UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C.  20549








FORM 10-Q





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





For the quarterly period ended December 31, 2010





OR





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:   2 - 87052 - D





Genesis Solar Corporation


(Exact name of Registrant as specified in its charter)


Colorado
84-0914754(State or other jurisdiction of
(IRS Employer Identificationincorporation or organization)
Number)


4600 South Ulster Street, Suite 800


Denver, Colorado 80237


(Address of principal executive offices and Zip Code)





(303) 221-3680


(Registrant's telephone number)





Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ___     No ____





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes XX   No ___





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





Large accelerated filer o         Accelerated filer o    Non-accelerated filer  o        Smaller reporting company þ





As of February 11, 2011 there were 17,059,093 shares, of the Registrant’s common stock $.01 par value, outstanding.











GENESIS SOLAR CORPORATION


(A Development Stage Company)





INDEX





PART I.  FINANCIAL INFORMATION





Item 1:                 Financial Statements





Balance Sheet – March 31, 2010 (audited) and December 31, 2010 (unaudited)





Statement of Operations – For the Three Months Ended December 31, 2009 and 2010 (unaudited)





Statement of Operations – For the Nine Months Ended December 31, 2009 and 2010 (unaudited) and Cumulative Amounts from Inception of the Development Stage (October 1, 2008) through December 31, 2010 (unaudited)





Statement of Stockholders' Equity (Deficit) - For the Nine Months Ended December 31, 2010 (unaudited)





Statement of Cash Flows - For the Nine Months Ended December 31, 2009 and 2010 and Cumulative Amounts from Inception of the Development Stage (October 1, 2008) through December 31, 2010 (unaudited)





Notes to Unaudited Financial Statements





Item 2:   Management’s Discussion and Analysis of Financial Condition and Results of OperationItem 3:   Quantitative and Qualitative Disclosure About Market RiskItem 4:  Controls and ProceduresPART II.  OTHER INFORMATIONItem 1:  Legal ProceedingsItem 1A:   Risk FactorsItem 2:   Unregistered Sales of Equity Securities and Use of ProceedsItem 3:   Defaults upon senior securities.Item 4:   Reserved.Item 5:   Other information.Item 6:   ExhibitsSignaturesCertification pursuant to Securities Exchange Act of 1934 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002






2







PART I.                            FINANCIAL INFORMATION





Item 1.  Financial Statements





GENESIS SOLAR CORPORATION


(A Development Stage Company)


BALANCE SHEET


March 31, 2010 and December 31, 2010


(Audited)                     (Unaudited








ASSETSMarch


DecemberCurrent assets:Cash

$
9,362


$
15,871Note receivable - related party - current portion (Note 4)


95,599



-Interest receivable - related party (Note 4)


1,441



-Prepaid expenses and other assets


15,770



-Total current assets


122,172



15,871Computer equipment, at cost, net of accumulateddepreciation of $3,496 (March) and $3,500 (December)


4



-Total assets

$
122,176


$
15,871LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)Current liabilities:Accounts payable

$
5,655


$
1,007Accounts payable - related party


31,952



26,460Officer payable (Note 4)


40,000



40,000Accrued salary - officer


241,750



241,750Accrued interest - officer (Note 4)


1,019



2,519Total current liabilities


320,376



311,736Stockholders' equity (deficit):Preferred stock, $.01 par value; 100,000,000 sharesauthorized, no shares issued and outstanding


-



-Common stock, $.01 par value; 500,000,000 sharesauthorized, 2,963,000 shares issued and


29,630



29,630outstandingAdditional paid-in capital


6,150,558



6,150,558Accumulated deficit (including $340,570 deficitaccumulated during the development stage atDecember 31, 2010) (Note 1)


(6,378,388
)


(6,476,053
)Total stockholders' equity (deficit)


(198,200
)


(295,865
)Total liabilities and stockholders' equity (deficit)

$
122,176


$
15,871See accompanying notes.




3


GENESIS SOLAR CORPORATION


(A Development Stage Company)


STATEMENT OF OPERATIONS


For the Three Months Ended December 31, 2009 and 2010


(Unaudited)








2009


2010Costs and expenses:Legal fees

$
12,042


$
5,692Travel and other expenses - related party


-



3,101General and administration


19,390



6,663Rent and storage expenses


8,025



6,877Depreciation


195



-Total costs and expenses


39,652



22,333Other income (expense) (Note 4)Interest income


1,791



359Interest expense


(519
)


(500
)Total other income (expense)


1,272



(141
)Net loss (Note 3)

$
(38,380
)

$
(22,474
)Basic and diluted loss per common share

$
(0.02
)

$
(0.01
)Weighted average number of commonshares outstanding


2,041,587



2,963,000See accompanying notes.







4


GENESIS SOLAR CORPORATION


(A Development Stage Company)


STATEMENT OF OPERATIONS


For the Nine Months Ended December 31, 2009 and 2010


and


Cumulative Amounts from Inception of the Development


Stage (October 1, 2008) through December 31, 2010


(Unaudited)




Cumulativeamounts from2009


2010


InceptionCosts and expenses:Legal fees

$
45,644


$
37,355


$
101,599Travel and other expenses - related party


28,866



7,123



39,680General and administration


82,941



33,221



142,230Rent and storage expenses


25,067



20,633



85,778Depreciation


587



4



1,178Total costs and expenses


183,105



98,336



370,465Other income (expense) (Note 4)Rental income


-



-



16,450Interest income


6,402



2,171



15,964Interest expense


(519
)


(1,500
)


(2,519
)Total other income (expense)


5,883



671



29,895Net loss (Note 3)

$
(177,222
)

$
(97,665
)

$
(340,570
)Basic and diluted loss per common share

$
(0.12
)

$
(0.03
)

$
(0.16
)Weighted average number of commonshares outstanding


1,503,509



2,963,000



2,092,732See accompanying notes.
  5


GENESIS SOLAR CORPORATION


(A Development Stage Company)


STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)


For the Nine Months Ended December 31, 2010


(Unaudited)








Additional





TotalCommon stock


paid-in


Accumulated


stockholders'Shares


Amount


capital


deficit


equity (deficit)Balance at March 31, 2010


2,963,000


$
29,630


$
6,150,558


$
(6,378,388
)

$
(198,200
)Net loss for the nine monthsended December 31, 2010


-



-



-



(97,665
)


(97,665
)Balance at December 31, 2010


2,963,000


$
29,630


$
6,150,558


$
(6,476,053
)

$
(295,865
)











6


GENESIS SOLAR CORPORATION


(A Development Stage Company)


STATEMENT OF CASH FLOWS


For the Nine Months Ended December 31, 2009 and 2010, and Cumulative Amounts


from Inception of the Development Stage (October 1, 2008) through December 31, 2010


(Unaudited)








Nine months Ended


CumulativeDecember 31,


amounts from2009


2010


InceptionCash flows from operating activities:Net loss

$
(177,222
)

$
(97,665
)

$
(340,570
)Adjustment to reconcile net loss to netcash used in operating activities:Depreciation expense


587



4



1,178Change in receivables and prepaid expense


9,045



17,211



19,514Change in payables and accrued expenses


25,515



(8,640
)


16,743Net cash used in operations


(142,075
)


(89,090
)


(303,135
)Cash flows from investing activities:Receipts on note receivable - related party


67,579



95,599



229,784Net cash provided by investing activities


67,579



95,599



229,784Cash flows from financing activities:Proceeds from sale of stock


17,300



-



17,300Proceeds from officer loan


40,000



-



40,000Net cash provided by financing activities


57,300



-



57,300Net increase (decrease) in cash


(17,196
)


6,509



(16,051
)Cash and cash equivalents atbeginning of period


34,448



9,362



31,922Cash and cash equivalents atend of period

$
17,252


$
15,871


$
15,871







7
 GENESIS SOLAR CORPORATION
 (A Development Stage Company)
 NOTES TO UNAUDITED FINANCIAL STATEMENTS
 December 31, 2010





1.     Significant Accounting Policies and basis of presentation
 
 Effective December 7, 2009 the Company changed its name from Cogenco International, Inc. to Genesis Solar Corporation (“Genesis Solar” or the “Company”) when the Company’s Amended and Restated Articles of Incorporation became effective with the Colorado Secretary of State.  The Company’s shareholders approved this name change at an annual meeting of shareholders held on March 30, 2009, but at that time authorized Company management to effect the name change at a later date.  Based on the business operations and transactions the Company hopes to engage in, in November 2009 the Company’s Board of Directors believed it was appropriate to change the Company’s name to Genesis Solar Corporation and thereafter caused the Company to effect the name change.
 
 Genesis Solar ceased active business operations in early 1988. Genesis Solar has been seeking potential business opportunities since that time, has maintained itself as a validly existing Colorado corporation, and has continued to make filings under Section 15(d) of the Securities Exchange Act of 1934. Except for a series of private equity financings in 2005, 2006, and 2007 totaling approximately $4.7 million, and the activities described below with DMI BioSciences, Inc. (“DMI”) and Genesis Energy Investments, PLC (“GEI Plc”), Genesis Solar has not engaged in active business operations for more than the past five years. Genesis Solar has not received any revenues from operations for more than the past ten years. Effective October 1, 2008, the Company decided to begin a search for a new business opportunity inasmuch as it determined that it was no longer pursuing any business opportunities or transactions with DMI. The Company therefore entered a new development stage as more fully defined in the guidance in Section 915 of the FASB Accounting Standards CodificationTM.
 
 On August 11, 2009, Genesis Solar entered into an agreement to acquire three subsidiaries (collectively the “Solar Subsidiaries”) of GEI Plc, which was then an affiliate of Genesis Solar’s principal shareholder.  As further described below, this agreement was amended twice, and then in May 2010 the parties entered into an Amended and Restated Stock Purchase Agreement with respect to the Company’s potential acquisition of the Solar Subsidiaries.  Later in May 2010, the parties conducted an initial closing of the transaction into escrow.   Effective August 3, 2010, the Company entered into various agreements further amending the terms of the transaction, pursuant to which the Solar Subsidiaries were transferred to an affiliate of the Company, with the expectation that the Company may be able to complete the acquisition of one of the Solar Subsidiaries and certain intellectual property from that affiliate by December 31, 2010.  Due both to a lack of funding and the failure of the other parties to the arrangement to complete their respective obligations, the Company did not complete the acquisition by that date and the Company’s obligations and right to do so expired.  As described below, although Genesis Solar still hopes to acquire one of one of the Solar Subsidiaries and related intellectual property, there is not currently a formal agreement between the parties setting forth the terms by which the Genesis Solar would do so.
 
 The March 31, 2010 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
 
 
  8
  
 1.     Significant Accounting Policies and basis of presentation (continued)
 
 The accompanying financial statements have been prepared by Genesis Solar, without audit. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of only normal recurring accruals) necessary for a fair presentation of the financial position as of March 31, 2010 and December 31, 2010, and the results of operations and cash flows for the periods ended December 31, 2009 and 2010.  The financial statements have been prepared on a going concern basis which contemplates the realization of assets and liquidation of liabilities in the ordinary course of business.  As shown in the accompanying financial statements, Genesis Solar has incurred significant losses from inception to date and does not have sufficient funds on hand to continue to fund operations.  As a development stage company, Genesis Solar has relied on infusions of equity capital, the repayment of debt (including related party debt owed to Genesis Solar by Genesis Capital Management Limited), and loans from its President to fund its limited activities.  As a result, substantial doubt exists about Genesis Solar’s ability to continue to fund future operations using its existing resources.  Genesis Solar will likely continue to seek equity investments from offshore accredited investors; however there can be no assurance that it will actually receive any such funding.
 
 Earnings (loss) per share
 
 In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 260, Earnings per Share ("ASC 260"), basic earnings (loss) per shares is computed by dividing net loss attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net loss attributable to common shares by the weighted average number of common and potential common shares outstanding during period.
 
 The Company has excluded the contingent stock agreements with Vital Source, S.A. for 3,500,000 common shares and the GEI Plc for 14,096,093 common shares, as described in these notes and in the notes to our March 31, 2010 Form 10-K, from its calculation of the effect of dilutive securities, as they represent anti-dilutive stock.
 
 2.      Recently Issued Accounting Standards
 
 In September 2010, the Securities and Exchange Commission issued Release 33-9142 which removed the requirement for issuers that are neither accelerated filers nor large accelerated filers to have an auditor attestation on internal controls over financial reporting.  Therefore, smaller reporting companies such as Genesis Solar Corporation will not need its auditors to provide the attestation on internal controls; however management will complete its assessment for the year ended March 31, 2011.
 
 In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to require an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing reassessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. It requires an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance is effective for fiscal years beginning on January 1, 2010. The Company adopted this standard on April 1, 2010 and it does not have an impact on the unaudited financial statements.
 
 In October 2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This update provides accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. The guidance requires that a share-lending arrangement entered into on an entity’s own shares in contemplation of a convertible debt offering or other financing is required to be measured at fair value and recognized as issuance cost in the financial statement of the entity. This issue only applies to share-lending arrangements that are classified as equity in the financial statements of the share lender. This update is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years with retrospective application required. The Company adopted this update on April 1, 2010, and it did not have an impact on the Unaudited Financial Statements.
 
 
 9
 
 3.      Income taxes
 
 No provision for income taxes is required at March 31, 2010 or December 31, 2010 because, in management’s opinion and based on historical performance the effective tax rate for the periods in question will be zero.
 
 As of March 31, 2010 and December 31, 2010, total deferred tax assets and valuation allowance are as follows:
 
 March 31,


December 31,2010


2010Deferred tax assets resulting from:Loss carryforward

$
346,900


$
374,200Future deduction for accrued salaries and interest


90,600



91,300Valuation allowance


(437,500
)


(465,500
)$
-


$
-
 
 4.      Related party transactions
 
 a.      Brenman Employment Agreement
 
 In November 2004 we entered into an employment agreement with David Brenman (Genesis Solar’s president) which became effective on or about September 30, 2005. The employment agreement was approved by our board of directors, including Mr. Brenman’s father and brother-in-law.  The material terms of David Brenman’s employment agreement are described in our annual report on Form 10-K for the year ended March 31, 2010.  We paid Mr. Brenman his salary as due under the employment agreement through August 15, 2006, but, except for a $2,000 payment made in June 2007, since August 31, 2006, we have been unable to make payments to him as required under his employment agreement.  Mr. Brenman has orally agreed to defer (without interest) collection of any other amounts due under his employment agreement until such time as Genesis Solar is adequately financed.  Further, on March 31, 2008 Mr. Brenman orally agreed to suspend the accrual of his salary until Genesis Solar is adequately financed.
 
 b.      Affiliate Loan
 
 During the quarter ended September 30, 2009, Mr. Brenman advanced Genesis Solar $40,000 to provide Genesis Solar additional liquidity to pay its obligations pursuant to the terms of a promissory note issued by the Company (the “Note”).  The Note is a demand note and accrues interest at 5%.  Principal and accrued interest is due in full upon demand by Mr. Brenman.
 
 c.      Office Lease
 
 On January 1, 2010, the Company moved its offices to 4600 South Ulster Street, Suite 800, Denver, CO  80237.  The office is leased by Micro-Imaging Solutions, LLC (“MIS”) on a month-to-month basis.  The Company currently pays approximately $2,292 per month under this arrangement.  An affiliate of Mr. Brenman has a significant equity interest in MIS and Mr. Brenman is a manager of MIS.
 
 d.      DMI Stock Sale and Genesis Capital Management Limited Promissory Note
 
 On March 7, 2008 Genesis Solar sold its minority ownership of DMI to Genesis Biotechnology Fund (“Genesis Biotech”) and Genesis Capital Management Limited (“GCM Ltd”).   Genesis Biotech and GCM Ltd. are affiliated with Genesis Investment Funds Limited, which through its affiliated entities was, and currently is, the majority shareholder of Genesis Solar (currently owning greater than 50% of Genesis Solar’s outstanding common stock).
 
 The transaction occurred as follows:
 
 ·
Genesis Solar sold 1,423,256 shares of DMI to Genesis Biotech in consideration for Genesis Biotech surrendering 1,423,256 shares of Genesis Solar common stock;
 
 
 10
 
 
 4.      Related party transactions (continued)
 
 ·
Genesis Solar sold 250,000 shares of DMI to GCM Ltd. in consideration for a promissory note in the face amount of $250,000 (the “CGM Note”).  The CGM Note carried 6% interest and obligated GCM Ltd. to pay Genesis $25,000 per quarter.  The first payment was made on June 26, 2008, and the final payment was made on or about December 20, 2010.  Payments totaled $274,211.
 
 Payments under the CGM Note were the only outside source of liquidity for Genesis Solar, and Genesis Solar used the quarterly payments to help satisfy its basic obligations.  Now that the CGM Note has been paid in full in the near future Genesis Solar will have to identify and obtain other sources of funding to pay its routine general and administrative obligations.
 
 e.      Potential Acquisition of Genesis Solar Espana, S.L.
 
 On May 12, 2010 the Company entered into an Amended and Restated Stock Purchase Agreement (the “Restated SPA”) with GEI Plc (then an affiliate of GCM Ltd) regarding the Company’s potential acquisition of the “Solar Subsidiaries” (being Genesis Solar Espana, S.L. (“GSE”), Genesis Solar Singapore Pte. Ltd. (“GSS”), and Genesis Solar Hungary Kft (“GSH”)).  This agreement amended and restated the agreement the parties initially entered into on August 11, 2009 and then amended twice subsequently (on November 24, 2009 and January 19, 2010).  The parties completed the initial closing into escrow on May 25, 2010 at which time the Company deposited share certificates with a third party escrow agent (the “Escrow Agent”) representing 14,146,093 shares of the Company’s common stock, and certain other certificates and documents.  The shares deposited were allocated for the purchase price of GSE, GSS, GSH, and certain intellectual property owned by GEI Plc.
 
 In July 2010 the Company assigned its rights under the Restated SPA to GCM Ltd, and on or about August 3, 2010, GCM Ltd exercised its rights to acquire the Solar Subsidiaries and certain know-how from GEI Plc.   As a part of that that transaction, the Company indicated that it was not interested in acquiring GSS or GSH, and as a result 50,000 shares of Company common stock were returned to the Company for cancellation.  GCM Ltd. exercised its rights under the Restated SPA to acquire the Solar Subsidiaries and Know-How on or about August 3, 2010.  Genesis Solar retained rights to acquire GSE and the know-how from GCM Ltd.  Pursuant to the terms of a new escrow agreement the Escrow Agent continued to hold certificates representing 14,096,093 shares of Company common stock (the “Shares”) in escrow, which the parties agreed would not be released from escrow until Gensis Solar’s notification following the satisfaction or waiver of various conditions precedent (the “Release Conditions”).   The parties had agreed that if the Release Conditions were not satisfied or waived by December 31, 2010 the Escrow Agent would return the Shares to the Company.
 
 In large part because the Company did not have the working capital necessary to engage in significant due diligence with respect to GSE and the Know-How, and the other parties did not enter into various other agreements necessary to satisfy the Release Conditions, Genesis Solar’s rights to acquire GSE and the Know-How expired on January 1, 2011 when the escrow agreement terminated.
 
 Genesis Solar does not know whether it will now be able to acquire GSE or the Know-How, but it has advised the other parties to the transaction that it is willing to continue negotiations subject to compliance with its disclosure requirements.  Nevertheless, Genesis Solar has requested the Escrow Agent to return to it the 14,096,093 shares of Genesis Solar common stock that the Escrow Agent continues to hold.  Upon receipt of those shares (which are considered outstanding for the purposes of the Colorado Business Corporation Act), Genesis Solar will direct its transfer agent to cancel them.
  As of the date of this Report, the Company has not acquired GSE and there can be no assurance that it will be able to do so at any time in the future.  Genesis Solar’s ability to acquire GSE and the Know-How depends on a number of factors, including Genesis Solar’s ability to perform adequate due diligence and the ability of other parties to negotiate acceptable arrangements among themselves.  A significant issue for Genesis Solar’s ability to negotiate a new arrangement and then to complete the transaction will be Genesis Solar’s ability to obtain the financing necessary to do so – financing that Genesis Solar has not been able to acquire.
 
 
 11
 
 5.      Financial Instruments
 
 The financial instruments recorded on our balance sheets include cash, related party notes receivable, related party accounts payable and trade accounts payable.  Due to their short term maturity, the carrying amounts of these financial instruments approximate fair value.
 
 6.  Subsequent events
 
 On or about January 20, 2011 Genesis Solar requested that the Escrow Agent return to Genesis Solar for cancellation the 14,096,093 shares of Genesis Solar common stock held by the Escrow Agent.  Although the Escrow Agent has informed Genesis Solar that it has taken steps to return the shares, due to logistical and administrative demands, as of February 14 , 2011, Genesis Solar had not yet received the return of those shares.
 
 The Company has evaluated events subsequent to December 31, 2010 through February 14, 2011, the date the financial statements were issued.


12


Item 2.             Management’s Discussion and Analysis of Financial Condition and Results of Operations





The statements contained in this Report on Form 10-Q that are not purely historical are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements regarding our expectations, hopes, intentions or strategies regarding the future.  Forward looking statements include: statements regarding future products or product development; statements regarding future selling, general and administrative costs and research and development spending, and our product development and marketing strategies; statements regarding future capital expenditures and financing requirements; and similar forward looking statements.  All forward-looking statements included in this document are based on information available to us on the date hereof, and we undertake no obligation to update any such forward-looking statements.  It is important to note that our actual results could differ materially from those in such forward-looking statements.





Introduction and Background





Overview





Effective December 7, 2009 the Company changed its name from Cogenco International, Inc. to Genesis Solar Corporation (“Genesis Solar” or the “Company”) when the Company’s Amended and Restated Articles of Incorporation became effective under Colorado law.  This name change was proposed to the Company’s shareholders (and then effected) based on the business operations and transactions the Company is pursuing.  Except for a series of equity financings in 2005, 2006, and 2007, the activities related to DMI (generally described in previous reports filed with the Securities and Exchange Commission), and the negotiation of the contemplated transaction involving Genesis Solar Espana, S.L. (“GSE”), Genesis Solar has not engaged in any business operations for more than the past five years.  GSE is a Spanish entity that is in the process of planning, financing and building a plant in Spain to manufacture hi-tech solar panels using thin film technology.  GSE has acquired real estate and has taken various steps in the permitting process for the manufacturing plant to be located near Cadiz, Spain.





Genesis Solar has not received any revenues from operations for more than the past ten years.  We have not had an equity interest in DMI since March 2008 and we are no longer pursuing any further business opportunities with DMI.  A portion of our liquidity since March 2008 was derived from payments we have received from GCM Ltd (Genesis Capital Management, Ltd., a principal shareholder of Genesis Solar) for the purchase by it of shares of DMI common stock.  GCM Ltd purchased those shares for a promissory note in the original principal amount of $250,000, carrying 6% interest, and which obligated GCM Ltd to pay Genesis Solar $25,000 per quarter.  The first payment was made on June 26, 2008, and the final payment was made on or about December 20, 2010.  Payments during the period of the note totaled $274,211.





Instead, as described in various reports filed with the Securities Exchange Commission starting in April 2009 we began pursuing a transaction whereby we were attempting to acquire a 100% interest in certain subsidiaries of and certain “Know-How owned by what was then an affiliated company, Genesis Energy Investment Plc (“GEI Plc”).  In addition to GSE, the “Solar Subsidiaries” were Genesis Solar Singapore Pte. Ltd. (“GSS”) and Genesis Solar Hungary Kft (“GSH”).






13





The transactions have been described in numerous reports filed by Genesis Solar, but have not been completed and, on January 1, 2011 (as described below), Genesis Solar’s obligations and rights to acquire GSE and the Know-How expired.  The transactions can be summarized as follows:




Date
EventApril 2009
Genesis Solar and GEI Plc entered into a letter of intent.August 2009
Genesis Solar entered into stock purchase agreement with GEI Plc to acquire the Solar Subsidiaries and the Know-How, an agreement amended in November 2009 and January 2010.May 2010
Genesis Solar entered into an amended and restated stock purchase agreement with GEI Plc to acquire the Solar Subsidiaries and the Know-How.May 2010
Initial closing of the amended and restated stock purchase agreement into escrow.August 2010
Genesis Solar assigned its rights in the amended and restated stock purchase agreement to GCM Ltd., which then proceeded to complete the transaction with GEI Plc.August 2010
As part of the GCM Ltd-GEI Plc closing, 50,000 shares of Genesis Solar stock were returned to Genesis Solar for cancellation and the balance (14,096,093 shares) were retained in escrow as consideration to be released to GEI Plc  should Genesis Solar acquire GSE and the Know-How from GCM Ltd.January 2011
The August 2010 escrow agreement expired, Genesis Solar did not acquire GSE or the Know-How from GCM Ltd., and Genesis Solar demanded the return to it of the 14,096,093 shares held in escrow.





During these periods, Genesis Solar entered into various agreements with parties which Genesis Solar reasonably believed could provide the promised financing.  These agreements, reported in various filings with the Securities and Exchange Commission under the 1934 Act, never resulted in any external financing for Genesis Solar.





Although the Company is still interested in acquiring GSE, there no longer is an agreement in place between the parties providing for such an acquisition, and Genesis Solar has not been able to conduct or complete the due diligence necessary to do so.  To close the transaction the Company will need to make further arrangements with GEI Plc, GCM Ltd, and several other parties which could result in a change in the structure of the contemplated transaction, a change in the structure and amount of the consideration to be paid by the Company.  Any such transaction will require significant additional financing for Genesis Solar which it has not yet been able to obtain despite its efforts to do so.





Material Changes in Financial Conditions





Since the time Genesis Solar ceased active business operations in 1988, at times we have been seeking potential business opportunities.  As a result of our lack of liquidity, lack of assets and lack of business operations, we believe the on-going volatility in the capital markets are likely to make it especially difficult for us to obtain debt or equity financing.  However, when we have identified an appropriate business opportunity either domestically or abroad at times we have attempted to pursue that opportunity, although in each case to date a lack of financing has prevented us from completing that acquisition.





On December 31, 2010, we had working capital deficit of $(295,865) as compared to our working capital deficit of $(198,204) as of March 31, 2010.  The increase in our working capital deficit is the result of our utilization of a significant portion of the our current assets during the nine months ended December 31, 2010 to help fund our standard operating expenses during the period.  During the period we primarily utilized payments received from GCM Ltd pursuant to a promissory note (the “GCM Note”) to fund our limited operations.  We expect that our working capital deficit will continue to increase until (if ever) we obtain a significant amount of current assets as an investment or a long-term liability, or we achieve a position where our revenues exceed our expenses.  During the period, our total assets also decreased from $122,176 at March 31, 2010 to $15,871 at December 31, 2010 because of our use of current assets to pay our operating losses as discussed above.  Total stockholders’ deficit increased similarly during the period from $(198,200) to $(295,865).  Absent our acquisition of additional assets or outside funding our total assets will continue to decrease and stockholders’ deficit will continue to increase as we expect to use our remaining funds on-hand to pay our on-going general obligations.






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In considering our substantial working capital deficit, it is important to note that more than $310,000 of our liabilities are owed to our president, David Brenman, or to an affiliate of his.  Although these are all current liabilities, Mr. Brenman has not attempted collection action with respect thereto.  With Mr. Brenman’s consent, Genesis Solar prioritizes payables owed to unrelated parties and, as additional cash is available, pays amounts due to Mr. Brenman.  As a result, management believes that in the near term Genesis Solar will be able to continue to pay its routine obligations to third parties as they become due. However, because the Company does not currently have any outside source of liquidity, and only has limited cash on hand, the Company will need to secure outside funding to pay its obligations beyond the near term.





For the nine months ended December 31, 2010, total stockholders’ equity decreased by $(97,665) to $(295,865) as compared to $(198,200) as of March 31, 2010.  The decrease in stockholders’ equity is primarily the result of the continued operating losses and the corresponding rise in our accumulated deficit.





Through the first three quarters of fiscal 2010 the Company’s only source of outside liquidity was the receipt of quarterly payments of $25,000 under the GCM Note.  GCM was obligated to pay the Company $25,000 per quarter through the quarter ended December 31, 2010.  GCM made the final payment due under the GCM Note on or about December 20, 2010. With the GCM Note being paid in full, our only current source of funds for our general and administrative and other expenses likely will come in the form of loans from our president, David Brenman or other Company affiliates.  There can be no assurance that Mr. Brenman (or other Company affiliates) will loan the Company funds to permit the Company to satisfy its basic obligations.   Although the Company is continuing to seek outside sources of funding, to date the Company has not been successful in raising the capital necessary to pursue its proposed business operations.





We have had significant cash flow difficulties.  During recent fiscal years, we paid our operating expenses with funds raised from the issuance of common stock, the sale of marketable securities we held, as well as the funds provided in accordance with the GCM Note as it paid its obligations under the note at the rate of $25,000 per quarter.  We no longer hold any marketable securities and have only limited cash on-hand.  Further, since March 2007 we have only raised $17,300 through the sale of our equity securities in a private placement completed in November 2009.  Although we have expected to receive funding through various agreements we have negotiated with third parties, (including a stock purchase agreement originally entered into in April 2009) to date we have not received any funding under those agreements.





Material Changes in Results of Operations





We are not operating in any business at this time, although we are continuing to seek out business opportunities.   Business opportunities require working capital to investigate and complete, and at the present time we do not have the necessary working capital and especially with the current market conditions we can offer no assurance that, if the need arises, we will be able to obtain financing on reasonable terms, if at all.  We have not received any revenues from operations for more than the past ten years and, therefore, we anticipate that we will continue to incur losses.






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During the three months ended December 31, 2010, we had a net loss of $(22,474), a decrease of nearly $16,000 compared to our net loss of $(38,380) from the same period in fiscal 2009.  The decreased net loss for the three months ended December 31, 2010, was primarily the result of our decrease in general and administrative expenses during the 2010 period ($6,663 in the 2010 period versus $19,390 during the 2009 period).   Additionally, during the 2010 period we incurred significantly decreased legal fees ($5,692 in the 2010 period versus $12,042 during the 2009 period).  During the three months ended December 31, 2009 as the Company worked on further defining and exploring the potential business opportunity through the acquisition of GSE and the Company devoted more time and financial resources to the contemplated transaction than it did during the 2010 period.





During the nine months ended December 31, 2010, we had a net loss of $(97,665), a decrease of approximately $79,500 from our net loss of $(177,222) during the same period in 2009.  The net loss for the nine months ended December 31, 2010, was caused primarily by costs and expenses associated with the various business activities undertaken by the Company as described above, including negotiations with Vital Source and the discussions with GEI Plc and GCM Ltd regarding future business possibilities.  However, this loss was less during the 2010 period versus the 2009 period as during 2009 the Company incurred greater expenses in 2009 when it initially negotiated and agreed to the terms by which the Company planned to acquire GSE.





Off Balance Sheet Arrangements





We have no off balance sheet arrangements and thus no disclosure is required. However, the Company currently pays rent to an affiliated party, Micro-Imaging Solutions, LLC, under an office lease at the rate of approximately $2,300 per month. Micro-Imaging Solutions leases the office space from an unaffiliated landlord, and Genesis Solar reimburses Micro-Imaging Solutions for Genesis Solar’s proportional share (based on square footage occupied).





Recently Issued Accounting Standards





In September 2010, the Securities and Exchange Commission issued Rule 33-9142 which removed the requirement for issuers that are neither accelerated filers nor large accelerated filers to have an auditor attestation on internal controls over financial reporting.  Therefore, smaller reporting companies such as Genesis Solar Corporation will not need its auditors to provide the attestation on internal controls; however management will still need to do its assessment for the year ended March 31, 2011.





In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to require an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance requires an ongoing reassessment and eliminates the quantitative approach previously required for determining whether an entity is the primary beneficiary. It requires an analysis to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity. This guidance is effective for fiscal years beginning on January 1, 2010. The Company adopted this standard on April 1, 2010 and it does not have an impact on the unaudited financial statements.





In October 2009, the FASB issued ASU 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This update provides accounting and reporting guidance for own-share lending arrangements issued in contemplation of convertible debt issuance. The guidance requires that a share-lending arrangement entered into on an entity’s won shares in contemplation of a convertible debt offering or other financing is required to be measured at fair value and recognized as issuance cost in the financial statement of the entity. This issue only applies to share-lending arrangements that are classified as equity in the financial statements of the share lender. This update is effective for fiscal years beginning on or after December 15, 2009, and interim periods within those fiscal years with retrospective application required. The Company adopted this update on April 1, 2010, and it did not have an impact on the Unaudited Financial Statements.






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Item 3.      Quantitative and qualitative disclosures about market risk





Not applicable.





Item 4.    Controls and Procedures





Our management, with the participation of our principal executive officer and our principal financial officer has evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of December 31, 2010 (the end of the period covered by this report). Based on that evaluation, our principal executive officer and our principal financial officer have concluded that because of the material weakness identified in our internal control over financial reporting described in our annual report for the year ended March 31, 2010 on Form 10-K, that, our disclosure controls and procedures were not effective as of December 31, 2010.  Due to a lack of financial resources, we are not able to, and do not intend to, immediately take any action to remediate the material weaknesses identified.





Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.





There were no changes in our internal control over financial reporting during the quarter ended December 31, 2010, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.








PART II – OTHER INFORMATION





Item 1.  Legal Proceedings.





Not applicable.





Item 1A.  Risk Factors.





There have been no material changes to the information included in risk factors set forth in our Annual Report on Form 10-K for the year ended March 31, 2010, except: (i) the on-going risk that we will not be able to complete the acquisition of GSE and the Know-How or otherwise identify and execute upon a business opportunity; and (ii) as related to Genesis Solar’s continuing financial difficulties, lack of an outside source of liquidity, and lack of adequate working capital.





Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.





There were no sales of unregistered equity securities that occurred during the quarter ended December 31, 2010, and through the date of this report.







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Item 3.   Defaults upon senior securities.





Not applicable.





Item 4.   Reserved








Item 5.   Other Information.





None.





Item 6.   Exhibits





31
Certification pursuant to Rule 13a-14(a).  Filed herewith.32
Certification pursuant to 18 U.S.C. §1350. Filed herewith.








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.


Date: February 14, 2011
/s/ David W. BrenmanDavid W. Brenman, President,Principal Executive Officer, Principal Accounting Officer,Principal Financial Officer and Director

















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