SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-QSB



(Mark One)



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



For quarterly period ended November 30, 2007



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



For the transition period from _____ to _____



OCTILLION CORP. AND SUBSIDIARIES

(Exact name of registrant as specified in its charter)



Nevada

(State or other jurisdiction of incorporation)



333-127953

(Commission File Number)



59-3509694

(I.R.S Employer Identification No.)



2638 Lapeer Road, Suite 2, Auburn Hills, MI  48326

(Address of principal executive offices)



(800) 213-0689

(Registrants telephone number, including area code)





Indicate by check mark whether the registrant: (1) has filed all reports required 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act)

Yes [  ]    No [X]



State the number of shares outstanding of each of the Issuers classes of common equity as of the latest practicable date. As of January 9, 2008, there were 53,864,600 shares of the Issuers Common Stock, $0.001 par value per share outstanding.



Transitional Small Business Disclosure Format (Check One): Yes [  ]    No [X]







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TABLE OF CONTENTS



OCTILLION CORP. AND SUBSIDIARIES



FORM 10-QSB, QUARTER ENDED NOVEMBER 30, 2007





PART I    FINANCIAL INFORMATION



Item 1. Financial Statements



Interim Unaudited Consolidated Balance Sheet at November 30, 2007

3



Interim Unaudited Consolidated Statements of Operations

4

For the Three Months Ended November 30, 2007 and 2006,

and For the Period from Inception (May 5, 1998) to November 30, 2007



Interim Unaudited Consolidated Statement of Stockholders Equity (Deficiency)

5

from Inception (May 5, 1998) to November 30, 2007



Interim Unaudited Consolidated Statements of Cash Flows

9

For the Three Months Ended November 30, 2007 and 2006, and For the Period

from Inception (May 5, 1998) to November 30, 2007



Notes to Interim Unaudited Consolidated Financial Statements

10



Item 2.  Management's Discussion and Analysis or Plan of Operation

15



Item 3.  Controls and Procedures

25





PART II   OTHER INFORMATION



Item 1. Legal Proceedings

26



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

26



Item 3. Defaults Upon Senior Securities

26



Item 4. Submission of Matters to a Vote of Security Holders

26



Item 5. Other Information

26



Item 6. Exhibits and Reports on Form 8-K

26



Signatures

27









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Item 1. Financial Statements



In the opinion of management, the accompanying unaudited consolidated interim financial statements included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of the results of operations for the periods are presented.  The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.



|                                                                                         |  |             
|---------------------------------------------------------------------------------------- |  | ------------
|OCTILLION CORP. AND SUBSIDIARIES                                                        
|(A Development Stage Company)                                                           
|                                                                                         |  |             
|CONSOLIDATED BALANCE SHEET                                                              
|NOVEMBER 30, 2007                                                                       
|(Expressed in U.S. Dollars)                                                             
|(Unaudited)                                                                             
|                                                                                         |  |             
|                                                                                         |  | November 30,
|                                                                                         |  | 2007        
|                                                                                         |  |             
|ASSETS                                                                                   |  |             
|                                                                                         |  |             
|Current Assets                                                                           |  |             
|Cash and cash equivalents                                                                |  | $ 905,422   
|Prepaid expenses                                                                         |  | 1,506       
|                                                                                         |  | 906,928     
|                                                                                         |  |             
|Equipment, net (Note 6)                                                                  |  | 2,410       
|                                                                                         |  |             
|Total Assets                                                                             |  | $909,338    
|                                                                                         |  |             
|                                                                                         |  |             
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                     |  |             
|                                                                                         |  |             
|Current Liabilities                                                                      |  |             
|Accounts payable and accrued liabilities                                                 |  | $82,748     
|Accounts payable - related party (Note 10)                                               |  | 4,375       
|                                                                                         |  |             
|Total Liabilities                                                                        |  | 87,123      
|                                                                                         |  |             
|Stockholders' Equity                                                                     |  |             
|Authorized:                                                                              |  |             
|1,000,000 preferred shares, with par value of $0.10 per share                            |  |             
|100,000,000 common shares, with par value of $0.001 per share                            |  |             
|Issued: 53,864,600 common shares                                                         |  | 53,865      
|Additional paid-in capital                                                               |  | 4,641,592   
|Accumulated other comprehensive income (loss)                                            |  | (5,829)     
|Deficit accumulated during the development stage                                         |  | (3,867,413) 
|Total Stockholders' Equity                                                               |  | 822,215     
|                                                                                         |  |             
|Total Liabilities and Stockholders' Equity                                               |  | $ 909,338   
|                                                                                         |  |             
|(The accompanying notes are an integral part of these consolidated financial statements)





3



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|                                                                                         |  |                   |  |              |  |             
|---------------------------------------------------------------------------------------- |  | ----------------- |  | ------------ |  | ------------
|OCTILLION CORP. AND SUBSIDIARIES                                                        
|(A Development Stage Company)                                                           
|                                                                                         |  |                   |  |              |  |             
|CONSOLIDATED STATEMENTS OF OPERATIONS                                                   
|FOR THREE MONTHS ENDED NOVEMBER 30, 2007 AND 2006, AND FOR THE                          
|PERIOD FROM INCEPTION (MAY 5, 1998) TO NOVEMBER 30, 2007                                
|(Expressed in U.S. Dollars)                                                             
|(Unaudited)                                                                             
|                                                                                         |  |                   |  |              |  |             
|                                                                                         |  | Cumulative        |  | Three Months |  | Three Months
|                                                                                         |  | May 5, 1998       |  | Ended        |  | Ended       
|                                                                                         |  | (inception) to    |  | November 30, |  | November 30,
|                                                                                         |  | November 30, 2007 |  | 2007         |  | 2006        
|                                                                                         |  |                   |  |              |  |             
|Expenses                                                                                 |  |                   |  |              |  |             
|                                                                                         |  |                   |  |              |  |             
|                                                                                         |  |                   |  |              |  |             
|Investor relations                                                                       |  | $1,408,935        |  | $378,910     |  | $380,970    
|Management fees - related party                                                          |  | 203,074           |  | -            |  | -           
|Other operating expenses                                                                 |  | 271,611           |  | 100,114      |  | 2,806       
|Professional fees                                                                        |  | 236,442           |  | 18,065       |  | 7,055       
|Research and development (Note 5)                                                        |  | 266,709           |  | 78,054       |  | 27,150      
|Stock based compensation expenses (Note 9)                                               |  | 887,125           |  | 887,125      |  | -           
|Travel and entertainment                                                                 |  | 108,145           |  | 28,361       |  | 5,211       
|Loss from operations                                                                     |  | 3,382,041         |  | 1,490,629    |  | 423,192     
|                                                                                         |  |                   |  |              |  |             
|Other income                                                                             |  |                   |  |              |  |             
|Interest                                                                                 |  | 50,075            |  | 12,904       |  | 2,340       
|Foreign exchange gain (loss)                                                             |  | (3,350)           |  | 2,211        |  | (107)       
|Payable forgiven                                                                         |  | 30,000            |  | -            |  | -           
|                                                                                         |  |                   |  |              |  |             
|Loss from continuing operations                                                          |  | (3,305,316)       |  | (1,475,514)  |  | (420,959)   
|                                                                                         |  |                   |  |              |  |             
|Loss from discontinued operations                                                        |  | (162,097)         |  | -            |  | (26,460)    
|                                                                                         |  |                   |  |              |  |             
|Net loss for the period                                                                  |  | $(3,467,413)      |  | $(1,475,514) |  | $(447,419)  
|                                                                                         |  |                   |  |              |  |             
|Loss per share:                                                                          |  |                   |  |              |  |             
|Continuing operations                                                                    |  |                   |  | $(0.027)     |  | $(0.009)    
|Discontinued operations                                                                  |  |                   |  | -            |  | (0.001)     
|                                                                                         |  |                   |  | $(0.027)     |  | $(0.010)    
|                                                                                         |  |                   |  |              |  |             
|Weighted average number of                                                               |  |                   |  |              |  |             
|common shares outstanding:                                                               |  |                   |  |              |  |             
|Basic and diluted                                                                        |  |                   |  | 53,864,600   |  | 44,598,996  
|                                                                                         |  |                   |  |              |  |             
|                                                                                         |  |                   |  |              |  |             
|(The accompanying notes are an integral part of these consolidated financial statements)



4



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|                                                            |                 |              |            |               |                 |               |                     |               |                     | 
|----------------------------------------------------------- | --------------- | ------------ | ---------- | ------------- | --------------- | ------------- | ------------------- | ------------- | ------------------- | 
|OCTILLION CORP. AND SUBSIDIARIES                           
|(A Development Stage Company)                              
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
|FROM MAY 5, 1998 (INCEPTION) TO NOVEMBER 30, 2007          
|(Expressed in U.S. Dollars)                                
|(Unaudited)                                                
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|                                                            |                 |              |            |               |                 | Accumulated   |                     |               |                    
|                                                            |                 |              |            |               |                 | other         | Deficit accumulated |               |                    
|                                                            | Preferred Stock | Common Stock | Additional | comprehensive | during the      | Comprehensive | Total stockholders'
|                                                            | Shares          | Amount       | Shares     | Amount        | paid-in capital | income (loss) | development stage   | income (loss) | equity (deficiency)
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Restricted common stock                                     |                 |              |            |               |                 |               |                     |               |                    
|issued to related parties for                               |                 |              |            |               |                 |               |                     |               |                    
|management services                                         |                 |              |            |               |                 |               |                     |               |                    
|at $0.003 per share                                         | -               | $-           | 9,000,000  | $9,000        | $(6,000)        | $-            | $-                  | $-            | $3,000             
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Unrestricted common stock sales                             |                 |              |            |               |                 |               |                     |               |                    
|to third parties at $0.13 per share                         | -               | -            | 1,125,000  | 1,125         | 148,875         | -             | -                   |               | 150,000            
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Comprehensive income (loss)                                 |                 |              |            |               |                 |               |                     |               |                    
|Net loss for the period                                     | -               | -            | -          | -             | -               | -             | (12,326)            | (12,326)      | (12,326)           
|Total comprehensive loss                                    |                 |              |            |               |                 |               |                     | (12,326)      |                    
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Balance, August 31, 1998                                    | -               | -            | 10,125,000 | 10,125        | 142,875         | -             | (12,326)            |               | 140,674            
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Comprehensive income (loss)                                 |                 |              |            |               |                 |               |                     |               |                    
|Net loss for the year                                       | -               | -            | -          | -             | -               | -             | (77,946)            | (77,946)      | (77,946)           
|Total comprehensive loss                                    |                 |              |            |               |                 |               |                     | (77,946)      |                    
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Balance, August 31, 1999                                    | -               | -            | 10,125,000 | 10,125        | 142,875         | -             | (90,272)            |               | 62,728             
|                                                            |                 |              |            |               |                 |               |                     |               |                    
|Comprehensive income (loss)                                 |                 |              |            |               |                 |               |                     |               |                    
|Net loss for the year                                       | -               | -            | -          | -             | -               | -             | (12,446)            | (12,446)      | (12,446)           
|Total comprehensive loss                                    |                 |              |            |               |                 |               |                     | (12,446)      |                    



5



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|                                       |   |   |            |        |         |   |           |          |          | 
|-------------------------------------- | - | - | ---------- | ------ | ------- | - | --------- | -------- | -------- | 
|                                       |   |   |            |        |         |   |           |          |         
|Balance, August 31, 2000               | - | - | 10,125,000 | 10,125 | 142,875 | - | (102,718) |          | 50,282  
|                                       |   |   |            |        |         |   |           |          |         
|Comprehensive income (loss)            |   |   |            |        |         |   |           |          |         
|Net loss for the year                  | - | - | -          | -      | -       | - | (12,904)  | (12,904) | (12,904)
|Total comprehensive loss               |   |   |            |        |         |   |           | (12,904) |         
|                                       |   |   |            |        |         |   |           |          |         
|Balance, August 31, 2001               | - | - | 10,125,000 | 10,125 | 142,875 | - | (115,622) |          | 37,378  
|                                       |   |   |            |        |         |   |           |          |         
|Comprehensive income (loss)            |   |   |            |        |         |   |           |          |         
|Net loss for the year                  | - | - | -          | -      | -       | - | (54,935)  | (54,935) | (54,935)
|Total comprehensive loss               |   |   |            |        |         |   |           | (54,935) |         
|                                       |   |   |            |        |         |   |           |          |         
|Balance, August 31, 2002               | - | - | 10,125,000 | 10,125 | 142,875 | - | (170,557) |          | (17,557)
|                                       |   |   |            |        |         |   |           |          |         
|Restricted common stock issued to      |   |   |            |        |         |   |           |          |         
|a related party to satisfy outstanding |   |   |            |        |         |   |           |          |         
|management fees at $0.003 per share    |   |   |            |        |         |   |           |          |         
|on December 19, 2002                   | - | - | 24,000,000 | 24,000 | 56,000  | - | -         |          | 80,000  
|                                       |   |   |            |        |         |   |           |          |         
|Restricted common stock issued to a    |   |   |            |        |         |   |           |          |         
|related party to satisfy outstanding   |   |   |            |        |         |   |           |          |         
|management fees at $0.003 per share    |   |   |            |        |         |   |           |          |         
|on March 18, 2003                      | - | - | 6,999,600  | 7,000  | 16,332  | - | -         |          | 23,332  
|                                       |   |   |            |        |         |   |           |          |         
|Comprehensive income (loss)            |   |   |            |        |         |   |           |          |         
|Net loss for the year                  | - | - | -          | -      | -       | - | (97,662)  | (97,662) | (97,662)
|Total comprehensive loss               |   |   |            |        |         |   |           | (97,662) |         
|                                       |   |   |            |        |         |   |           |          |         
|Balance, August 31, 2003               | - | - | 41,124,600 | 41,125 | 215,207 | - | (268,219) |          | (11,887)
|                                       |   |   |            |        |         |   |           |          |         
|Comprehensive income (loss)            |   |   |            |        |         |   |           |          |         
|Net loss for the year                  | - | - | -          | -      | -       | - | (19,787)  | (19,787) | (19,787)
|Total comprehensive loss               |   |   |            |        |         |   |           | (19,787) |         
|                                       |   |   |            |        |         |   |           |          |         
|Balance, August 31, 2004               | - | - | 41,124,600 | 41,125 | 215,207 | - | (288,006) |          | (31,674)
|                                       |   |   |            |        |         |   |           |          |         
|Comprehensive income (loss)            |   |   |            |        |         |   |           |          |         



6



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|                                         |   |   |            |        |         |         |           |           |           | 
|---------------------------------------- | - | - | ---------- | ------ | ------- | ------- | --------- | --------- | --------- | 
|Net loss for the year                    | - | - | -          | -      | -       | -       | (103,142) | (103,142) | (103,142)
|Total comprehensive loss                 |   |   |            |        |         |         |           | (103,142) |          
|                                         |   |   |            |        |         |         |           |           |          
|Balance, August 31, 2005                 | - | - | 41,124,600 | 41,125 | 215,207 | -       | (391,148) |           | (134,816)
|                                         |   |   |            |        |         |         |           |           |          
|Issuance of common stock and warrants    |   |   |            |        |         |         |           |           |          
|at $0.17 per share on May 16, 2006       | - | - | 3,000,000  | 3,000  | 497,000 | -       | -         |           | 500,000  
|                                         |   |   |            |        |         |         |           |           |          
|Comprehensive income (loss)              |   |   |            |        |         |         |           |           |          
|Net loss for the year                    | - | - | -          | -      | -       | -       | (157,982) | (157,982) | (157,982)
|Total comprehensive loss                 |   |   |            |        |         |         |           | (157,982) |          
|                                         |   |   |            |        |         |         |           |           |          
|Balance, August 31, 2006                 | - | - | 44,124,600 | 44,125 | 712,207 | -       | (549,130) |           | 207,202  
|                                         |   |   |            |        |         |         |           |           |          
|Exercise of Class A Warrants  at $0.167  |   |   |            |        |         |         |           |           |          
|per share                                | - | - | 3,000,000  | 3,000  | 497,000 | -       | -         |           | 500,000  
|                                         |   |   |            |        |         |         |           |           |          
|Exercise of Class B Warrants  at $0.183  |   |   |            |        |         |         |           |           |          
|per share                                | - | - | 3,000,000  | 3,000  | 547,000 | -       | -         |           | 550,000  
|                                         |   |   |            |        |         |         |           |           |          
|Exercise of Class C Warrants  at $0.50   |   |   |            |        |         |         |           |           |          
|per share                                | - | - | 980,000    | 980    | 489,020 | -       | -         |           | 490,000  
|                                         |   |   |            |        |         |         |           |           |          
|Exercise of Class D Warrants  at $0.55   |   |   |            |        |         |         |           |           |          
|per share                                | - | - | 880,000    | 880    | 483,120 | -       | -         |           | 484,000  
|                                         |   |   |            |        |         |         |           |           |          
|Exercise of Class E Warrants  at $0.60   |   |   |            |        |         |         |           |           |          
|per share                                | - | - | 880,000    | 880    | 527,120 | -       | -         |           | 528,000  
|                                         |   |   |            |        |         |         |           |           |          
|Issuance of common stock and warrants    |   |   |            |        |         |         |           |           |          
|at $0.50 per share on April 23, 2007     | - | - | 1,000,000  | 1,000  | 499,000 | -       | -         |           | 500,000  
|                                         |   |   |            |        |         |         |           |           |          
|Dividend paid - spin off of MircoChannel |   |   |            |        |         |         |           |           |          
|Technologies Corporation                 | - | - | -          | -      | -       | -       | (400,000) |           | (400,000)
|                                         |   |   |            |        |         |         |           |           |          
|Comprehensive income (loss)              |   |   |            |        |         |         |           |           |          
|Foreign currency translation adjustments | - | - | -          | -      | -       | (1,811) | -         | (1,811)   | (1,811)  
|                                         |   |   |            |        |         |         |           |           |          



7



---



|                                                                                         |   |    |            |         |            |          |              |              |             | 
|---------------------------------------------------------------------------------------- | - | -- | ---------- | ------- | ---------- | -------- | ------------ | ------------ | ----------- | 
|Net loss for the year                                                                    | - | -  | -          | -       | -          | -        | (1,442,769)  | (1,442,769)  | (1,442,769)
|Total comprehensive loss                                                                 |   |    |            |         |            |          |              | (1,444,580)  |            
|                                                                                         |   |    |            |         |            |          |              |              |            
|Balance, August 31, 2007                                                                 | - | -  | 53,864,600 | 53,865  | 3,754,467  | (1,811)  | (2,391,899)  |              | 1,414,622  
|                                                                                         |   |    |            |         |            |          |              |              |            
|Stock based compensation                                                                 | - | -  | -          | -       | 887,125    | -        | -            | -            | 887,125    
|                                                                                         |   |    |            |         |            |          |              |              |            
|Comprehensive income (loss)                                                              |   |    |            |         |            |          |              |              |            
|Foreign currency translation adjustments                                                 | - | -  | -          | -       | -          | (4,018)  | -            | (4,018)      | (4,018)    
|                                                                                         |   |    |            |         |            |          |              |              |            
|Net loss for the period                                                                  | - | -  | -          | -       | -          | -        | (1,475,514)  | (1,475,514)  | (1,475,514)
|                                                                                         |   |    |            |         |            |          |              | $(1,479,532) |            
|                                                                                         |   |    |            |         |            |          |              |              |            
|Balance, November 30, 2007                                                               | - | $- | 53,864,600 | $53,865 | $4,641,592 | $(5,829) | $(3,867,413) |              | $822,215   
|                                                                                         |   |    |            |         |            |          |              |              |            
|(The accompanying notes are an integral part of these consolidated financial statements)





8



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|                                                                                         |  |                 |  |              |  |             
|---------------------------------------------------------------------------------------- |  | --------------- |  | ------------ |  | ------------
|OCTILLION CORP. AND SUBSIDIARIES                                                        
|(A Development Stage Company)                                                           
|                                                                                         |  |                 |  |              |  |             
|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                   
|FOR THREE MONTHS ENDED NOVEMBER 30, 2007 AND 2006, AND FOR THE                          
|PERIOD FROM INCEPTION (MAY 5, 1998) TO NOVEMBER 30, 2007                                
|(Expressed in US Dollars)                                                               
|(Unaudited)                                                                             
|                                                                                         |  |                 |  |              |  |             
|                                                                                         |  | Cumulative      |  | Three Months |  | Three Months
|                                                                                         |  | May 5, 1998     |  | Ended        |  | Ended       
|                                                                                         |  | (inception) to  |  | November 30, |  | November 30,
|                                                                                         |  | August 31, 2007 |  | 2007         |  | 2006        
|                                                                                         |  |                 |  |              |  |             
|Cash flows used in operating activities                                                  |  |                 |  |              |  |             
|Loss from continuing operations                                                          |  | $(3,305,316)    |  | $(1,475,514) |  | $(420,959)  
|Add: loss from discontinued operations                                                   |  | (162,097)       |  | -            |  | (26,460)    
|Adjustments to reconcile net loss to                                                     |  |                 |  |              |  |             
|net cash used in operating activities:                                                   |  |                 |  |              |  |             
|- depreciation                                                                           |  | 3,506           |  | 313          |  | 204         
|- stock based compensation expense                                                       |  | 887,125         |  | 887,125      |  | -           
|- payable written off                                                                    |  | (30,000)        |  | -            |  | -           
|- common stock issued for services                                                       |  | 3,000           |  | -            |  | -           
|- common stock issued for debt settlement                                                |  | 103,332         |  | -            |  | -           
|Changes in non-cash working capital items:                                               |  |                 |  |              |  |             
|- decrease (increase) in prepaid expenses                                                |  | (1,506)         |  | (1,506)      |  | 1,496       
|- increase (decrease) in accounts payable and accrued liabilities                        |  | 82,748          |  | 59,042       |  | 160,529     
|- increase (decrease) in accounts payable - related party                                |  | 34,375          |  | 4,375        |  | -           
|Net cash used in operating activities                                                    |  | (2,384,833)     |  | (526,165)    |  | (285,190)   
|                                                                                         |  |                 |  |              |  |             
|Cash flows from investing activities                                                     |  |                 |  |              |  |             
|Purchase of equipment                                                                    |  | (5,916)         |  | (2,271)      |  | -           
|Net cash flows used in investing activities                                              |  | (5,916)         |  | (2,271)      |  | -           
|                                                                                         |  |                 |  |              |  |             
|Cash flows from financing activities                                                     |  |                 |  |              |  |             
|Proceeds from the issuance of common stock                                               |  | 3,702,000       |  | -            |  | 375,000     
|Repayment of promissory note                                                             |  | (155,000)       |  | -            |  | -           
|Proceeds from promissory notes                                                           |  | 155,000         |  | -            |  | -           
|Dividend paid                                                                            |  | (400,000)       |  | -            |  | -           
|Net cash flows provided by financing activities                                          |  | 3,302,000       |  | -            |  | 375,000     
|                                                                                         |  |                 |  |              |  |             
|Increase (decrease) in cash and cash equivalents                                         |  | 911,251         |  | (528,436)    |  | 89,810      
|                                                                                         |  |                 |  |              |  |             
|Effect of foreign currency translation                                                   |  | (5,829)         |  | (4,018)      |  | -           
|                                                                                         |  |                 |  |              |  |             
|Cash and cash equivalents - beginning of period                                          |  | -               |  | 1,437,876    |  | 247,492     
|                                                                                         |  |                 |  |              |  |             
|Cash and cash equivalents - end of period                                                |  | $905,422        |  | $905,422     |  | $337,302    
|                                                                                         |  |                 |  |              |  |             
|                                                                                         |  |                 |  |              |  |             
|Supplemental cash flow information:                                                      |  |                 |  |              |  |             
|Interest paid in cash                                                                    |  | $10,219         |  | $-           |  | $9,844      
|Income taxes paid in cash                                                                |  | $-              |  | $-           |  | $-          
|                                                                                         |  |                 |  |              |  |             
|Supplemental noncash transaction:                                                        |  |                 |  |              |  |             
|Accrued mangement fees converted to equity                                               |  | $103,332        |  | $-           |  | $103,332    
|                                                                                         |  |                 |  |              |  |             
|(The accompanying notes are an integral part of these consolidated financial statements)





9



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OCTILLION CORP. AND SUSIDIARIES

(a development stage company)

Notes to Consolidated Financial Statements

November 30, 2007

(Expressed in U.S. Dollars)



1. Basis of Presentation and Going Concern Uncertainties



Octillion Corp. (the Company) was incorporated in the State of Nevada on May 5, 1998. The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Sungen Energy, Inc. (Sungen), Octillion Technologies Limited (Octillion Technologies). Sungen was incorporated on July 11, 2006 in the State of Nevada and has no assets and no liabilities. Octillion Technologies was incorporated on April 11, 2007 in the Province of British Columbia, Canada for providing administrative services to the Companys Canada office. All significant inter-company balances and transactions have been eliminated.



Octillion Corp., together with its wholly owned subsidiaries, is a technology incubator focused on the identification, acquisition, development and eventual commercialization of emerging technologies. Among the Companys current research and development activities are the development of a patent-pending technology that could adapt existing home and office glass windows into ones capable of generating electricity from solar energy without losing significant transparency or requiring major changes in manufacturing infrastructure.



On August 22, 2007, the Company spun off its wholly-owned biotechnology subsidiary, MicroChannel Technologies Corporation (MicroChannel) with the shareholders of the Company. The net assets and results of operations of MicroChannel of the prior period have been reclassified as discontinued operation.



The Company has not generated any revenues and has incurred losses of $3,867,413 since inception. The Company has incurred a loss of $1,475,514 during the three months ended November 30, 2007. In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations.  Management believes that its current and future plans enable it to continue as a going concern.



To meet these objectives, the Company completed a private placement for gross proceeds of $500,000 on April 23, 2007 and continues to seek other sources of financing in order to support existing operations and expand the range and scope of its business. However, there are no assurances that any such financing can be obtained on acceptable terms, if at all. Management believes that actions presently taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. The Company's ability to achieve these objectives cannot be determined at this time.



These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharges its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.



2. Presentation of Interim Information



The accompanying interim unaudited consolidated financial statements have been prepared in accordance with Form 10-QSB instructions and in the opinion of management contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of November 30, 2007, and the results of operations and cash flows for the three months ended November 30, 2007 and 2006. These results have been determined on the basis of generally accepted accounting principles and practices in the United States and applied consistently as those used in the preparation of the Company's 2007 Annual Report on Form 10-KSB.



Certain information and footnote disclosure normally included in the financial statements presented in accordance with generally accepted accounting principles in the United States have been condensed or omitted. It is suggested that the accompanying financial statements should be read in conjunction with the financial statements and notes thereto incorporated in the Company's 2007 Annual Report on Form 10-KSB.



3. New Accounting Pronouncements



In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" ("SFAS 141(R)"), which replaces SFAS No. 141. SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements



10



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the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS 141(R) will have an impact on accounting for business combinations once adopted, but the effect is dependent upon acquisitions at that time.



In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51" ("SFAS 160"), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent's ownership interest and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company has not determined the effect that the application of SFAS 160 will have on its consolidated financial statements.



4. Net Loss Per Common Share



Basic earnings or loss per share is based on the weighted average number of shares outstanding during the period of the financial statements.  Diluted earnings or loss per share are based on the weighted average number of common shares outstanding and dilutive common stock equivalents.  Effective September 1, 2006, the Company enacted a 3 for 1 forward stock split.  All loss per share amounts in the financial statements are basic loss per share because the inclusion of stock options and warrants outstanding would be antidilutive. All per share and per share information are adjusted retroactively to reflect stock splits and changes in par value. The computation of basic and diluted loss per share is as follows:



|                                         |  |            |                    |           
|---------------------------------------- |  | ---------- | ------------------ | ----------
|                                         |  |            | Three months ended
|                                         |  |            | November 30,      
|                                         |  |            | 2007               | 2006      
|Numerator - net loss available to common |  |            |                   
|stockholders                             |  |            | $(1,475,514)       | $(447,419)
|                                         |  |            |                    |           
|Denominator - weighted average number of |  |            |                   
|common shares outstanding                |  | 53,864,600 | 44,598,996        
|                                         |  |            |                    |           
|Basic and diluted loss per common share  |  | $ (0.027)  | $ (0.010)         
|                                         |  |            |                    |           



5. Option Interest in Solar Energy Conversion Technology



In August 2006, the Company, through its wholly owned subsidiary, Sungen Energy Inc., entered into a Sponsored Research Agreement (Research Agreement) with scientists at the University of Illinois (UOI) for the development of a new patent-pending technology using nanosilicon photovoltaic solar cells that could convert normal home and office glass windows into ones capable of converting solar energy into electricity with limited loss of transparency and minimal changes in manufacturing infrastructure. The process of producing silicon nanoparticles is supported by 10 issued US patents, 7 pending US patents, 2 issued foreign counterpart patents and 19 pending foreign counterpart patents. The period of performance of the Research Agreement is for two years until August 22, 2008 and the Company has to pay $422,818 for the performance of the project, with $2,000 payable upon execution of the agreement (paid), first installment of $27,150 payable on September 23, 2006 (paid) and the remaining 3 of $27,150 each (paid) and 4 of $78,054 each payable every three months thereafter ($78,054 paid and $78,054 accrued).



The Company has the option to enter into a commercial license for the project intellectual property by reimbursement of the related remaining out-of-pocket expenditures incurred by UOI and payment of royalties and fees to be negotiated, which should not exceed 5% and $100,000, respectively.



As of November 30, 2007, the Company has paid $266,709 for the Research Agreement. As the research project has not reached the commercial development stage, the amounts incurred to support the project are thus expensed.





11



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6. Equipment



|                               |  |       |        |             
|------------------------------ |  | ----- | ------ | ------------
|                               |  |       |        | November 30,
|                               |  |       |        | 2007        
|                               |  |       |        |             
|Computer equipment             |  |       | $3,257
|Less: accumulated depreciation |  | (847)
|                               |  |       |        | $2,410      
|                               |  |       |        |             





Depreciation expenses charged to operations was $313 (2006: $204) for the three months ended November 30, 2007.



7. Capital Stock



At November 30, 2007 there were 1,000,000 shares of preferred stock (par value $0.10 per share) authorized, of which no shares were issued and outstanding.  The Board of Directors has the authority to issue such stock in one or more series, to fix the number of shares and to fix and determine the relative rights and preferences of the shares of any such series so established to the full extent permitted by the laws of the State of Nevada and the Articles of Incorporation.



8. Warrants



As of November 30, 2007, the following warrants were outstanding:



(a) 20,000 Class C warrants which entitle the holders to purchase 20,000 common shares of the Company at $0.50 each expiring on October 23, 2008.



(b) 120,000 Class D warrants which entitle the holders to purchase 120,000 common shares of the Company at $0.55 each expiring on April 23, 2009.



(c) 120,000 Class E warrants which entitle the holders to purchase 120,000 common shares of the Company at $0.60 each expiring on April 23, 2010.



9. Stock Options



As of November 30, 2007, the Company had an active stock option plan that provides shares available for options granted to employees, directors and others. Options granted to employees under the Companys option plans generally vest over two to five years or as otherwise determined by the plan administrator. Options to purchase shares expire no later than ten years after the date of grant.



On September 10, 2007, the Company appointed Mr. Nicholas Cucinelli to the positions of President and Chief Executive Officer. Mr. Cucinelli receives an annualized base salary of $105,000 and has been granted options to purchase up to 1,500,000 shares of the Companys common stock at an exercise price of $4.21.  The options vest as follows: (a) 500,000 vest and become exercisable upon receiving engineering reports and independent confirmation that the NanoPower Windows can be manufactured at commercially viable prices and be able to generate a sufficient amount of electricity to be marketable to customers, whether retail or wholesale; (b) 500,000 vest and become exercisable upon commencing commercial sales of the NanoPower Window, whether to retail customers or wholesale customers; (c) 500,000 vest and become exercisable upon reaching $1,000,000 in total cumulative commercial sales of the NanoPower Window during any three month period of a fiscal year, and (d) All 1,500,000 vest and become exercisable if and when Sungen Technologies, Inc. is acquired by a third party at a price that has been approved by shareholders and the Board of Directors or when the Company, because of its ownership of Sungen Technologies, Inc., is acquired by a third party at a price that has been approved by shareholders and the Board of Directors.



As the 1,500,000 stock options will vest based on certain performance conditions, the Company expects that the first 500,000 stock options will vest at around 18 months from the date of grant, the second 500,000 stock options will vest at around 24 months from the date of grant and the remaining 500,000 stock options will vest at around 30 months from the date of grant. The fair value of each batch of stock options will be amortized over their expected service periods. The Company will periodically reassess the probability of the performance conditions being met and the estimated service period of each batch of stock options.





12



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The fair value of the 1,500,000 options granted was estimated at $4.53 each, for a total of amount of $6,795,000, by using the Black-Scholes Option Pricing Model with the following weighted average assumptions: dividend yield of 0%, expected volatility of 187.12%, risk-free interest rates of 4.56%, and expected lives of 5 years.



The movement of stock options can be summarized as follows:



|                                         |  |                   |  |                  |  |             |           |          
|---------------------------------------- |  | ----------------- |  | ---------------- |  | ----------- | --------- | ---------
|                                         |  |                   |  |                  |  | Remaining   | Aggregate
|                                         |  |                   |  | Weighted average |  | contractual |           | intrinsic
|                                         |  | Number of options |  | exercise price   |  | term        |           | value    
|                                         |  |                   |  |                  |  |             |           |          
|Outstanding at August 31, 2007           |  | -                 |  | $-               |  |             |           |          
|Granted                                  |  | 1,500,000         |  | 4.21             |  |             |           |          
|Outstanding at November 30, 2007         |  | 1,500,000         |  | 4.21             |  | 9.79 years  |           | $-       
|                                         |  |                   |  |                  |  |             |           |          
|Exercisable at November 30, 2007         |  | -                 |  | $4.21            |  |             |           |          
|                                         |  |                   |  |                  |  |             |           |          
|Available for grant at November 30, 2007 |  |                   |  |                  |  |             |           |          
|                                         |  |                   |  |                  |  |             |           |          



The aggregate intrinsic value in the table above represents the total pretax intrinsic value for all in-the-money options (i.e. the difference between the Companys closing stock price on the last trading day of the period ended November 30, 2007 and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on November 30, 2007. This amount change is based on the fair market value of the Companys stock. Total intrinsic value of options exercised was $nil for the three months ended November 30, 2007. Weighted average fair value of options granted during the three months ended November 30, 2007 was $4.21 per share.



A summary of the Companys unvested stock options and changes during the periods are as follows:



|                               |  |                   |  |           
|------------------------------ |  | ----------------- |  | ----------
|                               |  |                   |  | Fair value
|                               |  | Number of options |  | per share 
|                               |  |                   |  |           
|Outstanding, August 31, 2007   |  | -                 |  | $-        
|Granted during the period      |  | 1,500,000         |  | 4.21      
|Vested during the period       |  | -                 |  | -         
|Outstanding, November 30, 2007 |  | 1,500,000         |  | $4.21     
|                               |  |                   |  |           





During the three months period ended November 30, 2007, compensation expense of $887,125 (2006: $nil) was recognized. As of November 30, 2007, the Company had $5,490,542 of total unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a period of 2.5 years.



The options outstanding and exercisable as of November 30, 2007 can be summarized as follows:



|         |  |                |  |              |  |          |  |                |  |         
|-------- |  | -------------- |  | ------------ |  | -------- |  | -------------- |  | --------
|         |  | Outstanding    |  | Exercisable 
|         |  |                |  | Weighted     |  |          |  |                |  |         
|         |  | Number         |  | Average      |  | Weighted |  | Number         |  | Weighted
|Range of |  | Outstanding at |  | Remaining    |  | Average  |  | Exercisable at |  | Average 
|Exercise |  | November 30,   |  | Contractual  |  | Exercise |  | November 30,   |  | Exercise
|Prices   |  | 2007           |  | Life (Years) |  | Price    |  | 2007           |  | Price   
|         |  |                |  |              |  |          |  |                |  |         
|$4.21    |  | 1,500,000      |  | 9.79         |  | $4.21    |  | -              |  | $4.21   
|         |  |                |  |              |  |          |  |                |  |         





The Company does not repurchase shares to fulfill the requirements of options that are exercised. Further, the Company issues new shares when options are exercised.





13



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10. Related Party Transactions



Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties.



During the three months ended November 30, 2007, the company paid $3,000 (2006: $nil) to the current president for services provided to the Company starting from August 2007.



At November 30, 2007, the Company has an amount of $4,375 (2006: $nil) due to an officer of the Company for his services provided.



The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by the Chief Financial Officer and majority shareholder. The Company pays a monthly rent of C$3,200 effective from February 1, 2007. The Company paid rent of $12,146 (2006: $nil) for the three months ended November 30, 2007.



Mr. Harmel S. Rayat is also an officer, director and majority shareholder of each of International Energy, Inc., PhytoMedical Technologies, Inc., Entheos Technologies, Inc., MicroChannel Technologies Corporation and HepaLife Technologies, Inc.



11. Segment Information



The Companys business is considered as operating in one segment based upon the Companys organizational structure, the way in which the operations are managed and evaluated, the availability of separate financial results and materiality considerations.





14



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Item 2. Management's Discussion and Analysis or Plan of Operations



Cautionary Statement Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995:



Except for the historical information presented in this document, the matters discussed in this Form 10-QSB for the three months ending November 30, 2007, and specifically in the items entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations", or otherwise incorporated by reference into this document, contain "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are identified by the use of forward-looking terminology such as "believes", "plans", "intend", "scheduled", "potential", "continue", "estimates", "hopes", "goal", "objective", expects", "may", "will", "should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. The safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, apply to forward-looking statements made by the Company.



The reader is cautioned that no statements contained in this Form 10-QSB should be construed as a guarantee or assurance of future performance or results. These forward-looking statements involve risks and uncertainties, including those identified within this Form 10-QSB. The actual results that the Company achieves may differ materially from any forward-looking statements due to such risks and uncertainties. These forward-looking statements are based on current expectations, and the Company assumes no obligation to update this information. Readers are urged to carefully review and consider the various disclosures made by the Company in this Form 10-QSB and in the Company's other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks and factors that may affect the Company's business.



Overview



We were incorporated in the State of Nevada on May 5, 1998, with an authorized capital stock of 100,000,000 shares of common stock, $0.001 par value, and 1,000,000 shares of preferred stock, par value $0.10.  As of January 9, 2008, 53,864,600 shares of common stock were issued and outstanding; there are no preferred shares issued and outstanding.



Our corporate headquarters is located at 2638 Lapeer Road, Suite 2, Auburn Hills, MI.  Our telephone number is (800) 213-0689.



Octillion Corp., together with its wholly owned subsidiaries, is a technology incubator focused on the identification, acquisition, development and eventual commercialization of emerging technologies.



Among our current research and development activities is the development of a technology that could adapt existing home and office glass windows into ones capable of generating electricity from solar energy without losing significant transparency or requiring major changes in manufacturing infrastructure.



UIUC Silicon Nanoparticle Energy Technology



On August 25, 2006, through our wholly owned subsidiary, Sungen Energy, Inc. (Sungen), we entered into a Sponsored Research Agreement (UIUC Sponsored Research Agreement) with the University of Illinois at Urbana-Champaign (UIUC) for the development of a new patent-pending technology to integrate films of silicon nanoparticle material on glass substrates, acting as photovoltaic solar cells that have the potential to convert normal home and office glass windows into ones capable of converting solar energy into electricity, with limited loss of transparency and minimal changes in manufacturing infrastructure (the UIUC Silicon Nanoparticle Energy Technology). On July 23, 2007, the Company through its wholly owned subsidiary, Sungen, amended its Sponsored Research Agreement with the UIUC Pursuant to this amended Sponsored Research Agreement, Octillion agreed to provide additional funds to the previously awarded amount of $219,201 to the University of Illinois in order to accelerate the development of films of silicon nanoparticle material composed of nanosilicon photovoltaic solar cells that have the potential to convert solar radiation to electrical energy.



The process of producing silicon nanoparticles is supported by ten (10) issued US Patents, seven (7) pending US patents, two (2) issued foreign counterpart patents and nineteen (19) pending foreign counterpart patents. Collectively, such patents are referred to as the UIUC Patents. The initial term of the UIUC Sponsored Research Agreement expires on August 22, 2008; during this period we have agreed to advance a total of $422,818 to fund the research and development activities.



Plan of Operation



Octillion Corp., together with its wholly owned subsidiaries, is a technology incubator focused on the identification, acquisition, development and eventual commercialization of emerging technologies.  We are conducting our operations through our wholly owned subsidiary, Sungen.





15



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Our business model is premised upon the use of established research infrastructure owned by the various institutions the Company deals with, saving significant capital which would otherwise be required for such things as land and building acquisition, equipment and furniture purchases, and other incidental start up costs. Our current research and development activities are focused on the development of the UIUC Silicon Nanoparticle Energy Technology.



We have not generated any revenues and have incurred losses of $3,867,413 since inception. We have incurred losses of $1,475,514 during the three months ended November 30, 2007.  Cash on hand at November 30, 2007 totaled $905,422.  We do not anticipate any revenues from operations for the foreseeable future.  Accordingly, we will need to obtain financing from other sources to meet our obligations.



On August 22, 2007, the Company spun off its wholly-owned biotechnology subsidiary, MicroChannel Technologies Corporation with the shareholders of the Company of record on that day, to receive shares of MicroChannel on a one-for-one basis. We recently decided to focus all of our resources and efforts on the development of the UIUC Silicon Nanoparticle Energy Technology. The transaction is regarded as a dividend-in-kind paid to the shareholders of the Company. The Company converted the debt incurred by MicroChannel of $161,997 to equity as part of the spin-off process.  The divesture is subject to regulatory approval.



Since inception we have financed our operations primarily with the net proceeds received from sales of our common stock and the exercise of warrants in the aggregate amount of $3,702,000 and loans from Mr. Rayat (our Secretary, Treasurer, Chief Financial Officer, one of our directors and controlling stockholder) in the amount of $150,000, which has been repaid.   In light of our recently completed financing we believe that our available funds will be sufficient to fund our operations through at least 2008. However, this is a forward-looking statement, and there may be changes that would consume available resources significantly before such time. Our long-term capital requirements and the adequacy of our available funds will depend upon many factors, including:





the progress of our research, and development programs;



changes in existing collaborative relationships;



our ability to establish additional collaborative relationships;



the magnitude of our research and development programs;



competitive and technological advances;



the time and costs involved in obtaining regulatory approvals;



the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims;



successful commercialization of our products consistent with our licensing strategy.



Additional funding, whether through additional sales of securities or collaborative or other arrangements with corporate partners or from other sources, may not be available when needed or on terms acceptable to us. The issuance of preferred or common stock or convertible securities, with terms and prices significantly more favorable than those of the currently outstanding common stock, could have the effect of diluting or adversely affecting the holdings or rights of our existing stockholders. In addition, collaborative arrangements may require us to transfer certain material rights to such corporate partners. We plan to continue to seek other sources of financing on favorable terms; however, there are no assurances that any such financing can be obtained on favorable terms, if at all.



We hope to keep operating costs to a minimum until we achieve positive cash flow through financings or operating activities. If we are unable to generate profits or unable to obtain sufficient additional funds for our working capital needs, we may need to delay, scale-back or eliminate certain areas of our research and development programs or cease operations. In view of these conditions, our ability to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations.



Liquidity and Capital Resources



As of November 30, 2007, the Company had a cash balance of $905,422. The Company has financed its operations primarily through cash on hand during the three months ended November 30, 2007.



Net cash flows used in operating activities was $526,165, for the three month period ending November 30, 2007, compared to net cash flows used of $285,190 for the same period in 2006, primarily due to an increase in stock based compensation costs.  The Company intends to seek additional funds from shareholders and third parties to finance the Companys operations.



Net cash provided by financing activities was $0 for the three months period ending November 30, 2007, compared to $375,000 for the same period in 2006. The Company has financed its operations primarily from cash on hand and warrant exercises.





16



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Related Party Transactions



Related party transactions are in the normal course of operations and are recorded at amounts established and agreed between the related parties.



During the three months ended November 30, 2007, the company paid $3,000 (2006: $nil) to the current president for services provided to the Company starting from August 2007.



At November 30, 2007, the Company has an amount of $4,375 (2006: $nil) due to an officer of the Company for his services provided.



The Companys administrative office is located at 1628 West 1st Avenue, Suite 216, Vancouver, British Columbia, Canada, V6J 1G1. These premises are owned by a private corporation controlled by the Chief Financial Officer and majority shareholder. The Company pays a monthly rent of C$3,200 effective from February 1, 2007. The Company paid rent of $12,146 (2006: $nil) for the three months ended November 30, 2007.



Mr. Harmel S. Rayat is also an officer, director and majority shareholder of each of International Energy, Inc., PhytoMedical Technologies, Inc., Entheos Technologies, Inc., MicroChannel Technologies Corporation and HepaLife Technologies, Inc.



Off-Balance Sheet Items



The Company currently has no off-balance sheet items.



Critical Accounting Policies



Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. We review our estimates on an ongoing basis.



We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made; and changes in the estimate or different estimates that could have been made could have a material impact on our results of operations or financial condition. While our significant accounting policies are described in more detail in the notes to our financial statements, the most critical accounting policy for us at this time is related to share-based payments.





Risk Factors



You should carefully consider the risks described below before purchasing any shares. Our most significant risks and uncertainties are described below; if any of the following risks actually occur, our business, financial condition, or results or operations could be materially adversely affected, the trading of our common stock could decline, and you may lose all or part of your investment therein. You should acquire the shares only if you can afford to lose your entire investment.





17



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We have experienced significant losses and expect losses to continue for the foreseeable future.



We are a development stage company; we have not generated any revenues since inception and we do not expect to generate any revenues for the foreseeable future.  We have incurred losses since inception. We had a working capital surplus of $819,805 at November 30, 2007, and stockholders equity of $822,215 at November 30, 2007.



We currently do not have, and may never develop, any commercialized products.



We currently do not have any commercialized products or any source of revenue. We have invested substantially all of our time and resources over the last three years in the identification, acquisition of rights to, and the research and development of technologies. Even if we were to acquire a license for the UIUC Silicon Nanoparticle Energy Technology, we will require additional research, development, significant marketing efforts, and in some cases regulatory approval before any of the technologies will generate any revenues.  This will necessitate additional investment of time and capital by us.



We cannot currently estimate with any accuracy the amount of either the additional funds or time required to successfully commercialize either technology, because the actual cost and time may vary significantly depending on results of current basic research and development and product testing, cost of acquiring an exclusive license, changes in the focus and direction of our research and development programs, competitive and technological advances, the cost of filing, prosecuting, defending and enforcing patent claims, the regulatory approval process, manufacturing, marketing and other costs associated with commercialization of products following receipt of regulatory approvals and other factors.



We may require additional financing to sustain our operations and our obligations under the UIUC Sponsored Research Agreement.



Our independent registered public accounting firm has added an explanatory paragraph to their audit opinion issued in connection with the financial statements for the year ended August 31, 2007, relative to our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.



We are obligated to advance up to an additional $234,163 under the UIUC Sponsored Research Agreement.  These amounts do not include any financial undertakings required for us to secure a license with respect to the underlying technologies. We currently have sufficient financial resources to fund these costs and to maintain our operations. We will require substantial funds to conduct additional basic research and development activities, and other activities relating to the successful commercialization of the UIUC Silicon Nanoparticle Energy Technology. We do not have committed external sources of funding for our projects and we may not be able to obtain the additional funds we will require on acceptable terms, if at all.



In addition, our cash requirements may vary materially from those now planned. We cannot currently estimate with any accuracy the amount of additional capital we may require because the amount needed may vary significantly depending on results of current basic research and development and product testing, cost of acquiring an exclusive license the technologies, changes in the focus and direction of our research and development programs, competitive and technological advances, the cost of filing, prosecuting, defending and enforcing patent claims, the regulatory approval process, if any, that must be addressed, manufacturing, marketing and, finally, other costs associated with commercialization of products following receipt of regulatory approvals and other factors.



If adequate funds are not available or prohibitively expensive when we require it, the consequences would be a material adverse effect on our business, operating results, financial condition and prospects.  We may be required to delay, reduce the scope of or terminate one or more or all of our research programs; to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to certain UIUC Silicon Nanoparticle Energy Technology, or other technologies or products based upon such technologies that we would otherwise seek to develop or commercialize ourselves; or to license the rights to such technologies or products on terms that are less favorable to us than might otherwise be available. If we raise additional funds by issuing equity or debt securities, further dilution to stockholders may result and new investors could have rights superior to existing stockholders.



The success of our research and development activities is uncertain. If the research efforts are not successful, we will be unable to generate revenues from our operations and we will have to cease doing business.



We are at an early stage of development.  We have the right to negotiate a license to only one technology. The UIUC Silicon Nanoparticle Energy Technology requires significant further research, development, testing, as well as additional capital investment before we can determine whether we will elect to acquire a license to the technologies; accordingly, we cannot now project whether the ultimate results of these projects will prove successful or form the basis for a commercially viable technology or product.



During the term of our UIUC Sponsored Research Agreement, we will determine whether to acquire an exclusive license from UIUC to the technologies underlying the agreements. The final terms and conditions of any such licenses cannot now be determined.



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If the results of the continuing research projects do not warrant our exercise of our option to negotiate an exclusive license from the UIUC Silicon Nanoparticle Energy Technology, we may need to abandon our business model, in which case our shares may have no value and you may lose your investment.



We anticipate we will remain engaged in research and development for a considerable period of time, at least through the initial funding period under our agreement the University of Illinois; if results warrant we may continue the research and development efforts towards the goal of commercializing the UIUC Silicon Nanoparticle Energy Technology.



Research and development activities, by their nature, preclude definitive statements as to the time required and costs involved in reaching certain objectives. Actual costs may exceed the amounts we have budgeted and actual time may exceed our expectations. As we have indicated, we cannot currently estimate with any accuracy the amount of these additional funds we will ultimately require to commercialize one or both of our sponsored technologies. We may be unable to generate adequate revenue from operations or be able to financially support the level of research required to develop a commercially viable technology or product.



The development of the UIUC Silicon Nanoparticle Energy Technology are subject to the risks of failure inherent in the development of any novel technology.



Ultimately, the development and commercialization of the UIUC Silicon Nanoparticle Energy Technology is subject to a number of risks that are particular to the development and commercialization of any novel technology.  These risks include the following:



·

we may not be able to acquire or maintain license rights to the UIUC Silicon Nanoparticle Energy Technology, or products developed from the UIUC Silicon Nanoparticle Energy Technology;



·

the UIUC Silicon Nanoparticle Energy Technology  (or any products derived from the technology) may prove to be ineffective, unsafe or otherwise fail to receive necessary regulatory approvals;



·

the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technology), even if safe and effective, may be difficult to manufacture on a large scale or uneconomical to market;



·

our marketing license or proprietary rights to products derived from the UIUC Silicon Nanoparticle Energy Technology may not be sufficient to protect our products from competitors;



·

the proprietary rights of third parties may preclude us or our collaborators from making, using or marketing the products utilizing the UIUC Silicon Nanoparticle Energy Technology; or,



·

third parties may market superior, more effective, or less expensive technologies or products having comparable results to the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technology).



If we ultimately do not obtain the necessary regulatory approvals for the commercialization of the UIUC Silicon Nanoparticle Energy Technology, we will not achieve profitable operations and your investment may be lost.



Our ability to achieve profitability is dependent on ultimately commercializing the UIUC Silicon Nanoparticle Energy Technology and entering into agreements for commercialization of such products.   At this time we have not submitted any products for regulatory approval nor do we have any agreements with any third parties regarding the commercialization of any products.  The failure to obtain any such necessary regulatory approvals or to enter into any such necessary agreements could delay or prevent us from achieving profitability.  This would result in the loss of your investment.  Moreover, even if the UIUC Silicon Nanoparticle Energy Technology, or any products based on such technologies are commercialized, we may still not achieve profitable operations, in which event we may need to curtail or cease our operations and as a result the value of your investment may be diminished or entirely lost.



We may not receive an exclusive license for the UIUC Silicon Nanoparticle Energy Technology, or obtain such licenses on terms and conditions acceptable to us.



Our success is dependent in part on our obtaining, if warranted, an exclusive license from UIUC to market the UIUC Silicon Nanoparticle Energy Technology.  The receipt of any such license is contingent on successful early stage research, which we are funding.



The receipt of exclusive license to market the UIUC Silicon Nanoparticle Energy Technology is contingent on fulfilling the terms and conditions set forth in the UIUC Agreement.  We will need to reach agreement with respect to, among other things, licensing



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fees, reimbursement of patents costs, royalty rates, sub-licensing fees, and agreement to UIUCs out-of-pocket expenses.  We may not be successful in negotiating a license with UIUC.



If we are successful in negotiating a license agreement, we may not be able to make required cash payments, if any, when due or achieve other requirements. If we do not, we will risk the loss of our license and our right to develop and market products, if any, derived from the UIUC Silicon Nanoparticle Energy Technology, the loss of which will have a material adverse effect on the business and may require us to substantially curtail our operations.



We may need additional licenses in the future in order to maintain our rights to market products developed from the UIUC Silicon Nanoparticle Energy Technology.



We may not retain all rights to developments, inventions, patents and other proprietary information resulting from any collaborative arrangements, whether in effect as of the date hereof or which may be entered into at some future time with third parties. As a result, we may be required to license such developments, inventions, patents or other proprietary information from such third parties, possibly at significant cost to us. Our failure to obtain any such licenses could have a material adverse effect on the business, financial condition and results of our operations. In particular, the failure to obtain a license could prevent us from using or commercializing our technology.



We have yet to obtain a license and our intellectual property rights may not provide meaningful commercial protection for our interests in the UIUC Silicon Nanoparticle Energy Technology.



Our ability to compete effectively depends in part, on our ability to maintain the proprietary nature of our technologies, which includes the ability to license patented technology or obtain, protect and enforce new patents on our technology and to protect our trade secrets. Since we have not yet obtained a license to either the UIUC Silicon Nanoparticle Energy Technology, it is not clear what rights, if any, we may have under the UIUC Patents.



If we cannot directly pursue others from infringing on the UIUC Patents, we will need to rely on UIUC, as the case may be, to do so.  UIUC may not devote the resources that may be required in any such effort to preclude others from infringing on their respective patents or other proprietary rights which may be related to the UIUC Silicon Nanoparticle Energy Technology. Even if we do obtain a license to the UIUC Silicon Nanoparticle Energy Technology, we cannot rely on the UIUC Patents to provide us with any significant competitive advantage. Others may challenge the UIUC Patents and, as a result, the UIUC Patents could be narrowed, invalidated or rendered unenforceable. Competitors may develop competitive products that may be outside the scope of protection, if any, afforded by the UIUC Patents.



In addition, any future patent applications may not result in the issuance of patents in the United States or foreign countries. Further, it may take years to obtain the approval (or rejection) of patent applications. The validity or enforceability of a patent after its issuance by the Patent and Trademark Office can be challenged in litigation.  The patents protecting our products may be infringed or successfully avoided through design innovation.  The cost of patent litigation may be substantial. If the outcome of the litigation is adverse to the owner of the patent, third parties may then be able to use the invention covered by the patent without payment or permission of the patent owner.



If we lose the services of the scientific personnel not employed by us, the development of our technologies will be substantially delayed or precluded, resulting in a total loss of our investment in technology.



We are dependent upon certain key collaborating scientific personnel who are not employed by us, with respect to the continuing research and development of the UIUC Silicon Nanoparticle Energy Technology. The loss of such services could have a materially adverse effect on us. We have no control over whether our principal investigators or other scientific personnel will choose to remain involved with our projects. These individuals are not bound by contract to us nor employed by us. They might move on to other research.  Because there is no assurance that qualified replacements can be found, the loss of their services may substantially delay if not preclude the continued development of our technologies, in which event we may need to curtail or cease our operations and as a result the value of your investment may be diminished or entirely lost.



If we are  not be able to attract and retain qualified personnel, either as employees or as consultants, when and as needed, we may not be successful in our efforts to commercialize the UIUC Silicon Nanoparticle Energy Technology.



Competition for qualified employees among companies in the photovoltaics industry is intense. Our future success depends upon our ability to attract, retain and motivate highly skilled employees. Our present management has no experience in the development of nanoparticle-photovoltaic products. Attracting desirable employees will require us to offer competitive compensation packages, including stock options. In order to successfully commercialize our products, we must substantially expand our personnel, particularly in the areas of commercial photovoltaics-nanotechnology development, regulatory affairs, business development and marketing.  We may not be successful in hiring or retaining qualified personnel. Managing the integration of new personnel and our



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growth generally could pose significant risks to our development and progress. The addition of such personnel may result in significant changes in our utilization of cash resources and our development schedule.



Compliance with environmental regulations, or dealing with hazardous materials involved in our research and development, may require us to divert our limited capital resources.



Our research and development programs do not generally involve the handling of hazardous materials, but they may occasionally do so. The University of Illinois at Urbana-Champaign, and we, are subject to federal, state and local laws and regulations governing the use, handling, storage and disposal of hazardous materials. If violations of environmental, health and safety laws occur, we could be held liable for damages, penalties and costs of remedial actions. These expenses or this liability could have a significant negative impact on our business, financial condition and results of operations. We may violate environmental, health and safety laws in the future as a result of human error, equipment failure or other causes. Environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We may be subject to potentially conflicting and changing regulatory agendas of political, business and environmental groups. Changes to or restrictions on permitting requirements or processes, hazardous material storage or handling might require an unplanned capital investment or relocation. Failure to comply with new or existing laws or regulations could harm our business, financial condition and results of operations.



We have limited sales and marketing experience and will likely rely on third party marketers.



We expect to market and sell or otherwise commercialize the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technologies) through distribution, co-marketing, co-promotion or licensing arrangements with third parties. We have limited experience in sales, marketing or distribution of photovoltaic products. To the extent that we enter into distribution, co-marketing, co-promotion or licensing arrangements for the marketing or sale of the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technologies), any revenues received by us will be dependent on the efforts of third parties. If any such parties were to breach or terminate its agreement with us or otherwise fail to conduct marketing activities successfully and in a timely manner, the commercialization of the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technologies) would be delayed or terminated.



We operate in a highly competitive market; in attempting to acquire or commercialize technology, we face competition from other companies, products and technologies.



Our commercial success will depend on our ability and the ability of our sublicensees, if any, to compete effectively in product development areas such as, but not limited to, safety, ease of use, price, marketing and distribution. Our competitors may succeed in developing products that are more effective than any products derived from our research and development efforts or that would render such products obsolete and non-competitive. The photovoltaic industry is characterized by intense competition, rapid product development and technological change. Most of the competition that we encounter will come from companies, research institutions and universities who are researching and developing technologies and products similar to or competitive with any we may develop.



These companies enjoy numerous competitive advantages, including:



·

significantly greater name recognition;

·

established relations with customers and third-party payors;

·

established distribution networks;

·

additional lines of products, and the ability to offer rebates, higher discounts or incentives to gain a competitive advantage;

·

greater experience in conducting research and development, manufacturing, obtaining regulatory approval for products, and marketing approved products; and

·

greater financial and human resources for product development, sales and marketing, and patent litigation.



As a result, we may not be able to compete effectively against these companies or their products.



Risks Particular to the UIUC Silicon Nanoparticle Energy Technology



We are subject to current and proposed government and safety regulations with respect to the development of the UIUC Silicon Nanoparticle Energy Technology, compliance with which will require capital expenditures beyond our current financial means.



The production and marketing of products which may be developed from the UIUC Silicon Nanoparticle Energy Technology involves the development of photovoltaic technologies subject to existing regulations, and new nanomaterials technologies which may be subject to yet undetermined regulations.  Our ongoing research and development activities may be subject to extensive regulation and review by numerous governmental and safety regulatory authorities. The UIUC Silicon Nanoparticle Energy



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Technology and any products derived from the technology must undergo rigorous safety testing and may be subject to extensive regulatory approvals processes before they can be marketed if they were to receive approval (which they may not in fact receive). This process makes it longer, harder and more costly to bring products which may be developed from our technologies to market.



The safety approvals process can be expensive, lengthy and uncertain.  Ongoing discussion and review of safety implications of the use of nanomaterials, including the use of nanoparticles, may result in the introduction of rigorous regulatory oversight.  The UIUC Silicon Nanoparticle Energy Technology and any products derived from the technology may be subject to regulation of nanomaterials, including silicon nanoparticles, and their application in the production-distribution of electrical current and photovoltaic products.



Current safety requirements for photovoltaic and electrical products in commercial and residential applications include, but may not be limited to, Occupational Safety and Health Administration (OSHA) regulations, National Electrical Code (NEC) as approved as an American National Standard by the American National Standards Institute (ANSI) or ANSI/NFPA-70, certification by Underwriters Laboratories (UL) and the Society of Automotive Engineers (SAE), and compliance with local building codes.



Use of nanomaterials, including silicon nanoparticles, is currently unregulated; however, the use and regulation of nanomaterials is currently under review by numerous safety and regulatory agencies.  Among review is the evaluation of the potential environmental impact and human health implications of exposure to nanomaterials. Non compliance with applicable regulatory requirements, such violations could result in warning letters, non-approval, suspensions of regulatory approvals, civil penalties and criminal fines, product seizures and recalls, operating restrictions, injunctions, and criminal prosecution, any or all of which will adversely affect our operations.



Delays in or rejection of prospective government or regulatory agency approval of the UIUC Silicon Nanoparticle Energy Technology (or products derived from the technology) may also adversely affect our business. Such delays or rejection may be encountered due to, among other reasons, government or regulatory delays, unforeseen safety issues, varying interpretations of data generated during safety testing, or changes in regulatory policy during the period of product development in the United States.



The research to be conducted regarding the UIUC Silicon Nanoparticle Energy Technology is based on the use of unregulated silicon nanoparticles, classified as nanomaterials, currently under review by federal agencies, regulatory bodies, and others for environmental impact and human health and safety for potential regulation; the use of nanomaterials in photovoltaic products may be limited or prohibited under future federal, state, and local laws.



The production and marketing of products which may be developed from the UIUC Silicon Nanoparticle Energy Technology involves the use of silicon nanoparticles, more broadly categorized as nanomaterials.  Currently, the use of nanomaterials for photovoltaics products remains unregulated, however, the use and regulation of nanomaterials is currently under review by numerous safety and regulatory agencies, evaluating potential environmental impact and human health implications of exposure to nanomaterials.



The UIUC Silicon Nanoparticle Energy Technology and any products derived from the technology may be subject to safety regulations which may emerge from many ongoing reviews by several agencies, including but not limited to: the Environmental Protection Agency (EPA), investigating nanomaterials for inclusion in the Toxic Substances Control Act; Department of Health and Human Services (DHHS), National Toxicology Program to determine toxicity of nanomaterials; National Institute for Occupational Safety and Health (NIOSH), to ensure worker safety; Food and Drug Administration (FDA) for potentially adverse health effects; National Toxicology Program (NTP), investigating potential toxicity of nanoscale materials by way of inhalation and uptake by the skin; National Cancer Institute in collaboration with the FDA and National Institute of Standards and Technology (NIST) to better characterize nanomaterials, and examine the physical attributes of nanoparticles for absorption, distribution, metabolism, excretion, and toxicity; and numerous additional agencies evaluating the effects of nanoscale materials on biological systems, the transport and transformation of nanoparticles in the environment, and other effects.



Future legislation or regulatory restrictions related to the use of nanoparticles may be implemented, and may become more onerous over time.  We may not be able to comply with any future regulations, including local, state and federal laws.  As a result, we may be unable to develop the UIUC Silicon Nanoparticle Energy Technology or produce our products based on the UIUC Silicon Nanoparticle Energy Technology in a profitable manner.



In the future, more stringent oversight in product clearance and enforcement activities in the United States could result in our experiencing longer approval cycles, more uncertainty, greater risk, and higher expenses. Even if regulatory approval of a product is granted, this approval may entail limitations on uses for which the product may be labeled and promoted. It is possible, for example, that we may not receive approvals to market the UIUC Silicon Nanoparticle Energy Technology (or products derived from the technology) for broader or different applications or to market updated products that represent extensions of the UIUC Silicon Nanoparticle Energy Technology. In addition, assuming we obtain a license to the UIUC Silicon Nanoparticle Energy Technology, we may not receive regulatory approvals to export products, based on the UIUC Silicon Nanoparticle Energy Technology, in the future, and countries to which the products are to be exported may not approve them for import.



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In the event that future legislation is enacted in order to regulate the use of nanomaterials, any manufacturing facilities which we would utilize for the production of products based on the UIUC Silicon Nanoparticle Energy Technology may also be subject to review and inspection.  In such a case, a governmental authority may challenge our compliance with applicable federal, state, local and foreign regulations. In addition, any discovery of previously unknown problems with the UIUC Silicon Nanoparticle Energy Technology, products derived from the technology, or manufacturing facilities used to manufacture the UIUC Silicon Nanoparticle Energy Technology (or any products derived from the technology) may result in restrictions on the products or the facility, including withdrawal of the product from the market or other enforcement actions.



Risks Particular to the Market for Our Common Stock



Concentration of ownership among our directors, executive officers, and principal stockholders may prevent new investors from influencing significant corporate decisions.



As of January 9, 2008, our directors, executive officers, holders of more than 5% of our common stock, and their affiliates will, in the aggregate, beneficially own approximately 68% of our outstanding common stock. As a result, these stockholders will be able to exercise a controlling influence over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions, and will have significant control over our management and policies. Some of these persons or entities may have interests that are different from yours. For example, these stockholders may support proposals and actions with which you may disagree or which are not in your interests. The concentration of ownership could delay or prevent a change in control of our company or otherwise discourage a potential acquirer from attempting to obtain control of our company, which in turn could reduce the price of our common stock. In addition, these stockholders, some of whom have representatives sitting on our board of directors, could use their voting influence to maintain our existing management and directors in office, delay or prevent changes of control of our company, or support or reject other management and board proposals that are subject to stockholder approval, such as amendments to our employee stock plans and approvals of significant financing transactions.



We may compete for the time and efforts of our officers and directors.



Some of our officers and directors are also officers, directors, and employees of other companies, and we may have to compete with the other companies for their time, attention and efforts. Other than our President, Mr. Nicholas Cucinelli, none of our officers and directors anticipate devoting more than approximately five (5%) percent of their time to our matters.   Other than with our President, Mr. Cucinelli, we currently have no other employment agreements with any of our officers and directors imposing any specific condition on our officers and directors regarding their continued employment by us.



Our proposed businesses raise potential conflicts of interests between certain of our officers and directors and us.



Certain of our directors are or may become directors and employees of other technology companies and, to the extent that such other companies may participate in ventures in which we may participate, our directors may have a conflict of interest in negotiating and concluding terms regarding the extent of such participation by us and such other companies. In addition, directors may present potential prospects to such other companies rather than presenting the opportunities to us or be affiliated with companies developing technologies which may compete with our technologies. We have not established any mechanisms regarding the resolution of any such conflict if it were to arise; accordingly, there is no assurance that any such conflict will be resolved in a manner that would not be adverse to our interest.



The trading price of our common stock historically has been volatile and may not reflect its value.



The trading price of our common stock has, from time to time, fluctuated widely and in the future may be subject to similar fluctuations. During the last twelve months our stock has traded at a low of $0.56 (April 5, 2007) and a high of $5.39 (August 17, 2007).  The trading price may be affected by a number of factors including the risk factors set forth herein, as well as our operating results, financial condition, general economic conditions, market demand for our common stock, and various other events or factors both in and out of our control. In addition, the sale of our common stock into the public market upon the effectiveness of this registration statement could put downward pressure on the trading price of our common stock. In recent years, broad stock market indices, in general, and smaller capitalization companies, in particular, have experienced substantial price fluctuations. In a volatile market, we may experience wide fluctuations in the market price of our common stock. These fluctuations may have a negative effect on the market price of our common stock.



We have a large number of restricted shares outstanding, a portion of which may be sold under rule 144 which may reduce the market price of our shares.



Of the 53,864,600 shares of our common stock issued and outstanding, assuming no warrants are exercised, 36,749,600 shares are deemed "restricted securities," within the meaning of Rule 144; one hundred (100%) percent of these restricted shares are owned by



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our secretary, treasurer, chief financial officer, director and a controlling shareholder. Absent registration under the Securities Act, the sale of such shares is subject to Rule 144, as promulgated under the Securities Act.



All of the "restricted securities" will be eligible for resale under Rule 144. In general, under Rule 144, subject to the satisfaction of certain other conditions, a person, including one of our affiliates, who has beneficially owned restricted shares of our common stock for at least one year is permitted to sell in a brokerage transaction, within any three-month period, a number of shares that does not exceed the greater of 1% of the total number of outstanding shares of the same class, or, if our common stock is quoted on a stock exchange, the average weekly trading volume during the four calendar weeks preceding the sale, if greater. Rule 144 also permits a person who presently is not and who has not been an affiliate of ours for at least three months immediately preceding the sale and who has beneficially owned the shares of common stock for at least two years to sell such shares without regard to any of the volume limitations described above.



The possibility that substantial amounts of our common stock may be sold under Rule 144 into the public market may adversely affect prevailing market prices for the common stock and could impair our ability to raise capital in the future through the sale of equity securities.



We may conduct further offerings in the future in which case your shareholdings will be diluted.



Since our inception, we have relied on such equity sales of our common stock to fund our operations. We may conduct further equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, your percentage interest in us will be diluted. The result of this could reduce the value of your stock.



Our compliance with changing laws and rules regarding corporate governance and public disclosure may result in additional expenses to us which, in turn, may adversely affect our ability to continue our operations.



Keeping abreast of, and in compliance with, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations and, in the event we are ever approved for listing on either NASDAQ or a registered exchange, NASDAQ and stock exchange rules, will require an increased amount of management attention and external resources. We intend to continue to invest all reasonably necessary resources to comply with evolving standards, which may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities. This could have an adverse impact on our ongoing operations.



We may issue preferred stock which may have greater rights than our common stock.



We are permitted in our charter to issue up to 1,000,000 shares of preferred stock. Currently no preferred shares are issued and outstanding; however, we can issue shares of our preferred stock in one or more series and can set the terms of the preferred stock without seeking any further approval from our common stockholders. Any preferred stock that we issue may rank ahead of our common stock in terms of dividend priority or liquidation premiums and may have greater voting rights than our common stock. In addition, such preferred stock may contain provisions allowing them to be converted into shares of common stock, which could dilute the value of common stock to current stockholders and could adversely affect the market price, if any, of our common stock.



Our common stock is a "penny stock," and because "penny stock rules will apply, you may find it difficult to sell the shares of our common stock you acquired in this offering.



Our common stock is a penny stock as that term is defined under Rule 3a51-1 of the Securities Exchange Act of 1934. Generally, a "penny stock" is a common stock that is not listed on a securities exchange and trades for less than $5.00 a share. Prices often are not available to buyers and sellers and the market may be very limited. Penny stocks in start-up companies are among the riskiest equity investments. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the U.S. Securities & Exchange Commission. The document provides information about penny stocks and the nature and level of risks involved in investing in the penny stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser's written agreement to the purchase. Many brokers choose not to participate in penny stock transactions. Because of the penny stock rules, there is less trading activity in penny stocks and you are likely to have difficulty selling your shares.



We do not intend to pay dividends for the foreseeable future.



We currently intend to retain future earnings, if any, to support the development and expansion of our business and do not anticipate paying cash dividends in the foreseeable future. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including but not limited to our financial condition, operating results, cash needs,



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growth plans and the terms of any credit agreements that we may be a party to at the time. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize their investment. Investors seeking cash dividends should not purchase the shares offered by us pursuant to this prospectus.



ITEM 3.   Controls and Procedures



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 Securities Exchange Act of 1934, as amended. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.



An evaluation was performed under the supervision of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Securities Exchange Act of 1934 (the Exchange Act) Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based on that evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.



Notwithstanding the foregoing, there can be no assurance that our disclosure controls and procedures will detect or uncover all failures of persons associated with us to disclose material information otherwise required to be set forth in our periodic reports. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even effective disclosure controls and procedures can only provide reasonable, not absolute, assurance of achieving their control objectives.



There have been no changes in internal controls, or in factors that could significantly affect internal controls, subsequent to the date that management, including the Chief Executive Officer and the Chief Financial Officer, completed their evaluation.



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PART II  Other Information



Item 1.   Legal Proceedings



None



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



None



Item 3.   Defaults Upon Senior Securities



None



Item 4.   Submission of Matters to a Vote of Security Holders



None



Item 5.   Other Information



None



Item 6.   Exhibits and Reports on Form 8-K



(a) Exhibits



31.1

Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)



31.2

Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)



32.1

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



32.2

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



(b) Reports on Form 8-K



September 14, 2007: On September 10, 2007, the Company appointed Mr. Nicholas Cucinelli to the positions of President and Chief Executive Officer, effective immediately.  The Company established and Mr. Cucinelli agreed to a compensation package consisting of a salary, stock options, relocation expenses and health benefits, as agreed to in a General Offer of Employment Agreement dated September 4, 2007.



September 18, 2007: On September 17, 2007, Octillion Corp. issued a news release to announce the appointment of Professor Thomas N. Gladwin, PhD, MBA, to the Company's Board of Directors.



September 24, 2007: On September 19, 2007, Octillion Corp. issued a news release to announce the appointment of Professor Alastair K. Livesey, PhD, to the Company's Board of Directors.



October 4, 2007: On October 1, 2007, Dr. Kaiyo Nedd and Ms. Pattiann Hiranandani resigned from the Company's Board of Directors in order to serve exclusively on the Board of Directors of the Companys wholly-owned subsidiary, MicroChannel Technologies Corporation.



October 15, 2007: On October 1, 2007, Octillion Corp. issued a news release to announce that its wholly owned subsidiary, MicroChannel Technologies Corporation (MicroChannel), has filed a registration statement with the Securities and Exchange Commission (SEC), which will allow for the spin out and distribution of MicroChannel shares as a special dividend to shareholders of Octillion on a one-for-one basis. On October 9, 2007, Octillion Corp. issued a news release to announce that it has increased its research staff to four, with plans to further boost research personnel, contingent upon ongoing results from the development of the Companys first-of-its-kind transparent glass window capable of generating electricity.





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SIGNATURES



Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,  thereunto duly  authorized on this 9th day of January, 2008.





Octillion Corp.







/s/ Nicholas Cucinelli



Nicholas Cucinelli



President, Chief Executive 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 capacities and on the dates indicated.







Signature

Title

Date





/s/ Nicholas Cucinelli

President, Chief Executive Officer

January 9, 2008

Nicholas Cucinelli

Director





/s/ Harmel S. Rayat

Secretary, Treasurer, Chief Financial Officer

January 9, 2008

Harmel S. Rayat

Director







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