PINX:QSPW Quantum Solar Power Corp Annual Report 10-K Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2012

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

For the transition period from _____ to _____

COMMISSION FILE NUMBER: 000-52686

QUANTUM SOLAR POWER CORP.
(Exact name of registrant as specified in its charter)

NEVADA 27-1616811
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   
Suite 300-1055 W. Hastings Street  
Vancouver, British Columbia, CANADA. V6E 2E9
(Address of principal executive offices) (Zip Code)
   
Registrant’s telephone number, including area code (604) 681-7311
   
Securities registered under Section 12(b) of the Exchange Act: NONE.
Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 Par Value per Share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act.
Yes [   ]     No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes [   ]     No [X]

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (s. 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]     No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [   ]

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   [   ] (Do not check if a smaller reporting company) Smaller reporting company [X]

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.
$29,372,923 on the basis of the price at which the common equity was sold stock on December 30, 2011.

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:
154,429,742 as at September 18, 2012.


QUANTUM SOLAR POWER CORP.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED JUNE 30, 2012

TABLE OF CONTENTS

  PAGE
     
PART I   3
     
ITEM 1. BUSINESS. 3
     
ITEM 1A. RISK FACTORS 8
     
ITEM 2. PROPERTIES. 14
     
ITEM 3. LEGAL PROCEEDINGS 14
     
ITEM 4. MINE SAFETY DISCLOSURES 14
     
PART II   15
     
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 15
     
ITEM 6. SELECTED FINANCIAL DATA 16
     
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 16
     
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 18
     
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 19
     
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 20
     
ITEM 9A. CONTROLS AND PROCEDURES. 20
     
ITEM 9B. OTHER INFORMATION. 21
     
PART III   22
     
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 22
     
ITEM 11. EXECUTIVE COMPENSATION. 24
     
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 26
     
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. 28
     
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. 29
     
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. 30
     
SIGNATURES   32

2


PART I

The information in this discussion contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding the Company's capital needs, business strategy and expectations. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate,” "predict," "potential" or "continue," the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks described below, and, from time to time, in other reports the Company files with the United States Securities and Exchange Commission (the “SEC”). These factors may cause the Company's actual results to differ materially from any forward-looking statement. The Company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements.

As used in this Annual Report, the terms “we,” “us,” “our,” “Quantum,” and the “Company” refer to Quantum Solar Power Corp., unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars, unless otherwise indicated.

ITEM 1.             BUSINESS.

OVERVIEW

Quantum Solar Power Corp. formerly QV, Quantum Ventures, Inc. was incorporated under the laws of the State of Nevada on April 14, 2004. From 2004 to 2009 we had been engaged in the software development business. Our business plan was to develop and commercialize the MediFlow Software Program, a medical tracking software program that will assist healthcare professionals in diagnosing and recommending treatment for patients. We decided to shift our business focus to solar energy in late 2009.

Our principal executive office is located in Vancouver, British Columbia, Canada. Our principal business is the research, development and marketing of next generation solar power generation devices utilizing our patent pending technology (the “Next Generation Device™ or NGD™ Technology”) for photovoltaic devices that do not use silicon or other, rare earth elements. Once we have completed development, we expect to derive substantially all revenues from royalty based licensing arrangements.

The NGD™ Technology, which is covered by two provisional U.S. patents and one Patent Cooperation Treaty Application, differs from conventional solar technology as it does not require expensive silicon based absorber components or rare earth elements. We have developed and built a proof of concept prototype of a next generation device utilizing the NGD™ Technology (see “Technology Acquisition” and “NGDTM Technology” below).

We are a development stage company. We have not earned any revenue to date nor have we engaged in any licensing agreements to date. We do not anticipate earning revenue until we have completed the development and testing of our NGD™ Technology. We are presently in the development stage of our business and we can provide no assurance that we will be able to complete commercial development or successfully sell or license products incorporating our solar power generation devices, once development and testing is complete. We have limited operations. Our research activities are currently suspended until we can pay outstanding creditors and fund continued research activities of which there is no assurance.

RECENT CORPORATE DEVELOPMENTS

Since the filing of our Quarterly Report for the fiscal quarter ended March 31, 2012 with the SEC, we experienced the following significant corporate developments:

Loan Agreement

On April 23, 2012, we secured an aggregate of $475,000 CDN in debt financing (the “Loan”) from Foundation Freehold Ltd. (“Foundation”). $343,000 CDN was advanced before our fiscal year ended June 31, 2012 and the remaining $132,000 CDN was advanced subsequent to our fiscal year end. At any time, Foundation may elect to receive shares of our common stock in exchange for any portion of the principal or interest outstanding on the Loan on the basis of one share for each CDN $0.02 of indebtedness converted. In the event of a default, Foundation may elect to receive shares on the basis of one share for each CDN $0.01 of indebtedness converted (the “Reduced Conversion Rate”). Foundation represented that it was not a “US Person” as that term is defined by Regulation S of the Securities Act of 1933, as amended (the “Securities Act”).

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The Loan is evidenced by promissory notes we executed in favor of Foundation. We are required to pay 9% annual interest on the Loan from April 25, 2012, the day of the first advance. The Loan is payable on April 23, 2015 and secured by a guarantee of our wholly owned subsidiary, 0935493 B.C. Ltd (“SubCo”) charging, in favor of Foundation, one of our PVD 75 Deposition tools and our Nova NanoSEM 430 Ultra-high resolution FESEM microscope to the indebtedness.

The Loan is currently in default because of our failure to pay interest that was due on September 30, 2012. We are in discussions with Foundation to settle the indebtedness of which there is no assurance.

On October 12, 2012, we entered into an amendment agreement (the “Amended Loan Agreement”) with Foundation. Under the terms of the Amended Loan Agreement, Foundation advanced us an additional $25,000 CDN and we reduced the Reduced Conversion Rate by 20% from $0.01 CDN to $0.008 CDN.

Amendment to CIO-BC Research Agreement

On May 23, 2012, Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), a company that conducts research and development activities on the NGDTM Technology on our behalf, entered into its sixth amendment agreement (the “Amended Research Agreement”) to the research agreement (the “CIO-BC Research Agreement”) with Simon Fraser University (“SFU”). The Amended Research Agreement was dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CDN $452,749 in respect of previous research activities conducted on our behalf. The Promissory Note bears interest at a rate of 9% per annum. To secure payment under the Amended Research Agreement, We, along with SubCo, have agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, three of our PVD 75 Deposition tools.

We are currently in default of our obligation to pay the indebtedness under the Promissory Note and have proposed that SFU take the three PVD 75 Deposition tools in settlement of the indebtedness.

Consulting Agreement

On May 23, 2012, our Board of Directors ratified, confirmed and approved the entry into a consulting agreement (the “Consulting Agreement”) with Dr. Edward Sargent dated effective March 9, 2012. The term of the Consulting Agreement is one year from the effective date. The Consulting Agreement may be terminated, without cause, on 30 days notice. Under the terms of the Consulting Agreement, Dr. Sargent has agreed to act as Chairman of our newly formed science advisory board (the “Science Advisory Board”) and will be required to perform the following services (the “Services”):

  (1)

Recruit new Science Advisory Board members;

     
  (2)

Participate in monthly advisory calls;

     
  (3)

Chair quarterly Science Advisory Board meetings; and

     
  (4)

Be accessible to the Corporation to provide guidance on business and technology strategy issues.

In consideration of the Services, we granted 250,000 non-qualified options (the “Options”) to Dr. Sargent, entitling him to purchase shares of our common stock at a price of $0.165 per share, exercisable until March 1, 2014. As at September 18, 2012, 125,002 of the Options are fully vested and 124,998 Options will vest in increments of 20,833 Options per month during the six-month period ended February 28, 2013. The Options were granted under our 2011 Stock Incentive Plan.

4


Science Advisory Board

On May 23, 2012, our Board of Directors approved the formation of the Science Advisory Board and appointed Dr. Sargent as our first member and Chairman. Dr. Sargent, will be responsible for recruiting and appointing additional Science Advisory Board members.

The Science Advisory Board’s duties include the following:

  (1)

Preparing objective evaluations of our progress in science and technology;

     
  (2)

Acting as ambassadors for us and our technology; and

     
  (3)

Evaluating new technologies and intellectual property.

Issuance of Securities

On August 3, 2012, we issued 3,900,000 units (each a “Unit”) at an effective price of $0.05 per Unit for total proceeds of $195,000 in satisfaction of subscriptions received during our fiscal quarter ended March 30, 2012. The issuance was completed pursuant to the provisions of Regulation S of the Act. Each Unit consisted of one share of our common stock and one share purchase warrant exercisable at a price of $0.25 per share until November 3, 2012. We issued an additional 290,000 shares to two fundraisers as payment of finder’s fees related to the offering. Each subscriber and fundraiser represented that they were not a “U.S. Person” as that term is defined under Regulation S of the Securities Act and was not acquiring the shares for the account or benefit of any U.S. Person.

Also on August 3, 2012, we issued 60,000 shares to a consultant. The shares were issued as compensation under the terms of a consulting agreement. The issuance was completed pursuant to the provisions of Regulation S of the Act. The consultant represented that he was not a “U.S. Person” as that term is defined in Regulation S of the Act and was not acquiring the shares for the account or benefit of any U.S. Person.

TECHNOLOGY ACQUISITION

We acquired the NGDTM Technology on December 16, 2009 by an agreement (the “Technology Acquisition Agreement”) with Canadian Integrated Optics (IOM) Limited, (“CIO”). In consideration of the NGD™ Technology, we issued 71,500,000 shares of our common stock to CIO (of which CIO transferred over 99% pursuant to the terms of a takeover bid, under Canadian Securities Laws) and Desmond Ross, our former director and executive officer, returned 47,000,000 shares to the treasury. Under the Technology Acquisition Agreement, we also agreed to pay CIO, or such other parties designated by CIO, including Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), for ongoing development and research costs under CIO-BC’s existing research agreement (the “CIO-BC Research Agreement) with Simon Fraser University (“SFU”). The initial term of the CIO-BC Research Agreement was until July 30, 2010.

Subsequent to entering into the Technology Acquisition Agreement, CIO-BC entered into an amendment agreement to the CIO-BC Research Agreement, whereby SFU agreed to extend the term until December 31, 2010. On December 23, 2010, CIO-BC entered into another amendment agreement dated January 1, 2011, whereby SFU agreed to further extend the term until July 31, 2011. On July 28, 2011, CIO-BC entered into another amendment agreement dated July 2, 2011, whereby SFU agreed to further extend the term until December 31, 2011. CIO-BC entered into another amendment agreement dated January 2, 2012, whereby SFU agreed to further extend the term until June 29, 2012 and in consideration of which we will pay $594,401 CDN plus expenses, during the term. During our fiscal year ended June 30, 2012, we entered into another amendment to the research agreement (the “Amended Research Agreement”) dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CDN $452,749 in respect of previous research activities conducted on our behalf. The Promissory Note bears interest at a rate of 9% per annum. We, along with our wholly owned subsidiary 0935493 B.C. Ltd, guaranteed the Promissory Note with three of our PVD 75 Deposition Tools.

We have had insufficient funds to make our payments to CIO-BC for ongoing research and development activities conducted at SFU. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the Amended Research Agreement has been suspended by SFU. We are currently evaluating our research options going forward. We have focused our activities on arranging financing to pay outstanding liabilities and fund continued research and development activities. There is no assurance that we will be able to secure sufficient financing on acceptable terms or at all.

5


NGD™ TECHNOLOGY

Our NGD™ Technology is a patent pending, technology and proof of concept prototype for producing solar power without the necessity of utilizing expensive silicon based absorber components or other rare earth elements.

Solar cells based on the NGD™ Technology can reach a regime of cost and efficiency not obtainable with conventional solar cells. As a result, we believe our NGD™ Technology has the potential to enable the manufacture of solar cells at significantly less cost per Watt than current producers.

Thin Film solar cell technologies have proven inexpensive to manufacture but are at present only capable of efficiencies in the 10% power conversion efficient (“PCE”) range. Crystalline silicon solar cells are in the 15% to 20% PCE range but are very expensive to manufacture due to the cost of silicon processing. The reason for both these shortfalls is directly linked with the semiconductors used in the fabrication process.

All currently available solar cell technologies rely on a photovoltaic effect in which an incoming solar photon knocks loose a negative charge, leaving behind a positive charge, in a semiconducting material such as silicon. The positive and negative charges are then collected through separate conducting layers to be delivered as current to a load. Defects within the semiconductor layer can affect the power conversion efficiency by reducing the voltage and the current delivered to the load. Elimination of these defects can only occur through expensive purification and processing.

The NGD™ Technology’s principle of operation avoids the detrimental effects of defects within the semiconductor absorber layers by disposing of it altogether, and thus has the potential to simultaneously satisfy the requirements of high power conversion efficiencies and low costs. In addition, by eliminating expensive and exotic materials and manufacturing in a continuous rather than batch or wafer based process, we believe module costs can be reduced well below $1 per Watt-peak (Wp), the nominal price of a solar module widely recognized as the standard of solar commercial enablement.

The market for solar energy has been limited by the costs of panels and by their low efficiencies. Quantum expects that with its low cost, high efficiency NGD™ that the economics of solar power will prove to be superior to alternatives and that new and unforeseen markets will open for solar devices.

The solar panel business has been in a high growth phase over the past years however it is not sustainable since the growth has been fundamentally based on the availability of tax incentives, subsidies and other inducements. The economics of unsubsidized solar power are not attractive except in certain niche applications where choices are limited and the high costs can be justified.

An average crystalline silicon cell solar module has an efficiency of 15%, an average thin film cell solar module has an efficiency of 6%. Thin film manufacturing costs potentially are lower, though. Crystalline silicon cell technology forms about 90% of solar cell demand. The balance comes from thin film technologies. Approximately 45% of the cost of a silicon cell solar module is driven by the cost of the silicon wafer, a further 35% is driven by the materials required to assemble the solar module.

Thin film manufacturer First Solar is reported in some publications to have approximately $6 billion in contracts between 2010 and 2013. If First Solar were to have the opportunity to accept contracts worth $1 trillion and had the manufacturing capability to fulfill these contracts they would still be inhibited and negatively governed by material availability. According to the U.S. Geological Survey, there is enough tellurium available in global reserves to meet only 0.02 Terawatts (“TRW”) of energy provision using existing thin film technology. The same applies to San Jose, California-based Nanosolar’s Indium supply. Both companies current material choices (according to the Andrea Feltrin, Alex Freundlich Report, Photovoltaics and Nanostructures Laboratories, Center for Advanced Materials and Physics Department, University of Houston, Texas) limits these companies forever to sub-Gigawatt energy production (maximum 0.02 TRW per year).

6


Current Thin Film companies are coming close to competing commercially with coal but the materials they use such as tellurium and indium are very rare and capable of meeting only 0.13% of the worldwide energy demand even if they accessed the entire worldwide reserves of these materials.

THE INDUSTRY

Energy is the most critical issue of the new century. Energy is a necessary part of the solution to all of the other great problems of our age which include access to clean water, wholesome food, a sustainable environment, an end to poverty, widely available education, democracy and a stable population. The provision of electrical energy was a $1 trillion per year in 2007 and expected to grow to $2 trillion by 2025. There are a variety of ways in which electrical energy can be generated; many involve burning fossil fuels (coal, oil, natural gas, etc.) with the concerns regarding CO2 related climate change this is becoming a less acceptable solution.

Renewable energy is the fastest growth segment of the electrical generation market. Solar power may ultimately be the answer to the energy needs of the world. In 2012, however, solar power remains ill-equipped for prime time deployment. This is due to the costs of installing such systems and therefore of the cost of the electrical energy they generate being much higher than the alternatives. There are at least two easily addressed causes for the high cost of solar, one is the costs of the panels themselves and the other is their energy conversion efficiency.

We have developed a revolutionary and disruptive new product solution for the conversion of solar energy to electricity.

CUSTOMERS

We will not have direct interaction with end users customers. We plan to license the NGD™ Technology to original equipment manufacturers (“OEM’s) and derive our revenue from licensee fees and royalties from sales by OEM’s. There is no assurance that we will be able to license the technology to OEM’s or if we are able to license the technology, that OEM’s will be able to derive any revenues from which we would receive royalties.

COMPETITION

The renewable energy, solar energy and solar module sectors are highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete within the larger electric power industry. In addition, we expect to compete with future entrants to the photovoltaic industry that offer new technological solutions. We may also face competition from semiconductor manufacturers and semiconductor equipment manufacturers or their customers, several of which have already announced their intention to start production of photovoltaic cells, solar modules or turnkey production lines. Some of these competitors may be part of larger corporations and have greater financial resources and greater brand name recognition than we do and may, as a result, be better positioned to adapt to changes in the industry or the economy as a whole.

We also face competition from companies that currently offer or are developing other renewable energy technologies (including wind, hydropower, geothermal, biomass and tidal technologies) and other power generation sources that burn conventional fossil fuels.

RESEARCH AND DEVELOPMENT ACTIVITIES

Our research and development activities are currently suspended as a result of outstanding indebtedness to SFU. We expended $2,710,407 on research and development during the fiscal year ended June 30, 2012.

7


PATENTS AND TRADEMARKS

We have made one international patent cooperation treaty (PCT) application, PCT/CA2011/050471, filed on July 29, 2011, and published on March 2, 2012. The priority date is July 30, 2010. This PCT application pertains to our intellectual property from our previous provisional patent applications (US 61/424,252 and 61/434,727).

The PCT application provides us a 30-month window from the priority date to determine which applicable countries we will be pursuing patent protection.

EMPLOYEES

We have no employees other than our executive officers Mr. Ehrmantraut and Dr. Pattantyus-Abraham.

ITEM 1A.           RISK FACTORS.

Amended Research Agreement is currently suspended we are not be able to continue our research and development activities on our NGDTM Technology at SFU.

We have not had enough cash to make our payments to CIO-BC for ongoing research and development costs. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the CIO-BC Research Agreement has been suspended by SFU. There are no assurances that a new agreement with SFU will be reached, that SFU will allow us to continue to use their facilities to conduct our research and development activities. We will require financing to repay the debt owed on the Promissory Note and conduct further research and development activities. There is no assurance that we will be able to secure financing on acceptable terms or at all.

CIO-BC has defaulted on the Promissory Note that we have guaranteed and we have defaulted on the interest payments on the Loan from Foundation. As a result, we may lose all four of our PVD 75 Deposition tools and our Nova NanoSEM 430 Ultra-high resolution FESEM microscope.

SFU has made a demand on the outstanding balance of the Promissory Note and Foundation has made a demand on the interest payable on the Loan. The Loan is currently in default because of our failure to pay interest that was due on September 30, 2012. We do not have sufficient finances to pay the outstanding interest on the Loan and the outstanding balance due on the Promissory Note. As a result, we may lose all four of our PVD 75 Deposition tools and our Nova NanoSEM 430 Ultra-high resolution FESEM microscope. If we lose all of our equipment, our business may fail. There is no assurance that we will be able to negotiate an alternative arrangement with Foundation or SFU or that we will obtain sufficient financing to settle our outstanding debts.

If photovoltaic technology is not suitable for widespread adoption, or if sufficient demand for solar modules does not develop or takes longer to develop than we anticipate, we may never earn revenues or become profitable.

The solar energy market is at a relatively early stage of development and the extent to which solar modules will be widely adopted is uncertain. If photovoltaic technology proves unsuitable for widespread adoption or if demand for solar modules fails to develop sufficiently, we may be unable to grow our business or generate sufficient net sales to sustain profitability. In addition, demand for solar modules in our targeted may not develop or may develop to a lesser extent than we anticipate. Many factors may affect the viability of widespread adoption of photovoltaic technology and demand for solar modules, including the following:

1.

cost-effectiveness of the electricity generated by photovoltaic power systems compared to conventional energy sources and products, including conventional energy sources, such as natural gas, and other non-solar renewable energy sources, such as wind;

2.

availability and substance of government subsidies, incentives and renewable portfolio standards to support the development of the solar energy industry;

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3.

performance and reliability of photovoltaic systems compared to conventional and other non-solar renewable energy sources and products;

4.

success of other renewable energy generation technologies, such as hydroelectric, tidal, wind, geothermal, solar thermal, concentrated photovoltaic, and biomass;

5.

fluctuations in economic and market conditions that affect the price of, and demand for, conventional and non-solar renewable energy sources, such as increases or decreases in the price of oil, natural gas and other fossil fuels; and

6.

fluctuations in capital expenditures by end-users of solar modules, which tend to decrease when the economy slows and interest rates increase.

An increase in interest rates or lending rates or tightening of the supply of capital in the global financial markets (including a reduction in total tax equity availability) could make it difficult for end-users to finance the cost of a photovoltaic system and could reduce the demand for solar modules utilizing our NGD™ Technology and/or lead to a reduction in the average selling price for photovoltaic modules.

Many of potential solar technology customers will depend on debt financing to fund the initial capital expenditure required to develop, build and purchase a photovoltaic system. As a result, an increase in interest rates or lending rates could make it difficult for our potential customers to secure the financing necessary to develop, build, purchase or install a photovoltaic system on favorable terms, or at all, and thus lower demand for our solar modules which could limit our growth or reduce our net sales. Due to the overall economic outlook, our end-users may change their decision or change the timing of their decision to develop, build, purchase or install a photovoltaic system. In addition, we believe that a significant percentage of our end-users install photovoltaic systems as an investment, funding the initial capital expenditure through a combination of equity and debt. An increase in interest rates and/or lending rates could lower an investor’s return on investment in a photovoltaic system, increase equity return requirements or make alternative investments more attractive relative to photovoltaic systems, and, in each case, could cause these end-users to seek alternative investments. A reduction in the supply of project debt financing or tax equity investments could reduce the number of solar projects that receive financing and thus lower demand for solar modules.

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

The market for electricity generation products is heavily influenced by foreign, federal, state and local government regulations and policies concerning the electric utility industry, as well as policies promulgated by electric utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity generation. In the United States and in a number of other countries, these regulations and policies have been modified in the past and may be modified again in the future. These regulations and policies could deter end-user purchases of photovoltaic products and investment in the research and development of photovoltaic technology. For example, without a mandated regulatory exception for photovoltaic systems, utility customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility grid. If these interconnection standby fees were applicable to photovoltaic systems, it is likely that they would increase the cost to our end-users of using photovoltaic systems which could make them less desirable, thereby harming our business, prospects, results of operations and financial condition. In addition, electricity generated by photovoltaic systems mostly competes with expensive peak hour electricity, rather than the less expensive average price of electricity. Modifications to the peak hour pricing policies of utilities, such as to a flat rate for all times of the day, would require photovoltaic systems to achieve lower prices in order to compete with the price of electricity from other sources.

We anticipate that solar modules utilizing our technology and their installation will be subject to oversight and regulation in accordance with national and local ordinances relating to building codes, safety, environmental protection, utility interconnection and metering and related matters. It is difficult to track the requirements of individual states and design equipment to comply with the varying standards. Any new government regulations or utility policies pertaining to our solar modules may result in significant additional expenses to us, our resellers and their customers and, as a result, could cause a significant reduction in demand for our solar modules.

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We face intense competition from manufacturers of crystalline silicon solar modules, thin film solar modules and solar thermal and concentrated photovoltaic systems; if global supply exceeds global demand, it could lead to a reduction in the average selling price for photovoltaic modules.

The solar energy and renewable energy industries are both highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with the larger electric power industry. Within the global photovoltaic industry, we face competition from crystalline silicon solar module manufacturers, other thin film solar module manufacturers and companies developing solar thermal and concentrated photovoltaic technologies.

Even if demand for solar modules continues to grow, the rapid expansion plans of many solar cell and module manufacturers could create periods where supply exceeds demand.

During any such period, our competitors could decide to reduce their sales price in response to competition, even below their manufacturing cost, in order to generate sales. As a result our partners may be unable to sell solar modules based on our technology at attractive prices, or for a profit, during any period of excess supply of solar modules, which would reduce our net sales and adversely affect our results of operations. Also, we may decide to lower our average selling price to certain customers in certain markets in response to competition.

Our failure to further refine our technology and develop and introduce improved photovoltaic products could render solar modules based on our technology uncompetitive or obsolete and reduce our net sales and market share.

We will need to invest significant financial resources in research and development to continue to improve our module conversion efficiency and to otherwise keep pace with technological advances in the solar energy industry. However, research and development activities are inherently uncertain and we could encounter practical difficulties in commercializing our research results. We seek to continuously improve our products and processes, and the resulting changes carry potential risks in the form of delays, additional costs or other unintended contingencies. In addition, our significant expenditures on research and development may not produce corresponding benefits. In addition, other companies could potentially develop a highly reliable renewable energy system that mitigates the intermittent power production drawback of many renewable energy systems, or offers other value-added improvements from the perspective of utilities and other system owners, in which case such companies could compete with us even if the levelized cost of electricity associated with such new system is higher than that of our systems. Our solar modules may be rendered obsolete by the technological advances of our competitors, which could reduce our net sales and market share.

Our failure to protect our intellectual property rights may undermine our competitive position and litigation to protect our intellectual property rights or defend against third-party allegations of infringement may be costly.

Protection of our proprietary processes, methods and other technology is critical to our business. Failure to protect and monitor the use of our existing intellectual property rights could result in the loss of valuable technologies. We rely primarily on patents, trademarks, trade secrets, copyrights and contractual restrictions to protect our intellectual property. Our existing provisional patents and future patents could be challenged, invalidated, circumvented or rendered unenforceable. Our pending patent applications may not result in issued patents, or if patents are issued to us, such patents may not be sufficient to provide meaningful protection against competitors or against competitive technologies.

We also rely upon unpatented proprietary manufacturing expertise, continuing technological innovation and other trade secrets to develop and maintain our competitive position. While we generally enter into confidentiality agreements with our associates and third parties to protect our intellectual property, such confidentiality agreements are limited in duration and could be breached and may not provide meaningful protection for our trade secrets or proprietary manufacturing expertise. Adequate remedies may not be available in the event of unauthorized use or disclosure of our trade secrets and manufacturing expertise. In addition, others may obtain knowledge of our trade secrets through independent development or legal means. The failure of our patents or confidentiality agreements to protect our processes, equipment, technology, trade secrets and proprietary manufacturing expertise, methods and compounds could have a material adverse effect on our business. In addition, effective patent, trademark, copyright and trade secret protection may be unavailable or limited in some foreign countries, especially any developing countries into which we may expand our operations. In some countries we have not applied for patent, trademark or copyright protection.

10


Third parties may infringe or misappropriate our proprietary technologies or other intellectual property rights, which could have a material adverse effect on our business, financial condition and operating results. Policing unauthorized use of proprietary technology can be difficult and expensive. Also, litigation may be necessary to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of the proprietary rights of others. We cannot assure you that the outcome of such potential litigation will be in our favor. Such litigation may be costly and may divert management attention and other resources away from our business. An adverse determination in any such litigation may impair our intellectual property rights and may harm our business, prospects and reputation. In addition, we have no insurance coverage against litigation costs and would have to bear all costs arising from such litigation to the extent we are unable to recover them from other parties.

We have yet to attain profitable operations and we will need additional financing to fund continued development of solar energy products.

We have incurred a net loss of $13,755,070 for the period from inception to June 30, 2012, and have earned no revenues to date. We expect to spend additional capital in order produce and market solar energy products which we are licensed to do, and establish our infrastructure and organization to support anticipated operations. We cannot be certain whether we will ever earn a significant amount of revenues or profit, or, if we do, that we will be able to continue earning such revenues or profit. Also, any economic weakness may limit our ability to continue development and ultimately market our products and services. Any of these factors could cause our stock price to decline and result in investors losing a portion or all of their investment. These factors raise substantial doubt that we will be able to continue as a going concern. We have cash in the amount of $29,432 as at June 30, 2012.

We do have sufficient financing to fund our anticipated expenditures for the next twelve months. We currently do not have sufficient arrangements for future financing and we may not be able to obtain financing when required.

Our financial statements included with this Quarterly Report have been prepared assuming that we will continue as a going concern. If we are not able to earn revenues, then we may not be able to continue as a going concern and our financial condition and business prospects will be adversely affected. These factors raise substantial doubt that we will be able to continue as a going concern and adversely affect our ability to obtain additional financing.

Our short operating history makes our business difficult to evaluate, accordingly, we have a limited operating history upon which to base an evaluation of our business and prospects.

Our business is in the early stage of development and we have not generated any revenues or profit to date. We commenced our operations in April, 2004. Because of our limited operating history, investors may not have adequate information on which they can base an evaluation of our business and prospects.

In order to establish ourselves as a technology supplier, we are dependent upon continued funding and the successful development of the NGD™ Technology and products. Failure to obtain funding for continued development and marketing would result in us having difficulty establishing licensing agreements for our technology or achieving profitability. Investors should be aware of the increased risks, uncertainties, difficulties and expenses we face as a development stage company and our business may fail and investors may lose their entire investment.

We have a limited operating history upon which to base an evaluation of our business and prospects. Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets such as renewable energy. These risks include the initial completion of a developed product, the demand for the company’s product, the company’s ability to adapt to rapid technological change, the level of product and price competition, the company’s success in setting up and expanding distribution channels and whether the company can develop and market new products and control costs.

11


To address these risks, we must successfully implement our business plan and marketing strategies. We may not successfully implement all or any of our business strategies or successfully address the risks and uncertainties that we encounter. We have no history of earning revenues and there is no assurance that we will be able to generate revenues from sales or that the revenues generated will exceed the operating costs of our business.

Operating results are difficult to predict, with the result that we may not achieve profitability and our business may fail.

Our future financial results are uncertain due to a number of factors, many of which are outside our control. These factors include:

1.

Our ability to successfully license our technology to OEM’s and the ability of licensees to attract customers;

2.

Our ability to generate revenue through the licensing of the NGD™ Technology;

3.

The amount and timing of costs relating to expansion of our operations;

4.

The announcement or introduction of competing distributors and products of competitors; and

5.

General economic conditions and economic conditions specific to the solar power generation.

We believe that we can compete favorably on these factors. However, we will have no control over how successful our competitors are in addressing these factors. These factors could negatively impact on our financial results, with the result that we may not achieve profitability and our business may fail.

We will require additional financing and may not be able to continue operations if additional financing is not obtained.

We have not obtained sufficient financing to fund our anticipated business activities over the next twelve months. Our total expenditures over the next twelve months are anticipated to be approximately $1,700,000 the majority of which is due to the development and marketing of our products and general, legal, accounting and administrative expenses associated with our reporting obligations under the Exchange Act. Depending on the success of our initial marketing efforts, we estimate that we will require further funding to implement an advertising campaign to establish and enhance awareness of our products.

The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in Note 1 of our June 30, 2012 year end audited financial statements, we are in the development stage of operations, have had losses from operations since inception, and have insufficient working capital available to meet ongoing financial obligations over the next fiscal year. After the fiscal year end, we will require additional financing for any operational expenses and to pursue our plan of operation. We will require additional capital and financing in order to continue otherwise our business will fail. We have no agreements for additional financing and there can be no assurance that additional funding will be available to us on acceptable terms in order to enable us to complete our plan of operation.

If we fail to re-negotiate our secured debt obligations to our secured creditors, we could lose our assets and be forced to discontinue our business.

We will depend on recruiting and retaining qualified personnel and the inability to do so would seriously harm our business.

Our success is dependent in part on the services of certain key management personnel, including Dr. Andras Pattantyus-Abraham our Chief Executive Officer, President and Chief Technology Officer, Graham R. Hughes, our Chief Financial Officer, Secretary and Treasurer, and Daryl J. Ehrmantraut our Chief Operating Officer. We have an employment agreement with Mr. Ehrmantraut. We do not have employment agreements with Mr. Hughes or Dr. Pattantyus-Abraham. We do not have any employment agreements with any third parties providing services to us. The experience of these individuals is an important factor contributing to our success and growth and the loss of one or more of these individuals could have a material adverse effect on our company. Our future success also depends on our attracting, retaining and motivating highly skilled personnel and we may be unable to retain our key personnel or attract, assimilate or retain other highly qualified personnel in the future.

12


We may become liable for defects or patent disputes that arise and this could negatively affect our business.

We may become liable for any defects that exist in the NGD™ Technology, or any patent disputes. If we are deemed to be liable for any defects or licensing issues, this will have a material adverse impact on our financial condition and results of operation.

Because we are significantly smaller and less established we may lack the financial resources necessary to compete effectively and sustain profitability.

Our future success depends on our ability to compete effectively with other distributors of other solar technology. Many of these competitors are more established, offer more products, services and features, have a greater number of clients, locations, and employees, and also have significantly greater financial, technical, marketing, public relations, name recognition, and other resources than we have. While our objective is to continue to develop our technology, if we do not compete effectively with current and future competitors, we may not generate enough revenue to be profitable. Any of these factors could cause our stock price to decline and result in investors losing a portion or all of their investment. Increased competition may result in increased operating costs and the inability to generate revenues, any one of which could materially adversely affect our business, results of operations and financial condition. Many of our current and potential competitors have significantly greater financial, marketing, customer support, technical and other resources than us. As a result, such competitors may be able to attract potential customers away from us, and they may be able to devote greater resources to the development and promotion of their products than we can.

We do not intend to pay dividends in the near future.

We have not declared any dividends and we do not plan to declare any dividends in the foreseeable future. Our board of directors determines whether to pay dividends on our issued and outstanding shares. The declaration of dividends will depend upon our future earnings, our capital requirements, our financial condition and other relevant factors. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:

1.

We would not be able to pay our debts as they become due in the usual course of business; or

   
2.

Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

Our board does not intend to declare any dividends on our shares for the foreseeable future.

Our business is exposed to foreign currency fluctuations causing negative changes in exchange rates to result in greater costs.

A portion of our expenses and capital spending will be transacted in Canadian dollars. We do not have a foreign currency hedging program in place. Due to the unpredictable behavior of foreign currency exchange rate fluctuations we cannot assure that this will not have a material adverse impact on our financial condition and results of operation.

Because our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.

13


Because our securities constitute "penny stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

1.

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

   
2.

contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

   
3.

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

   
4.

contains a toll-free telephone number for inquiries on disciplinary actions;

   
5.

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

   
6.

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

ITEM 1B.           UNRESOLVED STAFF COMMENTS

None.

ITEM 2.             PROPERTIES.

Our principal office is located at Suite #300, located in the Guinness Tower, 3rd Floor at 1055 West Hastings Street, Vancouver, British Columbia, V6E 2E9 Canada.

ITEM 3.             LEGAL PROCEEDINGS.

None.

ITEM 4.             MINE SAFETY DISCLOSURES

None.

14


PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Quotations for our common stock are currently on the Over-The-Counter Bulletin Board (the “OTC Bulletin Board”) under the symbol "QSPW." The following is the high and low close information for our common stock during each fiscal quarter of our last two fiscal years.

QUARTER
HIGH
($)
LOW
($)
1st Quarter 2011 2.50 1.75
2nd Quarter 2011 2.25 2.24
3rd Quarter 2011 2.80 1.50
4th Quarter 2011 1.51 0.51
1st Quarter 2012 1.10 0.55
2nd Quarter 2012 0.9 0.18
3rd Quarter 2012 0.28 0.07
4th Quarter 2012 0.12 0.04

The high and low close price information provided above was obtained from the Yahoo Finance and the OTC Bulletin Board. The market quotations provided reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

Holders of Our Common Stock

As of September 18, 2012, there were 154,429,742 shares of our common stock issued and outstanding that are held of record by 260 registered stockholders. We believe that a number of stockholders hold stock on deposit with their brokers or investment bankers registered in the name of stock depositories.

Dividends

We have not declared any dividends on our common stock since our inception. There are no dividend restrictions that limit our ability to pay dividends on our common stock in our Articles of Incorporation or Bylaws. Our governing statute, Chapter 78 of the Nevada Revised Statute (“NRS”), does provide limitations on our ability to declare dividends. Section 78.288 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:

(a)

we would not be able to pay our debts as they become due in the usual course of business; or

   
(b)

our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution (except as otherwise specifically allowed by our Articles of Incorporation).

Recent Sales of Unregistered Securities

On August 3, 2012, we issued 3,900,000 units (each a “Unit”) at an effective price of $0.05 per Unit for total proceeds of $195,000 in satisfaction of subscriptions received during our fiscal quarter ended March 30, 2012. The issuance was completed pursuant to the provisions of Regulation S of the Act. Each Unit consisted of one share of our common stock and one share purchase warrant exercisable at a price of $0.25 per share until November 3, 2012. We issued an additional 290,000 shares to two fundraisers as payment of finder’s fees related to the offering. Each subscriber and fundraiser represented that they were not a “U.S. Person” as that term is defined under Regulation S of the Securities Act and was not acquiring the shares for the account or benefit of any U.S. Person.

15


Also on August 3, 2012, we issued 60,000 shares to a consultant. The shares were issued as compensation under the terms of a consulting agreement. The issuance was completed pursuant to the provisions of Regulation S of the Act. The consultant represented that he was not a “U.S. Person” as that term is defined in Regulation S of the Act and was not acquiring the shares for the account or benefit of any U.S. Person.

ITEM 6.             SELECTED FINANCIAL DATA.

Not Applicable.

ITEM 7.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

PLAN OF OPERATION

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the year ended June 30, 2012 and changes in our financial condition from June 30, 2011.

If we can obtain sufficient financing we intend to continue the final development of our NGD™ Technology, and identify and engage original equipment manufacturers (“OEM’s”) interested in licensing our technology. We anticipate that the licensing agreements will be between us and OEM’s with the expertise and facilities required to mass manufacture solar cells based on our NGD™ Technology and that the OEM’s will distribute the solar cells worldwide using their existing sales and marketing channels and at their expense. The cost of manufacture will be solely the responsibility of the OEM’s. We expect to receive revenue on royalties based on the number of cells produced by the OEM’s. This business model should allow us to maximize capital resources available at startup and through our OEM licensees positively address the demand for high efficiency solar cell devices. This business model should enable us to increase revenues and create brand recognition without the time, capital and risk associated with manufacturing plant construction.

Our research activities are currently suspended. We will need to acquire additional financing to pay outstanding liabilities and to fund additional research and development activities. There is no assurance that we will be able to obtain sufficient financing to proceed with our plan of operation.

RESULTS OF OPERATION

For the period from inception on April 14, 2004 to June 30, 2012, we have not earned any operating revenue. We had an accumulated net loss of $13,755,070 since inception. We incurred total operating expenses of $13,649,070 since inception.

We have not earned any revenues since inception. We do not anticipate earning revenues until such time as we complete further development of, and enter into licensing agreements for our NGD™ Cell Technology. We are presently in the development stage of our business and we can provide no assurance that we will be able to generate revenues from sales of our product or that the revenues generated will exceed the operating costs of our business.

Administrative Expenses

Administrative expenses for this period included the following expenses:

16



Administrative Expenses   Fiscal Year Ended June 30     Percentage  
                Increase/  
    2012     2011     (Decrease)  
Amortization of Equipment $ 1,715   $ 1,112     54.2%  
Amortization of Patents   1,496,448     76,741     1,850.0%  
General And Administrative   650,924     539,105     20.7%  
Interest and Accretion of Convertible Loan   339,642     -     100.0%  
Professional Fees   818,041     543,419     50.5%  
Research and Development   2,710,407     2,322,046     16.7%  
Stock Based Compensation   1,361,639     1,246,115     9.3%  
Total Administrative Expenses $  7,378,816   $  4,728,538     56.0%  

Our administrative expenses for the fiscal year ended 2012 have increased primarily as a result of increases in amortization of equipment and patents, general and administrative expenses, interest and accretion of convertible loan, professional fees, research and development and stock based compensation.

General and administrative expenses primarily relate to fees paid to our officers, directors, consultants and employees.

Interest and Accretion of Convertible Loan relates to our Loan from Foundation Freehold Ltd.

Stock based compensation relates to recorded expenses for stock options granted to our directors, officers and consultants.

Professional fees related to meeting our ongoing reporting requirements with the SEC and consultant fees for investor relations activities.

Subject to obtaining sufficient financing, we anticipate our operating expenses will increase as we undertake our plan of operation. The increase will be attributable to our development, of our NGD™ solar cell technology. We also anticipate our ongoing operating expenses will also increase as a result of our ongoing reporting requirements under the Exchange Act.

Net Loss

We incurred a loss in the amount of $13,755,070 for the period from inception to June 30, 2012. Our loss was attributable to the costs of operating expenses which primarily consisted of research and development costs, general and administrative expenses, amortization of equipment and patents, stock based compensation, expenses related to loans received and preparing and filing our Current, Quarterly and Annual Reports.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

                Percentage  
    At June 30, 2012     At June 30, 2011     Increase /(Decrease)  
Current Assets $  36,934   $  344,965     (89.3)%  
Current Liabilities   (1,567,857 )   (162,417 )   865.3%  
Working Capital Surplus (Deficit) $  (1,530,923 ) $  182,548     (938.6)%  

Cash Flows

      Year Ended     Year Ended  
      June 30, 2012     June 30, 2011  
  Cash Flows used in Operating Activities $  (2,969,910 ) $  (3,440,271 )
  Cash Flows used in Investing Activities   (3,620 )   -  
  Cash Flows provided by Financing Activities   2,659,673     3,713,330  
  Net Increase (Decrease) in Cash During Period $  (313,857 ) $  273,059  

17


As at June 30, 2012, we had cash of $29,432 and a working capital deficit of $1,530,923.

The change in our working capital at June 30, 2012 from our year ended June 30, 2011 are primarily a result of increases in accounts payable and accrued liabilities, the recording of loans payable and decreases in cash. The decrease in our cash flows during the year ended on June 30, 2012 is primarily due to purchases of equipment used in our research and development activities and decreases in proceeds from the issuance of our common stock. The decrease in our cash used during the period ended on June 30, 2012, from the comparable periods of the preceding fiscal years are due decreased research and development activities related to our NGDTM Technology. This was partially offset by our professional fees related to the preparation of our current, quarterly and annual reports filed on Forms 8-K, 10-Q and 10-K respectively, with the SEC and from the fact that we had no revenue on June 30, 2012.

Future Financings

As of June 30, 2012, we had cash on hand of $29,432. Since our inception, we have used proceeds from the sales of our common stock and loans to fund our operations and for our technology acquisition. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. For these reasons, our auditors stated in their report to our audited financial statements for the year ended June 30, 2012, that there is substantial doubt that we will be able to continue as a going concern.

On August 17, 2012, our Board of Directors approved an offering (the “Foreign Units Offering”) of up to 10,000,000 shares (the “Shares”) at a price of $0.02 US per Share pursuant to Regulation S of the Securities Act. To date we have not received any subscriptions under this offering.

We have no revenues to date from our inception. We anticipate continuing to rely on loans or equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. We do not believe that we have obtained sufficient financing to cover our anticipated expenses over the next four months. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for to fund our planned business activities.

Off-Balance Sheet Arrangements

On May 23, 2012, Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), a company that conducts research and development activities on the NGDTM Technology on our behalf, entered into its sixth amendment agreement (the “Amended Research Agreement”) to the research agreement (the “CIO-BC Research Agreement”) with SFU. The Amended Research Agreement was dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CDN $452,749 in respect of previous research activities conducted on our behalf. The Promissory Note bears interest at a rate of 9% per annum.

To secure payment under the Amended Research Agreement, We, along with SubCo, have agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, three of our PVD 75 Deposition tools.

We entered into this arrangement with SFU in order to ensure that research and development activities could continue. In the event that CIO defaults on the Promissory Note, SFU will be able to collect from us. Our research activities with SFU have been suspended due to non-payment. SFU has made a demand for payment of the Promissory Note and we are in default. We may lose three of our PVD 75 Deposition tools if we cannot settle the outstanding indebtedness.

CRITICAL ACCOUNTING POLICIES

Our critical accounting policies are included in the Notes to our Financial Statements contained in this Annual Report on Form 10-K.

ITEM 7A.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

18


ITEM 8.             FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Index to Financial Statements

1.

Report of Independent Registered Public Accounting Firms:

   
2.

Audited Consolidated Financial Statements for the year ended June 30, 2012, including:


a.

Consolidated Balance Sheets as at June 30, 2012 and 2011;

   
b.

Consolidated Statements of Operations for the years ended June 30, 2012 and 2011 and accumulated from inception to June 30, 2012;

   
c.

Consolidated Statements of Cash Flows for the years ended June 30, 2012 and 2011 and accumulated from inception to June 30, 2012;

   
d.

Consolidated Statement of Stockholders’ Equity (Deficiency) for the period from inception to June 30, 2012; and

   
e.

Notes to the Consolidated Financial Statements.

19


DAVIDSON & COMPANY LLP      
  Chartered Accountants A Partnership of Incorporated Professionals

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of
Quantum Solar Power Corp.
(A Development Stage Company)

We have audited the accompanying consolidated balance sheets of Quantum Solar Power Corp. as of June 30, 2012 and 2011 and the related consolidated statements of operations, stockholders' equity (deficiency) and cash flows for the years ended June 30, 2012 and 2011 and for the period from April 14, 2004 (inception) to June 30, 2012. Quantum Solar Power Corp.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Quantum Solar Power Corp. as of June 30, 2012 and 2011, and the results of its operations and its cash flows for the years ended June 30, 2012 and 2011, and for the period from April 14, 2004 (inception) to June 30, 2012, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that Quantum Solar Power Corp. will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses from operations, defaulted on loan and operating agreements and has no current source of revenue that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

“DAVIDSON & COMPANY LLP”

Vancouver, Canada Chartered Accountants

October 12, 2012



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)

    June 30,     June 30,  
    2012     2011  
ASSETS            
             
Current            
   Cash $  29,432   $  343,289  
   Receivables   6,852     -  
   Prepaid expenses   650     1,676  
Total Current Assets   36,934     344,965  
             
Equipment (Note 3)   3,573     1,668  
Patents (Note 4)   -     1,496,448  
             
Total Assets $  40,507   $  1,843,081  
             
             
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)        
             
Current            
   Accounts payable and accrued liabilities $  1,218,361   $  162,417  
   Loans payable (Note 5)   12,910     -  
   Convertible loan (Note 6)   336,586     -  
Total Liabilities   1,567,857     162,417  
             
Stockholders' equity (deficiency)            
   Preferred stock, $0.001 par value 
      10,000,000 shares authorized - no shares issued and outstanding 
   Common stock, $0.001 par value 400,000,000 shares authorized and 
      150,179,742 shares outstanding as of June 30, 2012 
      (2011 – 146,927,692) (Note 7)
  150,179     146,927  
   Subscriptions received in advance (Note 7)   195,000     -  
   Commitment to issue shares (Note 7)   18,700     60,000  
   Additional paid in capital (Note 7)   12,235,841     8,221,991  
   Accumulated deficit during development stage   (14,127,070 )   (6,748,254 )
Total Stockholders' Equity (Deficiency)   (1,527,350 )   1,680,664  
Total Liabilities and Stockholders' Equity (Deficiency) $  40,507   $  1,843,081  
             
Nature and continuance of operations (Note 1)            
Subsequent event (Note 11)            

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

F-1



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)

                For the  
                period from  
    For the     For the     April 14, 2004  
    year ended     year ended     (Inception) to  
    June 30,     June 30,     June 30,  
    2012     2011     2012  
                   
OPERATING EXPENSES                  
   Amortization of equipment $  1,715   $  1,112   $  3,383  
   Amortization of patents   1,496,448     76,741     1,611,559  
   General and administrative (Note 9)   650,924     539,105     1,640,475  
   Interest and accretion of convertible loan   339,642     -     339,642  
   Professional fees   818,041     543,419     1,570,857  
   Research and development   2,710,407     2,322,046     5,715,691  
   Stock-based compensation (Note 7)   1,361,639     1,246,115     2,767,463  
    (7,378,816 )   (4,728,538 )   (13,649,070 )
OTHER ITEM                  
   Impairment of intangible assets   -     -     (106,000 )
Loss and comprehensive loss for the year $  (7,378,816 ) $  (4,728,538 ) $  (13,755,070 )
                   
Basic and diluted loss per common share $  (0.05 ) $  (0.03 )      
Weighted average number of
    common shares outstanding
148,930,408 145,252,662

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

F-2



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Expressed in United States Dollars)

                                        Total  
                Additional     Commitment     Subscriptions     Accumulated     Stockholders'  
                Paid in     to Issue     Received in     Deficit During     Equity  
    Shares     Amount     Capital     Shares     Advance     the Dev. Stage     (Deficiency)  
Balance, April 14, 2004 (Inception)   -   $  -   $  -   $  -   $  -   $  -   $  -  
Common shares issued at par   117,200,000     15     92,485     -     -     -     92,500  
   Loss   -     -     -     -     -     (9,557 )   (9,557 )
Balance, June 30, 2004   117,200,000     15     92,485     -     -     (9,557 )   82,943  
   Loss   -     -     -     -     -     (40,111 )   (40,111 )
Balance, June 30, 2005   117,200,000     15     92,485     -     -     (49,668 )   42,832  
   Loss   -     -     -     -     -     (26,654 )   (26,654 )
Balance, June 30, 2006   117,200,000     15     92,485     -     -     (76,322 )   16,178  
   Loss   -     -     -     -     -     (15,652 )   (15,652 )
Balance, June 30, 2007   117,200,000     15     92,485     -     -     (91,974 )   526  
   Common shares issued at $2.00 
      per share
  100,000     100     199,900     -     -     -     200,000  
   Loss   -     -     -     -     -     (166,032 )   (166,032 )
Balance, June 30, 2008   117,300,000     115     292,385     -     -     (258,006 )   34,494  
   Loss   -     -     -     -     -     (28,747 )   (28,747 )
Balance, June 30, 2009   117,300,000     115     292,385     -     -     (286,753 )   5,747  
   Private placement   280,000     280     559,720     -     -     -     560,000  
   Share issuance costs   -     -     (4,140 )   -     -     -     (4,140 )
   Stock-based compensation   -     -     159,709     -     -     -     159,709  
   Commitment to issue shares   -     -     -     112,632     -     -     112,632  
   Acquisition of patents   71,500,000     71,500     1,540,059     -     -     -     1,611,559  
   Shares issued for services   50,000     50     99,950     -     -     -     100,000  
   Par value reclassification   -     117,185     (117,185 )   -     -     -     -  
   Return to treasury   (47,000,000 )   (47,000 )   47,000     -     -     -     -  
   Loss   -     -     -     -     -     (1,360,963 )   (1,360,963 )
Balance, June 30, 2010   142,130,000   $  142,130   $  2,577,498   $  112,632   $  -   $  (1,647,716 ) $  1,184,544  

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

F-3



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
(Expressed in United States Dollars)

                                  Accumulated     Total  
                Additional     Commitment     Subscriptions     Deficit During     Stockholders'  
                Paid in     to Issue     Received in     the     Equity  
    Shares     Amount     Capital     Shares     Advance     Dev. Stage     (Deficiency)  
Balance, June 30, 2010   142,130,000   $  142,130   $  2,577,498   $  112,632   $  -   $  (1,647,716 ) $  1,184,544  
   Dividend-warrants   -     -     372,000     -     -     (372,000 )   -  
   Private placement   4,049,560     4,049     4,045,511     -     -     -     4,049,560  
   Return to nonqualified investors   (8,000 )   (8 )   (15,992 )   -     -     -     (16,000 )
   Exercise of warrants   372,000     372     3,348     -     -     -     3,720  
   Shares issued as finder’s fees   161,500     161     161,339     -     -     -     161,500  
   Share issuance costs   -     -     (390,237 )   -     -     -     (390,237 )
   Stock-based compensation   -     -     1,246,115     -     -     -     1,246,115  
   Shares issued for services   222,632     223     222,409     (112,632 )   -     -     110,000  
   Commitment to issue shares   -     -     -     60,000     -     -     60,000  
   Loss   -     -     -     -     -     (4,728,538 )   (4,728,538 )
Balance, June 30, 2011   146,927,692     146,927     8,221,991     60,000     -     (6,748,254 )   1,680,664  
   Private placements   2,662,050     2,662     2,128,948     -     -     -     2,131,610  
   Shares issued for services   590,000     590     203,110     (60,000 )   -     -     143,700  
   Share issuance costs   -     -     (21,805 )   -     -     -     (21,805 )
   Stock-based compensation   -     -     1,361,639     -     -     -     1,361,639  
   Subscriptions received in advance   -     -     -     -     195,000     -     195,000  
   Commitment to issue shares   -     -     -     18,700     -     -     18,700  
   Beneficial conversion feature 
      attributed to convertible loan
  -     -     341,958     -     -     -     341,958  
   Loss   -     -     -     -     -     (7,378,816 )   (7,378,816 )
                                           
Balance, June 30, 2012   150,179,742   $  150,179   $  12,235,841   $  18,700   $  195,000   $ (14,127,070 ) $ (1,527,350 )

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

F-4



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)

                For the Period  
    For the     For the     April 14, 2004  
    year ended     year ended     (Inception) to  
    June 30,     June 30,     June 30,  
    2012     2011     2012  
                   
CASH FLOWS FROM OPERATING ACTIVITIES                  
Loss for the year $  (7,378,816 ) $  (4,728,538 ) $  (13,755,070 )
Items not affecting cash:                  
   Amortization of equipment   1,715     1,112     3,383  
   Amortization of patents   1,496,448     76,741     1,611,559  
   Impairment of intangible assets   -     -     106,000  
   Stock-based compensation   1,361,639     1,246,115     2,767,463  
   Shares for management services   -     -     100,000  
   Shares for consulting and management bonuses   162,400     170,000     445,032  
   Interest and accretion on convertible loan   339,642     -     339,642  
   Unrealized foreign exchange loss on loans payable   306     -     306  
Changes in non-cash working capital items:                  
   (Increase) decrease in receivables   (6,852 )   4,638     (6,852 )
   Decrease (increase) in prepaid expenses   1,026     9,700     (650 )
   Increase (decrease) in accounts payable and accrued liabilities   1,052,582     (220,039 )   1,223,999  
Net cash used in operating activities   (2,969,910 )   (3,440,271 )   (7,165,188 )
CASH FLOWS FROM INVESTING ACTIVITIES                  
   Equipment   (3,620 )   -     (6,956 )
   Purchase of technology rights   -     -     (15,000 )
   Purchase of intangible assets   -     -     (100,000 )
Net cash used in investing activities   (3,620 )   -     (121,956 )
                   
CASH FLOWS FROM FINANCING ACTIVITIES                  
   Proceeds from line of credit and loans payable   354,868     -     398,581  
   Proceeds from issuance of common stock   2,131,610     3,973,060     7,033,670  
   Proceeds from exercise of warrants   -     3,720     3,720  
   Share issuance costs   (21,805 )   (228,737 )   (254,682 )
   Refunds to nonqualified investors   -     (16,000 )   (16,000 )
   Subscriptions received in advance   195,000     -     195,000  
   Cash used to pay line of credit and loans payable   -     (18,713 )   (43,713 )
Net cash provided by financing activities   2,659,673     3,713,330     7,316,576  
                   
Change in cash during the year   (313,857 )   273,059     29,432  
Cash, beginning of year   343,289     70,230     -  
Cash, end of year $  29,432   $  343,289   $  29,432  
Supplemental disclosures with respect to cash flows
    (Note 8)
           

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

F-5



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

1.

NATURE AND CONTINUANCE OF OPERATIONS

   

Quantum Solar Power Corp. (the “Company”) was incorporated in Nevada on April 14, 2004. The Company is a development stage company engaged in the business of developing and commercializing next generation solar power technology under the name Next Generation Device™ abbreviated NGD™. Quantum’s NGD™ is a patent pending, functioning, laboratory model that demonstrates its utility in solar power conversion.

   

The Company operates in one reportable segment being the research and development of solar power technology in Canada and the United States of America. Revenues will be substantially derived from royalty based licensing arrangements in this reporting segment.

   

Going concern

   

These consolidated financial statements have been prepared consistent with accounting policies generally accepted in the United States (“U.S. GAAP”) assuming the Company will continue as a going concern. Currently, the Company has no sales and has incurred a loss of $7,378,816 for the year ended June 30, 2012 and an accumulated loss of $13,755,070 for the period from April 14, 2004 (inception) to June 30, 2012. The Company has also experienced the following:

   

Suspension of research agreement

   

On May 23, 2012, Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), a company that conducts research and development activities on behalf of the Company, entered into an amendment agreement (the “Amended Research Agreement”) to the research agreement (the “CIO-BC Research Agreement”) with Simon Fraser University (“SFU”). The Amended Research Agreement was dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CAD$452,749 in respect of previous research activities conducted on the Company’s behalf. To secure payment under the Amended Research Agreement, the Company has agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, certain research equipment (Note 3).

   

The Company has not had enough cash to make payments to CIO-BC for ongoing research and development costs. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the CIO-BC Research Agreement has been suspended by SFU. SFU has made a demand for payment on the outstanding balances. There are no assurances that a new agreement with SFU will be reached, that SFU will allow the Company to continue to use their facilities to conduct the Company’s research and development activities. The Company will require financing to repay the debt owed on the Promissory Note and conduct further research and development activities. There is no assurance that the Company will be able to secure financing on acceptable terms or at all.

   

Default on convertible loan agreement

   

On April 23, 2012, the Company secured an aggregate of CAD$475,000 in debt financing from Foundation Freehold Ltd. (“Foundation”) (Note 6) of which CAD$343,000 was advanced before the Company’s fiscal year ended June 31, 2012 and the remaining CAD$132,000 was advanced subsequent to the Company’s fiscal year end. The Loan became in default due to failure to pay interest that was due on September 30, 2012. Subsequent to June 30, 2012 the Company received a notice of default and is in discussions with Foundation to settle the indebtedness of which there is no assurance.

   

These conditions indicate the existence of a material uncertainty that cast a substantial doubt about the Company’s ability to continue as a going concern. The future of the Company is dependent upon its ability to obtain financing, resume research activities and protect its proprietary process upon future profitable operations from development and commercialization of an NGD™.

F-6



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

1.

NATURE AND CONTINUANCE OF OPERATIONS (cont’d)

   

Going concern (cont’d)

   

Management is in the process of obtaining additional financing, which may involve debt or equity offerings, and negotiating an agreement to continue conducting research. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed. There are no assurances, however, with respect to the future success of these plans.

   

The accompanying consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company fail in any of the above objectives and is unable to operate for the coming year.

   
2.

SIGNIFICANT ACCOUNTING POLICIES

   

Basis of presentation and consolidation

   

The accompanying consolidated financial statements have been prepared in accordance with U.S. GAAP and are expressed in U.S. dollars. The consolidated financial statements have been prepared under the guidelines of Accounting and Reporting by Development Stage Enterprises. A development stage enterprise is one in which planned principal operations have not commenced, or if its operations have commenced, there have been no significant revenues therefrom. As of June 30, 2012, the Company had not commenced its planned principal operations.

   

These consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary, 0935493 BC Ltd. (incorporated in British Columbia, Canada on April 10, 2012). All significant inter-company balances and transactions have been eliminated upon consolidation.

   

Use of estimates

   

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounts that require estimates relate to the valuation of deferred tax assets, stock-based compensation, the estimated useful life of equipment, and the valuation of shares issued for technology, bonuses and services.

   

Start-up expenses

   

The Company has adopted Standard of Position (“SOP”) No.98-5 “Reporting the Costs of Start-up Activities,” which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company’s formation have been included in the Company’s general and administrative expenses for the period from inception on April 14, 2004 to June 30, 2012.

F-7



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d)

   

Foreign currency translations

   

The Company and its wholly own subsidiary’s functional currency is the United States dollar. There are significant transactions in Canadian dollars; these are recorded in US dollars using the exchange rates in effect on the date the transaction is recorded. The Company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission. Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Statement of operation accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the comprehensive income statement account in stockholder’s equity, if applicable. There were no translation adjustments as of June 30, 2012.

   

Loss per share and potentially dilutive securities

   

Basic loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding in the period. Diluted loss per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities. The effect of 7,200,000 outstanding options and 688,050 outstanding warrants were not included in the computation of diluted earnings per share because it was anti-dilutive due to the Company’s losses.

   

Fair value of financial instruments

   

Financial assets

   

All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“FVTPL”).

   

Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through profit and loss. The Company’s cash is classified as FVTPL. Financial assets classified as loans and receivables and held to maturity assets are measured at amortized cost. The Company’s receivables are classified as loans and receivables. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income and loss except for losses in value that are considered other than temporary which are recognized in earnings. At June 30, 2012, the Company has not classified any financial assets as available for sale.

   

Transaction costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

   

Financial liabilities

   

All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities. Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized at fair value with changes in fair value recognized in earnings unless they are designated as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized in earnings. The Company has classified the embedded derivative component of the loan payable as FVTPL.

F-8



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d)

   

Fair value of financial instruments (cont’d)

   

Financial liabilities (cont’d)

   

Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company’s accounts payable and accrued liabilities and loans payable are classified as other financial liabilities.

   

The Company measures the fair value of financial assets and liabilities based on the guidance of Fair Value Measurements which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Effective July 1, 2008, the Company adopted the policy for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis. The adoption of the provisions of this accounting policy did not materially impact the Company’s financial position and results of operations.

   

The policy defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The policy also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets and liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Fair values

The fair value of receivables, accounts payable and accrued liabilities and loans payable approximate their financial statement carrying amounts due to the short-term maturities of these instruments.

The Company’s cash was measured using Level 1 inputs.

Foreign currency risk

The Company operates in Canada, which gives rise to the risk that cash flows may be adversely impacted by exchange rate fluctuations. The Company has not entered into any forward exchange contracts or other derivative instrument to hedge against foreign exchange risk.

Credit risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. Management believes that the credit risk concentration with respect to financial instruments included in cash is remote. Receivables comprise mainly harmonized sales tax from the Canadian government.

F-9



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d)

   

Comprehensive loss

   

As of June 30, 2012 the Company has no items that represent comprehensive loss and therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.

   

Income taxes

   

The Company accounts for income taxes under an asset and liability approach, whereby deferred income tax liabilities or assets at the end of each year are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.

   

Impairment of assets

   

The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the asset will be written down to fair value.

   

Equipment

   

Equipment is recorded at cost less accumulated amortization. Amortization is provided annually on assets placed in use on a straight-line basis over 3 years for computer equipment. Additions in the year are subject to the half year rule.

   

Research and development

   

All research costs are charged to operations in the year of expenditure. Development costs are capitalized if they meet the criteria for capitalization and amortized over the period of the expected life. Development costs are written off when there is no longer an expectation of future benefits.

   

Stock-based compensation

   

The Company uses the fair value based method of accounting for stock options granted to employees and directors and compensatory warrants issued on private placements in accordance with the recommendations of the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 718, “Compensation – Stock Compensation”. Under this method, the fair value of the stock options at the date of the grant, as determined using the Black-Scholes option pricing model, is recognized to expense over the vesting period, and the fair value of compensatory warrants at the date of issuance, as determined using the Black-Scholes model, is recognized as share issuance costs, with the offsetting credit to additional paid in capital.

F-10



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d)

   

Recent accounting pronouncements and changes in accounting policies

   

Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.

   

In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Although early adoption is permitted, the Company adopted ASU 2011-08 as of January 1, 2012. Based on the Company’s evaluation of this ASU, the adoption of ASU 2011-08 did not have a material impact on the Company’s consolidated financial statements.

   

In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210)—Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). The update requires entities to disclose information about offsetting and related arrangements of financial instruments and derivative instruments. ASU 2011-11 is effective for the Company in the first quarter of its fiscal year ending June 30, 2014 (“fiscal 2014”). The Company currently believes there will be no significant impact on its consolidated financial statements.

   

In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers only those changes in Update No. 2011-05 that relate to the presentation of the reclassification adjustments. Under the amendments in Update No. 2011-05, entities are required to present reclassification adjustments and the effect of those reclassification adjustments on the face of the financial statements where net income is presented, by component of net income, and on the face of the financial statements where other comprehensive income is presented, by component of other comprehensive income. In addition, the amendments in Update No. 2011-05 require that reclassification adjustments be presented in interim financial periods. This standard is effective for annual reporting periods beginning after December 15, 2011.

   

In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite- Lived Intangible Assets for Impairment” (“ASU 2012-02”). The Update simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses, and distribution rights. The standard applies to all public, private, and not-for-profit organizations. The amendments allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. Under former guidance (FASB Accounting Standards Codification®, Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill), an organization was required to test an indefinite-lived intangible asset for impairment on at least an annual basis by comparing the fair value of the asset with its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeded its fair value, an impairment loss was recognized in an amount equal to the difference. The amendments in this Update are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted.

F-11



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

3.

EQUIPMENT


      Year ended     Year ended  
      June 30, 2012     June 30, 2011  
                                       
            Accumulated     Net           Accumulated     Net  
      Cost     Amortization     Book Value     Cost     Amortization     Book Value  
                                       
  Computer equipment $  6,956   $  3,383   $  3,573   $  3,336   $  1,668   $  1,668  

During the year ended June 30, 2012, the Company purchased $955,383 of scientific equipment which the Company expensed to research and development due to its specialized nature. Certain items of equipment are pledged as collateral on the convertible loan payable and the research agreement with SFU (Note 1).

   
4.

TECHNOLOGY PURCHASE AGREEMENT

   

On April 15, 2008, the Company entered into a License agreement (“The Agreement”) with CIOI, to manufacture and market CIOI’s patent pending solar technology based on a new approach for the generation of solar power. On May 7, 2008 the Agreement was subsequently amended and executed by CIOI and on May 16, 2008 the agreement was executed by the Company and is subject to certain terms and conditions. The purchase price paid in cash for the License was $100,000. These costs were later written-off and charged to operations in fiscal 2008.

   

In December 2009, the Company executed an agreement with CIOI to purchase technology and associated provisional patents related to the development of certain solar technology in exchange for 71,500,000 common stock of the Company valued at $1,611,559. The intellectual property is covered by two provisional U.S. patents and one Patent Cooperation Treaty Application. Due to the suspension of the research agreement and other issues raised in Note 1, the Company has recorded an impairment and charged the balance of $1,496,448 to operations during the year ended June 30, 2012.

   
5.

LOAN PAYABLE

   

In January 2012, the Company entered into a loan agreement in the amount of EUR 9,980 (US$12,910). The loan is non-interest bearing, unsecured and has no specific terms of repayment.

F-12



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

6.

CONVERTIBLE LOAN

   

In May 2012, the Company entered into a loan agreement for the principal amount of CAD$475,000 (the “Loan”). The Loan is to be advanced to the Company, subject to certain conditions, according to the following schedule:


  (i)

CAD$175,000 on April 25, 2012 (advanced);

  (ii)

CAD$18,000 on May 23, 2012 (advanced);

  (iii)

CAD$150,000 on June 25, 2012 (advanced);

  (iv)

CAD$132,000 to be advanced on July 23, 2012 (subsequently advanced).


The loan accrues interest at 9% per annum from the date of the first advance and matures on April 23, 2015. The loan is secured by certain assets.

   

At any time lender may elect to receive shares in exchange for any portion of the principal or interest outstanding on the Loan on the basis of one share for each USD $0.02 of indebtedness converted. In the event of a default, the lender may elect to receive shares on the basis of one share for each USD $0.01 of indebtedness converted (Note 1).

   

On comparison of the conversion price to the fair value of the Company’s common stock at issuance, the Company recorded a beneficial conversion feature of $341,958 (CAD$343,000), representing the entire proceeds received. This amount was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The discount will be amortized over the term of the convertible notes and recorded as interest expense. The convertible debt will be accreted over its term to its principal amount at maturity. During the year ended June 30, 2012, the Company recorded interest expense of $339,642 as a result of amortizing the discount due to the event of default noted below.

   

As at June 30, 2012, a principal balance of $336,586 (CAD$343,000) is outstanding. Included in accounts payable and accrued liabilities is accrued interest of $3,362. Subsequent to June 30, 2012 the Company defaulted on the interest payment which was due on September 30, 2012. The Company received a notice of default and has recorded the full principal balance as a current liability as at June 30, 2012.

   
7.

STOCKHOLDERS’ EQUITY (DEFICIENCY)

   

On May 7, 2004, the Company issued 69,200,000 of its common shares for cash of $86,500.

   

On June 30, 2004, the Company issued 48,000,000 of its common shares for cash of $6,000.

   

The Company completed a private placement on April 15, 2008 to issue 100,000 common shares at a price of $2.00 per share. The net proceeds received were $200,000. No commissions were paid and no registration rights have been granted.

   

On December 16, 2009, the Company entered into an agreement with CIOI as amended, wherein the Company agreed to purchase all of their solar cell technology in consideration of 71,500,000 restricted shares of common stock. As part of the transaction, the Company’s President returned and cancelled 47,000,000 shares of the Company’s common stock.

   

In April 2010, 50,000 shares valued at $100,000 were issued as compensation for a performance bonus to a director of the Company.

   

In April 2010, the Company completed a private placement to issue 280,000 shares at a price of $2.00 per share. The net proceeds received were $560,000.

   

During the year ended June 30, 2011, 10,000 shares were issued through a private placement at $1 per share for proceeds of $10,000. A total of 161,500 shares valued at $161,500 were issued as finders’ fees.

F-13



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

7.

STOCKHOLDERS’ EQUITY (DEFICIENCY) (cont’d)

   

During the year ended June 30, 2011, 274,060 shares were issued through a private placement at a stock price of $1.00 per share; net proceeds were $274,060 of which $76,500 was received during the year ended June 30, 2010. The Board granted 372,000 warrants to those shareholders who had purchased shares at $2.00 per share to allow them to purchase a matching number of shares at $0.01 in order to make them whole as a result of the change in the share sale price.

   

During the year ended June 30, 2011, 62,632 shares were issued for consulting services and 50,000 for a management performance bonus relating to services performed.

   

During the year ended June 30, 2011, a further 3,765,500 shares were issued through two private placements and a total of $228,737 in share issue costs were paid. In addition, 372,000 shares were issued when the warrants described above were exercised. Net proceeds were $3,769,220, all of which were received during the year. A refund of $16,000 was paid to several investors who previously paid for 8,000 shares and were found not to be qualified.

   

During the year ended June 30, 2011, 60,000 shares valued at $60,000 for consulting services and 50,000 shares valued at $50,000 for a management performance bonus relating to services provided were issued.

   

During the year ended June 30, 2012, 1,974,000 shares were issued through a private placement at a stock price of $1.00 per share for net proceeds of $1,974,000. A further 400,000 units were issued through a private placement at a stock price of $0.25 per share for net proceeds of $90,000. Each unit consists of one common share and one share purchase warrant with an exercise price of $0.30 expiring February 2, 2013. The Company paid finders’ fees of $10,000 in cash.

   

During the year ended June 30, 2012, 90,000 shares valued at $88,700 were issued in accordance to the terms of a consulting contract entered into during fiscal 2010, of which $60,000 was previously recorded as commitment to issue shares at June 30, 2011.

   

During the year ended June 30, 2012, 250,000 shares valued at $87,500 and 250,000 shares valued at $27,500 were issued for consulting services based on a consulting agreement entered on December 1, 2011.

   

During the year ended June 30, 2012, 288,050 units were issued through a private placement at a stock price of $0.20 per unit for net proceeds of $57,610. Each unit consists of one share and one share purchase warrant. Each warrant entitles the subscribers to purchase an additional common share at an exercise price of $0.25 per share, expiring on March 25, 2013.

   

During the year ended June 30, 2012, the Company paid $6,723 in share issue costs in connection with the private placements.

   

Commitment to issue shares

   

According to the terms of a contract entered into during the year ended June 30, 2010, the Company agreed to issue 10,000 shares per month to a consultant. As at June 30, 2012, the Company has a commitment to issue 60,000 common shares at a value of $18,700 (subsequently issued).

   

Subscriptions received in advance

   

During the year ended June 30, 2012, the Board of Directors of the Company approved an offering of up to 5,000,000 units at a price of $0.20 per unit of which $195,000 was received. Each unit will consist of one share and one share purchase warrant, with each warrant entitling the subscriber to purchase an additional share for a three month period following the date of issuance at an exercise price of $0.25. Subsequently, the offering was amended and the Company issued 3,900,000 units at a stock price of $0.05 per unit for net proceeds of $195,000. A total of 290,000 shares were issued as finder’s fees subsequent to June 30, 2012.

F-14



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

7.

STOCKHOLDERS’ EQUITY (DEFICIENCY) (cont’d)

   

Stock options and warrants

   

On February 28, 2011, the Company implemented a formal stock option plan under which it is authorized to grant options to directors, officers, employees and eligible consultants of the Company enabling them to acquire up to 14,650,000 shares of the Company. Under the plan, the exercise price of each option equals the market price of the Company’s stock, less applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 5 years. Vesting provisions are set at the discretion of the Company. The Plan has not been approved by the Company’s stockholders.

   

Stock options and warrants are summarized as follows:


      Warrants     Stock Options  
                           
            Weighted           Weighted  
            Average     Number of     Average  
      Number of     Exercise     Stock     Exercise  
      Warrants     Price     Options     Price  
                           
  Balance outstanding at June 30, 2010   -     -     500,000     0.50  
                           
         Granted   372,000     0.01     -     -  
         Granted   50,000     1.90     -     -  
         Exercised   (372,000 )   (0.01 )   -     -  
         Granted   -     -     1,300,000     1.50  
                           
  Balance outstanding at June 30, 2011   50,000     1.90     1,800,000     1.22  
                           
         Expired/cancelled   (50,000 )   (1.90 )   (2,466,668 )   (1.14 )
         Granted   688,050     0.28     7,866,668     0.37  
                           
  Balance outstanding at June 30, 2012   688,050   $  0.28     7,200,000   $  0.22  
                           
  Exercisable at June 30, 2012   688,050   $  0.28     5,404,198   $  0.22  

The following table summarizes information about stock options and warrants outstanding at June 30, 2012:

      Number outstanding     Exercise Price     Expiry Date  
  Options   500,000   $  0.50     January 1, 2013  
      250,000   $  0.165     March 1, 2014  
      5,950,000   $  0.20     April 12, 2015  
      500,000   $  0.20     March 6, 2016  
                     
  Warrants   400,000   $  0.30     February 2, 2013  
      288,050   $  0.25     March 25, 2013  

Stock-based compensation

During the year ended June 30, 2012, the Company granted 7,866,668 options (2011 – 1,300,000) to employees and consultants of the Company, with a weighted average fair value of $0.23 (2011 - $0.73) per option, which are being recognized over the vesting periods of the options. The Company cancelled 1,666,668 of these options during the year ended June 30, 2012.

Total stock-based compensation for the year ended June 30, 2012 was $1,361,639 (2011 - $1,246,115).

F-15



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

7.

STOCKHOLDERS’ DEFICIENCY (cont’d)

Stock options and warrants (cont’d)

   

The Company used the Black-Scholes option pricing model to determine the fair value of options granted. The fair value of stock options has been estimated with the following assumptions:


      Year ended     Year ended  
      June 30,     June 30,  
      2012     2011  
               
  Dividend yield   0.00%     0.00%  
  Expected volatility   152.02 %     143.30%  
  Risk free interest rate   1.35%     2.62%  
  Expected life of options   2.97 years     3.85 years  

8.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


                  For the period  
      For the     For the     from April 14,  
      year ended     year ended     2004(inception)
      June 30, 2012     June 30, 2011     to June 30, 2012  
                     
  Cash paid for interest $  -   $  -   $  -  
                     
  Cash paid for income taxes $  -   $  -   $  -  

Significant non-cash transaction for the year ended June 30, 2012 included issuing 60,000 common shares at a value of $60,000 from commitment to issue shares to common stock and additional paid in capital.

Significant non-cash transactions for the year ended June 30, 2011 included:

  a)

issuing 112,632 common shares at a value of $112,632 from commitment to issue shares to common stock and additional paid in capital;

     
  b)

granting 372,000 warrants for a value of $372,000 to various shareholders as a dividend;

     
  c)

issuing 161,500 common shares at value of $161,500 as finder’s fees;

     
  d)

granting 170,000 common shares at a value of $170,000 for consulting services and management bonuses, of which 110,000 were issued and 60,000 are a commitment to issue shares.

F-16



QUANTUM SOLAR POWER CORP.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States Dollars)
JUNE 30, 2012

9.

RELATED PARTY TRANSACTIONS

     

During the year ended June 30, 2012, the Company:

     
a)

paid or accrued $126,141 (2011 - $nil) for management fees to a former director and officer of the Company, of which $41,208 (2011 - $nil) is included in accounts payable and accrued liabilities as at June 30, 2012;

     

These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

     
10.

INCOME TAXES

     

A reconciliation of current income taxes at statutory rates with the reported taxes is as follows:


      2012     2011  
               
  Loss before income taxes $  (7,378,816 ) $  (4,728,538 )
               
  Expected tax recovery $  (2,582,586 ) $  (1,654,988 )
  Other   964,859     427,592  
  Unrecognized benefits of non-capital losses   1,617,727     1,227,396  
               
  Total income taxes $  -   $  -  

Details of deferred income tax assets are as follows:

      2012     2011  
               
  Deferred tax assets            
         Non-capital loss carryforwards $  3,367,832   $  1,750,105  
         Capital assets   471,222     -  
               
  Deferred tax liabilities            
         Capital assets   -     (15,532 )
               
      3,839,054     1,734,573  
  Valuation allowance   (3,839,054 )   (1,734,573 )
               
  Net deferred tax assets $  -   $  -  

The Company has non-capital losses of approximately $9,600,000 which may be carried forward and applied against taxable income in future years. These losses, if unutilized, will expire through to 2023. The future income tax benefits of these losses and other tax assets have not have been reflected in these consolidated financial statements and have been offset by a valuation allowance.

   
11.

SUSBSEQUENT EVENT

   

Subsequent to June 30, 2012, the Company entered into an amendment to the convertible loan agreement, pursuant to which the lender advanced an additional CAD$25,000 in consideration for which the conversion price of the loan was reduced to one common share of the Company for each USD$0.008 of indebtedness converted.

F-17


ITEM 9.             CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A.           CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2012 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the year ended June 30, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.

Management's Annual Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:

Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures.

20


Insufficient Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.

Inadequate Financial Statement Closing Process: We have an inadequate financial statement closing process.

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel, (3) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (4) may consider appointing outside directors and audit committee members in the future.

Management has discussed the material weaknesses noted above with our independent registered public accounting firm. Due to the nature of these material weaknesses, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2012 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of controls and procedures

Our management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the our controls and procedures will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

ITEM 9B.           OTHER INFORMATION.

On April 23, 2012, we secured an aggregate of $475,000 CDN in debt financing (the “Loan”) from Foundation Freehold Ltd. (“Foundation”). At any time, Foundation may elect to receive shares of our common stock in exchange for any portion of the principal or interest outstanding on the Loan on the basis of one share for each CDN $0.02 of indebtedness converted. In the event of a default, Foundation may elect to receive shares on the basis of one share for each CDN $0.01 of indebtedness converted (the “Reduced Conversion Rate”).

On October 12, 2012, we entered into an amendment agreement (the “Amended Loan Agreement”) with Foundation. Under the terms of the Amended Loan Agreement, Foundation advanced us an additional $25,000 CDN and we reduced the Reduced Conversion Rate by 20% from $0.01 CDN to $0.008 CDN.

21


PART III

ITEM 10.           DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following tables set forth information regarding our executive officers and directors as of September 18, 2012:

Name Age Positions
Andras Pattantyus-Abraham 38 Chief Executive Officer, President, Chief Technology Officer and Director
Graham R. Hughes 62 Chief Financial Officer, Secretary, Treasurer and Director
Daryl J. Ehrmantraut 60 Chief Operating Officer and Director

Set forth below is a brief description of the background and business experience of each of our executive officers and directors for at least the past five years.

Andras Pattantyus-Abraham joined Quantum Solar in December 2009. On March 3, 2010, he was appointed Chief Technology Officer. On July 22, 2011, Dr. Pattantyus-Abraham was appointed as a Director. On February 9, 2012, Dr. Pattantyus-Abraham was appointed as our President and Chief Executive Officer. Prior to joining the company, Dr. Pattantyus-Abraham was a Principal Scientist for Sargent Research Group, Electrical and Computer Engineering, University of Toronto. From 2007 to 2009, he was Postdoctoral Fellow at Sargent Research Group. In 2007 and 2008, Dr. Pattantyus-Abraham served as a Research Consultant for an Optoelectronics startup and for Applied Biophysics Research Group, University of British Colombia. From 2004 to 2006, Dr. Pattantyus-Abraham was a Postdoctoral Fellow of Photonic Nanostructures Research Group, University of British Columbia.

Graham R. Hughes has served as our Chief Financial Officer, Secretary, Treasurer and as a Director since November 27, 2007. Mr. Hughes is a Certified General Accountant in private practice for over 25 years. Mr. Hughes is an Instructor of Accountancy at the British Columbia Institute of Technology in Vancouver, Canada. Mr. Hughes served as President and Director of Western Hemisphere Mining Corp. from 2005 to 2007. He also served as Secretary and Director for a number of companies from 1986 to 1991.

Daryl J. Ehrmantraut was appointed our President, Chief Executive Officer and as a Director on January 4, 2010. On September 21, 2011, Mr. Ehrmantraut resigned from his position as President and Chief Executive Officer and was appointed as our Chief Operating Officer. Mr. Ehrmantraut previously served for 5 years until January 1, 2010 as CEO of Elemetric Instruments, a scientific instrumentation company which commercialized Los Alamos National Lab patented element detection technology, Mr. Ehrmantraut previously served as President of Triton Technology a privately held company in the information technology and services industry from 2002 to 2003. Mr. Ehrmantraut served as Vice President of Sales and Marketing, Bfound Business Unit for Signalsoft Corp., a company in the electrical/electronic manufacturing industry from 1999 to 2001. He served as President of Osiris Systems Corporation, a privately held company in the computer software industry. He also held various management positions from 1972 to 1999 in the computer and electronics industry.

On February 9, 2012, Stephen Pleging resigned as the our President, Chief Executive Officer, Chairman and as a Director and Stella Guo resigned as our Vice President of Corporate Development and as a Director. Both Mr. Pleging and Ms. Guo resigned in order to assist us in our efforts to reduce administrative costs to increase our research and development activities.

Term of Office

Members of our board of directors are appointed to hold office until the next annual meeting of our stockholders or until his or her successor is elected and qualified, or until he or she resigns or is removed in accordance with the provisions of the Nevada Revised Statutes (the “NRS”). Our officers are appointed by our board of directors and hold office until removed by the board.

22


Significant Employees

We have no other significant employees.

COMMITTEES OF THE BOARD OF DIRECTORS

Audit Committee

Our audit committee currently consists of our Board of Directors. Mr. Pattantyus-Abraham, Mr. Hughes and Mr. Ehrmantraut are also Executive Officers and therefore not independent directors.

The audit committee is responsible for:

(1)

selection and oversight of our independent accountant;

(2)

establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters;

(3)

establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters;

(4)

engaging outside advisors; and

(5)

funding for the outside auditory and any outside advisors engagement by the audit committee.

Our board of directors has adopted an Audit Committee Charter which provides appropriate guidance to Audit Committee members as to their duties.

Audit Committee Financial Expert

Graham R. Hughes, our Chief Financial Officer, Secretary and Treasurer and Director, qualifies as an audit committee financial expert.

Code of Ethics

We adopted a Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer, Corporate Controller and certain other finance executives, which is a "code of ethics" as defined by applicable rules of the SEC. Our Code of Ethics was attached as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, filed with the SEC on May 17, 2010. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our securities (“Reporting Persons”), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish us with copies of all forms they file pursuant to Section 16(a). Based solely on our review of such reports received by the Company, other than as described below, we believe that, during the year ended June 30, 2012, all Reporting Persons complied with all Section 16(a) filing requirements applicable to them.

23


The following persons have failed to file, on a timely basis, the identified reports required by Section 16(a) of the Exchange Act:



Name and Principal Position

Number of Late
Insider Reports

Transactions Not
Timely Reported
Known Failures to
File a Required
Form
Andras Pattantyus-Abraham
Chief Executive Officer, President Chief
Technology Officer and Director
None


None


None


Graham R. Hughes
Chief Financial Officer, Secretary,
Treasurer and Director
One


One


None


Daryl J. Ehrmantraut
Chief Operating Officer and Director
None

None

None

J. Eric Trygg
10% Holder
None

None

None

Steven Pleging
Former Executive Officer and Director
One

None

None

Stella Guo
Former Executive Officer and Director
None

None

None

Moatcroft Limited
Former 10% Holder
One

One

None

Total
Three
Two
None

ITEM 11.           EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth the total compensation paid to or earned by our named executive officers, as that term is defined in Item 402(m) of Regulation S-K as of our fiscal years ended June 30, 2012 and 2011:






Name & Principal
Position






Year





Salary
($)





Bonus
($)




Stock
Awards
($)




Option
Awards
($)
Non-
Equity
Incentive
Plan
Compen-
sation
($)
Non-
qualified
Deferred
Compen-
sation
Earnings
($)



All Other
Compen-
sation
($)





Total
($)
Andras Pattantyus-
Abraham
Chief Executive
Officer, Chief
Technology Officer
and Director (1)
2012
2011



-
-



-
-



-
-



81,133
-



-
-



-
-



-
-



81,133
-



Graham R. Hughes
Chief Financial
Officer, Secretary
Treasurer and
Director (1)
2012
2011


-
-
-

-
-
-

-
-
-

16,227
-
-

-
-
-

-
-
-

-
-
-

16,227
-
-

Daryl J. Ehrmantraut
Chief Operating
Officer and Director (2)
2012
2011

120,000
120,000

-
-

-
50,000

81,133
319,417

-
-

-
-

-
-

201,133
489,417

24



Steven Pleging
Former Executive
Officer and Director(3)
2012
2011
126,141
-
-
-
-
-
-
-
-
-
-
-
-
-
126,141
-
Stella Guo
Former Executive
Officer and Director(4)
2012
2011

41,616
-

-
-

-
-

-
-

-
-

-
-

-
-

41,616
-

Notes:

(1)

We do not currently have a compensation arrangement with Dr. Pattantyus-Abraham or Graham R. Hughes. We issued stock options to Dr. Pattantyus-Abraham and Mr. Hughes during the fiscal year ended June 30, 2012.

(2)

Mr. Ehrmantraut will receive compensation of $10,000 per month in addition to bonus and equity compensation as deemed proper by the Board of Directors.

(3)

Mr. Pleging resigned as an Executive Officer and Director on February 9, 2012

(4)

Ms. Guo resigned as an Executive Officer and Director on February 9, 2012

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information concerning unexercised options for each of our named executive officers, as that term is defined in Item 402(m)(2) of Regulation S-K, as of our fiscal year ended June 30, 2012:







Name and
Principal Position


Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable


Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
Equity Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options





Option
Exercise
Price





Option
Expiration
Date
Andras Pattantyus-
Abraham,
President CEO,
CTO & Director
750,002


499,998


--


$0.20


04/12/2015


Graham R.
Hughes, CFO,
Secretary
Treasurer &
Director
250,000



--



--



$0.20



04/12/2015



Daryl J.
Ehrmantraut,
COO & Director (1)
416,667
937,502
83,333
312,498
--

$0.50
$0.20
01/13/2013
04/12/2015

Note:

(1)

Pursuant to the terms of Mr. Ehrmantraut’s employment agreement, he is to receive 500,000 stock options vesting over twelve fiscal quarters commencing January 1, 2010.

Employment Agreements

On January 1, 2010, we entered into an employment agreement with Daryl J. Ehrmantraut (the “Employment Agreement”). Under the terms of the agreement, Mr. Ehrmantraut is paid an annual salary of $120,000. In addition to Mr. Ehrmantraut’s base salary, he is eligible to receive a bonus for each calendar quarter in an amount, if any, as determined by our Board of Directors at its discretion. Mr. Ehrmantraut received 500,000 options to purchase shares of our common stock vested quarterly over a three-year period commencing on the execution date of the Employment Agreement. The option exercise price is $0.50 and they expire January 13, 2013. Under the terms of the Employment Agreement, Mr. Ehrmantraut is required to devote the substantial portion of his entire business time, attention and energy exclusively to the business and affairs of the Company.

25


On August 23, 2011, we entered into an employment agreement with Stella Guo (the “Employment Agreement”) dated effective September 1, 2011. The Employment Agreement was terminated following Ms. Guo’s resignation.

On August 31, 2011, we entered into an Executive Services Agreement with Team Solar BV (“TSBV”) and Steven Pleging (the “Executive Services Agreement”) dated for reference August 8, 2011. The Executive Services agreement was terminated following Mr. Pleging’s resignation.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of August 31, 2012 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and each of our named executive officers, and (iii) officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.




Title of Class


Name and Address
of Beneficial Owner
Amount and
Nature of
Beneficial
Ownership

Percentage of
Common
Stock(1)

DIRECTORS AND OFFICERS
Common Stock


Andras Pattantyus-Abraham
President, Chief Executive Officer, Chief
Technology Officer and Director
1,083,334(2)
(Direct)

*


Common Stock


Graham R. Hughes
Chief Financial Officer, Secretary, Treasurer,
Director
1,250,000(3)
(Direct)

*


Common Stock

Daryl J. Ehrmantraut
Chief Operating Officer, Director
1,754,168(4)
(Direct)
1.1%

Common Stock

All Officers and Directors
as a Group (3 persons)
4,087,502(2)(3)(4)
(Direct)
2.6%


5% STOCKHOLDERS
Common Stock


J. Eric Trygg
PO Box 200
Milner, BC V0X 1T0
26,250,000(5)
(Direct and Indirect)

14.5%


Common Stock


Moatcroft Limited
8 St George's Street
Douglas, Isle of Man
IM1 1AH
11,006,320
(Direct)

7.1%


Common Stock

Mellinda-Mae Harlingten
1275 Hamilton Street
Vancouver, BC V6B 1E2
10,000,000
(Direct)
6.5%

Note:
* Less than 1%

26



(1)

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of our common stock actually outstanding on the date of this Annual Report. As at September 18, 2012, we had 154,429,742, shares of our common stock issued and outstanding.

   
(2)

The number of shares beneficially held by Mr. Pattantyus-Abraham consists of an option to purchase 1,250,000 shares of our common stock at a price of $0.20 per share until April 12, 2015 of which 1,083,334 have vested or vest within 60 days of September 18, 2012.

   
(3)

The number of shares beneficially held by Mr. Hughes consists of: (i) 1,000,000 shares of our common stock; and (ii) a vested option to acquire 250,000 shares of our common stock at a price of $0.20 per share until April 12, 2015

   
(4)

The number of shares beneficially held by Mr. Ehrmantraut consists of: (i) 150,000 shares of our common stock; (ii)a option to purchase 500,000 shares of our common stock at a price of $0.50 per share until January 13, 2013 of which 458,334 have vested or vest within 60 days of September 18, 2012; and (iii) an option to purchase 1,250,000 shares at a price of $0.20 per share until April 12, 2015 of which 1,145,834 have vested or vest within 60 days of September 18, 2012.

   
(5)

The number of shares beneficially held by Mr. Trygg consists of (i) 2,000,000 shares of our Common Stock held directly; and (ii) an option to convert $475,000 CDN in indebtedness into shares of our Common Stock at a rate of $0.02 CDN per share held by Foundation Freehold Ltd. a company controlled by Mr. Trygg.

CHANGE IN CONTROL

We are not aware of any arrangement that might result in a change of control.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth certain information concerning all equity compensation plans previously approved by stockholders and all previous equity compensation plans not previously approved by stockholders, as at June 30, 2012.

EQUITY COMPENSATION PLAN INFORMATION AS AT JUNE 30, 2012






Plan Category


Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)


Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
Number of securities
remaining available for future
issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)

Equity Compensation Plans
approved by security holders

Nil

N/A

Nil

Equity Compensation Plans not
approved by security holders

6,700,000

$0.20

7,950,000

Total

6,700,000

$0.20

7,950,000

Mr. Ehrmantraut was granted 500,000 stock options under his employment agreement dated January 1, 2010. These options were granted before the adoption of our 2011 Stock Option Plan.

27


2011 Stock Option Plan

On February 28, 2011, our Board of Directors adopted the 2011 Stock Incentive Plan (the "2011 Plan"). The purpose of the 2011 Plan is to enhance the long-term stockholder value of the Company by offering opportunities to our directors, officers, employees and eligible consultants (“Participants”) to acquire and maintain stock ownership in order to give these persons the opportunity to participate in our growth and success, and to encourage them to remain in the service of the Company.

The 2011 Plan allows us to grant options to our officers, directors and employees. In addition, we may grant options to individuals who act as our consultants, so long as those consultants do not provide services connected to the offer or sale our securities in capital raising transactions and do not directly or indirectly promote or maintain a market for our securities.

A total of 14,650,000 shares of our common stock are available for issuance under the Plan.

The Plan provides for the grant of incentive stock options and non-qualified stock options. Incentive stock options granted under the Plan are those intended to qualify as “incentive stock options” as defined under Section 422 of the Internal Revenue Code. However, in order to qualify as “incentive stock options” under Section 422 of the Internal Revenue Code, the Plan must be approved by our stockholders of within 12 months of its adoption. The Plan has not been approved by our stockholders. Non-qualified stock options granted under the Plan are option grants that do not qualify as incentive stock options under Section 422 of the Internal Revenue Code.

ITEM 13.           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

None of the following parties has, during the past two fiscal years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us, other than as noted in this section:

  (i)

Any of our directors or executive officers;

  (ii)

Any person proposed as a nominee for election as a director;

  (iii)

Any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to our outstanding shares of common stock;

  (iv)

Any of our promoters; and

  (v)

Any member of the immediate family (including spouse, parents, children, siblings and in-laws) of any of the foregoing persons.

During the year ended June 30, 2011, pursuant to the terms of a takeover bid, under Canadian Securities Laws, Canadian Integrated Optics (IOM) Ltd. (“CIO”), our largest shareholder, has transferred over 99% of its 71,500,000 shares of our common stock to 47 different shareholders. As a result of the transaction, CIO no longer holds a significant amount of our common shares. During the year ended June 30, 2012, we paid or accrued $2,514,738 in research and development costs to CIO.

Director Independence

Our common stock is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. Under NASDAQ Rule 5605(a)(2), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. All of our directors are considered executive officers under Rule 3b-7 of the Exchange Act. Therefore, none of our directors are independent.

As a result of our limited operating history and minimal resources, our management believes that it will have difficulty in attracting independent directors. In addition, we would likely be required to obtain directors and officers insurance coverage in order to attract and retain independent directors. Our management believes that the costs associated with maintaining such insurance is prohibitive at this time.

28


ITEM 14.           PRINCIPAL ACCOUNTING FEES AND SERVICES.

Audit Fees

The aggregate fees billed for the two most recently completed fiscal years ended June 30, 2012 and June 30, 2011 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included our Quarterly Reports on Form 10-Q or Form 10-QSB and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:

  Year Ended June 30, 2012 Year Ended June 30, 2011
Audit Fees $68,500 $90,000
Audit Related Fees - -
Tax Fees - -
All Other Fees - -
Total $68,500 $90,000

29


ITEM 15.           EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

The following exhibits are either provided with this Annual Report on Form 10-K or are incorporated herein by reference.

Exhibit  
Number Description of Exhibits
3.1

Articles of Incorporation.(1)

3.2

Certificate of Change Pursuant to NRS 78.209 increasing the issued and authorized capital of common stock to 350,000,000 shares, par value $0.001 per share.(3)

3.3

Certificate of Change Pursuant to NRS 78.209 increasing the issued and authorized capital of common stock to 400,000,000 shares, par value $0.001 per share.(3)

3.4

Certificate of Amendment to Articles of Incorporation.(3)

3.5

Certificate of Amendment to Articles of Incorporation.(3)

3.6

Bylaws, as amended.(1)

10.1

Technology Acquisition Agreement between Quantum and Canadian Integrated Optics (IOM) Ltd. dated December 16, 2009.(3)

10.2

CEO Employment Agreement between Quantum and Daryl J. Ehrmantraut dated January 1, 2010.(4)

10.3

Investor relations Consulting Services Contract between Quantum and Green Street Capital Partners, LLC dated January 6, 2010. (2)

10.4

Office Space Lease Agreement between Quantum and Santa Fe Business Incubator, Inc. dated January 19, 2010. (2)

10.5

Revolving Line of Credit Agreement between Quantum and Canadian Integrated Optics (IOM) Ltd. dated February 20, 2010.(3)

10.6

Consulting Agreement between Quantum and Caisey Harlingten dated April 19, 2010. (4)

10.7

Office Space Lease Agreement between Quantum and Santa Fe Business Incubator, Inc. dated July 27, 2010. (4)

10.8

Office Space Lease Agreement between Quantum and Guinness Business Center Ltd. dated June 21, 2010 and Addendum dated August 17, 2010. (4)

10.9

Finder’s Fee Agreement between Quantum and 1536476 Alberta Ltd. dated for reference August 30, 2010. (4)

10.10

Investor Relations Consulting Agreement between Quantum and Teatyn Enterprises Inc. dated for reference January 15, 2011.(5)

10.11

2011 Stock Incentive Plan.(6)

10.12

Task Order Agreement between Quantum and SgurrEnergy Ltd. dated April 28, 2011.(7)

10.13

Investor Relations Consulting Agreement between Quantum and John Thornton dated for reference March 1, 2011(8)

10.14

Public Relations Agreement dated June 21, 2011 between the Company and Vorticom Inc.(9)

10.15

Consulting Agreement dated July 18, 2011 between the Company and Advantag Aktiengesellschaft.(10)

10.16

English translation of the Consulting Agreement dated July 18, 2011 between the Company and Advantag Aktiengesellschaft.(10)

10.17

Consulting Agreement dated for reference July 8, 2011 between the Company and Quorum Capital Corporation.(11)

10.18

Executive Services Agreement dated for reference August 8, 2011 between the Company, Team Solar BV and Steven Pleging.(12)

10.19

Employment Agreement dated effective September 1, 2011 between the Company and Stella Guo.(3)

10.20

Release Agreement dated October 5, 2011 between the Company and Quorum Capital Corporation.(14)

10.21

Investor Relations Consulting Agreement dated December 1, 2011 between the Company and Pristine Capital Corp.(15)

10.22

Consulting Agreement dated December 1, 2011 between the Company and Mirador Consulting LLC.(15)

10.23

Loan Agreement dated April 23, 2012 between the Corporation and Foundation Freehold Ltd.(16)

10.24

Amendment No. 1 to Loan Agreement dated May 22, 2012 between the Corporation and Foundation Freehold Ltd.(16)

30



Exhibit  
Number Description of Exhibits
10.25

Guarantee dated April 23, 2012 between 0935493 B.C. Ltd. and Foundation Freehold Ltd.(16)

10.26

Security Agreement dated April 23, 2012 between 0935493 B.C. Ltd and Foundation Freehold Ltd.(16)

10.27

Guarantee dated May 8, 2012 between the Corporation and Simon Fraser University.(16)

10.28

Guarantee dated May 8, 2012 between the 0935493 B.C. Ltd and Simon Fraser University.(16)

10.29

Security Agreement dated May 8, 2012 between 0935493 B.C. Ltd and Simon Fraser University.(16)

10.30

Consulting Agreement dated for reference March 9, 2012 between the Corporation and Edward H. Sargent.(16)

10.31

Amendment No. 2 to Loan Agreement dated October 12, 2012 between the Corporation and Foundation Freehold Ltd.

14.1

Code of Ethics.(3)

21.1

List of Subsidiaries.

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.1

Audit Committee Charter.(3)

101.INS

XBRL Instance Document.

101.SCH

XBRL Taxonomy Extension Schema.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase.

101.DEF

XBRL Taxonomy Extension Definition Linkbase.

101.LAB

XBRL Taxonomy Extension Label Linkbase.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase.


(1)

Previously filed as an exhibit to our Registration Statement on Form S-1 originally filed with the SEC on September 21, 2004.

(2)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended December 31, 2009 filed with the SEC on February 17, 2010.

(3)

Previously filed as an exhibit to our Quarterly Report of Form 10-Q for the period ended March 31, 2010 filed with the SEC on May 17, 2010.

(4)

Previously filed as an exhibit to our Annual Report on Form 10-K for the year ended June 30, 2010 filed with the SEC on September 13, 2010.

(5)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on February 3, 2011.

(6)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on March 4, 2011.

(7)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 3, 2011.

(8)

Previously filed as an exhibit to our Quarterly Report of Form 10-Q for the period ended March 31, 2011 filed with the SEC on May 10, 2010.

(9)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 27, 2011.

(10)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 20, 2011.

(11)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 11, 2011.

(12)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 1, 2011.

(13)

Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on September 13, 2011.

(14)

Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on November 8, 2011.

(15)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 7, 2011.

(16)

Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 30, 2012

31


SIGNATURES

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

        QUANTUM SOLAR POWER CORP.
         
         
         
Dated: October 15, 2012     /s/ Andras Pattantyus-Abraham
        ANDRAS PATTANTYUS-ABRAHAM
        Chief Executive Officer, Chief Technology Officer and
        President
        (Principal Executive Officer)
         
         
Dated: October 15, 2012   By: /s/ Graham R. Hughes
        GRAHAM R. HUGHES
        Chief Financial Officer, Secretary and Treasurer
        (Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Dated: October 15, 2012   By: /s/ Andras Pattantyus-Abraham
        ANDRAS PATTANTYUS-ABRAHAM
        Director
         
         
         
Dated: October 15, 2012   By: /s/ Graham R. Hughes
        GRAHAM R. HUGHES
        Director
         
         
         
Dated: October 15, 2012   By: /s/ Daryl J. Ehrmantraut
        DARYL J. EHRMANTRAUT
        Director


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