Unassociated Document

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 8, 2010

REGISTRATION STATEMENT NO. 333-166362

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

Amendment No. 2

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

PREMIER POWER RENEWABLE ENERGY, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of incorporation or organization)

4931

(Primary Standard Industrial Classification Code Number)

13-4343369

(I.R.S. Employer Identification Number)

4961 Windplay Drive, Suite 100

El Dorado Hills, CA 95762

(916) 939-0400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Dean R. Marks, Chief Executive Officer

4961 Windplay Drive, Suite 100

El Dorado Hills, CA 95762

(916) 939-0400

Copies of all communications to:

Kevin K. Leung, Esq.	Richard H. Gilden, Esq.
Rahul Dange, Esq.	Christopher Auguste, Esq.
Jamie H. Kim, Esq.	Kramer Levin Naftalis & Frankel LLP
Richardson & Patel LLP	1177 Avenue of the Americas
10900 Wilshire Blvd., Suite 500	New York, NY 10036
Los Angeles, CA 90024	(212) 715-9100
(310) 208-1182

(Name, address, including zip code, and telephone number, including area code, of agent for service)

AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE

(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

	Large accelerated filer ¨		Accelerated filer ¨
	Non-accelerated filer ¨		Smaller reporting company x

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
Common stock, $0.0001 par value per share	$	8,000,000	$	446.40

Total			$	446.40

(1)	Calculated pursuant to Rule 457(o) on the basis of the maximum aggregate offering price of all of the securities to be registered.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. The securities offered pursuant to this prospectus may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state or other jurisdiction where the offer or sale is not permitted.

PROSPECTUS

SUBJECT TO COMPLETION, DATED JULY 8, 2010

____________ shares of Common Stock

We are offering up to ____________ shares of our common stock at a public offering price of $___ per share. Our common stock is quoted on the OTC Bulletin Board under the symbol “PPRW.OB.” On July 7, 2010, the last reported sales price of our common stock was $1.55 per share.

We are offering these shares on a best efforts basis. We have retained Merriman Curhan Ford & Co. to act as our exclusive placement agent in this offering, and we will pay fees to it in connection with this offering equal to 6.5% of the proceeds of the offering. We have also agreed to reimburse the placement agent for certain expenses incurred by it in connection with the offering. The placement agent is not required to purchase or sell any of the shares offered by this offering, but will use its commercially reasonable efforts to sell the shares offered. Because there is no minimum offering amount required as a condition to closing in this offering, the actual public offering amount, placement agent’s fee and net proceeds to us, if any, in this offering are not presently determinable and may be substantially less than the maximum offering amounts set forth below.

Investing in our securities involves a high degree of risk. See “Risk Factors” beginning on page 7 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Share		Total
Offering price per share	$	___	$	8,000,000
Placement agent’s fees (1)	$	___	$	___
Proceeds to Premier Power Renewable Energy, Inc. (before expenses)	$	___	$	___

(1)

Assumes all of the shares offered hereby are sold. See the section entitled “Plan of Distribution” for a full description of the compensation to be paid to the placement agent.

We estimate the total expenses of this offering, excluding the placement agent’s fee, will be approximately $_______.

Delivery of the shares to purchasers will be made on or about ___________, 2010.

As Placement Agent

__________, 2010

TABLE OF CONTENTS

	Page

Special Note Regarding Forward-Looking Statements		3
Prospectus Summary		4
About This Prospectus		4
About Premier Power		4
The Offering		5
Summary Consolidated Financial Data		6
Risk Factors		7
Use of Proceeds		19
Dilution		19
Description of Business		19
Description of Property		28
Management		28
Security Ownership of Certain Beneficial Owners and Management		31
Executive Compensation		32
Selected Condensed Consolidated Financial Data		36
Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Certain Relationships and Related Party Transactions		45
Market for Common Equity and Related Stockholder Matters		45
Dividend Policy		46
Description of Securities		46
Plan of Distribution		52
Legal Matters		53
Experts		53
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure		53
Disclosure of Commission Position on Indemnification for Securities Act Liabilities		54
Additional Information		54
Financial Statements		54
Index to Consolidated Financial Statements		F-1

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

All statements contained in this prospectus, other than statements of historical facts, that address future activities, events or developments, are forward-looking statements, including, but not limited to, statements containing the words “believe,” “anticipate,” “expect” and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Whether actual results will conform to the expectations and predictions of management, however, is subject to a number of risks and uncertainties that may cause actual results to differ materially. Such risks are in the section entitled “Risk Factors” on page 7, and in our previous SEC filings.

Consequently, all of the forward-looking statements made in this prospectus are qualified by these cautionary statements, and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations.

PROSPECTUS SUMMARY

About This Prospectus

This summary contains basic information about us and this offering. The reader should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under “Risk Factors.” References to “we,” “our,” “us,” the “Company,” or “Premier Power” refer to Premier Power Renewable Energy, Inc., a Delaware corporation, and its consolidated subsidiaries.

About Premier Power

Our Business

We are a developer, designer, and integrator of ground mount and rooftop solar energy solutions for residential, commercial, industrial, and equity fund customers in North America and Europe. Additionally, we distribute solar modules and inverters in certain of our markets, primarily in Italy, to obtain economies of scale in the purchasing of product for installation services. We provide a full range of installation services to our solar energy customers including design, engineering, procurement, permitting, construction, grid connection, warranty, system monitoring, and maintenance services. We use solar components from the industry’s leading suppliers and manufacturers including solar panels from General Electric (“GE”), Canadian Solar, Sharp, Solyndra, and Sun Power, inverters from Power One, Fronius, Wattsun, SMA, Satcon, and Xantrex, solar trackers from Wattsun, and residential solar thermal systems from Schuco. We have installed over 1,400 solar power systems since the commencement of our current business operations in 2003, with the scale of these projects ranging from 5 kilowatts to 1.1 megawatts of installed capacity. We believe our experience in developing, designing, and installing large and complex solar projects differentiates us from many of our competitors.

We operate our business through our subsidiaries. Premier Power Renewable Energy, Inc., a California corporation (“Premier Power California”) is one of our two wholly owned subsidiaries. Premier Power California wholly owns Bright Future Technologies, LLC, a Nevada limited liability company (“Bright Future”), and Premier Power Sociedad Limitada, a limited liability company formed in Spain (“Premier Power Spain”). Bright Future operates as a trading company that allows Premier Power California and Premier Power Spain to consolidate its purchases from suppliers of solar energy products in order to achieve advantageous trade terms. Rupinvest SARL, a corporation duly organized and existing under the law of Luxembourg (“Rupinvest”), is our other wholly owned subsidiary, and Rupinvest wholly owns Premier Power Italy S.p.A. (formerly known as ARCO Energy, SRL), a private limited company duly organized and existing under the laws of Italy (“Premier Power Italy”). Premier Power Spain and Premier Power Italy are the base of our European operations in Spain and Italy, respectively.

Risks Affecting Our Business

We are subject to a number of risks, which the reader should be aware of before deciding to purchase the securities in this offering. These risks are discussed in the summary below and in the section titled “Risk Factors” beginning on page 7 of this prospectus.

Summary of Risk Factors

This document contains certain statements of a forward-looking nature. Such forward-looking statements, including but not limited to growth and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond our control. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “will,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of business risks and uncertainties that could cause actual results to differ materially from those projected or anticipated, including but not limited to:

our ability to generate operating profits and cash flow from operations to fund our business operations;

existing regulations and our ability to adapt to changes in regulations;

the availability of rebates, tax credits, and other financial incentives;

our access to sufficient capital to meet working capital requirements for our operations and for future expansion efforts;

our ability to efficiently manage our international operations;

our ability to timely and accurately complete projects and orders for our products;

our dependence on a limited number of major customers;

our ability to expand and grow our distribution channels;

general economic conditions that affect demand for our products and services;

acceptance in the marketplace of our new products;

foreign currency exchange rate fluctuations; and

our ability to identify and successfully execute cost control initiatives.

The reader is cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this document. We undertake no obligation to update this forward-looking information.

While our management fully intends to make concerted efforts to manage these risks, we cannot provide assurances that we will be able to do so successfully.

Recent Developments

In June 2010, two plants in a series of 1.0 megawatt solar power plants that we designed and constructed for customers in Puglia, Italy became operational by connecting to the electric power grid of Enel SpA, Italy’s largest power company. These two plants have a contractual value of €3.8 million (approximately $4.79 million) each, which is included in the backlog information provided under “Capital Resources” on page 42. Revenues from these projects have not been recognized as of March 31, 2010.

In May 2010, we granted to EC America, Inc. and its wholly owned subsidiary, immixGroup, Inc. (together, “immixGroup”), a non-exclusive right to resell certain of our products to immixGroup’s government customers under its General Services Administration contract. Pursuant to a reseller agreement with immixGroup, we sell our solar installation services and products to immixGroup for each order that immixGroup takes from its government customers.

In April 2010, we agreed to co-market solar photovoltaic (PV) projects throughout the U.S. with REgeneration Finance, LLC (“REgeneration”) with the Company constructing projects that are funded by REgeneration.

In March 2010, we entered into a collaborative agreement with Plaan Czech, s.r.o. (“Plaan Czech”) for a total of 19 megawatts of PV solar projects in the Czech Republic with us providing distribution and engineering, procurement, and construction services on all projects under the agreement. We are currently engaged for three projects totaling 8.7 megawatts with Plaan Czech under this agreement, which is included in the backlog information provided under “Capital Resources” on page 42.

General Information

Our principal executive offices are located at 4961 Windplay Drive, Suite 100, El Dorado Hills, California 95762, and our telephone number is (916) 939-0400.

The Offering

Securities Offered:		Up to _________ shares of common stock, $0.0001 par value per share.

Offering Price:		$_______ per share.

Common Stock Outstanding Before the Offering:		29,099,750 shares as of July 7, 2010

Common Stock Outstanding After the Offering:		_________ shares

Use of Proceeds		We intend to use the net proceeds of this offering for project development and finance, working capital, and general corporate purposes. See “Use of Proceeds” beginning on page 19.

Risk Factors		The securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities should not purchase the securities unless they can afford the loss of their entire investment. See “Risk Factors” beginning on page 7.

The total number of shares of common stock outstanding after this offering is based on 29,099,750 shares outstanding as of July 7, 2010, which includes 3,000,000 shares held in escrow and available for issuance to Esdras Ltd. in connection with the acquisition of Rupinvest and Premier Power Italy from Esdras Ltd., but which excludes the following:

2,000,229 shares issuable upon exercise of stock options granted to date under the 2008 Equity Incentive Plan, at a weighted average exercise price of $3.17 per share;

75,000 shares issuable upon vesting of stock awards granted to date under the 2008 Equity Incentive Plan;

825,646 additional shares of common stock reserved for issuance pursuant to stock options and stock awards available for grant in the future under the 2008 Equity Incentive Plan;

3,500,000 shares of common stock issuable upon conversion of 3,500,000 shares of Series A Convertible Preferred Stock outstanding; and

2,800,000 shares of common stock issuable upon conversion of 2,800,000 shares of Series B Convertible Preferred Stock outstanding.

Unless otherwise specifically stated, information throughout this prospectus does not assume the exercise of outstanding options to purchase shares of our common stock or the conversion of our outstanding preferred stock.

Summary Consolidated Financial Data

The following tables summarize consolidated financial data regarding our business and should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 37 of this prospectus and our consolidated financial statements and the related notes included elsewhere in this prospectus. We derived the consolidated financial data as of March 31, 2010 and December 31, 2009 and 2008 and for the three months ended March 31, 2010 and 2009 and the years ended December 31, 2009 and 2008 from our audited and unaudited consolidated financial statements included in this prospectus. The historical results are not necessarily indicative of the results to be expected for any future period. All monetary amounts are expressed in U.S. dollars.

	Three Months Ended March 31,						Year Ended December 31,
	2010			2009			2009			2008
Statement of Operations Data (in thousands, except per share data):
Net sales	$	3,399		$	4,793		$	30,750		$	44,238
Cost of sales		(3,368	)		(4,425	)		(26,292	)		(38,711	)
Gross profit		31			368			4,458			5,527
Operating expenses:
Sales and marketing		742			655			2,910			2,224
Administrative expense		1,659			1,128			5,808			2,505
Total operating expenses		2,401			1,783			8,718			4,729
Operating (loss) income		(2,370	)		(1,415	)		(4,260	)		798
Other income (expense):
Interest expense		(37	)		(2	)		(89	)		(82	)
Other income		-			-			23			-
Change in fair value of contingent consideration liability		1,254			-			4,301			-
Change in fair value of warrants		-			1,475			2,184			-
Interest income		1			18			44			37
Total other income (expense), net		1,218			1,491			6,463			(45	)
Income (loss) before income taxes		(1,152	)		76			2,203			753
Income tax benefit		346			645			1,452			40
Net income (loss)		(806	)		721			3,655			793
Less: Net income attributable to noncontrolling interest		-			-			(85	)		(224	)
Net income (loss) attributable to Premier Power Renewable Energy, Inc.	$	(806	)	$	721		$	3,570		$	569
Earnings (loss) Per Share attributable to Premier Power Renewable Energy, Inc.:
Basic	$	(0.03	)	$	0.03		$	0.14		$	0.03
Diluted	$	(0.03	)	$	0.02		$	0.11		$	0.02
Weighted Average Shares Outstanding
Basic		26,619			26,049			26,050			22,666
Diluted		26,619			30,529			31,273			23,750

	Three Months Ended March 31,				Year Ended December 31,
	2010		2009		2009		2008
Non-Cash Stock-Based Compensation Data (in thousands):
Cost of sales	$	90	$	47	$	145	$	-
General and administrative		131		68		361		-
Sales and Marketing		25		30		118		-
Total non-cash share-based compensation	$	246	$	145	$	624	$	-

			As of December 31,
	As of March 31, 2010		2009		2008
Balance Sheet Data (in thousands):
Cash and cash equivalents	$	1,332	$	3,792	$	5,771
Total assets	$	37,221	$	43,180	$	14,813
Working capital	$	2,850	$	5,297	$	6,278
Line of credit and notes payable	$	2,215	$	2,240	$	131
Billings in excess of costs	$	559	$	374	$	1,206
Total shareholders’ equity	$	10,537	$	12,158	$	7,873

RISK FACTORS

An investment in our common stock is highly speculative and involves a high degree of risk. Before making an investment decision, you should carefully consider the risks described below together with all of the other information included in this prospectus. The statements contained in or incorporated into this prospectus that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and an investor in our securities may lose all or part of their investment.

Risks Relating to Our Business

We had an operating loss in 2009 and in the first quarter of 2010 and have used increasing amounts of cash for operations and to fund our project development and future acquisitions.

We had a $4.3 million operating loss in 2009 and a $2.4 million operating loss in the first quarter of 2010. Cash used in operations was $6.2 million in 2009 and $2.3 million in the first quarter of 2010. We continue to pursue additional solar projects, acquisitions, and investment opportunities and may need to support the financing needs of our subsidiaries. We currently have enough cash on hand and projected cash flow to fund our operations for the next 12 months. However, we may need additional funds to finance future investment and acquisition activity we wish to undertake. We do not know if such funds will be available if needed on terms that we consider acceptable. We may have to limit or adjust our project development and investment/acquisition strategy or sell some of our assets in order to continue to pursue our corporate goals.

We are dependent upon our suppliers for the components used in the systems we design and install, and our major suppliers are dependent upon the continued availability and pricing of polysilicon and other raw materials used in solar modules. Any increases in the price of solar components or any interruptions to or shortage or decline in the quality of the solar components we purchase for our solar energy systems could adversely affect our business.

Key components used in our systems are purchased from a limited number of manufacturers. In particular, Canadian Solar, Sharp, SunPower Corporation, Solyndra, and GE accounted for over 95% of our purchases of solar panels in 2009. We are subject to market prices for the components that we purchase for our installations, which are subject to fluctuation. We cannot ensure that the prices charged by our suppliers will not increase because of changes in market conditions or other factors beyond our control. An increase in the price of components used in our systems could result in an increase in costs to our customers and could have a material adverse effect on our revenues and demand for our products and services. Our suppliers are dependent upon the availability and pricing of polysilicon, one of the main materials used in manufacturing solar panels. Interruptions in our ability to procure needed components for our systems, whether due to discontinuance by our suppliers, delays or failures in delivery, shortages caused by inadequate production capacity or unavailability, or for other reasons, would adversely affect or limit our sales and growth. In addition, increases in the prices of solar modules could make systems that have been sold but not yet installed unprofitable for us. There is no assurance that we will continue to find qualified manufacturers on acceptable terms and, if we do, there can be no assurance that product quality will continue to be acceptable, which could lead to a loss of sales and revenues.

Various licenses and permits are required to operate our business, and the loss of or failure to renew any or all of these licenses and permits could prevent us from either completing current projects or obtaining future projects, and, thus, materially adversely affect our business.

We, together with our subsidiaries, hold all required licenses in all the areas in which we operate. Also, we hold all certifications required by the jurisdictions in which we operate. The loss of any such licenses or certifications, or the loss of any key personnel who hold such licenses or certifications, would materially adversely affect our business because it could prevent us from obtaining and/or completing solar integration projects in states where we or our personnel lose such licenses or certifications or are in non-compliance with state licensing or certification requirements.

Our growth strategy may prove to be disruptive and divert management resources.

Our growth strategy may involve complex transactions and present financial, managerial and operational challenges, including diversion of management attention from our existing businesses, difficulty with integrating personnel and financial and other systems, increased expenses, including compensation expenses resulting from newly hired employees, the assumption of unknown liabilities and potential disputes. We could also experience financial or other setbacks if any of our growth strategies incur problems of which we are not presently aware.

We are currently out of compliance with certain financing covenants under our loan agreement with Umpqua Bank, which may limit future capital expenditures and working capital needs.

In July 2009, we entered into a loan agreement with Umpqua Bank for a line of credit of up to $12 million (of which $1,379,796 is outstanding as of July 2, 2010), which is secured by our assets and the assets of Premier Power California and Bright Future. We are currently out of compliance with certain covenants under the loan agreement. The bank is aware of the non-compliance and has not issued a notice of default, nor have they enforced any default provisions. The bank, however, has also not waived the non-compliance. We are currently working with the bank to redefine our financial covenants, but without the redefinition, we are unable to comply with the covenants with which we are out of compliance. The bank has the right to seek available remedies under the loan agreement for such noncompliance, including institution of default rates or cutting our funding under the line. While we believe we have sufficient cash balances and projected cash flows from operations to meet our current working capital needs should the bank issue a notice of default and demand repayment of all obligations or cut off funding under the line, such actions by the bank may limit future capital expenditures and exacerbate our working capital needs.

We may need to obtain additional debt or equity financing to fund future capital expenditures and to meet working capital requirements, which may be obtained on terms that are unfavorable to the Company and/or our stockholders.

We may require additional financing in the future in connection with our growth strategy to fund future capital expenditures and for working capital. Additional equity may result in dilution to the holders of our outstanding shares of capital stock. Additional debt financing may include conditions that would restrict our freedom to operate our business, such as conditions that:

increase our vulnerability to general adverse economic and industry conditions;

require us to dedicate a portion of our cash flow from operations to payments on our debt, thereby reducing the availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and

limit our flexibility in planning for, or reacting to, changes in our business and our industry.

In addition to the foregoing challenges, our ability to obtain additional financing may be limited as a result of the fact that we are out of compliance with certain financing covenants under our loan agreement with Umpqua Bank. We cannot guarantee that we will be able to obtain any additional financing on terms that are acceptable to us, or at all.

Our ability to raise capital, in general, is limited by the terms of our engagement of Genesis Capital Advisors.

We are party to an engagement agreement with Genesis Capital Advisors, LLC for their exclusive services in connection with sales, mergers, acquisitions, financings, or other transactions involving the Company. Should we terminate this agreement with Genesis, its right to compensation continues with respect to transactions entered into for the 24 month period following termination. If we require additional capital and engage other firms or persons in capital-raising efforts, we will need to obtain a waiver by Genesis of the exclusivity provisions of their engagement. Any such waiver may cause a delay or discourage third parties from entering into a business relationship with us. We may also need to compensate Genesis for such a waiver if Genesis is willing to waive its exclusivity rights.

Geographical business expansion efforts we make could result in difficulties in successfully managing our business and consequently harm our financial condition.

As part of our business strategy, we may seek to expand by acquiring competing businesses or customer contracts outside of our current geographic markets, or we may open offices in the geographical markets we desire to operate within. We may face challenges in managing expanding product and service offerings and in integrating acquired businesses with our own. We cannot accurately predict the timing, size and success of our expansion efforts and the associated capital commitments that might be required. We expect to face competition for expansion candidates, which may limit the number of expansion opportunities available to us and may lead to higher expansion costs. There can be no assurance that we will be able to identify, acquire or profitably manage additional businesses and contracts or successfully integrate acquired businesses and contracts, if any, into our company, without substantial costs, delays or other operational or financial difficulties. In addition, expansion efforts involve a number of other risks, including:

failure of the expansion efforts to achieve expected results;

diversion of management’s attention and resources to expansion efforts;

failure to retain key customers or personnel of the acquired businesses;

failure to maintain adequate financial controls across borders; and

risks associated with unanticipated events, liabilities, or contingencies.

Client dissatisfaction or performance problems at a single acquired business could negatively affect our reputation. The inability to acquire businesses on reasonable terms or successfully integrate and manage acquired companies, or the occurrence of performance problems at acquired companies, could result in dilution to our stockholders, unfavorable accounting charges and difficulties in successfully managing our business.

Our inability to obtain capital, use internally generated cash, or use shares of our common stock or debt to finance future expansion efforts could impair the growth and expansion of our business.

Reliance on internally generated cash or debt to finance our operations or to complete business expansion efforts could substantially limit our operational and financial flexibility. The extent to which we will be able or willing to use shares of common stock to consummate expansions will depend on our market value from time to time and the willingness of potential sellers to accept it as full or partial payment. Using shares of common stock for this purpose also may result in significant dilution to our then existing stockholders. To the extent that we are unable to use common stock to make future expansions, our ability to grow through expansions may be limited by the extent to which we are able to raise capital for this purpose through debt or equity financings. No assurance can be given that we will be able to obtain the necessary capital to finance a successful expansion program or our other cash needs. If we are unable to obtain additional capital on acceptable terms, we may be required to reduce the scope of any expansion. In addition to requiring funding for expansions, we may need additional funds to implement our internal growth and operating strategies or to finance other aspects of our operations. Our failure to (i) obtain additional capital on acceptable terms, (ii) use internally generated cash or debt to complete expansions because it significantly limits our operational or financial flexibility, or (iii) use shares of common stock to make future expansions may hinder our ability to actively pursue any expansion program we may decide to implement and negatively impact our stock price.

Additionally, our inability to repatriate profits from Europe to the United States may limit our ability to access cash for operations in the United States.

Our operations are cash intensive, and our business could be adversely affected if we fail to maintain sufficient levels of working capital.

We expend a significant amount of cash in our operations, principally to fund our materials procurement. Our suppliers typically provide us with credit. In turn, we typically require our customers to make payment at various stages of the project. We generally fund most of our working capital requirements out of cash flow generated from operations. If we fail to generate sufficient revenues from our sales or if we experience difficulties collecting our accounts receivables, we may not have sufficient cash flow to fund our operating costs, and our business could be adversely affected.

Our internal control over financial reporting has been determined to be deficient as of December 31, 2009. Failure to remedy this deficiency may reduce our ability to accurately report our financial results or prevent fraud.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our management has identified a significant deficiency in our internal control over financial reporting and concluded that our internal controls over financial reporting were ineffective at December 31, 2009. Our financial reporting includes various highly complex technical accounting issues. As a result of the previously identified significant deficiency, we have made the following significant changes in our internal controls over financial reporting to reasonably ensure that our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States:

We implemented a formal process for preparing and controlling journal entries to prevent processing erroneous or unauthorized entries by restricting preparation of monthly journal entries to certain authorized personnel; implementing a system of sequential numbering and numeric accounting of each journal entry; implementing a system of attaching supporting documentation to each journal entry; and implementing a system of independent review of each journal entry.

We hired additional experienced accounting personnel in an effort to increase the experience level within our accounting department; including the hiring of a new corporate controller and chief financial officer who are individuals with significant experience applying generally accepted accounting principles. Our new chief financial officer participated in the December 31, 2009 financial close and reporting processes, and our new controller participated in the September 30, 2009 and December 31, 2009 financial close and reporting processes, which added an additional level of supervisory review.

We hired an external consultant to provide internal control reviews and provide suggestions for improvement.

We implemented a detailed financial performance review with management and our Board of Directors.

Such changes in our internal control structure should fully remediate the significant deficiency in the fiscal year ending December 31, 2010. However, if we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, current and potential stockholders and the market in general could lose confidence in our financial reporting, which loss of confidence could harm our business and the trading price of our common stock.

Because the solar integration industry is highly competitive and has low barriers to entry, we may lose market share to larger companies due to increased competition.

Our industry is highly competitive and fragmented, is subject to rapid change and has low barriers to entry in some of the markets in which we operate. We may in the future compete for potential customers with solar system installers and servicers, electricians, roofers, utilities and other providers of solar power equipment or electric power. Some of these competitors may have significantly greater financial, technical and marketing resources and greater name recognition than we have. We believe that our ability to compete depends in part on a number of factors outside of our control, including:

the ability of our competitors to hire, retain and motivate qualified technical personnel;

the ownership by competitors of proprietary tools to customize systems to the needs of a particular customer;

the price at which others offer comparable services and equipment;

the extent of our competitors’ responsiveness to client needs;

risk of local economy decline; and

installation technology.

Competition in the solar power services industry may increase in the future, partly due to low barriers to entry, as well as from other alternative energy resources now in existence or developed in the future. Increased competition could result in price reductions, reduced margins or loss of market share and greater competition for qualified technical personnel. There can be no assurance that we will be able to compete successfully against current and future competitors. If we are unable to compete effectively, or if competition results in a deterioration of market conditions, our business and results of operations would be adversely affected.

We act as the general contractor for our customers in connection with the installation of our solar power systems and are subject to risks associated with construction, bonding, cost overruns, delays, and other contingencies, which could have a material adverse effect on our business and results of operations.

We act as the general contractor for our customers in connection with the installation of our solar power systems. All essential costs are estimated at the time of entering into the sales contract for a particular project, and these are reflected in the overall price that we charge our customers for the project. These cost estimates are preliminary and may or may not be covered by contracts between us or the other project developers, subcontractors, suppliers and other parties to the project. In addition, we require qualified, licensed subcontractors to install some of our systems. Shortages of such skilled labor could significantly delay a project or otherwise increase our costs. Should miscalculations in planning a project or defective or late execution occur, we may not achieve our expected margins or cover our costs. Also, many systems customers require performance bonds issued by a bonding agency. Due to the general performance risk inherent in construction activities, it is sometimes difficult to secure suitable bonding agencies willing to provide performance bonding. In the event we are unable to obtain bonding, we will be unable to bid on, or enter into, sales contracts requiring such bonding. Delays in solar panel or other supply shipments, other construction delays, unexpected performance problems in electricity generation or other events could cause us to fail to meet these performance criteria, resulting in unanticipated and severe revenue and earnings losses and financial penalties. Construction delays are often caused by inclement weather, failure to timely receive necessary approvals and permits, or delays in obtaining necessary solar panels, inverters or other materials. We operate in international markets that have unique permitting requirements, which, if not met, may cause delays. The occurrence of any of these events could have a material adverse effect on our business and results of operations.

We generally recognize revenue on system installations on a “percentage of completion” basis and payments are due upon the achievement of contractual milestones, and any delay or cancellation of a project could adversely affect our business.

We recognize revenue on our system installations on a “percentage of completion” basis and, as a result, our revenue from these installations is driven by the performance of our contractual obligations, which is generally driven by timelines for the installation of our solar power systems at customer sites. This could result in unpredictability of revenue and, in the short term, a revenue decrease. As with any project-related business, there is the potential for delays within any particular customer project. Variation of project timelines and estimates may impact the amount of revenue recognized in a particular period. In addition, certain customer contracts may include payment milestones due at specified points during a project. Because we must invest substantial time and incur significant expense in advance of achieving milestones and the receipt of payment, failure to achieve milestones could adversely affect our business and cash flows.

We are subject to particularly lengthy sales cycles with our equity fund, commercial, and government customers, which may adversely affect our sales and marketing efforts.

Factors specific to certain of our customers’ industries have an impact on our sales cycles. Our equity fund, commercial, and government customers may have longer sales cycles due to the timing of various state and federal requirements. These lengthy and challenging sales cycles may mean that it could take longer before our sales and marketing efforts result in revenue, if at all, and may have adverse effects on our operating results, financial condition, cash flows, and stock price.

Our failure to meet a customer’s expectations in the performance of our services, and the risks and liabilities associated with placing our employees and technicians in our customers’ homes and businesses, could give rise to claims against us.

Our engagements involve projects that are critical to our customers’ business or home. Our failure or inability to meet a customer’s expectations in the provision of our products and services could damage or result in a material adverse change to their premises or property, and therefore could give rise to claims against us or damage our reputation. In addition, we are exposed to various risks and liabilities associated with placing our employees and technicians in the homes and workplaces of others, including possible claims of errors and omissions, harassment, theft of client property, criminal activity and other claims.

We generally do not have long-term agreements with our solar integration customers and, accordingly, could lose customers without warning.

Our products are generally not sold pursuant to long-term agreements with solar integration customers, but instead are sold on a purchase order basis. We typically contract to perform large projects with no assurance of repeat business from the same customers in the future. Although cancellations on our purchase orders to date have been insignificant, our customers may cancel or reschedule purchase orders with us on relatively short notice. Cancellations or rescheduling of customer orders could result in the delay or loss of anticipated sales without allowing us sufficient time to reduce, or delay the incurrence of, our corresponding inventory and operating expenses. In addition, changes in forecasts or the timing of orders from these or other customers expose us to the risks of inventory shortages or excess inventory. This, in addition to the non-repetition of large systems projects and our failure to obtain new large system projects due to current economic conditions and reduced corporate and individual spending, could cause our revenues to decline, and, in turn, our operating results to suffer.

Our profitability depends, in part, on our success in brand recognition, and we could lose our competitive advantage if we are unable to protect our trademark against infringement. Any related litigation could be time-consuming and costly.

We believe our brand has gained substantial recognition by customers in certain geographic areas. We have trademark protection for the brand names “Premier Power” and “Bright Futures” and have applied for trademark protection of our sales slogan “Your Solar Electricity Specialist.” Use of our name or a similar name by competitors in geographic areas in which we have not yet operated could adversely affect our ability to use or gain protection for our brand in those markets, which could weaken our brand and harm our business and competitive position. In addition, any litigation relating to protecting our trademark against infringement is likely to be time consuming and costly.

We may face intellectual property infringement claims that could be time-consuming and costly to defend and could result in our loss of significant rights and the assessment of damages.

If we receive notice of claims of infringement, misappropriation or misuse of other parties’ proprietary rights, some of these claims could lead to litigation. We cannot provide assurances that we will prevail in these actions, or that other actions alleging misappropriation or misuse by us of third-party trade secrets, infringement by us of third-party patents and trademarks or the validity of our patent or trademarks, will not be asserted or prosecuted against us. We may also initiate claims to defend our intellectual property rights. Intellectual property litigation, regardless of outcome, is expensive and time-consuming, could divert management’s attention from our business and have a material negative effect on our business, operating results or financial condition. If there is a successful claim of infringement against us, we may be required to pay substantial damages (including treble damages if we were to be found to have willfully infringed a third party’s patent) to the party claiming infringement, develop non-infringing technology, stop selling our products or using technology that contains the allegedly infringing intellectual property or enter into royalty or license agreements that may not be available on acceptable or commercially practical terms, if at all. Our failure to develop non-infringing technologies or license the proprietary rights on a timely basis could harm our business. Parties making infringement claims on any future issued patents may be able to obtain an injunction that would prevent us from selling our products or using technology that contains the allegedly infringing intellectual property, which could harm our business.

Product liability claims against us could result in adverse publicity and potentially significant monetary damages.

As a seller of consumer products, we face an inherent risk of exposure to product liability claims in the event that our solar energy systems’ use results in damages, injuries or fatalities. Since solar energy systems are electricity producing devices, it is possible that our products could result in damage, injury or fatality, whether by product malfunctions, defects, improper installation or other causes. If such damages, injuries or fatalities or claims were to occur, we could incur monetary damages, and our business could be adversely affected by any resulting negative publicity. The successful assertion of product liability claims against us also could result in potentially significant monetary damages and, if our insurance protection is inadequate to cover these claims, could require us to make significant payments from our own resources.

We do not carry business interruption insurance, and any unexpected business interruptions could adversely affect our business.

Our operations are vulnerable to interruption by earthquake, fire, power failure and power shortages, hardware and software failure, floods, computer viruses, and other events beyond our control. In addition, we do not carry business interruption insurance to compensate us for losses that may occur as a result of these kinds of events, and any such losses or damages incurred by us could disrupt our solar integration projects and other Company operations without reimbursement.

A decrease in the availability of credit or an increase in interest rates could make it difficult for customers to finance the cost of solar energy systems and could reduce demand for our services and products.

Some of our prospective residential and commercial customers may depend on debt financing, such as power purchase agreements or home equity loans, to fund the initial capital expenditure required to purchase a solar energy system. Third-party financing sources, specifically for solar energy systems, are currently limited, especially due to recent domestic and worldwide economic troubles. The lack of financing sources, a decrease in the availability of credit or an increase in interest rates could make it difficult or more costly for our potential customers to secure the financing necessary to purchase a solar energy system on favorable terms, or at all, thus lowering demand for our products and services and negatively impacting our business.

A portion of our revenues is generated by construction contracts, and, thus, a decrease in construction could reduce our construction contract-related sales and, in turn, adversely affect our revenues.

Some of our solar-related revenues were generated from the design and installation of solar power products in newly constructed and renovated buildings, plants and residences. Our ability to generate revenues from construction contracts will depend on the number of new construction starts and renovations, which should correlate with the cyclical nature of the construction industry and be affected by general and local economic conditions, changes in interest rates, lending standards and other factors. For example, the current housing slump and tightened credit markets have resulted in reduced new home construction, which could limit our ability to sell solar products to residential and commercial developers.

We derive most of our revenue from sales in a limited number of territories, and we will be unable to further expand our business if we are unsuccessful in adding additional geographic sales territories to our operations.

We currently derive most of our revenue from sales of our solar integration services in the United States, Italy, and Spain. This geographic concentration exposes us to growth rates, economic conditions, government regulations, permitting requirements, and other factors that may be specific to those territories to which we would be less subject if we were more geographically diversified. In addition, our reliance on tariffs and other government incentive programs (which may not always be available to us) could magnify any adverse consequences associated with such geographic concentration. The growth of our business will require us to expand our operations and commence operations in other states, countries, and territories. Any geographic expansion efforts that we undertake may not be successful, which, in turn, would limit our growth opportunities.

Our financial results often vary significantly from quarter to quarter, and results for a particular quarter may not necessarily be indicative of the results for the following quarter.

Since individual solar projects can represent a meaningful percentage of our revenues and net income in any single quarter, the deferral or failure to complete a single order in a quarter can result in unexpected revenue and net income shortfalls. For example, our revenue in the fourth quarter of 2009 was positively affected by the recognition of revenue of a significant project, which was completed in Italy, but no similar recognition occurred in the first quarter of 2010. We base our current and future expense levels on our internal operating plans and sales forecasts, and our operating costs are to a large extent fixed. As a result, we may not be able to sufficiently reduce our costs in any quarter to adequately compensate for an unexpected near-term shortfall in revenues, and even a small shortfall could disproportionately and adversely affect financial results for that quarter.

We face risks associated with international trade and currency exchange that could have a material impact on our profitability.

We transact business in the U.S. dollar and the Euro. Changes in exchange rates would affect the value of deposits of currencies we hold. We do not currently hedge against exposure to currencies. We cannot predict with certainty future exchange rates and their impact on our operating results. Movements in the exchange rate between the U.S. dollar and the Euro could have a material impact on our profitability.

Our success may depend in part on our ability to make successful acquisitions.

As part of our business strategy, we plan to expand our operations through strategic acquisitions in our current markets and in new geographic markets. We cannot accurately predict the timing, size, and success of our acquisition efforts. Our acquisition strategy involves significant risks, including the following:

our ability to identify suitable acquisition candidates at acceptable prices;

our ability to successfully complete acquisitions of identified candidates;

our ability to compete effectively for available acquisition opportunities;

potential impairment to our goodwill and other intangible assets;

increases in asking prices by acquisition candidates to levels beyond our financial capability or to levels that would not result in the returns required by our acquisition criteria;

diversion of management’s attention to expansion efforts;

unanticipated costs and contingent liabilities associated with acquisitions;

failure of acquired businesses to achieve expected results;

our failure to retain key customers or personnel of acquired businesses; and

difficulties entering markets in which we have no or limited experience.

These risks, as well as other circumstances that often accompany expansion through acquisitions, could inhibit our growth and negatively impact our operating results. In addition, the size, timing, and success of any future acquisitions may cause substantial fluctuations in our operating results from quarter to quarter. Consequently, our operating results for any quarter may not be indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year. These fluctuations could adversely affect the market price of our common stock.

Our failure to integrate the operations of acquired businesses successfully into our operations or to manage our anticipated growth effectively could materially and adversely affect our business and operating results.

In order to pursue a successful acquisition strategy, we must integrate the operations of acquired businesses into our operations, including centralizing certain functions to achieve cost savings and pursuing programs and processes that leverage our revenue and growth opportunities. The integration of the management, operations, and facilities of acquired businesses with our own could involve difficulties, which could adversely affect our growth rate and operating results. We may be unable to do any of the following:

effectively complete the integration of the management, operations, facilities and accounting and information systems of acquired businesses with our own;

efficiently manage the combined operations of the acquired businesses with our operations;

achieve our operating, growth and performance goals for acquired businesses;

achieve additional revenue as a result of our expanded operations; or

achieve operating efficiencies or otherwise realize cost savings as a result of anticipated acquisition synergies.

Our rate of growth and operating performance may suffer if we fail to manage acquired businesses profitably without substantial additional costs or operational problems or to implement effectively combined growth and operating strategies.

Costs incurred because we are a public company may affect our profitability.

As a public company, we incur significant legal, accounting and other expenses, and we are subject to the SEC’s rules and regulations relating to public disclosure that generally involve a substantial expenditure of financial resources. In addition, the Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC, requires changes in corporate governance practices of public companies. We expect that full compliance with such rules and regulations will significantly increase our legal and financial compliance costs and make some activities more time-consuming and costly, which may negatively impact our financial results. To the extent our earnings suffer as a result of the financial impact of our SEC reporting or compliance costs, our ability to develop an active trading market for our securities could be harmed.

It may be time-consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act, when applicable to us. Some members of our management team have limited or no experience operating a company with securities traded or listed on an exchange, or subject to SEC rules and requirements, including SEC reporting practices and requirements that are applicable to a publicly traded company. We may need to recruit, hire, train, and retain additional financial reporting, internal controls, and other personnel in order to develop and implement appropriate internal controls and reporting procedures both domestically and internationally. If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, when applicable, we may have material weaknesses reported in our independent accountant’s attestation report on our internal control over financial reporting required by the Sarbanes-Oxley Act.

Our business is exposed to risks associated with the weak global economy, which increases the uncertainty of project financing for commercial solar installations and the risk of non-payment from both commercial and residential customers.

The recent tightening of the credit markets and turmoil in the financial markets and the current weak global economy contributed to slowdowns in the solar industry, which slowdowns may continue and worsen if current economic conditions are prolonged or deteriorate further. The market for installation of solar power systems depends largely on commercial and consumer capital spending. Economic uncertainty exacerbates negative trends in these areas of spending, and may cause our customers to push out, cancel, or refrain from placing orders, which may reduce our net sales. Difficulties in obtaining capital and deteriorating market conditions may also lead to the inability of some customers to obtain affordable financing, including traditional project financing and tax-incentive based financing and home equity-based financing, resulting in lower sales to potential customers with liquidity issues, and may lead to an increase of incidents where our customers are unwilling or unable to pay for systems they purchase, and additional bad debt expense for the Company. Further, these conditions and uncertainty about future economic conditions may make it challenging for us to obtain equity and debt financing to meet our working capital requirements to support our business, forecast our operating results, make business decisions, and identify the risks that may affect our business, financial condition and results of operations. If we are unable to timely and appropriately adapt to changes resulting from the difficult macroeconomic environment, our business, financial condition, or results of operations may be materially and adversely affected.

We are highly dependent on senior management and key sales and technical personnel. The loss and inability to replace any such persons could have a material adverse effect on our business and operations.

We are highly dependent on our senior management to manage our business and operations and our key managerial, financial, sales, design, engineering, technical and other personnel for the sale, development and installation of our solar power systems. In particular, we rely substantially on Dean R. Marks, our President and Chief Executive Officer, and Miguel de Anquin, our Chief Operating Officer, to manage our operations. Although we have employment agreements with, and have obtained key-man life insurance policies for our benefit on the lives of, Messrs. Marks and de Anquin, we cannot assure their continued services to the Company. The loss of either one of them, or any other member of our senior management, would have a material adverse effect on our business and operations. Competition for senior management and sales and technical personnel is intense, and the pool of suitable candidates is limited. We may be unable to locate a suitable replacement for any member of our senior management or key sales and technical personnel that we lose. In addition, if any member of our senior management or key sales and technical personnel joins a competitor or forms a competing company, they may compete with us for customers, business partners and other key professionals and staff members of our company. Although each of our senior management and key sales and technical personnel has signed a confidentiality and non-competition agreement in connection with his employment with us, we cannot provide assurances that we will be able to successfully enforce these provisions in the event of a dispute between us and any member of our senior management or key operational personnel.

If we are unable to attract, train, and retain highly qualified personnel, the quality of our services may decline, and we may not meet our business and financial goals.

We compete for qualified personnel with other solar integration companies. Intense competition for these personnel could cause our compensation costs to increase significantly, which, in turn, could have a material adverse effect on our results of operations. Our future success and ability to grow our business will depend in part on the continued service of these individuals and our ability to identify, hire and retain additional qualified personnel. If we are unable to attract and retain qualified employees, we may be unable to meet our business and financial goals, which will require the retention of these qualified employees to work on our future solar integration projects as we expand our business.

Risks Relating To Our Industry

Our business depends on the availability of rebates, tax credits and other financial incentives, the reduction or elimination of which would reduce the demand for our services.

Many U.S. states, including California, Nevada, and New Jersey, offer substantial incentives to offset the cost of solar power systems. These incentives can take many forms, including direct rebates, state tax credits, system performance payments, and Renewable Energy Credits. There can be no assurance that these incentives will continue to be available. Moreover, although the United States Congress passed legislation to extend for 8 years a 30% federal tax credit for the installation of solar power systems, there can be no assurance that the tax credit will be further extended once they expire. Additionally, businesses that install solar power systems may elect to accelerate the depreciation of their system over five years. Spain also offers substantial incentives, including feed-in tariffs. Spain’s Industry Ministry has implemented a capped solar subsidy program for MW installation and reduced tariff levels. Italy offers incentives in the form of minimum user prices for solar electricity production and feed-in tariffs that are subject to reduction annually for new applications. In Italy, the current feed-in tariff decree is effective through 2010. Subsequent decrees will redefine rates for solar power plants commissioned thereafter. A reduction in or elimination of such incentives could substantially increase the cost or reduce the economic benefit to our customers, resulting in significant reductions in demand for our products and services, which may negatively impact our sales.

We have experienced technological changes in our industry. New technologies may prove inappropriate and result in liability to us or may not gain market acceptance by our customers.

The solar power industry, which currently accounts for less than 1% of the world’s power generation according to the Solar Energy Industries Association, is subject to technological change. Our future success will depend on our ability to appropriately respond to changing technologies and changes in function of products and quality. If we adopt products and technologies that are not attractive to consumers, we may not be successful in capturing or retaining a significant share of our market. In addition, some new technologies are relatively untested and unperfected and may not perform as expected or as desired, in which event our adoption of such products or technologies may cause us to lose money.

Solar energy is generally a more expensive source of energy than conventional energy or non-solar alternative energy sources, and a drop in the retail price of conventional energy or non-solar alternative energy sources may negatively impact our profitability.

We believe that a customer’s decision to purchase or install solar power capabilities is primarily driven by the cost and return on investment resulting from solar power systems. Solar energy is generally a more expensive source of energy than conventional energy or non-solar alternative energy sources, especially in the United States. Fluctuations in economic and market conditions that impact the prices of conventional and non-solar alternative energy sources, such as decreases in the prices of oil, coal and other fossil fuels and changes in utility electric rates and net metering policies, could cause the demand for solar power systems to decline, which would have a negative impact on our profitability.

Existing regulations, and changes to such regulations, may present technical, regulatory, and economic barriers to the purchase and use of solar power products, which may significantly reduce demand for our products.

Installations of solar power systems are subject to oversight and regulation in accordance with national and local ordinances, building codes, zoning, environmental protection regulation, utility interconnection requirements for metering, and other rules and regulations. We attempt to keep up-to-date with these requirements on a national, state, and local level, and must design, construct and connect systems to comply with varying standards. Certain cities may have ordinances that prevent or increase the cost of installation of our solar power systems. In addition, new government regulations or utility policies pertaining to solar power systems are unpredictable and may result in significant additional expenses or delays and, as a result, could cause a significant reduction in demand for solar energy systems and our services. For example, there currently exists metering caps in certain jurisdictions that effectively limit the aggregate amount of power that may be sold by solar power generators into the power grid. Moreover, in certain markets, the process for obtaining the permits and rights necessary to construct and interconnect a solar power system to the grid requires significant lead time and may become prolonged, and the cost associated with acquiring such permits and project rights may be subject to fluctuation.

Adverse changes in the political and economic policies of European governments could have a material adverse effect on the overall economic growth of European markets, which could reduce the demand for our products and materially and adversely affect our competitive position in Europe.

A significant portion of our business operations are conducted in, and a significant portion of our sales are made in, Spain through our subsidiary, Premier Power Spain. In addition, we have business operations in Italy through our wholly owned subsidiary, Premier Power Italy, and we hope to generate a significant level of sales in Italy. Spain and Italy offer substantial incentives, including feed-in tariffs, to encourage the growth of solar power as a form of renewable energy. However, recently there have been significant changes in Spain’s laws which cap the amount of kilowatts installed by solar power installers in Spain at 66 MW per quarter, effectively limiting the number of solar module installations throughout Spain, and such new laws also created a more complicated and lengthy permitting process in order to receive the government funded feed-in tariffs. Accordingly, our business, financial condition, results of operations, and prospects are affected significantly by economic, political, and legal developments in such European countries. Any adverse change in such policies could have a material adverse effect on the overall economic growth in Europe or on the level of our incentives, which, in turn, could lead to a reduction in demand for our products and consequently have a material adverse effect on our European operations and sales.

If the demand for solar power technology and solar power products does not continue to increase, our sales may decline, and we may be unable to achieve or sustain profitability.

The market for solar power products is continuing to evolve, and the level of demand for solar power technology is uncertain. Many factors will influence the widespread use of solar power technology and demand for solar power products, including:

cost effectiveness of solar power technologies as compared with conventional and non-solar alternative energy technologies;

performance and reliability of solar power products as compared with conventional and non-solar alternative energy products;

the level of capital expenditures by customers, especially in a weak global economy; and

availability of government subsidies and incentives.

If demand for solar power products fails to sufficiently grow, we may be unable to generate enough revenue to achieve and sustain profitability. In addition, demand for solar power products in the markets and geographic regions we target may not develop or may develop more slowly than we anticipate.

Public opposition toward solar farms may make it more difficult to obtain the necessary permits and authorizations required to develop or maintain a solar farm.

Public attitude towards aesthetic and environmental impacts of solar energy projects impacts the ability to develop our solar farms. In many jurisdictions, the environmental impact review process ensures a role for concerned members of the public who oppose solar energy projects in general or are concerned with potential environmental, health, or aesthetic impacts, impacts on property values or the rewards of property ownership, or impacts on the natural beauty of public lands, which can lead to changes in design or layout, extensive impact mitigation requirements, or even the rejection of a project. In such areas, local acceptance is critical to the ability to obtain and maintain necessary permits and approvals. We cannot assure you that any solar farm projects under development will be accepted by the affected population. Public opposition can also lead to legal challenges that may result in the invalidation of a permit or, in certain cases, the dismantling of an existing solar farm as well as increased cost and delays. Reduced acceptance of solar farms by local populations, an increase in the number of legal challenges, or an unfavorable trend in the outcome of these challenges could prevent us from achieving our plans, which, in turn, could have a material adverse effect on our business, results of operations, and financial condition.

Risk Relating to Our Securities

We have not paid any cash dividends, and no cash dividends will be paid in the foreseeable future, which may require our stockholders to generate a cash flow from their investment in our securities through alternative means.

We do not anticipate paying cash dividends on our common stock in the foreseeable future, and we may not have sufficient funds legally available to pay dividends. Even if funds are legally available for distribution, we may nevertheless decide not to or may be unable to pay any dividends to our stockholders. We intend to retain all earnings for our operations. Accordingly, our stockholders may have to sell some or all of their common stock in order to generate cash flow from their investment. Our stockholders may not receive a gain on their investment when they sell their common stock and may lose some or all of their investment. Any determination to pay dividends in the future on our common stock will be made at the discretion of our board of directors and will depend on our results of operations, financial conditions, contractual restrictions, restrictions imposed by applicable law, capital requirements, and other factors that our board of directors deems relevant.

We may need additional capital, and the sale of additional shares or other equity securities could result in dilution to our stockholders. Additionally, our stockholders may face dilution from conversion of our Series A Convertible Preferred Stock or Series B Convertible Preferred Stock, and our stock price may be depressed by the transfer and subsequent sale of the 3 million shares held in escrow issuable to Esdras Ltd. in connection with our purchase of Rupinvest and Premier Power Italy.

We may require additional cash resources due to changed business conditions or other future developments, including any investments or acquisitions we may decide to pursue. If our resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain an increased credit facility. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of additional indebtedness would result in increased debt service obligations and could result in further operating and financing covenants that would further restrict our operations. We cannot provide assurances that financing will be available in amounts or on terms acceptable to us, if at all. Additionally, there are outstanding shares of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock issued by us that could convert into up to 6.3 million of additional shares of common stock, the conversion of which will dilute our current stockholders. This offering may trigger additional dilution as a result of anti-dilution rights of our Series A Convertible Preferred Stock. Please see “Description of Securities” starting on page 46. Further, our current stockholders will face dilution from the issuance of any portion of the 3 million shares that are held in escrow and issuable to Esdras Ltd. in connection with our purchase of our Italian operations from Esdras Ltd.

The application of the “penny stock” rules could adversely affect the market price of our common stock and increase our stockholders’ transaction costs to sell those shares.

Our common stock may be subject to the “penny stock” rules adopted under Section 15(g) of the Securities Exchange Act of 1934, as amended. The penny stock rules apply to companies that are not traded on a national securities exchange whose common stock trades at less than $5.00 per share or that have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). The “penny stock” rules impose additional sales practice requirements on broker-dealers who sell securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse). For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of securities and have received the purchaser’s written consent to the transaction before the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the broker-dealer must deliver, before the transaction, a disclosure schedule prescribed by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent disclosing recent price information on the limited market in penny stocks. These additional burdens imposed on broker-dealers may restrict the ability or decrease the willingness of broker-dealers to sell our common stock, and may result in decreased liquidity for our common stock and increased transaction costs for sales and purchases of our common stock as compared to other securities.

Our common stock is thinly traded, and an active public market for our common stock may not develop or be sustained.

Although our common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”), we cannot predict the extent to which an active public market for our common stock will develop or be sustained. Our common stock has historically been sporadically or “thinly traded” on the OTCBB, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small or nonexistent. This situation is attributable to a number of factors, including the fact that we are a small company that is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-adverse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer that has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on our stock price. We cannot provide assurances that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

The volatility of the market price of our common stock may render our stockholders unable to sell their shares of our common stock at or near “ask” prices or at all if they need to sell their shares to raise money or otherwise desire to liquidate their shares.

The market price of our common stock is particularly volatile given our status as a relatively small company with a small and thinly traded “float” that could lead to wide fluctuations in our stock price. The price at which our common stock is purchased may not be indicative of the price that will prevail in the trading market. An investor in our common stock may be unable to sell their common stock at or above their purchase price if at all, which may result in substantial losses to such investor.

The market for our common stock is characterized by significant price volatility when compared to seasoned issuers, and we expect that our stock price will continue to be more volatile than a seasoned issuer for the indefinite future. The volatility in our stock price is attributable to a number of factors. As noted above, our common stock is sporadically and/or thinly traded. As a consequence of this lack of liquidity, the trading of relatively small quantities of shares by our stockholders may disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously in the event a large number of our shares are sold on the market without commensurate demand, as compared to a seasoned issuer which could better absorb those sales without adverse impact on its stock price. The following factors also may add to the volatility in the price of our common stock: actual or anticipated variations in our quarterly or annual operating results; adverse outcomes; additions to or departures of our key personnel, as well as other items discussed under this “Risk Factors” section, as well as elsewhere in this prospectus. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our common stock will be at any time, including as to whether our common stock will sustain its current market prices, or as to what effect the sale of shares or the availability of shares for sale at any time will have on the prevailing market price.

If we do not meet the listing standards established by national securities exchange markets such as Nasdaq and NYSE Amex LLC, our common stock may not become listed for trading on one of those markets, which may restrict the liquidity of shares held by our stockholders.

We have applied for listing of our common stock for trading on national securities exchanges, and the applications are currently pending. The listing of our common stock on a national securities exchange may result in a more active public market for our common stock, resulting in turn in greater liquidity of shares held by our stockholders. National securities exchanges such as Nasdaq and NYSE Amex LLC have established certain quantitative criteria and qualitative standards that companies must meet in order to become and remain listed for trading on these markets. We cannot guarantee that we will be able to maintain all necessary requirements for listing; therefore, we cannot guarantee that our common stock will be listed for trading on a national securities exchange.

Volatility in our common stock price may subject us to securities litigation that could result in substantial costs to our business.

The market for our common stock may be characterized by significant price volatility when compared to seasoned issuers, and we expect our stock price will be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources that otherwise could have been focused on our business operations.

Past activities of our company and affiliates may lead to future liability for our company.

Prior to our acquisition of Premier Power California, we were a third-party logistics provider for supply chain management, a business unrelated to our current operations. Any liabilities relating to such prior business against which we are not completely indemnified will be borne by us and may result in substantial costs to the Company and could divert management’s attention and resources that otherwise could have been focused on our business operations.

A large majority of our shares are held by a few stockholders, some of whom are members of our management. As these principal stockholders substantially control our corporate actions, our other stockholders may face difficulty in exerting any influence over matters not supported by these principal stockholders.

Our principal stockholders include Dean R. Marks, who is our Chairman of the Board, President, and Chief Executive Officer, and Miguel de Anquin, who is our Chief Operating Officer and Corporate Secretary and a member of our Board. Messrs. Marks and de Anquin own approximately 62.0% of our outstanding shares of common stock. Additionally, Bjorn Persson, the Executive Vice President of European Operations, and Vision Opportunity Master Fund, Ltd. own approximately 8.8% and 9.99%, respectively, of our outstanding shares of common stock. These stockholders, acting individually or as a group, could exert control over matters such as electing directors, amending our certificate of incorporation or bylaws, and approving mergers or other business combinations or transactions. In addition, because of the percentage of ownership and voting concentration in these principal stockholders and their affiliated entities, elections of our board of directors will generally be within the control of these stockholders and their affiliated entities. While all of our stockholders are entitled to vote on matters submitted to our stockholders for approval, the concentration of shares and voting control presently lies with these principal stockholders and their affiliated entities. As such, it would be difficult for stockholders to propose and have approved proposals not supported by these principal stockholders and their affiliated entities. There can be no assurance that matters voted upon by our officers and directors in their capacity as stockholders will be viewed favorably by all stockholders of our company. The stock ownership of our principal stockholders and their affiliated entities may discourage a potential acquirer from seeking to acquire shares of our common stock which, in turn, could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Anti-takeover rules with respect to business combinations with certain stockholders under Delaware law could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders.

We are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder (or a stockholder who owns more than 15% of the corporation's voting stock) for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by our board of directors. This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our stockholders.

The Certificate of Designation of Preferences, Rights and Limitations of our Series A Convertible Preferred Stock provides the holder of our Series A Preferred with anti-dilution rights, which, if triggered, will result in dilution to our existing stockholders.

The Certificate of Designation of our Series A Convertible Preferred provides full-ratchet anti-dilution rights as to issuances of our common stock or common stock equivalents at a price lower than the then-conversion price of the Series A Convertible Preferred that occur on or before the 24-month anniversary of the issuance of Series A Convertible Preferred to the holder of such stock. For such issuances after the 24-month anniversary, the holder of Series A Preferred is provided weighted average anti-dilution protection. Vision Opportunity Master Fund, Ltd. is the sole holder of our Series A Convertible Preferred, and it currently holds 3,500,000 shares, which were issued on September 10, 2008. As of July 7, 2010, Vision’s shares of Series A Convertible Preferred are convertible into 3,500,000 shares of our common stock at a then current conversion price of $2.00. If we issue shares of our common stock or common stock equivalents at a price below $2.00 on or before September 10, 2010, then our existing stockholders will be diluted due to Vision’s full-ratchet anti-dilution protection. If we issue shares of our common stock or common stock equivalents after September 10, 2010, then our existing stockholders will be diluted due to Vision’s weighted average anti-dilution protection.

Our certificate of incorporation authorizes our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

Contractual limitations that restrict conversion of securities held by Vision Opportunity Master Fund, Ltd. may not necessarily prevent substantial dilution of the voting power and value of an investment in our securities.

The contractual limitations that restrict conversion of shares of Series A Convertible Preferred Stock and of Series B Convertible Preferred Stock held by Vision Opportunity Master Fund, Ltd. (“Vision”) for shares of our common stock are limited in their application and effect and may not prevent substantial dilution of our existing stockholders. Pursuant to the terms of such securities, Vision may not convert the Series A Stock or the Series B Stock to the extent that such conversion would cause Vision’s beneficial ownership, together with its affiliates, to exceed 9.99% of the number of shares of our outstanding common stock immediately after giving effect to the issuance of shares of common stock as a result of a conversion. Vision, may, however waive this limitation upon 61 days’ notice to the Company. In addition, this 9.99% limitation does not prevent Vision from converting the Series A Stock or the Series B Stock into shares of our common stock and then reselling those shares in stages over time where Vision and its affiliates do not, at any given time, beneficially own shares in excess of the 9.99% limitation. Consequently, this limitation will not necessarily prevent substantial dilution of the voting power and value of an investment in our securities. Further, the Company has registered for resale shares of the Company’s common stock issuable upon conversion of the Series A Stock and Series B Stock. After a contemplated 90-day lock-up period described elsewhere in this prospectus, Vision may waive the 9.99% limitation and sell a large number of shares of the Company’s common stock issued to it upon conversion of the Series A Stock and Series B Stock into the open market, which could result in a substantial drop in the market price of our common stock.

USE OF PROCEEDS

We estimate that we will receive up to $___________ in net proceeds from the sale of common stock in this offering, based on an assumed price of $___ per share and after deducting estimated placement agent fees and estimated offering expenses payable by us.

We intend to use the net proceeds of the offering as follows:

	Application of Net Proceeds	Percentage of Net Proceeds
Project Development and Finance	$		%
General Working Capital
Total	$

The amounts actually spent by us for any specific purpose may vary significantly and will depend on a number of factors. Accordingly, our management has broad discretion to allocate the net proceeds.

DILUTION

Our reported net tangible book value as of March 31, 2010 was ($1.9) million, or ($0.07) per share of common stock, based upon 29,099,750 shares outstanding as of that date. Net tangible book value per share is determined by dividing such number of outstanding shares of common stock into our net tangible book value, which is our total tangible assets less total liabilities. After giving effect to the sale by us of up to _________ shares of common stock offered in this offering at an assumed public offering price of $___ per share, after giving effect to the anti-dilution rights of the Series A Convertible Preferred Stock, and after deducting the placement agent commissions and estimated offering expenses, our adjusted net tangible book value as of March 31, 2010 would have been $_________, or $____ per share. This represents an immediate increase in net tangible book value of approximately $____ per share to our existing stockholders and an immediate dilution of $_____ per share to new investors purchasing shares at the public offering price.

The following table illustrates the per share dilution assuming a sale price of $______ per common stock share:

Public offering price per share		$
Net tangible book value per share as of March 31, 2010 (1)		$
Increase per share attributable to new investors		$
As adjusted net tangible book value per share after the offering		$
Dilution per share to new investors

(1) Taking into effect the anti-dilution rights of the Series A Convertible Preferred Stock triggered by this offering. There are 3,500,000 shares of Series A Convertible Preferred Stock that are convertible into 3,500,000 shares of our common stock, which will increase to [ ] shares of our common stock as a result of anti-dilution rights triggered by this offering. Please see the “Description of Securities” starting on page 46. Also taking into effect the placement agent commissions and estimated offering expenses.

DESCRIPTION OF BUSINESS

Overview

We are a developer, designer, and integrator of ground mount and rooftop solar energy solutions for residential, commercial, industrial, and equity fund customers in North America and Europe. Additionally, we distribute solar modules and inverters in our markets, primarily in Italy. We provide a full range of installation services to our solar energy customers including design, engineering, procurement, permitting, construction, grid connection, warranty, system monitoring, and maintenance services. We use solar components from the industry’s leading suppliers and manufacturers including solar panels from GE, Canadian Solar, Sharp, Solyndra, and Sun Power, inverters from Fronius, Wattsun, SMA, Satcon, and Xantrex, solar trackers from Wattsun, and residential solar thermal systems from Schuco. We have installed over 1,400 solar power systems, or a total of 7 MW, since the commencement of our current business operations in 2003, with the scale of these projects ranging from 5 kilowatts to multi megawatts of installed capacity. We believe our experience in developing, designing, and installing large and complex solar projects differentiates us from many of our competitors.

On July 31, 2009, we acquired Premier Power Italy S.p.A. (formerly known as ARCO Energy, SRL, hereinafter “Premier Power Italy”), a distributor of solar modules and developer and integrator of ground mount and rooftop solar power systems in Italy.

Our History

We were originally incorporated as “Harry’s Trucking, Inc.” in Delaware on August 31, 2006. Effective September 5, 2008, we changed our name to “Premier Power Renewable Energy, Inc.” On September 9, 2008, we consummated a share exchange transaction whereby we acquired Premier Power Renewable Energy, Inc., a California corporation (“Premier Power California”) and Premier Power California’s wholly owned subsidiaries, Premier Power Sociedad Limitada (“Premier Power Spain”) and Bright Future Technologies, LLC (“Bright Future”).

Premier Power California’s history dates back to 2001 when Premier Homes Properties, Inc. (“Premier Homes”), a privately held homebuilder based in Roseville, formed a solar power systems design and integration division (the “Solar Division”) in order to meet its internal mandate to make one out of every three homes Premier Homes developed into a solar home. On April 22, 2003, in order to meet the growing demand for commercial and residential retrofit solar power system installations, the Solar Division was spun-off from Premier Homes by the formation of Premier Power California.

Bright Future, a wholly owned subsidiary of Premier Power California, was formed on December 13, 2006 as a Nevada limited liability company. Bright Future operates as a trading company that allows Premier Power California and Premier Power Spain to consolidate its purchases from suppliers of solar energy products in order to achieve advantageous trade terms.

Premier Power Spain, a wholly owned subsidiary of Premier Power California, was formed on July 7, 2006 as a Spanish limited liability company by the principals of Premier Power California in order to conduct design, sales, and installation operations in Spain and other parts of Europe. Premier Power Spain was our initial entry into the European market.

On July 31, 2009, we acquired all of the capital stock of Rupinvest SARL, a corporation duly organized and existing under the law of Luxembourg (“Rupinvest”). Rupinvest initially owned 90% of Premier Power Italy, a private limited company duly organized and existing under the laws of Italy. On December 31, 2009, Rupinvest purchased the remaining 10% interest in Premier Power Italy making it a wholly owned subsidiary. Premier Power Italy is a distributor, developer, and integrator of ground mount and rooftop solar power systems in Italy.

Share Exchange Transaction with Rupinvest SARL and Esdras Ltd.

On July 31, 2009, we closed the acquisition of 100% of the issued and outstanding equity ownership of Rupinvest from Esdras Ltd., a corporation duly organized and existing under the laws of Cyprus (“Esdras”). Rupinvest distributes, develops, and integrates ground mount and rooftop solar power systems in Italy through its subsidiary, Premier Power Italy, which was a majority-owned subsidiary at the closing but which became a wholly owned subsidiary on December 31, 2009 as described below. The terms of the transaction are set forth in a Share Exchange Agreement entered into on June 3, 2009 between the Company, Rupinvest, and Esdras. Prior to the closing of this share exchange, Rupinvest was the wholly owned subsidiary of Esdras. We acquired Rupinvest from Esdras in exchange for (i) a cash payment by us to Esdras in the amount of €12,500 (approximately $18,292) and (ii) the potential transfer to Esdras of up to 3 million shares of our common stock, with the number of shares to be transferred, if any, to be calculated based on achieving certain sales and gross margin goals by Premier Power Italy over a three-year period. Pursuant to the terms of the transaction, we also made a capital contribution in the amount of €1,125,000 (approximately $1,580,063) into Premier Power Italy. Following the closing of this share exchange, we conduct operations in Italy through Premier Power Italy.

On December 31, 2009, Rupinvest purchased the remaining 10% interest of Premier Power Italy from Esdras pursuant to the Share Exchange Agreement whereby Premier Power Italy became the wholly owned subsidiary of Rupinvest. The agreement allowed for the reimbursement of the initial capitalization of €125,000 (approximately $175,600) made by Esdras if the remaining 10% was purchased by December 31, 2009.

Industry Overview

Challenges Facing the Electric Power Industry

According to the Energy Information Administration (“EIA”), a section of the United States Department of Energy, energy outlook projects moderate growth in U.S. energy consumption with greater use of renewables. In fact the EIA’s outlook in 2010 was that global energy consumption would increase by 14% from 2008 to 2035. Electric power used to operate businesses and industries provides the power needed for homes and offices and provides the power for our communications, entertainment, transportation, and medical needs. On the residential side, growth in population and homeowners’ desires to utilize solar as an alternative source of energy have increased demand over time. Population shifts to warmer regions have also increased the need for cooling. Electricity is now more commonly used for local transportation (electric vehicles) and space/water heating needs.

Due to continuously increasing energy demands, we believe the electric power industry faces the following challenges:

Limited Fossil Fuel Supplies and Cost Pressures. Supplies of fossil fuels that are used to generate electricity such as oil, coal and natural gas are limited, and yet worldwide demand for electricity continues to increase. The increasing demand for electricity and a finite supply of fossil fuels may result in increased fossil fuel prices, which, in turn, will likely result in a continuation of increases in long-term average costs for electricity.

Stability of Suppliers. Many of the world’s leading suppliers of fossil fuels are located in unstable regions of the world where political instability, labor unrest, war and terrorist threats may disrupt oil and natural gas production. Purchasing oil and natural gas from these countries may increase the risk of supply shortages and may increase costs of fossil fuels.

Generation, Transmission and Distribution Infrastructure Costs. Historically, electricity has been generated in centralized power plants transmitted over high voltage lines and distributed locally through lower voltage transmission lines and transformer equipment. Despite the increasing demand for electricity, investment in electricity generation, transmission and distribution infrastructure have not kept pace, resulting in service disruptions in the U.S. As electricity demands increase, these systems will need to be expanded, and such expansion will be capital intensive and time consuming, and may be restricted by environmental concerns. Without further investments in this infrastructure, the likelihood of power shortages may increase.

Environmental Concerns and Climate Change. Concerns about climate change and greenhouse gas emissions have resulted in the Kyoto Protocol, an international agreement establishing a legally binding commitment for the reduction of greenhouse gases. As of February 2010 189 countries had voluntarily ratified the Kyoto Protocol and are required to reduce greenhouse gas emissions to target levels which vary by country. In the United States, 29 states have implemented the Renewable Portfolio Standard, which require electric companies to purchase a specific amount of power from renewable sources.

Drivers of Solar Market Adoption

The challenges facing the traditional electric power industry are driving the adoption of renewable energy sources. Solar power systems have been used to produce electricity for several decades, although at generally higher costs as compared with traditional energy sources. Technological advances during the past decade that have significantly reduced system costs, combined with the advantages of solar power as a renewable energy source and government subsidies and incentives for solar power, have led to solar power becoming one of the fastest growing renewable energy technologies.

Advantages that solar power offers over other sources of power include:

Clean Energy Production. Unlike traditional fossil fuel energy sources and many other renewable energy sources, solar power systems generate electricity with no emissions or noise impact.

Location-Based Energy Production. Solar power is a distributed energy source, meaning the electricity can be generated at the site of consumption. This provides a significant advantage to the end user who is therefore not reliant upon the traditional electricity infrastructure for delivery of electricity to the site of use.

Energy Generated to Match Peak Usage Times. Peak energy usage and high electricity costs typically occur mid-day, which also generally corresponds to peak sunlight hours and solar power electricity generation.

Reliable Source of Electricity. Solar power systems generally do not contain moving parts, nor do they require significant ongoing maintenance. As a result, we believe solar power systems are one of the most reliable forms of electricity generation.

Modular. Solar power systems are made from interconnecting and laminating solar cells into solar modules. Given this method of construction, solar power products can be deployed in many different sizes and configurations to meet specific customer needs.

According to Solarbuzz, an independent solar energy research firm, total worldwide solar cell production increased from 2,826 megawatts (MW) in 2007 to 5,948 MW in 2008 to 9,340 MW in 2009, which represented an annual growth rate, or CAGR, of approximately 110% and 59%, respectively. Solarbuzz projects worldwide solar cell production will return to high growth in 2010 and also over the next 5 years. Even in the slowest growth scenario, the global market will be 2.5 times its current size by 2014.

Government Incentives for Solar Energy

Despite the significant advantages of solar energy that have resulted in recent rapid market growth, solar energy continues to represent only a small fraction of the world’s energy output as a result of costs that remain higher than those of traditional energy sources. According to Solarbuzz, a residential solar energy system typically costs about $8-10 per watt. Where government incentive programs exist, together with lower prices secured through volume purchases, installed costs as low as $3-4 watt – or 10-12 cents per kilowatt hour (kWh) – can be achieved. Without incentive programs, solar energy costs (in an average sunny climate) range between 22-40 cent/kWh for very large PV systems. These incentives include:

Feed-in Tariffs. Feed-in tariffs, used primarily in Europe, require utility companies to purchase electricity from renewable energy sources at a guaranteed rate, generally above the standard rate for electricity.

Renewable Portfolio Standards. Renewable portfolio standards, adopted by 29 states in the United States, require utilities to deliver a certain percentage of power from renewable energy sources by a specific date. For example, California requires electric companies to increase procurement from eligible renewable energy sources by at least 1% of their retail sales annually, until they reach 20% by 2010.

Tax credits or grants. Tax credits or grants provide an offset to the cost of installing a solar system. In the United States, there is currently a 30% federal tax credit for commercial and residential solar power systems, which takes the form of a cash grant in 2009 and 2010.

Loan Guarantees. Government-backed loan guarantees enable companies to finance solar projects at a lower cost of capital than would otherwise be available in the capital markets.

U.S. Solar Market Dynamics

According to Solarbuzz, the market for solar energy in the United States grew from 220 MW in 2007 to 357 MW in 2008 to 7.3 gigawatt (GW) in 2009, representing a CAGR of 62% and 1,948%, respectively. The market has grown significantly over the past 15 years, and Solarbuzz research shows that demand in the U.S. is expected to have strong growth over the next five years. Drivers for solar market growth include rapidly declining costs of solar systems as much as 20% to 40% over the next three years as well as government incentives including an investment tax credit (providing a 30% federal rebate for solar energy systems), renewable portfolio standards in 29 states, and selected state and local tax credits.

Spanish Solar Market Dynamics

Spain led the global market for solar in 2008, with 2.66 GW installed that year alone, according to a report from the European Photovoltaic Industry Association (EPIA). Spain imposed a 500 MW cap on the feed-in tariff in 2009, and the market decreased by 4% with 2.56 GW installed. Spain, however, is expected to resume growth to 1,050 MW by 2012. With a majority of Spain’s rooftop solar energy targets unmet, and government support of rooftop solar systems through a revised feed-in-tariff, the commercial rooftop market has become the leading solar market segment in Spain.

Italian Solar Market Dynamics

According to SolarPlaza, the global independent platform for the solar energy industry, the market for solar energy in Italy grew by more than 770% and 480% in 2007 and 2008, respectively. In 2009, European countries accounted for 5.6 GW, or 77% of the world’s demand with Italy being the second largest market in the world.. We believe that Italy represents an attractive solar market as a result of favorable sunlight patterns, high traditional power prices, and an attractive feed-in tariff of €0.346 per kWh (approximately $0.50). The Italian government has set ambitious goals for solar PV, with an initial target of 3,000 MW of installed PV power by 2016 and 8,500 MW of PV expected to be installed by 2020. We believe that grid-parity will become a fact of life in Italy during this timeframe, meaning that solar electricity will be able to compete with electricity from the grid without subsidies.

Our Products and Services

We provide a full range of installation services to our solar energy customers including design, engineering, procurement, permitting, construction, grid connection, warranty, system monitoring, and maintenance services. In addition, we are a reseller of solar energy system components including, but not limited to, racking, wiring, inverters, solar modules, and other related components sourced from the industry’s leading manufacturers and suppliers. We assist in arranging power purchase agreement programs for our customers. In 2010, we intend to offer direct power purchase agreements.

Business Segments

We operate in three business segments: U.S., Italy, and Spain.

U.S.

U.S. Commercial

Our U.S. commercial business consists of ground mount or rooftop solar energy projects generally ranging from 100 kilowatt (kWh) to 1.1 MW provided to corporate, municipal, agricultural, and utility customers. In this market, we design and build our solar energy systems to meet each customer’s individual needs and circumstances. We assess the customer’s annual power requirements and average daily consumption rates in different seasons of the year to size and engineer the solar energy system. We assess the customer’s site and if relevant roof size, configuration, and composition to determine the optimum location for the solar modules. We factor in information about the customer’s electrical service territory and its rate structures, and we identify the customer’s budget and preferred financing method, as well as the customer’s aesthetic preferences. We also identify the relevant federal, state, and local regulations, including building codes that are important to the cost, operation, and return on investment of the customer’s solar energy system, as well as relevant tax rates and various other factors. We assess this data using solar monitoring tools that enable us to design a solar energy system to a size and configuration that maximizes energy efficiency for each customer’s circumstances. We provide customers with a return on investment analysis and determine the rebates and performance-based incentives that are available to each customer. We prepare final construction plans to obtain a building permit and, as soon as the permit is approved, our installation professionals begin the installation by placing metal racking on the customer’s roof (or by building a ground mount), followed by installation of the solar modules, inverters, and the balance of systems components and safety equipment.

After the solar photovoltaic (PV) modules and inverters are procured and installed, we obtain a final inspection of the installation by the local building department, prepare and submit all rebate applications to the appropriate rebating jurisdiction, and apply for the local utility company to interconnect the customer’s solar energy system to the utility grid. The entire process from signing of the contract through final inspection by the local building department typically takes between 3 and 6 months, with the actual installation work usually requiring two weeks to two months.

U.S. Residential

Our U.S. residential business consists mainly of rooftop solar installations generally ranging from 5 kWh to 40 kWh provided to customers primarily in California and New Jersey as a result of the attractive government incentives in those states. We do provide installations in other states when financially attractive. The services we provide to our residential customers are largely similar to our U.S. commercial customers. Key differences include that the entire process typically takes between 60 to 90 days for residential customers versus 3 to 6 months for commercial customers, and the actual installation work usually requires two to five days for residential customers versus two weeks to two months for commercial customers.

U.S. Distribution

We also distribute solar modules and inverters in the U.S. In 2009, distribution revenue in the U.S. was minimal.

Italy

Our Italian business consists of distribution, ground mount, roof mount, and solar power plant installations. In Italy, a portion of our business consists of ground mount or rooftop solar energy projects generally ranging from 50 kWh to 500 kWh provided to corporate, municipal, agricultural, and utility customers. In Italy, our customers commission us to install solar energy systems based on customer-defined specifications, but we have the ability to define our own projects and select sites based on attractive solar characteristics. These projects are typically 1 MW in size. We enter into these projects generally with a reseller of solar power plants or a financial investor who contracts us to construct the project. Upon completion of a project, the acquirer of the project has the rights to the sell electricity to the Italian power authority at specified rates over 20 years based on Italy’s feed-in tariff. Global Green Energy (formerly Global Green Advisors) is a major reseller of solar power plants for our Italian operations, and we are currently in the process of completing construction of 3 MW’s under an agreement with this reseller.

Our Italian business also consists of distribution of solar modules and inverters. In 2009, distribution revenue in Italy amounted to $4.8 million.

Spain

Our Spanish business consists of rooftop solar installations generally ranging 5 kWh to 1 MW provided primarily to businesses that own commercial buildings or warehouses. Our Spanish business also serves other European countries other than Italy. The services we provide to our Spanish customers are largely similar to our U.S. commercial customers. Our global experience and unmatched engineering and design expertise strongly position us to capitalize on the commercial rooftop opportunities and further build our leadership role in this growing market. Starting in 2010, we perform distribution services whereby we procure solar modules and invertors and sell these to other solar integrators or commercial buyers.

In addition, our Spanish business is expanding its sales and distribution reach into other European countries, such as the Czech Republic, Sweden, and France, through a collaborative agreement and direct sales efforts. On March 29, 2010, we entered into a collaborative agreement with Plaan Czech, s.r.o. for a total of 19 MW of PV solar projects in the Czech Republic. We are currently engaged for three projects totaling 8.7 MW under this agreement.

Strategy

Our goal is to be the leading integrator of commercial solar energy systems. We intend to pursue the following strategies to achieve this goal:

Target multiple markets. We intend to continue to target numerous market segments and opportunities ranging from commercial and industrial to agricultural and residential, both domestically and internationally. Through geographic, market segment, and product diversification, we have reduced, and will continue to be able to reduce, the impact of economic and other fluctuations that any one individual market, segment, or region may have on our business.

Develop proprietary know how. We believe our experience in developing, designing, and installing large and complex solar projects differentiates us from many of our competitors. We intend to continue to develop proprietary turn-key solar power systems and continued improvements upon our prefabrication abilities for application in commercial, rooftop, and ground mount applications that will reduce design, permitting, and installation time and cost.

Balance in-house engineering with outsourced labor. We intend to balance the use of our in-house engineering, design, and installation staffs with the use of outsourcing when appropriate in order to improve the customer experience, maintain quality control, reduce costs, and protect our brand.

Expand our participation in “value added” businesses. We intend to continue to expand our offerings to include services such as providing after-market systems management programs and customized project finance solutions to customers and prospective customers. This will allow us to have greater participation in the ancillary revenue that our projects create, which currently is not a significant portion of our business.

Expand through both acquisitions and organic growth. As a growing number of states and countries adopt solar programs, we expect solar demand to continue to grow. We intend to continue to evaluate potential acquisitions to expand our presence worldwide. We view acquiring a local presence in a new market as a critical step in gaining a strong brand and presence in a market.

Develop financial tools such as leases or Power Purchase Agreements (PPAs) to help consumers and businesses decide in favor of solar power. A PPA is a long-term contract under which a customer has no up-front cost and instead agrees to purchase the energy produced by the solar system at a fixed rate, typically adjusted annually at an agreed rate, for 15, 20, or 25 years. The customer does not own the system and the elimination of a capital outlay simplifies the “going solar” decision.

Establish best practices across market segments. We intend to continue to focus on establishing and refining best practices for design, sales, and marketing that can be replicated throughout our different locations while identifying and centralizing operations that are best centralized in order to reduce the cost of operations and increase awareness of our services so that our best practices are applied in a uniform manner and delivered consistently across markets.

Customers

Our business consists of the installation of solar energy systems and all related components for use by commercial and industrial enterprises, municipalities, residential homeowners, and other solar energy providers. The following table highlights the breakdown of our revenue by market during our first quarter of 2010 and in 2009 and 2008:

		United States				Italy				Spain
2010 - First Quarter			28.6	%			27.2	%			44.2