directors and Officers. 

Nevada Law

Section 78.7502 of the Nevada Revised Statutes permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he: (i) is not liable pursuant to Nevada Revised Statute 78.138, or (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. 

In addition, Section 78.7502 permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he: (i) is not liable pursuant to Nevada Revised Statute 78.138; or (ii) acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. 

To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.

Section 78.751 of the Nevada Revised Statutes provides that such indemnification may also include payment by the Company of expenses incurred in defending a civil or criminal action or proceeding in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay such payment if he shall be ultimately found not to be entitled to indemnification under Section 78.751. Indemnification may be provided even though the person to be indemnified is no longer a director, officer, employee or agent of the Company or such other entities.

Other financial arrangements made by the corporation pursuant to Section 78.752 may include the following:

(a)the creation of a trust fund;  

(b)the establishment of a program of self-insurance;  

(c)the securing of its obligations of indemnification by granting a security interest or other lien on any assets of the corporation; and  

(d)the establishment of a letter of credit, guaranty or surety.  

No financial arrangement made pursuant to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses of indemnification ordered by a court.

Any discretionary indemnification pursuant to Section 78.7502 of the Nevada Revised Statutes, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances. The determination must be made:

(a)by the stockholders;  

(b)by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;  

(c)if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or  

(d)if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.  

Subsection 7 of Section 78.138 of the Nevada Revised Statutes provides that, subject to certain very limited statutory exceptions, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his or

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her capacity as a director or officer, unless it is proven that the act or failure to act constituted a breach of his or her fiduciary duties as a director or officer and such breach of those duties involved intentional misconduct, fraud or a knowing violation of law. The statutory standard of liability established by Section 78.138 controls even if there is a provision in the corporation’s articles of incorporation unless a provision in the corporation’s articles of incorporation provides for greater individual liability.

Charter Provisions and Other Arrangements

Pursuant to the provisions of Nevada Revised Statutes, we have adopted the following indemnification provisions in our Articles of Incorporation for our directors and officers:

IX.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

.01 Indemnification.

The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney’s fees), judgment, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interest of the Corporation and with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct was unlawful.  The termination of any action, suit, or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interest of the Corporation, and with respect to any criminal action proceeding, had reasonable cause to believe that such person’s conduct was unlawful.

.02 Derivative Action

The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation’s favor by reason of the fact that such person is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney’s fees) and amount paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person’s duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper.  The termination of any action or suit by judgment or settlement shall not of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation .

.03 Successful Defense.  

To the extent that a Director, Trustee, Officer, employee or Agent of the Corporation has been successful on the merits or otherwise, in whole or in part in defense of any action, suit or proceeding referred to in Paragraphs .01 and .02 above, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorney’s fees) actually and reasonably incurred by such person in connection therewith.

.04 Authorization.

Any indemnification under Paragraphs .01 and .02 above (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the Director, Trustee, Officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Paragraphs .01 and .02 above.  Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of Directors who were not parties to such action, suit or proceeding, or (b) if such a quorum is not obtainable, by a majority vote of the Directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the Directors, whether or not a quorum and whether or not disinterested) in written opinion, or (d) by the Shareholders.  Anyone making such a determination under this Paragraph .04 may determine that a person has met the standards

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therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification.

.05 Advances.

Expenses incurred in defending civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Paragraph .04 above upon receipt of an undertaking by or on behalf of the Director, Trustee, Officer, employee or agent to repay such amount unless it shall ultimately be by the Corporation is authorized in this Section.

.06 Nonexclusively.

The indemnification provided in this Section shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of shareholders or disinterested Directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a Director, Trustee, Officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person.  

.07 Insurance.

The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a Director, Trustee, Officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director, Trustee, Officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such liability.

.08 “Corporation” Defined.

For purposes of this Section, references to the “Corporation” shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its Directors, Trustees, Officers, employees or agents, so that any person who is or was a Director, Trustee, Officer, employee or agent of such constituent corporation or of any entity a majority of the voting stock of which is owned by such constituent corporation or is or was serving at the request of such constituent corporation as a Director, Trustee, Officer, employee or agent of the corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Section with respect to the resulting or surviving Corporation as such person would have with respect to such constituent corporation if its separate existence had continued. 

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Item 13.Financial Statements and Supplementary Data. 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

F-34

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

F-1

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

F-2

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

F-3