UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-K



|[X]   | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|----- | ------------------------------------------------------------------------------
|      |                                                                               
|      | For the fiscal year ended December 31, 2010                                   
|      |                                                                               
|[   ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT    
|      |                                                                               
|      | For the transition period from _________ to ________                          
|      |                                                                               
|      | Commission file number: 333-150692                                            



|Sunvalley
    Solar, Inc.                             
|------------------------------------------------------
|(Exact name of registrant as specified in its charter)



|Nevada                                                         | 20-8415633                          
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.)
|                                                               |                                     
|398 Lemon
    Creek Dr., Suite AWalnut, California             | 91789                               
|(Address of principal executive offices)                       | (Zip Code)                          
|Registrant’s telephone number: (909) 598-0618                  |                                     



|Securities registered under Section 12(b) of the Exchange Act:
|--------------------------------------------------------------
|Title of each class                                           
|None                                                          
|Securities registered under Section 12(g) of the Exchange Act:
|Title of each class                                           
|None                                                          



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



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



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



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



Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K (§ 232.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge,
in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes [X] No [ ]



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



Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting
company [X]



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 aggregate market value of the voting and non-voting common equity held by non-affiliates
computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common
equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. Approx. $n/a as of
June 30, 2010. (No trades until after the end of registrant’s most recently completed second fiscal quarter).



Indicate the number of shares outstanding of each of the registrant’s classes of
common stock, as of the latest practicable date. 803,068,420as of March 24, 2011.






Table of Contents


TABLE OF CONTENTS





|            |                                                                                                                 | Page
|----------- | --------------------------------------------------------------------------------------------------------------- | ----
|PART I     
|Item 1.     | Business                                                                                                        | 3   
|Item 1A.    | Risk Factors                                                                                                    | 20  
|Item 1B.    | Unresolved Staff Comments                                                                                       | 20  
|Item 2.     | Properties                                                                                                      | 20  
|Item 3.     | Legal Proceedings                                                                                               | 20  
|Item 4.     | Submission of Matters to a Vote of Security Holders                                                             | 20  
|PART II    
|Item 5.     | Market for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities | 21  
|Item 6.     | Selected Financial Data                                                                                         | 23  
|Item 7.     | Management’s Discussion and Analysis of Financial Condition and Results of Operations                           | 23  
|Item 7A.    | Quantitative and Qualitative Disclosures About Market Risk                                                      | 29  
|Item 8.     | Financial Statements and Supplementary Data                                                                     | 29  
|Item 9.     | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure                            | 30  
|Item 9A(T). | Controls and Procedures                                                                                         | 30  
|Item 9B.    | Other Information                                                                                               | 31  
|PART III   
|Item 10.    | Directors, Executive Officers and Corporate Governance                                                          | 31  
|Item 11.    | Executive Compensation                                                                                          | 36  
|Item 12.    | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                  | 39  
|Item 13.    | Certain Relationships and Related Transactions, and Director Independence                                       | 40  
|Item 14.    | Principal Accountant Fees and Services                                                                          | 40  
|PART IV    
|Item 15.    | Exhibits, Financial Statement Schedules                                                                         | 41  





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PART I



Item 1. Business



Principal Place of Business



Our principal offices are located at 398 Lemon Creek Dr., Suite A, Walnut, CA 91789.



Description of Business



We were incorporated as “Western Ridge Minerals, Inc.” on August 16, 2007,
in the State of Nevada for the purpose of engaging in mineral exploration. On June 24, 2010, we entered into a Share Exchange Agreement
with Sunvalley Solar, Inc. (“Sunvalley”) a California-based solar power technology and system integration company founded
in January of 2007. Under the Share Exchange Agreement, we acquired all of the issued and outstanding common stock of Sunvalley.  Following
the share exchange with Sunvalley, we changed our name to “Sunvalley Solar, Inc.” As a result of entering into the
Exchange Agreement, we abandoned our mineral exploration plans and continued with Sunvalley’s existing business of solar
power technology, system design and integration.



We are focused on developing its expertise and proprietary technology to install residential,
commercial and governmental solar power systems. We offer turnkey solar system solutions for owners, builders and architecture
firms that include designing, building, operating, monitoring and maintaining solar power systems. We develop advanced solar technology
and deploy to solar power application. Our customers range from small private residences to large commercial solar power users.
We have the necessary licenses and expertise to design and install large scale solar power systems. We hold a C-46 Solar License
from CBCL (California Board of Contractor License). Some of the large scale commercial solar power systems that we have designed
and installed include large office buildings, manufacturing facilities and warehouses. Our proprietary technologies in solar installation
provide our customers with a high quality and flexible solar power system solutions at a competitive cost.



We seek to develop as an end-to-end solar energy solution provider by providing system
solution, post-sale service, customer technical support, solar system design and field installation.



In 2007 and 2008, Sunvalley’s revenues came from its solar system design and installation
business, including both residential and commercial projects. In 2008, Sunvalley produced $2.63M in revenue from solar system design
and installation. Starting in November 2008, Sunvalley expanded its business to include solar equipment distribution. Sunvalley
established distribution partnerships with Canadian Solar Inc, CEEG SST, Tianwei Solarfilms and PV Powered Inc., to distribute
solar panels, solar inverters and other solar equipments to its clients in the U.S.. In 2009 and 2010, Sunvalley achieved $4.413M
and $4.634M in revenues respectively, from its installation and distribution business. Meanwhile, since 2007, the company has spent
considerable amount of resources on new solar technology research and development. We have a patent-pending technology that we
believe is able to increase the efficiency of a solar panel while barely increasing the cost. Further development of this
technology is needed in order to apply it in commercialized mass production of solar panels.

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Glossary of Terminology Used In The Solar
Power Industry



The following is a glossary of terms commonly used in the solar power industry in order
to describe the functioning of solar power products, related technologies, and technological developments:



Absorber — In a photovoltaic device,
the material that readily absorbs photons to generate charge carriers (free electrons or holes).



Alternating Current (AC) — A type
of electrical current, the direction of which is reversed at regular intervals or cycles. In the United States, the standard is
120 reversals or 60 cycles per second. Electricity transmission networks use AC because voltage can be controlled with relative
ease.



Acceptor — A dopant material, such
as boron, which has fewer outer shell electrons than required in an otherwise balanced crystal structure, providing a hole, which
can accept a free electron.



Ambient Temperature — The temperature
of the surrounding area.



Amorphous Silicon — A thin-film,
silicon photovoltaic cell having no crystalline structure. Manufactured by depositing layers of doped silicon on a substrate.



Ampere (amp) — A unit of electrical
current or rate of flow of electrons. One volt across one ohm of resistance causes a current flow of one ampere.



Angle of Incidence — The angle that
a ray of sun makes with a line perpendicular to the surface. For example, a surface that directly faces the sun has a solar angle
of incidence of zero, but if the surface is parallel to the sun (for example, sunrise striking a horizontal rooftop), the angle
of incidence is 90°.



Antireflection Coating — A thin coating
of a material applied to a solar cell surface that reduces the light reflection and increases light transmission.



Cell efficiency – The percentage
of electrical energy that a solar cell produces (under optimal conditions) as compared to the total amount of energy from the
sun falling on the cell.



Cell Junction — The area of immediate
contact between two layers (positive and negative) of a photovoltaic cell. The junction lies at the center of the cell barrier
or depletion zone.



Clean Technology— Renewable energy
and energy efficiency technologies plus other technologies that make use of resources more environmentally benign and/or reduce
carbon emissions.



Conversion efficiency – The percentage
of electricity that is created by a solar cell as compared to the amount of energy needed to generate that electricity.

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Converter — A unit that converts
a direct current (dc) voltage to another dc voltage.



Crystalline Silicon — A type of photovoltaic
cell made from a slice of single-crystal silicon or polycrystalline silicon.



Current – The flow of electricity
between two points. Measured in amps.



Direct Current (DC) — A type of electricity
transmission and distribution by which electricity flows in one direction through the conductor, usually relatively low voltage
and high current. To be used for typical 120 volt or 220 volt household appliances, DC must be converted to alternating current,
its opposite.



Distributed Power — Generic term
for any power supply located near the point where the power is used. Opposite of central power. See stand-alone systems.



Distributed Systems — Systems that
are installed at or near the location where the electricity is used, as opposed to central systems that supply electricity to
grids. A residential photovoltaic system is a distributed system.



Donor — In a photovoltaic device,
an n-type dopant, such as phosphorus, that puts an additional electron into an energy level very near the conduction band; this
electron is easily exited into the conduction band where it increases the electrical conductivity over than of an undoped semiconductor.



Efficiency – The ratio of output
energy to input energy.



Electrical grid – A large distribution
network that delivers electricity over a wide area.



Electrode — A conductor that is brought
in conducting contact with a ground.



Electron — An elementary particle
of an atom with a negative electrical charge and a mass of 1/1837 of a proton; electrons surround the positively charged nucleus
of an atom and determine the chemical properties of an atom. The movement of electrons in an electrical conductor constitutes
an electric current.



Energy — The capability of doing
work; different forms of energy can be converted to other forms, but the total amount of energy remains the same.



Frequency — The number of repetitions
per unit time of a complete waveform, expressed in Hertz (Hz).



Gigawatt (GW) — A unit of power equal
to 1 billion Watts; 1 million kilowatts, or 1,000 megawatts.



Greenhouse effect – When heat from
the sun becomes trapped in the Earth's atmosphere due to certain gases.

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Grid – A distribution network, including
towers, poles, and wires that a utility uses to deliver electricity.



Grid-connected PV system – A solar
system that is tied in to the utility's network. When generating more power than necessary, the system supplies the surplus to
the grid. At night, the system draws power from the grid.



Heterojunction — A region of electrical
contact between two different materials.



Hole — The vacancy where an electron
would normally exist in a solid; behaves like a positively charged particle.



Homojunction — The region between
an n-layer and a p-layer in a single material, photovoltaic cell.



Incident Light — Light that shines
onto the face of a solar cell or module.



Interconnect — A conductor within
a module or other means of connection that provides an electrical interconnection between the solar cells.



Inverter — A device that converts
direct current electricity to alternating current either for stand-alone systems or to supply power to an electricity grid.



Irradiance — The direct, diffuse,
and reflected solar radiation that strikes a surface. Usually expressed in kilowatts per square meter. Irradiance multiplied by
time equals insolation.



Kilowatt (kW) — A standard unit of
electrical power equal to 1000 watts, or to the energy consumption at a rate of 1000 joules per second.



Kilowatt-Hour (kWh) — 1,000 thousand
watts acting over a period of 1 hour. The kWh is a unit of energy. 1 kWh=3600 kJ.



Megawatt (MW) — 1,000 kilowatts,
or 1 million watts; standard measure of electric power plant generating capacity.



Monocrystalline solar cell – A type
of solar cell made from a thin slice of a single large crystal silicon.



Multicrystalline — A semiconductor
(photovoltaic) material composed of variously oriented, small, individual crystals. Sometimes referred to as polycrystalline or
semicrystalline.



Multijunction Device — A high-efficiency
photovoltaic device containing two or more cell junctions, each of which is optimized for a particular part of the solar spectrum.

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Net metering – A practice used in
conjunction with a solar electric system where your electric meter tracks your net power usage, spinning forward when you use
electricity from the utility, and spinning backward when your system is generating more electricity than you need.



Orientation — Placement with respect
to the cardinal directions, N, S, E, W; azimuth is the measure of orientation from north.



Photoelectric Cell — A device for
measuring light intensity that works by converting light falling on, or reach it, to electricity, and then measuring the current;
used in photometers.



Photon — A particle of light that
acts as an individual unit of energy.



Photovoltaic(s) (PV) — Pertaining
to the direct conversion of light into electricity.



Photovoltaic (PV) Array — An interconnected
system of PV modules that function as a single electricity-producing unit. The modules are assembled as a discrete structure,
with common support or mounting. In smaller systems, an array can consist of a single module.



Photovoltaic (PV) Cell — The smallest
semiconductor element within a PV module to perform the immediate conversion of light into electrical energy (direct current voltage
and current). Also called a solar cell.



Photovoltaic (PV) Conversion Efficiency
— The ratio of the electric power produced by a photovoltaic device to the power of the sunlight incident on the device.



Photovoltaic (PV) Device — A solid-state
electrical device that converts light directly into direct current electricity of voltage-current characteristics that are a function
of the characteristics of the light source and the materials in and design of the device. Solar photovoltaic devices are made
of various semiconductor materials including silicon, cadmium sulfide, cadmium telluride, and gallium arsenide, and in single
crystalline, multicrystalline, or amorphous forms.



Photovoltaic (PV) Effect — The phenomenon
that occurs when photons, the "particles" in a beam of light, knock electrons loose from the atoms they strike. When
this property of light is combined with the properties of semiconductors, electrons flow in one direction across a junction, setting
up a voltage. With the addition of circuitry, current will flow and electric power will be available.



Photovoltaic (PV) Module — The smallest
environmentally protected, essentially planar assembly of solar cells and ancillary parts, such as interconnections, terminals,
[and protective devices such as diodes] intended to generate direct current power under unconcentrated sunlight. The structural
(load carrying) member of a module can either be the top layer (superstrate) or the back layer (substrate).



Photovoltaic (PV) Panel — often used
interchangeably with PV module (especially in one-module systems), but more accurately used to refer to a physically connected
collection of modules (i.e., a laminate string of modules used to achieve a required voltage and current).

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Photovoltaic (PV) System — A complete
set of components for converting sunlight into electricity by the photovoltaic process, including the array and balance of system
components.



P/N — A semiconductor photovoltaic
device structure in which the junction is formed between a p-type layer and an n-type layer.



Polycrystalline — See Multicrystalline.



Polycrystalline Silicon — A material
used to make photovoltaic cells, which consist of many crystals unlike single-crystal silicon.



Power Conversion Efficiency — The
ratio of output power to input power of the inverter.



Semiconductor — Any material that
has a limited capacity for conducting an electric current. Certain semiconductors, including silicon, gallium arsenide, copper
indium diselenide, and cadmium telluride, are uniquely suited to the photovoltaic conversion process.



Silicon (Si) — A semi-metallic chemical
element that makes an excellent semiconductor material for photovoltaic devices. It crystallizes in face-centered cubic lattice
like a diamond. It's commonly found in sand and quartz (as the oxide).



Solar Energy — Electromagnetic energy
transmitted from the sun (solar radiation). The amount that reaches the earth is equal to one billionth of total solar energy
generated, or the equivalent of about 420 trillion kilowatt-hours.



Solar-Grade Silicon — Intermediate-grade
silicon used in the manufacture of solar cells. Less expensive than electronic-grade silicon.



Solar Resource — The amount of solar
insolation a site receives, usually measured in kWh/m2/day, which is equivalent to the number of peak sun hours.



Solar Spectrum — The total distribution
of electromagnetic radiation emanating from the sun. The different regions of the solar spectrum are described by their wavelength
range. The visible region extends from about 390 to 780 nanometers (a nanometer is one billionth of one meter). About 99 percent
of solar radiation is contained in a wavelength region from 300 nm (ultraviolet) to 3,000 nm (near-infrared). The combined radiation
in the wavelength region from 280 nm to 4,000 nm is called the broadband, or total, solar radiation.



Stand-Alone System — An autonomous
or hybrid photovoltaic system not connected to a grid. May or may not have storage, but most stand-alone systems require batteries
or some other form of storage.



Standard Test Conditions (STC) —
Conditions under which a module is typically tested in a laboratory.

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Storage Battery — A device capable
of transforming energy from electric to chemical form and vice versa. The reactions are almost completely reversible. During discharge,
chemical energy is converted to electric energy and is consumed in an external circuit or apparatus.



Thin Film — A layer of semiconductor
material, such as copper indium diselenide or gallium arsenide, a few microns or less in thickness, used to make photovoltaic
cells.



Thin Film Photovoltaic Module — A
photovoltaic module constructed with sequential layers of thin film semiconductor materials. See amorphous silicon.



Tilt Angle — The angle at which a
photovoltaic array is set to face the sun relative to a horizontal position. The tilt angle can be set or adjusted to maximize
seasonal or annual energy collection.



Volt (V) — A unit of electrical force
equal to that amount of electromotive force that will cause a steady current of one ampere to flow through a resistance of one
ohm.

Voltage — The amount of electromotive
force, measured in volts, that exists between two points.



Wafer — A thin sheet of semiconductor
(photovoltaic material) made by cutting it from a single crystal or ingot.



Watt — The rate of energy transfer
equivalent to one ampere under an electrical pressure of one volt. One watt equals 1/746 horsepower, or one joule per second.
It is the product of voltage and current (amperage).



Waveform — The shape of the phase
power at a certain frequency and amplitude.



Principal Products and Services



Our philosophy is to “provide solar electricity directly from the sun in a technology
innovation-centric and cost effective way”. Since inception, we have concentrated on serving the solar power needs of residential
and commercial customers tied to the electric power grid.  Our business plans are focused in four specific areas:



• Solar Systems Design and Installation

• Solar Technology Research and Development

• Solar Equipment Manufacturing and Distribution

• Distributed Power Plant Projects

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In 2007 and 2008, 100% of our revenues were generated from our Solar Systems Design and
Installation business. In 2009, 87.9% ($3.879 million) of our revenues were generated from our Solar Equipment Distribution business
and 12.1% ($0.534 million) were generated from our Solar Systems Design and Installation business. In 2010, 89.23% ($4.135 million)
of our revenues were generated from our Solar Equipment Distribution business and 10.77% ($0.499 million) from our Solar Equipment
Distribution business. Our Solar Technology Research and Development and our Distributed Power Plant Projects businesses are in
the development stage and have not yet generated revenue.



We are not currently dependent on one or a few major customers for our revenues. Instead,
our total revenues for the last fiscal year were generated from over one hundred different customers.



Solar Systems Design and Installation



The scope of our solar systems design and installation business includes:



• Designing solar systems for commercial, residential, governmental and non-profit customers

• Installing solar power systems and related constructional systems for solar power end users

• Providing technical support and service to solar power end users

• Providing system performance monitoring services to solar power end users

• Providing government permit/incentives application services to solar power end users



Since our founding in 2007, we have focused on solar system design and installation. Installation
is our core business, and it also provides the company with a platform for solar product supply, new technology development, and
other lines of business. Our gross revenues to date have come mostly from the solar systems installation business. Our installation
business is focused primarily in Southern California.  We were the first Chinese-American owned solar installation technology
company in Southern California and much of the early growth in our systems installation business came from customers in the Chinese-American
community of Southern California.



We are one of a few companies in California that has the permit and expertise to install
large commercial solar systems (over 150K watts).  Design and installation of a solar power
system, especially a large commercial solar power system, requires proper licenses, design capabilities in electrical systems and
solar systems, and constructional (ground or roof) implementation ability, as well as experienced project management and an understanding
of industry regulations. In addition, the ability to procure proper solar equipment is critical to large commercial solar system
projects.



Sunvalley has obtained a C-46 Solar License from CBCL (California Board of Contractor
License). We use engineers and project managers that have Certification of Solar Power System Design and Installation from SEI
(Solar Energy International Training School). We have been focusing on developing our expertise and proprietary technology to install
large commercial and governmental solar power systems since 2007. We are also able to procure the necessary equipment and supplies
through our distribution partnerships. Some of large scale commercial solar power systems that we has
designed and installed include large office buildings, manufacturing facilities, warehouses and hotels.

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In 2008, we were positioned in the top twenty solar installation companies in terms of
total installed solar system size in a list compiled by the California Energy Commission (CEC). In the CEC list, over 90% of companies
were doing residential or small size commercial solar systems installation. Only a few companies in the list, including Sunvalley,
had designed or installed solar power system projects over 100,000 watts.



Our installation business generated all of our revenues in 2007 and 2008, and it remains
a significant component of our total revenue structure. Our development efforts in this area focus on the installation of large
commercial and governmental solar power systems, as well as residential solar power systems. Our customers in this line of business
run the gamut from small private residences to large commercial solar power projects. Some of large scale commercial solar power
systems that we have designed and installed include large office buildings, manufacturing facilities, warehouses, and hotels.



Solar Technology Research and Development



As a reusable and green energy source, the solar cell has been providing an increasing
portion of consumed energies, including in household heating and electricity, in commercially available cars, and in centralized
solar electricity plants. However, the current solar cell modules or panels suffer severe drawbacks compared to fossil fuel energy
sources in terms of cost-per-watt as well as in the efficiency of energy storage. The cost issue is related to the poor energy
conversion efficiency and the use of the costly semiconductors as the electricity generation unit, which primarily corresponds
to the light absorption of the solar cell module.



To improve the efficiency of the solar cell without adding more cost to it, we are developing
a new metallic sub-wavelength design to realize the combination of the electrodes as SPP generators.  A
typical PV solar cell operates by receiving sun light on an electric conversion unit or active layer. Active layers have typically
been a semi-conductor having a p-n junction to produce electron-hole pairs or excitions whenever illuminated with light. In operation,
each electron and hole of produced excition pairs are pulled in opposite directions by the internal electric field of the p-n junction
resulting in an electric current. The same effect in organic cells is accomplished via either a bi-layer of acceptor and donor
materials or a bulk hetero-junction of an acceptor and donor material. The resultant electric current may be extracted by electrodes
and delivered to an electric circuit to an electricity storage device.



Despite this successful development and implementation, PV solar cell technologies have
not yet been completely satisfactory for their intended purpose since manufacturing costs are high and efficiencies are too low
for PV solar technologies to compete with non-renewable energies in terms of costs per energy watt produced.

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As one of potential solutions, it has been discovered that surface plasmon polariton
(SPP) assisted solar technologies may be developed to result in enhanced electricity production due to surface resonant excitation
or surface Plasmon resonance (SPR). SPP assisted PV cells have heretofore operated by using the enhanced electrical fields produced
by the SPR to either be directly converted to electricity or concentrate the light onto an active layer. With this technology,
the efficiency of the solar cell can be increased, therefore the cost of solar power per watt will be reduced also.



The innovative design will also consider the variant spectral and angles, to guarantee
excitation of the SPP at any angle around the bang gap, or absorption region of the solar cell unit. With the successful development
of our new PV cells, we are expecting the efficiency of the organic thin-film-based solar cells to be over 10%, which is close
to a 50% increase from that of the current commercially available thin film solar cells.



A typical PV solar cell operates by receiving sun light on an electric conversion unit
or active layer. Active layers have typically been a semiconductor having a p-n junction to produce an electric current. The efficiency
of the conversion depends on purity of the semiconductor, structure of the solar cell, insight spectrum, angle, and power directly
to the solar cell, as well as temperature and other environmental conditions.



Our patent-pending technology uses Surface Plasmon Polariton (SPP) assisted solar technologies
to enhance electricity production due to surface resonant excitation or Surface Plasmon Resonance (SPR). It will provide an apparatus
and related method for efficiently converting solar radiation into electricity wherein the conversion efficiency in thin film active
layers is measurable increased.



We believe that deployment of our new technology to increase the panel efficiency will
reduce solar panel cost per watt as well as the total system cost. As an example, in the current U.S. market, the cost of thin-film
solar panel (a-Si) is approximately $1.1/w~$1.4/w. The efficiency of the module is around 7%. For instance, a-Si thin film solar
module TW-SF 95W produced by the Tianwei Soalrfilm is rated 95 watts output power. We assume the manufacturing cost for this module
is $1/w. With the commercialization and implementation of new solar technologies, such as our patent-pending technology, the efficiency
of this module can be increased from 7% to 10%, which in turn will increase the module output power from 95W to 135W with the same
module size. So the solar panel cost per watt will be reduced to $0.70/w compared to $1.0/w before. The customer could save $3,000
for a 10,000 watt solar power system based on reduced solar panel cost only. Plus, with higher efficiency solar panels, the racking
and electrical accessory cost of the system will be also reduced because fewer panels will be used for the same system size. The
total system cost could be reduced over 30%. We expect that implementation of our new technology will reduce the overall cost of
the solar power system to a level that is less than or at least comparable with fossil fuel energy sources in the near future.

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Though our patent-pending technology is able to increase the efficiency of thin-film-based
solar cells to over 10%, commercializing this technology into mass production will involve a trade-off between manufacturing cost
per-panel and increased per-panel efficiency. In addition, our new PV cell concept will also need to demonstrate that panels using
the technology will have a productive life-span and a tolerance to environmental conditions such as humidity, temperature, wind
load that are sufficient for the panels to be used in real life application. Accordingly, there is no guarantee that we will be
able to commercially produce and market solar panels using our new PV technology.



We have not yet generated revenues from our patent-pending new technology. With additional
capital, however, we hope to commercialize our R&D outputs to our PV panels and installation applications. By combining our
research and development capability with our existing installation business and planned panel manufacturing operation, we hope
to establish a vertically integrated entity that can grow to become a premier supplier of solar panels in the United States.



The main points of focus for our R&D operation are as follows:



• Keeping and developing a small but strong R&D team in San Diego

• Collaborating with universities in the U.S. and panel manufacturers in China

• Effectively use resources from research institutes and universities in China

• Developing new solar technology and parts, focusing on application technologies



We are working together with UCSD (University of California, San Diego) to develop Surface
Plasmon Polariton (SPP) assisted solar technologies. The equipment and facilities needed to fabricate the device is accessed from
University of California, San Diego. The nano- clean room facilities in the School of Engineering at UCSD are equipped with many
state of the art micro and nano- fabrication equipment and facility. The interference pattern that will be recorded in the solar
cells will be obtained using an Argon laser operating at 362nm. This laser and its associated equipment, is available to us through
special arrangement with the administration of the University of California, San Diego, as well as the Ultrafast and Nano- scale
Optics lab in the Department of Electrical and Computer Engineering at UCSD. We are also working together with some panel manufacturers
in China to get product line supports to commercialize the patented technology in the panel manufacturing. The panel manufacturers
are also providing us some raw materials for lab testing. We are also collaborating with Haerbin Industrial University in China
and Shenyang Mechanical Research Institute to develop and prototype a new solar micro-inverter.



Our key current R&D topics include:



• Developing new coating technology to increase the efficiency of PV panel

• Develop solar
PV application technology to reduce system level cost and increase installation flexibility – racking and panel
cleaning system

• Commercializing our patented advanced solar technology.

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In 2009, we had R&D expenses of $35,000 for the development of advanced solar technologies, not including
regular salary payment to our research engineers. In 2010, we incurred no R&D expenses except salary payment to our research
engineers. None of our R&D costs have been borne directly by our customers.



Solar Equipment Manufacturing and Distribution



In recent years, we have signed distribution agreements with three of the largest solar
panel producers in the world and one large solar inverter suppliers. Our partnerships with these manufacturers in the solar power
industry have allowed us to broaden our customer base and to provide our customers with more cost competitive and complete solar
system solutions with multiple selective options on PV panels and inverters. In 2009 and 2010, our solar equipment distribution
business has grown to constitute the majority of our revenues.



Although we have not yet generated revenue from the manufacture of our own solar panels,
our R&D team has developed a new type of nano-structured solar cell and filed for patent protection in the U.S. as “New
Solar Cell Structure with Increased Efficiency” on March 22, 2010, application number 12/729,201.  We are currently
applying for a Phase-I grant from Department of Energy, entitled "Surface Plasmon Enhanced Solar Cells,” in order to
fund additional development of its proprietary solar cell.  With proper funding, the new technology could be commercialized
and implemented in solar panel manufacture starting from OEM manufactured panels from reputable solar panel manufacturers in China.
The manufactured solar panels would use our brand name with its patented technology. We would be responsible for quality control,
certification applying, marketing, technical support and services in the United States. Our unique technology, if successfully
commercialized and brought to market, would provide the solar panel market with a higher efficiency, lower cost unit than competing
panels currently on the market. Our ability to provide after-sale services such as system maintenance, technical support, training,
etc. for its customers could add another selling point for promotion of the new panel.



Distributed Power Plant Projects



We are in the development stage for a new line of business based on the installation
of distributed solar power plants.  Although we are not currently generating revenue from the installation of distributed
solar power plants, this area is a focus of our ongoing business development. Currently, most proposed solar power plants are stand-alone
large scale power plants. Currently, all completed or proposed stand-alone large scale solar power plants were proposed or implemented
by large solar panel manufacturers (such as First Solar, Solar Power, etc.) as well as investment bankers, utility companies or
large installation companies as a group. We do not have sufficient funds and resources to build stand-alone large scale solar power
plant, and we do not intend to develop stand-alone large scale power plants in the near future. Such plants are either solar thermal
power plants (using solar panels to generate heat and then using thermal electrical methods to generate electricity) or photovoltaic
farms (using PV panels to generate electrical power directly). Stand-alone power plants need to deploy high-voltage transformers,
high-voltage power transmission lines, etc. Also, the limiting factor of solar power is that it generates little electricity when
skies are cloudy and none at night. Excess power must therefore be produced during sunny hours and stored for use during dark hours.
Most energy storage systems such as batteries are expensive or inefficient. Pressurized caverns and hot salt technologies are commonly
used right now for these solar power plants, but they will require larger storage room and more complex technology. Due to these
reasons, stand-alone power plants naturally are large scale (generally more than 15M Watts), and most of them are built on open
public land, such as in a hot desert, due to large installation physical space required and cost of the land.

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Building larger solar power plants involves serious issues such as the need for large
investments in land and infrastructure including power transmission line and electrical distribution network constructions. Other
troublesome issues are customer management independent from current utility company billing systems, three years or even longer
environmental impact assessment study (required by federal environmental protection laws), sophisticated application processing
for land use permits, different safety and security requirements for open public space, etc. All of these difficulties add up to
tremendous investments, efforts and long waiting times. The Bureau of Land Management has taken as long as two years in order to
just complete required environmental reviews.



By comparison, the small size, tied-to-grid, Distributed Power Plants we are planning
to launch would be quite different from stand-alone large scale power plants. Our planned projects won’t use public land.  Instead,
our plan is to use free roofs on private commercial buildings or private lands. We plan to build the power plants on private property
to avoid environmental issues and easily tie to the grid to avoid power transmission lines and electrical distribution networks
construction. We would also use current utility company billing systems to manage the system.



Most of environmental issues involved in the use public lands involve costs related to
the protection of certain plants and animals and to the maintenance of soil composition, as the public lands that are suitable
for large power plants are generally preserved open lands. Private property suitable for smaller distributed power plants generally
does not involve in such issues, however since the land is typically smaller tracts in private agricultural use or existing rooftop
spaces.



Although we do not currently have a distributed power plant under construction, we are
working with customers, suppliers, and utility companies to develop a plan for our first such installation. The size of these types
of roof-top solar power plants is much smaller than typical solar power plants (1M to 2M watts is typical for roof-top power plants,
compared to over 15M watts for typical plants), but we would be able to build many smaller “power plants” on top of
different buildings and tie them to utility grid to form a distributed power plant system.



Our planned distributed PV power plants are prompted by recent advances in solar technology
that reduce the cost of installed photovoltaic generation and federal/state laws that ensure the “oversize to load”
(no restriction on homeowners or businesses over-sizing their solar system when compared with their usage, or “load”)
and provides greater fairness for consumers by requiring wholesale compensation for surplus power. Building smaller roof solar
power plants would avoid most of the difficulties that currently face those who build larger solar power plants.



We are currently negotiating with some agricultural farmers who are our existing customers
in the Palm Desert, California area to use their private lands to build our power plants. We are also in discussions with local
utility companies about the possibility of selling excess solar power to be generated by the plants back to the utilities.



As an established solar system designer/installer, we have the requisite technical background,
experience, licenses, and other capabilities necessary to build the roof-top distributed power plants. Because of our experience
in larger scale commercial solar system design and installation, the planned distributed power plants would closely resemble some
relatively larger commercial solar systems we are building today.

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Competition and Market Overview



The solar power industry is at an early stage of its growth and is highly fragmented
with many smaller companies. The prospect for long-term worldwide demand for solar power has attracted many new solar panel manufacturers,
as well as a multitude of design/integration companies in our market segment, with no single competitor gaining market dominance.
We expect the manufacturing segment of the industry to consolidate as more solar panel manufacturing capacity comes online. We
also expect there to be consolidation in the design/integration segment of the industry based mostly on branding, development of
new technology and business process improvements.



Distribution Methods and Marketing



The most important part in a solar power system is the solar panel (PV module). Photovoltaic
(PV) devices generate electricity directly from sunlight via an electric process that occurs naturally in certain types of materials.
Groups of PV cells are configured into modules and arrays, which can be used to power any number of electrical loads. Crystalline
silicon - the same material commonly used by the semiconductor industry - is the material used in a large portion of all PV modules
today. PV modules generate direct current (DC) electricity. For residential use, the current is then fed through an inverter to
produce alternating current (AC) electricity that can be used to power home appliances.



The majority of PV systems today are installed for homes and businesses that remain connected
to the electric grid. Consumers use their grid-connected PV system to supply some of the power they need and use utility-generated
power when their power usage exceeds the PV system output (e.g., at night). When the owner of a grid connected PV system uses less
power than their PV system creates, they can sell the electricity back to their local utility, watch their meter spinning backwards,
and receive a credit on their electric bill - a process referred as net metering. The electric grid thus serves as a “storage
device” for PV-generated power.



The initial market focus for our commercial installation business has been the Chinese-American
and broader Asian-American community of Southern California, with special emphasis on the Asian-American commercial market. We
have been able to attract the attention of news media serving this market segment. Several newspapers (Chinese Daily News and World
Journal), TV stations (Phoenix Satellite Television and DongSen Satellite Television), and local radio stations (AM1300), have
had special reports on our company. These reports have generated positive reactions from readers, viewers, and listeners and have
driven customer traffic to our office.



Today, we are focused on offering solar power solutions for owners, builders and architecture
firms, including designing, building, operating, monitoring and maintaining solar power systems. Our customers run the gamut from
small private residences to larger commercial solar power projects. In year 2008, we designed and installed a solar system for
an office building, which covered 20,000 square feet roof top with 21KW, 112 pieces solar PV panels. The system is expected
to save $89,185 in first 5 years for the customer. The end to end solution included roof reconstruction and solar power
system. The system will have reduced CO2 emissions by 549,468 pounds which is equivalent to planting 120 acres of trees or removing
50 cars from the road.

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In year 2009, we designed and installed one 170KW and one 165KW solar power system for
a logistic company and a food & oil manufacturer respectively. These two systems will have saved around $900,000 for customers
in the first five years in the form of reduced ongoing energy bills. End to end solutions included design and construction of mental
shielding frame, roof reconstruction, and solar power system design/installation. These two systems are expected to reduce CO2
emissions by 3,830,067 pounds and 3,736,567 pounds which is the equivalent to planting around 900 acres of trees or removing around
350 cars from the road.



We plan to continue to pursue our media-based marketing and sales strategy in Southern
California.  In addition, we are working very closely with our solar panel suppliers and inverter supplier to bid on
larger power plants, including government contracts.



Principal Suppliers



We currently purchase solar panels primarily from several manufacturers, including Canadian
Solar Inc., CEEG SST (which was acquired by China Energy in 2010.) and Tianwei Solarfilms. For the year ended December 31,
2009, these vendors accounted for approximately 92% of our total inventory purchases. We are the preferred distributor in the USA
and the exclusive distributor in Southern California, Nevada and New Mexico of Canadian Solar Inc., which is a top-10 PV manufacturer
in the world.



We maintain good relationships with all of our suppliers, and especially with our primary
and important suppliers. In addition, we are continuously adding new alternative suppliers to our supplier list. Due to the standardization
of solar equipment, all materials we purchase from our suppliers are available from other sources and suppliers.



We are the preferred distributor in the USA and the exclusive distributor in Texas, Nevada
and Arizona of CEEG SST (acquired by CSUN in year 2010), one of a few PV panel manufacturers in the world that is able to provide
high efficiency mono-crystalline solar panels. We are also the preferred distributor in the USA and the exclusive distributor in
Texas, Nevada and Florida of Tianwei Solarfilm, one of the few manufactures in the world that is able to provide high efficiency
thin film panels.



Our revenues currently derive from solar system design and installation as well as solar
equipment distribution. In order to expand our installation business to states other than California, we will be required to comply
with local license requirements by acquiring a local installer or by hiring locally-licensed contractors to serve as officers.
For our solar equipment distribution business, no local licensures are required in California or other states.



As a result of continuing global development at all levels of solar equipment manufacturing,
including in the area of raw materials supply, in 2009 and 2010, the risk of disruption in the supply of necessary raw materials
for solar panels has been greatly reduced in 2011. In addition, we have established solid relationships with several large solar
equipment suppliers, allowing us to access multiple sources. For the immediate future, we therefore believe that raw materials
for our products will continue to be readily available.

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Solar power companies in China have invested billions of dollars in solar power technology
and PV panel manufacturing over the past few years. However, the market for solar power in China is not yet mature. Meanwhile,
the European market is overcrowded. As a result, Chinese manufacturers are looking for business opportunities in the United States.
As an established technology and system integration company, Sunvalley maintains a unique position to act as the bridge between
Chinese manufacturers and their North American end customers while providing superior value-added services to these customers.
Sunvalley has established strategic partnerships with several solar equipment manufacturers, solar power technology companies,
and research institutes in China. We have signed a distribution agreement with Canadian Solar, Inc., which is a top-10 PV manufacturer.
To further broaden our product coverage and provide its customers with more options on solar panels and inverters, We have also
signed distribution agreements with CEEG SST (acquired by CSUN in year 2010) and Tainwei Solarfilms.  This will allow
us to extend our product coverage from low cost PV panels to high efficiency PV panels and up to thin-film panels. We have also
established partnerships with inverter supplier PV Powered, as well as solar racking manufacturers and solar electrical wires providers.
The partnership with these manufacturers in the solar power industry allows Sunvalley to provide its customers with a cost competitive,
complete solar system solution with multiple selective options on PV panels and inverters.



Intellectual Property



Our R&D team has developed a new type of nano-structured solar cell and filed for
patent protection in the U.S. as “New Solar Cell Structure with Increased Efficiency” on March 22, 2010, application
number 12/729,201.  We are currently applying for a Phase-I grant from Department of Energy, entitled "Surface Plasmon
Enhanced Solar Cells,” in order to fund additional development of our proprietary solar cell.



The specific patent application info is as follows:



|EFS ID              | 7261431                                                                                                                           
|------------------- | ----------------------------------------------------------------------------------------------------------------------------------
|Application Number  | 12729201                                                                                                                          
|Confirmation Number | 6760                                                                                                                              
|Title               | A Surface Plasmon Resonance Enhanced Solar Cell Structure with Broad Spectral and Angular Bandwidth and Polarization Insensitivity
|Receipt Date        | 22-MAR-2010                                                                                                                       
|Application Type    | Utility under 35 USC 111(a)                                                                                                       



Personnel



We have 20 employees, 16 of whom are full-time employees.  Our current internal
departments include the Administration Department, the Engineering Department, the Sales/Marketing Department and the New Technology
Development Department.  We are lead by a management team that includes a group of scientists, research/development engineers,
a professional marketing/sales team, and an experienced supply chain management team. In addition, our team includes solar power
system design engineers, solar power system installation engineers, electrical system design engineers and construction engineers.

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Government Regulation



The market for solar energy systems is heavily influenced by foreign, federal, state
and local government regulations and policies concerning the electric utility industry, as well as policies adopted by electric
utilities. These regulations and policies often relate to electricity pricing and technical interconnection of customer-owned electricity
generation. For example, there currently exist metering caps in certain jurisdictions, which limit the aggregate amount of power
that may be sold by solar power generators into the electric grid. These regulations and policies have been modified in the past
and may be modified in the future in ways that could deter purchases of solar energy systems and investment in the research and
development of solar energy technology. For example, without a mandated regulatory exception for solar energy systems, utility
customers are often charged interconnection or standby fees for putting distributed power generation on the electric utility grid.
Such fees could increase the cost to our customers of using solar energy systems and make them less desirable, thereby harming
our business, operating results and financial condition. Changes in net metering policies could also deter the purchase and use
of solar energy systems. In addition, electricity generated by solar energy systems competes primarily with expensive peak hour
electricity rates rather than with the less expensive average price of electricity. Modifications to the peak hour pricing policies
of utilities, such as to a flat rate, would require solar energy systems to achieve lower prices in order to compete with the price
of electricity.



The importation of a part of the products we sell is subject to tariffs, duties and quotas
imposed by the United States.  In addition, other restrictions on the importation of our products are periodically considered
by the United States Congress, and may again be considered to protect against “Asian” deflation.  No assurances
can be given that tariffs or duties on such goods may not be raised, resulting in higher costs to us or that import quotas with
respect to such goods will not be lowered.  Deliveries of products from our foreign suppliers could be restricted or
delayed by the imposition of lower quotas or increased tariffs.  We may be unable to obtain similar quality products
at equally favorable prices from domestic suppliers or from other foreign suppliers whose quotas have not been exceeded by the
supply of goods to existing customers.



Research and Development Expenditures



In 2009, we had R&D expenses of $35,000 for the development of advanced solar technologies,
not including regular salary payment to our research engineers. In 2010, we incurred no R&D expenses except salary payment
to our research engineers. None of our R&D costs have been borne directly by our customers.



Subsidiaries



We do not have any subsidiaries.

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Item 1A. Risk Factors



A smaller reporting company is not required to provide the information required by this
Item.



Item 1B. Unresolved Staff Comments



A smaller reporting company is not required to provide the information required by this
Item.



Item 2. Properties



We lease approximately 2,193 sq ft of office space in the Walnut Tech Business Center
located at 398 Lemon Creek Drive, Suite A, Walnut CA 91789 for $3,211 per month.  This lease will terminate on May 31,
2011. The property is sufficient for our current business size. We plan to extend our lease for another three years after May 31,
2011.



Item 3. Legal Proceedings



Trade Secrets Lawsuit



On March 3, 2009, we filed a lawsuit against Yuming (Travis) Chou and Chenghsien (Ken)
Hsieh for fraud, conversion, violation of the trade secrets act, violations of the business and professions code section 17200,
and unjust enrichment.  The lawsuit was filed in the Los Angeles Superior Court, and the case number is BC408968.  Our
counsel for this case is The Law Offices of Bin Li, PLC and its associate counsel, Jason J.L. Yang, Esq.  We alleged
that Chou and Hsieh, while employed at the Company, wrongfully took our trade secrets (consisting of customer contracts, customer
lists, Sunvalley solar system designs, investment agreements, financial reports, and employee records) for the purpose of starting
their own competing solar company.  On May 22, 2009, Hsieh filed a cross-complaint against Sunvalley Solar, Inc. for
rescission of 70,000 shares purchased by Hsieh (at the cost of $70,000), unpaid wages, and wrongful termination.  Hsieh
amended the cross-complaint on July 29, 2009, and withdrew the unpaid wages and wrongful termination claims on October 22, 2009.  After
we reached a settlement with Travis Chou, Mr. Chou was dismissed from the case on September 18, 2009.  We amended our
complaint on October 13, 2009 by adding two defendants – KYM Construction, Inc. and Tai Hai (Terry) Yu.  On August
26, 2010, we reached a settlement with Chenghsien Hsieh. Mr. Hsien and other defendants were dismissed from the case. The remainder
of the suit has subsequently been dismissed.



Our agent for service of process in Nevada is Val-U-Corp Services, Inc., 1802 North Carson
St., Ste. 108, Carson City, NV 89701.



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



No matters were submitted to a vote of the Company's shareholders during the fiscal year
ended December 31, 2010.



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PART II



Item 5. Market
for Registrant’s Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities



Market Information



Our common stock is currently quoted on the OTC Bulletin Board (“OTCBB”),
which is sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a
computer network that provides information on current "bids" and "asks", as well as volume information. Our
shares are quoted on the OTCBB under the symbol “SSOL.OB.”



The following table sets forth the range of high and low bid quotations for our common
stock for each of the periods indicated as reported by the OTCBB. These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual transactions.



|Fiscal Year Ended December 31, 2010 
|------------------------------------
|Quarter Ended                       
|December 31, 2010                   
|September 30, 2010                  
|June 30, 2010                       
|March 31, 2010                      
|                                    
|Fiscal Year Ending December 31, 2009
|Quarter Ended                       
|December 31, 2009                   
|September 30, 2009                  
|June 30, 2009                       
|March 31, 2009                      



On March 24, 2011, the last sales price per share of our common stock was $0.0124.



Penny Stock



The SEC has adopted rules that regulate broker-dealer practices in connection with transactions
in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b)
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer
with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid
and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in
the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form,
including language, type size and format, as the SEC shall require by rule or regulation.

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The broker-dealer also must provide, prior to effecting any transaction in a penny stock,
the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson
in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to
the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny
stock held in the customer's account.



In addition, the penny stock rules require that prior to a transaction in a penny stock
not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement,
a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.



These disclosure requirements may have the effect of reducing the trading activity for
our common stock. Therefore, stockholders may have difficulty selling our securities.



Holders of Our Common Stock



As of March 25, 2011, we had approximately two hundred seventeen (217) holders of record
of our common stock, as well as other stockholders who hold shares in street name.



Dividends



There are no restrictions in our articles of incorporation or bylaws that restrict us
from declaring dividends. The Nevada Revised Statutes (the “NRS”) provides that a corporation may pay dividends out
of surplus, out the corporation's net profits for the preceding fiscal year, or both provided that there remains in the stated
capital account an amount equal to the par value represented by all shares of the corporation's stock raving a distribution preference.



We have never declared or paid any cash dividends on our common stock. We currently intend
to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash
dividends in the foreseeable future.



Securities Authorized for Issuance under Equity Compensation Plans



To date, we have not adopted a stock option plan or other equity compensation plan and
have not issued any stock, options, or other securities as compensation.



Recent Sales of Unregistered Securities



None.

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Item 6. Selected Financial Data



A smaller reporting company is not required to provide the information required by this
Item.



Item 7. Management’s Discussion and
Analysis of Financial Condition and Results of Operations



Forward-Looking Statements



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







Business Development Plan





The primary components of our growth strategy
are as follows:



• Developing and commercializing our proprietary solar technologies including our coating and
focusing technologies, racking and panel cleaning system. By deploying these new technologies into our PV panels and solar
installation business, we hope to enhance the value provided to our customers and increase our profitability.



• Promoting and enhancing our company’s brand and reputation in solar design and integration
and expanding our installation business from Southern California to Northern California, Arizona or other states.



• Developing a PV panel
manufacturing capability to provide high efficiency and low cost solar panels to US market. This will complement our
installation business and provide an implementation platform for our R&D.



• Getting involved in the private power providing business (Distributed Power
Plants).  Developing this line of business will lead to higher profit margins and income to our business. In the
future, this line of business could become one of our main income sources.



Expansion of Installation Business



We are planning to expand its installation business from Southern California to Northern
California, Arizona or other states in two to three years. We will continue to execute our marketing and sales strategy in Southern
California and, with additional capital, will be able to expand our business to cover Northern California, Arizona or other states.  The
planned expansion is expected to occur through acquiring smaller installation companies in these regions and/or through the establishment
of subsidiaries in these states and boost our installation profits. Our current intention is to establish two new offices located
in Northern California or other states and in San Diego. The estimated start-up cost for each new branch would be approximately
$500,000.

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If we are able to expand our installation business, it will assist us in gaining favorable
terms from OEM international manufacturers of our planned solar panel manufacturing operation.  In addition, an expanded
installation business would allow us to accelerate the introduction of our new technologies and solar parts and would generate
additional revenue to fund initial investment in our planned Distributed Power Plant business and to further fund our investments
in R&D.

Commercialization of Research and Development



Prior to initiating our planned OEM manufacturing of Sunvalley-branded solar panels,
we will need to commercialize our advanced panel technology through the design, fabrication, and characterization of a prototype
solar cell.  The total expense for planned commercialization of our research and development will be approximately $500,000. The
necessary equipment and facilities will be accessed from University of California, San Diego. The Nano3 clean room facilities in
the school of Engineering at UCSD are equipped with state-of-the-art micro and nano fabrication equipment and facilities, and can
be accessed by outside users with a $107 hourly fee.



The interference pattern that will be recorded in the solar cells will be obtained using
an Argon laser operating at 362nm. This laser and its associated equipment is available to us through a special arrangement with
the administration office in the University of California, San Diego, as well as the Ultrafast and Nano-scale Optics lab in the
Department of Electrical and Computer Engineering in UCSD.



Other equipment will also be required, including coating machine for PV panel testing.



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Initiate OEM Manufacturing of Solar
Panels



By leveraging its solar panel installation business and R&D, we plan to procure OEM
solar panels from selected Chinese manufacturers and to market them in the U.S. under our brand name. We will be responsible for
R&D, quality control, customer service, sales and marketing activities, as well as panel certification in U.S.



The estimated OEM panel cost is less than $1.40 per watt. As a reference, currently,
the lowest panel price is around $1.80 per watt (Mono-crystalline, Polycrystalline). We can use our own sales and installation
platform to showcase the new panels and drive sales of the new panels in the U.S market. Meanwhile, we will continue our R&D
effort on panel coating and other advanced technologies and apply the results to its panel manufacturing business. The goal will
be to further improve the efficiency, lower the cost of solar panels with our proprietary technologies, and to grow our market
share.



Our marketing strategy for its planned OEM solar panels is as follows:



• Set-up a platform to showcase our innovative solar panel
technologies and make Sunvalley solar panels a household name.



Unlike other merchandise, solar panel is very unique in that it requires very high level
of quality assurance and customer satisfaction. Providing satisfactory customer service and technical support is absolutely vital
in solar panel sales. As the first step, we will strive to make its brand a household name. The Sunvalley solar panel will be used
by our installation business as well as several other installation companies which have partnerships with us. We do not currently
have partnerships with other solar installation companies, but we plan to pursue them after introducing the panels to the market
through our own installation business. A marketing campaign aimed at other solar installation companies will help to achieve this
goal. We will use our own installation business as the platform to showcase the product quality and build up consumer awareness
of its brand.



• Penetrate into the main stream
distribution network



By
leveraging early successes and customer trust earned from our initial installations, we plan to penetrate into the mainstream
distribution network with our OEM solar panels.



• Further sale activities



Once
our brand name solar panels become well known, our sales team will begin an aggressive marketing campaign to connect the individual
sales points (distributors and venders) to form a distribution network. The marketing campaigns will also include attending trade
shows, advertising in the media (TV commercials and newspaper advertisement) and designating local representatives to boost the
market share and brand awareness.



• Offer a low cost, high efficiency
solar panel derived from advanced research

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To boost our solar panel market share, our R&D team will work with our OEM partner
to apply selective coating technique and other cutting edge technologies to further reduce the manufacturing cost and improve the
panel efficiency.



The total capital required to initiate our planned panel manufacturing business would
be approximately $2,000,000 which can be categorized into three parts:



• Registration and Certification of OEM panels with our brand – $300,000,
including UL certification fees, CEC registration fees, and lab testing fees.



• Initial Inventory – $1,500,000.  We will need to keep
at least 4 containers of PV panels in the warehouse in order to support sales of 5~10M watts per year, which means we will need
to have over $1,000,000 in inventory for PV panels only. An additional $300,000 in inventory would be needed in order to keep
the requisite amount of inverters and racking and panel cleaning systems. In addition, we anticipate providing variable payment
terms to different customers based on their creditworthiness; this will add additional cash flow pressure.



• OEM Management
costs – $200,000



Develop Distributed Power Plan Business



With our resources and experience gained from large scale solar power system designs,
installation and other related business, we believe we have unique advantages in the design and installation of large roof-top
power plant systems. We are aggressively proposing our Distributed Power Plant solution to utility companies in Southern California.
We believe that by collaborating with us on this approach, utility companies will benefit in the form of free installation, field
space, and our expertise on large commercial solar system designs, installation and maintenance services, as well as our technical
and management experience. By collaborating with us, utility companies can help to achieve their alternative energy requirements
under California law.



We are pursuing substantial contracts with some of our current installation customers
who control or own over 2,000,000 square feet of roofs on warehouses or other buildings in Southern California. We are also seeking
additional private space agreements with other commercial customers. We are among the few companies in California that has the
permit and expertise to install large-scale commercial and/or government solar power systems, together with roof constructional
design and building interior/exterior electrical designs. We believe additional advantages are provided by our experience in filing
solar power system permit applications and rebate applications and our expertise gained through our experience with governments
and utility companies.

26


Table of Contents


Results of Operations for the Years Ended
December 31, 2010 and 2009.



During the fiscal year ended December 31, 2010, we generated gross revenues of $4,634,140.
Total cost of sales was $3,924,330, resulting in gross profit of $709,810. Operating expenses were $1,080,905. We experienced other
income in the amount of $11,147 and interest expense of $15,891. The net loss for the fiscal year ended December 31, 2010 was therefore
$375,839.



By comparison, we generated gross revenues of $4,413,033 during the fiscal year ended
December 31, 2009. Total cost of sales was $3,804,905, resulting in gross profit of $608,108. Operating expenses for 2009 were
$1,219,905. We experienced other income in the amount of $40,000 and interest expense of 16,062. The net loss for the fiscal year
ended December 31, 2009 was therefore $587,859.



In 2007 and 2008, the majority of our revenue came from our solar system design and installation
business, including both residential and commercial projects. Specifically, in 2008, we produced $2.63 million in revenue from
solar system design and installation. The gross profit margin of the solar installation business is approximately 20%.



Although we had expected to see an increase of over 150% in our solar installation business
in 2009, our solar installation business and the solar industry as a whole was badly affected by the global economic crisis started
in late 2008. During 2009 and 2010, because banks and investment institutes were very reluctant to loan money to solar customers,
many potential solar power system customers suspended their plans to invest in new solar power systems. This development, in turn,
had a negative impact on our solar installation business in 2009 and 2010. In order to reduce the risk to our business presented
by these developments, we expanded our operations to include a new solar equipment distribution business beginning in November
of 2008. We established distribution partnerships with Canadian Solar Inc., CEEG SST, Tainwei Solarfilms, and PV Powered Inc.,
to distribute solar panels, solar inverters and other solar equipments to their clients in the U.S. Although the gross margin for
our distribution business is less than 10%, this line of business contributed to the majority of our gross revenues in 2009 and
2010.



Liquidity and Capital Resources



As of December 31, 2010, we had current assets in the amount of 3,097,062, consisting
of cash in the amount of $546,164, accounts receivable of $546,388, inventory in the amount of $1,925,233, other receivables of
$7,481, and prepaid expenses and other current assets of $71,796. As of December 31, 2010, we had current liabilities in the amount
of $2,994,330. These consisted of accounts payable and accrued expenses in the amount of $2,883,316, accrued warranty in the amount
of $27,688, customer deposits of $70,070, and the current portion of long term debt in the amount of $13,256. Our working capital
as of December 31, 2010 was therefore $102,732.

27


Table of Contents


Our accounts payable and accrued expenses as of December 31, 2010 consisted of the following:



|Accounts Payable         | $ | 2,780,527   
|------------------------ | - | ------------
|Credit Card payable      | $ | 44,789      
|Accrued vacation         | $ | 14,905      
|Other accrued expense    | $ | 22,995      
|Payroll liabilities      | $ | 1,068       
|Sales tax payable        | $ | 18,232      
|State Income tax payable | $ | 800         
|Total                    | $ | 2,883,316.00



As of December 31, 2010, our only long-term liability was a loan owing to East West Bank
with a balance of $87,525. The current portion due within the next year is $13,256. The principal amount outstanding accrues annual
interest at the bank's variable index rate (approx. 6.00% as of December 31, 2010). The East West Bank loan is collateralized by
all business assets.

In order to move forward with our business development plan set forth above, we will
require additional financing in the approximate amount of $4,500,000, to be allocated as follows:



|Initiate OEM Manufacturing                          | $ | 2,000,000
|--------------------------------------------------- | - | ---------
|R &D Commercialization Costs                        | $ | 500,000  
|Expansion of Installation Business (3 new branches) | $ | 1,500,000
|Additional working capital and general corporate    | $ | 500,000  
|Total capital needs                                 | $ | 4,500,000



We will require substantial additional financing in the approximate amount of $4,500,000
in order to execute our business expansion and development plans and we may require additional financing in order to sustain substantial
future business operations for an extended period of time.  We currently do not have any firm arrangements for financing
and we may not be able to obtain financing when required, in the amounts necessary to execute on our plans in full, or on terms
which are economically feasible.



We are currently seeking additional financing through the sale of common equity, including
the sale of common equity to Auctus Private Equity Fund, LLC through a Draw-Down Equity Financing Agreement, and/or the issuance
of debt convertible to common equity. If we are unable to obtain the necessary capital to pursue our strategic plan, we may have
to reduce the planned future growth of our operations.



Going Concern



We have experienced recurring losses from operations and had an accumulated deficit of
$958,924 as of December 31, 2010. To date, we have not been able to produce sufficient sales to become cash flow positive and profitable
on an ongoing basis. The success of our business plan during the next 12 months and beyond will be contingent upon generating sufficient
revenue to cover our costs of operations and/or upon obtaining additional financing. For these reasons, our auditor has raised
substantial doubt about our ability to continue as a going concern.

28


Table of Contents


Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements that have or are reasonably likely
to have a current or future effect on our financial condition, results or operations, liquidity, capital expenditures or capital
resources that is deemed material.



Purchase or Sale of Equipment



We do not expect to purchase or sell any plant or significant equipment.



Item 7A. Quantitative
and Qualitative Disclosures about Market Risk



A smaller reporting company is not required to provide the information required by this
Item.





Item 8. Financial Statements and Supplementary
Data



Index to Financial Statements Required by Article 8 of Regulation S-X:



|Audited
    Financial Statements:
|---------------------------------
|F-1                              
|F-2                              
|F-3                              
|F-4                              
|F-5                              
|F-6                              

29


Table of Contents




SADLER,
GIBB & ASSOCIATES, L.L.C.



REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board
of Directors

Sunvalley
Solar, Inc.



We
have audited the accompanying consolidated balance sheets of Sunvalley Solar, Inc., as of December 31, 2010 and 2009, and the
related statements of operations, stockholders’ equity (deficit) and cash flows for the years then ended. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial
statements based on our audits.



We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are
free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control
over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.



In
our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Sunvalley
Solar, Inc., as of December 31, 2010 and 2009, and the results of their operations and their cash flows for the years then ended,
in conformity with U.S. generally accepted accounting principles.



The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company had losses from operations of $375,839 and accumulated deficit of $958,924,
which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters
are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this
uncertainty.



SADLER,
GIBB AND ASSOCIATES, LLC





/s/ Sadler,
Gibb and Associates, LLC

Salt Lake
City, UT

March 25,
2011

F-1


Table of Contents


SUNVALLEY SOLAR, INC.

Consolidated Balance Sheets



|ASSETS                                              
|----------------------------------------------------
|                                                    
|                                                    
|                                                    
|CURRENT ASSETS                                      
|Cash and cash equivalents                           
|Accounts receivable, net                            
|Inventory                                           
|Other receivables                                   
|Prepaid expenses and other current assets           
|                                                    
|Total current assets                                
|                                                    
|PROPERTY AND EQUIPMENT, NET                         
|                                                    
|OTHER ASSETS                                        
|Other assets                                        
|                                                    
|Total other assets                                  
|                                                    
|TOTAL ASSETS                                        
|                                                    
|LIABILITIES AND STOCKHOLDERS' EQUITY                
|                                                    
|CURRENT LIABILITIES                                 
|Accounts payable and accrued expenses               
|Bank overdraft                                      
|Accrued warranty                                    
|Current portion of long-term debt                   
|Notes payable to related party                      
|Customer deposits                                   
|                                                    
|Total current liabilities                           
|                                                    
|LONG-TERM LIABILITIES                               
|Notes payable                                       
|                                                    
|Total long-term liabilities                         
|                                                    
|TOTAL LIABILITIES                                   
|                                                    
|STOCKHOLDERS' EQUITY                                
|                                                    
|Common stock, $0.001 par value, 1,000,000,000 shares
|authorized, 800,068,420 and 485,151,406 shares      
|issued and outstanding, respectively                
|Additional paid-in capital                          
|Accumulated deficit                                 
|                                                    
|Total Stockholders' Equity                          
|                                                    
|TOTAL LIABILITIES AND                               
|STOCKHOLDERS' EQUITY                                
|                                                    



The accompanying notes are an integral part of these financial statements

F-2


Table of Contents


SUNVALLEY SOLAR, INC.

Consolidated Statements of Operations



|                                              | For the Years Ended
|--------------------------------------------- | -------------------
|                                              | December 31,       
|                                              | 2010               
|                                              |                    
|REVENUES                                      | $                  
|COST OF SALES                                 |                    
|                                              |                    
|GROSS PROFIT                                  |                    
|                                              |                    
|OPERATING EXPENSES                            |                    
|Salary and wage expense                       |                    
|Bad debt expense                              |                    
|General and administrative expenses           |                    
|                                              |                    
|Total operating expenses                      |                    
|                                              |                    
|LOSS FROM OPERATIONS                          |                    
|                                              |                    
|OTHER INCOME (EXPENSES)                       |                    
|Interest income                               |                    
|Interest expense-related parties              |                    
|Other income                                  |                    
|Interest income (expense), net                |                    
|                                              |                    
|Total other income (expenses)                 |                    
|                                              |                    
|LOSS BEFORE TAXES                             |                    
|                                              |                    
|Provision for income taxes                    |                    
|                                              |                    
|NET LOSS                                      | $                  
|                                              |                    
|LOSS PER SHARE                                |                    
|Basic and diluted                             | $                  
|                                              |                    
|WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING |                    
|Basic and diluted                             |                    



The accompanying notes are an integral part of these financial statements

F-3


Table of Contents




SUNVALLEY SOLAR, INC.

Consolidated Statements of Stockholders' Equity (Deficit)



|                             | Common Stock |             | Additional
Paid-In |  | Accumulated |         |        
|---------------------------- | ------------ | ----------- | ------------------ |  | ----------- | ------- | -------
|                             | Shares       |             | Amount             |  | Capital     |         | Deficit
|                             |              |             |                    |  |             |         |        
|Balance at December 31, 2008 |              | 488,984,171 |                    |  | $           | 488,984 |        
|                             |              |             |                    |  |             |         |        
|Retirement of common stock   |              | (3,832,765  | )                  |  |             | (3,833  | )      
|                             |              |             |                    |  |             |         |        
|Net loss for the year        |              |             |                    |  |             |         |        
|ended December 31, 2009      |              | —           |                    |  |             | —       |        
|                             |              |             |                    |  |             |         |        
|Balance at December 31, 2009 |              | 485,151,406 |                    |  |             | 485,151 |        
|                             |              |             |                    |  |             |         |        
|Repurchase of common stock   |              | (5,110,353  | )                  |  |             | (5,110  | )      
|                             |              |             |                    |  |             |         |        
|Recapiltalization            |              | 320,027,367 |                    |  |             | 320,027 |        
|                             |              |             |                    |  |             |         |        
|Contributed captial          |              | —           |                    |  |             | —       |        
|                             |              |             |                    |  |             |         |        
|Net loss for the year        |              |             |                    |  |             |         |        
|ended December 31, 2010      |              | —           |                    |  |             | —       |        
|                             |              |             |                    |  |             |         |        
|Balance at December 31, 2010 |              | 800,068,420 |                    |  | $           | 800,068 |        



The accompanying notes are an integral part of these financial statements

F-4


Table of Contents




SUNVALLEY SOLAR, INC.

Consolidated Statements of Cash Flows





|                                                       | For the Years Ended
|------------------------------------------------------ | -------------------
|                                                       | December 31,       
|                                                       | 2010               
|                                                       |                    
|OPERATING ACTIVITIES:                                  |                    
|                                                       |                    
|Net income (loss)                                      | $                  
|Adjustments to reconcile net income (loss) to net cash |                    
|provided by operating activities:                      |                    
|Depreciation and amortization                          |                    
|Changes in operating assets and liabilities:           |                    
|Accounts receivable                                    |                    
|Inventory                                              |                    
|Prepaid expenses and other assets                      |                    
|Other receivable                                       |                    
|Deferred financing costs                               |                    
|Accounts payable and accrued warranty expenses         |                    
|Other assets                                           |                    
|Customer deposits                                      |                    
|                                                       |                    
|Net Cash Provided by (Used) in Operating Activities    |                    
|                                                       |                    
|INVESTING ACTIVITIES:                                  |                    
|                                                       |                    
|Purchase in property and equipment                     |                    
|                                                       |                    
|Net Cash (Used) in Investing Activities                |                    
|                                                       |                    
|FINANCING ACTIVITIES:                                  |                    
|                                                       |                    
|Proceeds from related party notes payable              |                    
|Repayment of related party notes payable               |                    
|Proceeds from notes payable                            |                    
|Repayments from notes payable                          |                    
|Contributed capital                                    |                    
|Repurchase of common stock                             |                    
|                                                       |                    
|Net Cash Provided by Financing Activities              |                    
|                                                       |                    
|NET INCREASE (DECREASE) IN CASH                        |                    
|CASH AT BEGINNING OF YEAR                              |                    
|                                                       |                    
|CASH AT END OF YEAR                                    | $                  
|                                                       |                    
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:     |                    
|                                                       |                    
|CASH PAID FOR:                                         |                    
|Interest                                               | $                  
|Income taxes                                           | $                  
|                                                       |                    
|NON-CASH INVESTING AND FINANCING ACTIVITIES            | $                  
|None                                                   | $                  
|Common stock issued for placement agent services       | $                  



The accompanying notes are an integral part of these financial statements

F-5


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE 1: ORGANIZATION AND DESCRIPTION OF BUSINESS



Organization

Sunvalley
Solar, Inc. (the Company) was incorporated on August 16, 2007 under the laws of the State of Nevada as Western Ridge Minerals,
Inc. Sunvalley Solar Inc. (the "Subsidiary"), formerly known as West Coast Solar Technologies Corporation, a California
corporation, was incorporated on January 30, 2007.



On
June 24, 2010, in accordance with the Exchange Agreement dated June 24, 2010, Western Ridge Minerals acquired all of the issued
and outstanding shares of the Sunvalley, which resulted in Sunvalley becoming a wholly-owned subsidiary.  In exchange
for all of the issued and outstanding shares of Sunvalley, the shareholders of the Sunvalley received a total of 480,041,053 (2,514,600
pre-split) shares of Western Ridge Mineral’s common stock, which represented approximately 60% of the Company’s outstanding
common stock following the acquisition. There were 1,049,271,312 (5,496,400 pre-split) shares of common stock outstanding before
giving effect to the stock issuances in the acquisition and the cancellation of 729,243,944 (3,820,000 pre-split) shares by Mr.
Marco Bastidas and certain other shareholders resulted in there being 800,068,420 (4,191,000 pre-split) shares outstanding post
acquisition. As a result, the shareholders of the Subsidiary became the controlling shareholders of the combined entity. In connection
with the acquisition, $400,000 was contributed to the Company from a Company shareholder.



Accordingly,
the transaction is accounted for as a recapitalization with the Subsidiary deemed to be the accounting
acquirer and the Company the legal acquirer in the reverse acquisition. Consequently, the assets and liabilities and the historical
operations of the Subsidiary prior to the Merger are reflected in the financial statements and are recorded at the historical
cost basis of the Subsidiary. The Company’s consolidated financial statements after completion of the Acquisition include
the assets and liabilities of both companies. Following the Acquisition the Company’s fiscal year-end has been changed from
March 31 to December 31.



Description
of Business

The
Company markets, sells, designs and installs solar panel for residential and commercial customers. The Company primary market
is in the state of California, however the Company may sell anywhere in the United States.



NOTE
2: SIGNIFICANT ACCOUNTING POLICIES



Going
Concern

As
reflected in the accompanying financial statements, the Company has experienced recurring losses from operations through December
31, 2010 and has an accumulated deficit of $958,924 as of December 31, 2010. These factors, among others, raise substantial doubt
about the Company’s ability to continue as a going concern.



Management
plans to raise additional operating capital through a private placement of the Company’s common stock. Management believes
that with sufficient working capital the Company can produce sufficient sales to become cash flow positive and profitable which
will allow it to continue as a going concern. There is no assurance that the Company will be successful in its plans.



Basis
of Presentation

The
accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America.

F-6


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



Use of
Estimates

The
preparation of the financial statements in conformity with generally accepted accounting principles in the United States, requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. Significant estimates made in preparing the financial statements include the allowance for doubtful accounts, sales returns,
stock based compensation, inventory reserves, valuation allowances for property and equipment and intangible assets, deferred
income tax valuation allowances and litigation. To the extent there are material differences between estimates and the actual
results, future results of operations will be affected.



Operating
Segments

The
Company operates in one operating segment.



Cash
and Cash Equivalents

Cash
equivalents are comprised of certain highly liquid investments with original maturities of three months or less when purchased.  The
Company maintains its cash in bank deposit accounts which at times may exceed federally insured limits.  The Company
has not experienced any losses related to this concentration of risk.



Accounts
Receivable

The
Company performs periodic credit evaluations of its customers’ financial condition and does not require collateral. Trade
receivables generally are due in 30 days. Credit losses have consistently been within management’s expectations. An allowance
for doubtful accounts is recorded when it is probable that all or a portion of trade receivables balance will not be collected.
The Company’s allowance for doubtful accounts totals $80,000 and $44,680, as of December 31, 2010 and 2009.



Customer
Deposits

Customer
deposits represent advance payments received for products and are recognized as revenue in accordance with the Company’s
revenue recognition policy.



Inventory

Inventory
is stated at the lower of cost or net realizable value. Cost is determined on an average cost basis; and the inventory is comprised
of raw materials and finished goods. Raw materials consist of fittings and other components necessary to assemble the Company’s
finished goods.  Finished goods consist of solar panels ready for installation and delivery to customers.



At
each balance sheet date, the Company evaluates its ending inventory for excess quantities and obsolescence.  This evaluation
includes an analysis of sales levels by product type.  Among other factors, the Company considers current product configurations,
historical and forecasted demand, market conditions and product life cycles when determining the net realizable value of the inventory.  Provisions
are made to reduce excess or obsolete inventories to their estimated net realizable values.  Once established, write-downs
are considered permanent adjustments to the cost basis of the excess or obsolete inventory.  The Company’s reserve
for excess and obsolete inventory amounted to $-0- and $-0- as of December 31, 2010 and 2009.



Property
and Equipment

Property
and equipment are stated at cost.  Depreciation is computed using the straight-line method over the estimated useful
lives of the depreciable assets.  The estimated useful lives used in determining depreciation are three to five years
for tooling, five years for computers and vehicles, and five to seven years for furniture and equipment. Management evaluates
useful lives regularly in order to determine recoverability taking into consideration current technological conditions.

F-7


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)



Maintenance
and repairs are charged to expense as incurred; additions and betterments are capitalized. Upon retirement or sale, the cost and
related accumulated depreciation of the disposed assets are removed, and any resulting gain or loss is recorded. Fully depreciated
assets are not removed from the accounts until physical disposition. The estimated useful lives are as follows:



|                 | Useful
    Life
|---------------- | ---------------
|Automobile       | 5
    Years    
|Furniture        | 7
    Years    
|Software         | 5
    Years    
|Office Equipment | 5
    Years    
|Machinery        | 5
    Years    



Long-Lived
Assets

In
accordance with ASC 360, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets, such as property,
plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived
asset be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by an asset
to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash flow
basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through
various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals,
as considered necessary.



Based
on this analysis, the Company believes that no impairment of the carrying value on its long-lived assets existed at December 31,
2010 and 2009.



Fair
Value of Financial Instruments

For
certain financial instruments, including accounts receivable, accounts payable and accrued expenses, the carrying amounts approximate
fair value due to their relatively short maturities. In the case of the Notes Payable, the interest rate on the notes approximates
the market rate of interest for similar borrowings. Consequently the carrying value of the Notes Payable also approximates the
fair value. It is not practicable to estimate the fair value of the Notes Payable to Related Party due to the relationship of
the counterparty.



Revenue
Recognition

The
completion of a solar installation project ranges from one to six months, thus the Company recognizes revenue of a system installation
under the completed contract method of accounting. Revenue from installation of a system or sales of solar panels are recognized
when (1) persuasive evidence of an arrangement exists, (2) delivery has occurred or services have been rendered, (3) the sales
price is fixed or determinable and (4) collection of the related receivable is reasonably assured.



Cost
of Sales

Cost
of sales is comprised primarily of the cost of purchased product, as well as labor, inbound freight costs and other material costs
required to complete products.



Product
Warranties

The
Company warrants its products for various periods against defects in material or installation workmanship. The manufacturers of
the solar panels and the inverters provide a warranty period of generally 25 years and l0 years, respectively. The Company will
assist its customers in the event that the manufacturers’ warranty needs to be used to replace a defective solar panel or
inverter. The Company provides for a l0-year warranty on the installation of a system and all equipment and incidental supplies
other than solar panels and inverters that are recovered under the manufacturers’ warranty. Maintenance services such as
cleaning the solar panels and checking the systems are offered to customers twice a year without a separate service charge.

F-8


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)



The
Company records a provision for the installation warranty, an expense included in cost of sales, based on management's best estimate
of the probable cost to be incurred in honoring its warranty commitment. The Company's accrued warranty provision was $27,688
and $22,833 at December 31, 2010 and 2009, respectively.



Advertising
Expenses

Advertising
expenses are expensed as incurred.  Total advertising expenses amounted to $27,210 and $20,478 for the years ended December
31, 2010 and 2009, respectively.



Research
and Development

Research
and development costs are expensed as incurred and amounted to approximately $-0- and $35,000 for the years ended December 31,
2010 and 2009, respectively. These costs are included in selling, general and administrative expenses in the accompanying statements
of operations.



Income
Taxes

The
Company applies ASC 740, which requires the asset and liability method of accounting for income taxes.  The asset and liability
method requires that the current or deferred tax consequences of all events recognized in the financial statements are measured
by applying the provisions of enacted tax laws to determine the amount of taxes payable or refundable currently or in future years.
Deferred tax assets are reviewed for recoverability and the Company records a valuation allowance to reduce its deferred tax assets
when it is more likely than not that all or some portion of the deferred tax assets will not be recovered.



The
Company adopted ASC 740, at the beginning of fiscal year 2008. This interpretation requires recognition and measurement of uncertain
tax positions using a “more-likely-than-not” approach, requiring the recognition and measurement of uncertain tax
positions. The adoption of ASC 740 had no material impact on the Company’s financial statements. Deferred taxes are provided
on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax
credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are
the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by
a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred
tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates
on the date of enactment.



Loss
Per Common Share

Basic
net loss per common share is computed by dividing the net loss by the weighted average number of outstanding common shares (restricted
and free trading) during the periods presented. Basic loss per share and diluted loss per share are the same amount because the
impact of additional common shares that might have been issued under the Company’s outstanding and exercisable warrants
would be anti-dilutive. There were no potentially dilutive shares that were excluded from the shares used to calculate diluted
loss per share for the years ended December 31, 2010 and 2009.



Recent
Accounting Pronouncements

Management
has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company’s
management believes that these recent pronouncements will not have a material effect on the Company’s financial statements.



NOTE
3: RESTRICTED CASH



In
order to comply with the State of California's licensing requirement or contract bonds as of December 31, 2010 and 2009 the Company
maintains a certificate of deposit in the amount of $12,500 with a financial institution. The

restricted
cash amount is included in other assets in the accompanying December 31 , 2010 and 2009 balance sheets.

F-9


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
4: INVENTORY



The
Company’s inventory consisted of the following at December 31, 2010 and 2009:



|                 | 2010 |           | 2009
|---------------- | ---- | --------- | ----
|Raw materials    | $    | 8         |     
|Work in Progress |      | 6,741     |     
|Finished goods   |      | 1,918,484 |     
|Total Inventory  | $    | 1,925,233 |     



NOTE
5: OTHER RECEIVABLES



The
Company participates in the California Solar Initiative ("CSI") Program launched by Southern California Edison( "SCE").
Other receivables include the Expected Performance Based Buy-down ("EPBB") rebates under the CSI program. Once the Company
completes the solar systems which are connected to SCE's power grid and the site passes inspection and all of the required information
is submitted the Company will receive the EPBB rebates from SCE.



NOTE
6: PROPERTY AND EQUIPMENT



The
following is a summary of property and equipment at December 31, 2010 and 2009:



|                               | 2010 |         | 2009
|------------------------------ | ---- | ------- | ----
|Computer equipment             | $    | 32,407  |     
|Furniture                      |      | 16,065  |     
|Software                       |      | 2,368   |     
|Vehicles                       |      | 62,094  |     
|Gross Property and Equipment   |      | 112,934 |     
|Less: accumulated depreciation |      | (41,726 | )   
|Net Property and Equipment     | $    | 71,208  |     



Depreciation
expense for the years ended December 31, 2010 and 2009 was $14,159 and $15,355, respectively.



NOTE
7: RELATED PARTY TRANSACTIONS



The
Company owes $-0- and $175,000 for short-term related party loans with maturity dates less than a year bearing an interest
rate of 6.5% per annum to its stockholders as of December 31, 2010 and 2009, respectively. The interest expense incurred for
these short-term loans was $9,014 and $15,542, for the years ended December 31, 2010 and 2009, respectively. $175,000 plus $19,147
of interest was paid during 2010. $310,000 plus $6,400 of interest was repaid during 2009.

F-10


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
8: NOTES PAYABLE



Notes
payable outstanding as of December 31, 2010 and 2009 consisted of the following:



|                     | 2010 |        | 2009
|-------------------- | ---- | ------ | ----
|SBA loan payable (1) | $    | 87,525 |     
|Total Notes Payable  | $    | 87,525 |     



(1)    The
Company has a loan through a bank with a maximum borrowing of $100,000 is collateralized by all business assets. Any
principal amounts outstanding accrue interest at the bank's variable index rate (approximately 6.00% as of December 31,
2010).



Future
maturities of long-term debt are as follows:



|2011       | $ | 13,256 | 
|---------- | - | ------ | 
|2012       |   | 14,072 | 
|2013       |   | 14,940 | 
|2015       |   | 15,861 | 
|2016       |   | 16,839 | 
|Thereafter |   | 12,557 | 
|Total      | $ | 87,525 | 



NOTE
9: EQUITY TRANSACTIONS



Common
Stock Issuances

On
June 24, 2010, in accordance with the Exchange Agreement dated June 24, 2010, Western Ridge Minerals acquired all of the issued
and outstanding shares of the Sunvalley, which resulted in Sunvalley becoming a wholly-owned subsidiary.  In exchange
for all of the issued and outstanding shares of Sunvalley, the shareholders of the Sunvalley received a total of 480,041,053 (2,514,600
pre-split) shares of Western Ridge Mineral’s common stock, which represented approximately 60% of the Company’s outstanding
common stock following the acquisition. There were 1,049,271,312 (5,496,400 pre-split) shares of common stock outstanding before
giving effect to the stock issuances in the acquisition and the cancellation of 729,243,944 (3,820,000 pre-split) shares by Mr.
Marco Bastidas and certain other shareholders resulted in there being 800,068,420 (4,191,000 pre-split) shares outstanding post
acquisition. As a result, the shareholders of the Subsidiary became the controlling shareholders of the combined entity. In connection
with the acquisition, $400,000 was contributed to the Company from a Company shareholder.



Accordingly,
the transaction is accounted for as a recapitalization with the Subsidiary deemed to be the accounting
acquirer and the Company the legal acquirer in the reverse acquisition. Consequently, the assets and liabilities and the historical
operations of the Subsidiary prior to the Merger are reflected in the financial statements and are recorded at the historical
cost basis of the Subsidiary. The Company’s consolidated financial statements after completion of the Acquisition include
the assets and liabilities of both companies. Following the Acquisition the Company’s fiscal year-end has been changed from
March 31 to December 31.



During
the year ended December 31, 2009, the Company cancelled a total of 3,832,765 common stock shares returned to it from shareholders.



During the
year ended December 31, 2010, the Company entered into agreements to repurchase a total of 5,110,353 common stock shares from
shareholders at a price of approximately $0.04 per share.



F-11


Table of Contents






SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
9: EQUITY TRANSACTIONS (CONTINUED)



On
July 20, 2010 the Company’s board of directors approved a 19.0885235 for 1 forward stock split of the Company’s common
stock. On August 23, 2010 the Company’s board of directors approved a 10 for 1 forward stock split of the Company’s
common stock. The Company’s authorized common stock was increased to 1,000,000,000. This forward splits have been retroactively
applied and is reflected in the financial statements for the period ended September 30, 2010.



NOTE
10: SIGNIFICANT EVENTS



On
December 31, 2010, the Company entered into a Drawdown Equity Financing Agreement (the “DEFA”) and an accompanying
Registration Rights Agreement (the “RRA”) with Auctus Private Equity Fund, LLC, a Massachusetts limited liability
company (“Auctus”).  Under the DEFA, the Company has agreed to issue and sell up to $10,000,000 worth of
the Company’s common stock, par value $0.001 per share, over a three year period.



The
DEFA entitles the Company to request “Advances,” or draw-downs, under the agreement at our election from time to time.  By
delivery of a Drawdown Notice under the agreement, the Company can affect the sale of common stock to Auctus valued at a maximum
of either (i) $500,000 or (ii) 200% of the average daily volume of the common stock based on the ten (10) trading days preceding
the Drawdown Notice Date (as defined in the DEFA), whichever is larger. The purchase price of the common stock for an Advance
shall be set at ninety-three percent (93%) of the lowest closing bid price of the common stock during the Pricing Period, which
is defined as the five (5) consecutive trading days immediately after the Drawdown Notice Date.  There must be a minimum
of five (5) trading days between each Drawdown Notice Date.



Under
the DEFA, Auctus shall immediately cease selling any shares of the Company’s common stock during a Pricing Period if a)
the market price of the Company’s common stock falls below a fixed-price floor that the Company provide per Drawdown or
b) the market price of the Company’s common stock falls below seventy-five percent (75%) of the average closing bid price
of the common stock over the preceding ten (10) trading days prior to the Drawdown Notice Date (the "Floor"). In the
Company’s sole discretion, the Company may waive its right with respect to the Floor and allow Auctus to sell any shares
below the Floor Price.  The floor price restriction only applies to the five (5) consecutive trading days immediately
after the Drawdown Notice Date.



NOTE
11: INCOME TAXES



The
FASB has issued FASB ASC 740-10 which clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial
statements. This standard requires a company to determine whether it is more likely than not that a tax position will be
sustained upon examination based upon the technical merits of the position.  If the more-likely-than-not threshold is met,
a company must measure the tax position to determine the amount to recognize in the financial statements.  As a result of
the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition
and measurement standards established by FASB ASC 740-10.



Deferred
taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences.  Temporary
differences are the differences between the reported amounts of assets and liabilities and their tax basis.  Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.

F-12


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
11: INCOME TAXES (CONTINUED)



Deferred
tax assets and the valuation account are as follows:



|                       | 2010 |          | 2009
|---------------------- | ---- | -------- | ----
|Deferred tax assets:   |      |          |     
|NOL carryover          | $    | 127,786  |     
|Valuation allowance    |      | (127,786 | )   
|Net deferred tax asset | $    | —        |     



The
income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates
of 34% to pretax income from continuing operations for the years ended December 31, 2010 and 2009. The components of income tax
expense are as follows:



|                    | 2010 |          | 2009
|------------------- | ---- | -------- | ----
|Book income (loss)  | $    | (327,658 | )   
|Valuation allowance |      | 327,658  |     
|                    | $    | —        |     



The
Company currently has no issues creating timing differences that would mandate deferred tax expense. Net operating losses would
create possible tax assets in future years. Due to the uncertainty of the utilization of net operating loss carry forwards, an
evaluation allowance has been made to the extent of any tax benefit that net operating losses may generate. A provision for income
taxes has not been made due to net operating loss carry-forwards of $963,699 and $587,859 as of December 31, 2009 and 2008, respectively,
which may be offset against future taxable income through 2030. No tax benefit has been reported in the financial statements.



A
reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



|                                     | Years
    Ended |       
|------------------------------------ | --------------- | ------
|                                     | 2010            |       
|Federal statutory rate               |                 | -25.00
|State taxes - net of federal benefit |                 | -9.00 
|Meals and entertainment              |                 | 0.00  
|Contributed Services                 |                 | 0.00  
|Penalties                            |                 | 0.00  
|Change in valuation allowance        |                 | 34.00 
|                                     |                 | 0.00  



The
Company did not have any tax positions for which it is reasonably possible that the total amount of unrecognized tax benefits
will significantly increase or decrease within the next 12 months. The Company includes interest and penalties arising from the
underpayment of income taxes in the statements of operations in the provision for income taxes.  As of December 31, 2010
and 2009, the Company had no accrued interest or penalties related to uncertain tax positions. The tax years that remain subject
to examination by major taxing jurisdictions are for the years ended December 31, 2010, 2009, and 2008.

F-13


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
12: COMMITMENTS AND CONTINGENCIES



The
Company leases an office under an operating lease that expires on May 31, 2011.  Total rent expense amounted to $38,000
and $37,000 for the fiscal years ended December 31, 2010 and 2009, respectively.



Future minimum
base lease payments are as follows:



|      |   | Year EndingDecember 31, | 
|----- | - | ----------------------- | 
|2011  | $ | 16,000                  | 
|Total | $ | 16,000                  | 

Legal
Proceedings



From
time to time, the Company is involved in various claims and legal actions arising in the ordinary course of business.  In
the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s
consolidated financial position, results of operations, or liquidity.



NOTE
13: CONCENTRATIONS OF RISK



Supplier
Concentrations

The
Company purchases solar panels from one manufacturer and one manufacturer during the years ended December 31, 2010 and 2009, respectively.
For the years ended December 31, 2010 and 2009, these vendors accounted for approximately 97% and 97%, respectively, of total
inventory purchases.



Customer
Concentrations

For
the years ended December 31, 2010 and 2009, one and two customers, respectively, represented more than 10% of the Company’s
sales. This translates to approximately 19% and 29%, respectively, of the Company's annual net revenues.



NOTE
14: SUBSEQUENT EVENTS



On
December 30, 2010, the board of directors approved the entry into a Securities Purchase Agreement (the “SPA”) with
Asher Enterprises, Inc. (“Asher”) and the issuance to Asher of a Convertible Promissory Note (the “Note”)
under the SPA in the amount of $100,000.  The SPA and the Note are effective January 7, 2011.  The Note bears
interest at an annual rate of 8%, with principal and interest coming due on October 7, 2011.  The Note may be converted
in whole or in part, at the option of the holder, to shares of our common stock, par value $0.001, at any time following 180 days
after the issuance date of the Note.  The conversion price under the Note is 61% of the Market Price of our common stock
on the conversion date.  For purposes of the Note, “Market Price” is defined as the average of the 3 lowest
closing prices for our common stock on the 10 trading days immediately preceding the conversion date.  The number of
shares issuable upon conversion is limited so that the Holder’s total beneficial ownership of our common stock may not exceed
4.99% of the total issued and outstanding shares. This condition may be waived at the option of the holder upon not less than
61 days notice.



Upon
conversion of the Note in whole or in part, the Company will be obligated to deliver the conversion stock to the holder within
3 business days of our receipt of notice of conversion.  Failure to timely deliver conversion stock will cause us to
incur daily penalties.  The conversion price will be subject to adjustment in the event of certain dilutive issuances
of securities, distributions of stock or assets to shareholders, mergers, consolidations, and certain other events. Pre-payment
of the Note will result in certain penalties depending on the time of pre-payment, and will not be allowed after 180 days.

F-14


Table of Contents


SUNVALLEY
SOLAR, INC.

Notes
to the Consolidated Financial Statements

December
31, 2010 and 2009



NOTE
14: SUBSEQUENT EVENTS (CONTINUED)



On
January 19, 2011, a majority of the Company’s shareholders and the board of directors approved an amendment to the Articles
of Incorporation to increase the total authorized common stock from 1,000,000,000 shares to 1,500,000,000 shares.



In
accordance with ASC 855-10 Company management reviewed all material events through the date of this report and there are no additional
material subsequent events to report.















15


Table of Contents


Item 9. Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure



None



Item 9A(T). Controls and Procedures



Disclosure controls and procedures are controls and other procedures that are designed
to ensure that information required to be disclosed in company reports filed or submitted under the Securities Exchange Act of
1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the
Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include without limitation, controls
and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange
Act is accumulated and communicated to management, including our chief executive officer and treasurer, as appropriate to allow
timely decisions regarding required disclosure.



As required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive officer
and chief financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls
and procedures as of December 31, 2010. Based on their evaluation, they concluded that our disclosure controls and procedures were
ineffective. The ineffectiveness of our disclosure controls and procedures were due to a lack of segregation of duties.



Management is responsible for establishing and maintaining adequate internal control
over our financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Our internal control over financial
reporting is a process designed by, or under the supervision of, our chief executive officer and chief financial officer and effected
by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of our financial
reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting
principles. Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records
that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; provide reasonable assurance
that transactions are recorded as necessary to permit preparation of our financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made only in accordance with the authorization of our board
of directors and management; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on our financial statements.



Under the supervision and with the participation of our management, including our chief
executive officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the
criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). Based on this evaluation under the criteria established in Internal Control – Integrated
Framework, our management concluded that our internal control over financial reporting was ineffective as of December 31, 2010.
The ineffectiveness of our disclosure controls and procedures were due to a lack of segregation of duties.

30


Table of Contents


This annual report does not include an attestation report
of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not
subject to attestation by our registered public accounting firm pursuant to an exemption for non-accelerated filers set forth in
Section 989G of theDodd-Frank Wall Street Reform and Consumer Protection Act.



During the most recently completed fiscal year, there has been no change in our internal
control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control
over financial reporting.



Item 9B. Other Information



None



PART III



Item 10. Directors, Executive Officers
and Corporate Governance



The following table sets forth information regarding the members of our board of directors
and our executive officers and other significant employees. All of our officers and directors were appointed on the effective date
of the Merger. All of our directors hold office until the next annual meeting of stockholders and their successors are duly elected
and qualify. Executive officers serve at the request of the board of directors.



|Name                  | Age | Office(s)
    held                           
|--------------------- | --- | ---------------------------------------------
|Zhijian (James) Zhang | 43  | President, CEO, Director                     
|Mandy Chung           | 42  | Chief Financial Officer, Secretary, Treasurer
|Hangbo (Henry) Yu     | 56  | General Manager, Director                    
|Fang Xu               | 44  | Chief Technology Officer                     
|Shirley Liao          | 41  | Director of Administration                   
|Anyork Lee            | 60  | Director                                     



Set forth below is a brief description of the background and business experience of each
of our current executive officers and directors.



Zhijian (James) Zhang – Dr.
Zhang is our President, CEO, and a member of our board of directors. He has held these positions since January of 2007. Dr.
Zhang graduated from Tsinghua University with a Ph.D. in opto-electronics. He has over 15 years of experience in opto-electronics
and the semiconductor industry. From 2006 to 2008, he held the position of senior manager at Motorola, a leading telecommunication
equipment provider. From 2004 to 2006, he held the position of Director at ZTE San Diego, also a leading telecommunication equipment
provider.



Dr.Zhang has a strong reputation as an executive in the opto-electronics/semiconductor
industry, including the solar energy field. Dr. Zhang has quality leadership experience in business operations, especially in product
and program development, product development procedures, and milestone setting and enforcement, and R&D team building.

31


Table of Contents


Mandy Chung -- Ms. Chung is our Chief
Financial Officer, Secretary, and Treasurer.  She has held these positions since August of 2008. Ms. Chung co-founded
Chung & Chung Accountancy Corporation, CPAs (CCAC) in 2004 and she is licensed as a Certified Public Accountant in California.
Ms. Chung is one of the partners in CCAC and she provides audit, review, compilation, consulting, tax services and financial planning
to various clients. Ms. Chung has been working for CCAC for the past five years since its establishment.



Ms. Chung graduated from Texas A&M University (College Station) with a Master’s
degree in Finance and a Bachelor’s degree in Accounting. Ms. Chung has over 15 years of public accounting experience in providing
auditing, accounting, business consulting and tax services to a wide range of industries. She has extensive experience in performing
reviews and audits for various organizations, including publicly reporting companies. In addition, Ms. Chung helped the former
founder of Dietrich Coffee to prepare a ten-year business and financial plan to establish a new series of coffee stores. Ms. Chung
also conducted various incurred costs audits for MGM Mirage, Los Angeles County Metropolitan Transportation Authority and Caltrans.



Hangbo (Henry) Yu -- Mr. Yu is our
General Manager and a member of our Board of Directors. He has served in these positions since January of 2007 and was the
founder of our business. From 2004 through 2006, Mr. Yu was the General Manager and a board member of International Transportation
Corp., Canada. He graduated from Beijing University of Aeronautics and Astronautics with a Bachelor’s degree in Structure
Design. He has run several startup companies in China and Canada, respectively. Over the past 12 months, Mr. Yu has been working
to establish relationships with major solar power equipment manufacturers in China. Mr. Yu is an experienced business and operations
manager. He has over 20 years of experience in import-export, logistics, international transportation, solar business operation
and solar power system project planning and field managing.



Fang Xu -- Dr. Xu is our Chief Technology
Officer.  He has served in this position since July of 2008. From 2005 through June of 2008, he was a staff design engineer
at Via Telecom, Inc. He graduated from the Electrical Department of Beijing University in China, has a Masters Degree in Electronics
from the University of Alabama, and a PhD in Photonics from the University of California, San Diego. Dr. Xu is currently in charge
of our research and development efforts . Dr. Xu has over 13 years of experience in both in academic and industrial environments.
Dr. Xu has extensive knowledge in photonics, and optics, as well as micro and nano-scale device processing technologies. In addition,
Dr. Xu has hands on experience in making the nano-scale structure that modifies the effective dielectric properties of optical
materials. Dr. Xu has been a pioneer in the use polarization selective materials to construction micro and nanoscale diffractive
optical elements.

32


Table of Contents


Shirley Liao -- Mrs. Liao is our Director
of Administration.  She has served Sunvalley Solar, Inc. in this position since January of 2007. She graduated from Guangxi
University in Art and Financial Management. Before moving to the United States, Shirley Liao worked in an international trading
company (Audio & Video Company of Guangxi) as an executive management member. While working there, Mrs. Liao acquired experience
in international trade as well as general sales management. From 1997 through 1998, she worked at Trust Bank as a Loan Officer.
She has also worked at Coldwell Banker George Realty since 2000 as a real estate broker. Through the real estate sales business,
she established a great relationships with local societies, business owners, banks, builders and government agencies. Her excellent
market and sales experiences as well as connections to customers bring an exceptional value to the company.



Anyork Lee -- Mr. Lee is a member of
our Board of Directors.  He graduated from National Taiwan University, Taiwan and got his MBA from California State
University, Stanislaus, in 1979. Mr. Lee has extensive connections to various Chinese-American and other organizations and societies.
Mr. Lee has been a Director of the Board of Alhambra Medical University since 2005 and served as a Governing Board Member of Walnut
Valley from 1997 to 2005. He is the president of CAAM (California Alliance of Acupuncture Medicine), Chairman of Southern California
Chapter of APIAPAA (Asian Pacific Island American Public Affair Association), a Planning Committee Member of Susan Samueli Center
for Integrative Medicine at University of California, Irvine, a Board Member of the Chinese American Association of Diamond Bar,
and a member of the Board of Trustees of Walnut Valley Unified School District. Mr. Lee’s other affiliations include:



|Jan. 2008 – present  | Council of Acupuncture & Oriental Medical Association, President                                          
|-------------------- | ----------------------------------------------------------------------------------------------------------
|April 2007 – present | Asian Pacific Island American Public Affair Association- 
Southern California Chapter, Chair              
|Jan. 2007 – present  | Ca. Alliance of Acupuncture Medicine, President Emeritus                                                  
|Aug. 2005 – present  | University of California, Irvine, Susan Samueli Center for Integrative Medicine, Planning Committee Member
|Oct. 2004 – present  | DB 4Youth, member
        Asian American Acupuncture College, San Diego                                   



Directors



Our bylaws authorize no less than one (1) and no more than twelve (12) directors. We
currently have three directors.   Zhijian (James) Zhang, Hangbo (Henry) Yu, and Anyork Lee, are our current directors.



All directors hold office for one-year terms until the election and qualification of
their successors. Officers are elected by the board of directors and serve at the discretion of the board.



There are no family relationships between or among the directors, executive officers
or persons nominated or chosen by the Company to become directors or executive officers other than Shirley Liao and Hangbo (Henry)
Yu who are wife and husband.

33


Table of Contents


Committees of the Board



We do not currently have a compensation committee, executive committee, or stock plan
committee.



Audit Committee



We do not have a separately-designated standing audit committee. The entire Board of
Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing
the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants
and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board
reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants
our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting
matters including fees to be paid to the independent auditor and the performance of the independent auditor.



Nomination Committee



Our Board of Directors does not maintain a nominating committee. As a result, no written
charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating
committee.



When evaluating director nominees, our directors consider the following factors:



| | The appropriate size of our Board of Directors;                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our needs with respect to the particular talents and experience of our directors;                                                                                                                                                                        
| | The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board;
| | Experience in political affairs;                                                                                                                                                                                                                         
| | Experience with accounting rules and practices; and                                                                                                                                                                                                      
| | The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members.                                                                                                                      



Our goal is to assemble a Board that brings together a variety of perspectives and skills
derived from high quality business and professional experience. In doing so, the Board will also consider candidates with appropriate
non-business backgrounds.

34


Table of Contents


Other than the foregoing, there are no stated minimum criteria for director nominees,
although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In
addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current
members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are
considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate
a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria
above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board
may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate
or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if
necessary. The Board does not typically consider shareholder nominees because it believes that its current nomination process is
sufficient to identify directors who serve our best interests.



Involvement in Certain Legal Proceedings



To the best of our knowledge, during the past five years, none of the following occurred
with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years
prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting
his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction
(in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or vacated.



Section 16(a) Beneficial Ownership Reporting
Compliance



Section 16(a) of the Exchange Act requires our directors and executive officers and persons
who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC
initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers,
directors and greater than ten percent beneficial shareholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. To the best of our knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof)
received by us during or with respect to the year ended June 30, 2006, the following persons have failed to file, on a timely basis,
the identified reports required by Section 16(a) of the Exchange Act during fiscal year ended December 31, 2010:



|Name
    and principal position | Number of
        late reports | Transactions not
        timely reported | Known failures to
        file a required form
|------------------------------- | ------------------------------ | ---------------------------------------- | ----------------------------------------------
|Zhijian (James) Zhang           | 0                              | 0                                        | 0                                             
|Mandy Chung                     | 0                              | 0                                        | 0                                             
|Hangbo (Henry) Yu               | 0                              | 0                                        | 0                                             
|Fang Xu                         | 0                              | 0                                        | 0                                             
|Shirley Liao                    | 0                              | 0                                        | 0                                             
|Anyork Lee                      | 0                              | 0                                        | 0                                             



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Code of Ethics



As of December 31, 2010, we had not adopted a Code of Ethics for Financial Executives, which would include
our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing
similar functions.



Item 11. Executive Compensation



Compensation Discussion and Analysis



We presently do not have employment or compensation agreements with any of our named
executive officers and have not established any overall system of executive compensation or any fixed policies regarding compensation
of executive officers.  Currently, our executive officers receive fixed cash compensation as set forth below.



Summary Compensation Table



The table below summarizes all compensation awarded to, earned by, or paid to each named
executive officer for our last two completed fiscal years for all services rendered to us.



|SUMMARY
    COMPENSATION TABLE                     
|---------------------------------------------------
|Name and
        principal position                
|Zhijian (James) Zhang, President, CEO, and Director
|Mandy Chung, CFO, Secretary, and Treasurer         
|Hangbo (Henry) Yu, General Manager and Director    
|Fang Xu, CTO                                       
|Shirley Liao, Director of Administration           
|Marco Bastidas, former sole officer                



Narrative Disclosure to the Summary Compensation
Table



Currently, our executive officers receive fixed cash compensation as set forth in the
Summary Compensation Table. We presently do not have employment or compensation agreements with any of our named executive officers
and have not established any overall system of executive compensation or any fixed policies regarding compensation of executive
officers.

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Stock Option Grants



We have not granted any stock options to the executive officers or directors since our
inception.



Outstanding Equity Awards At Fiscal
Year-end Table



The table below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer outstanding as of the end of our last completed fiscal year.



|OUTSTANDING
    EQUITY AWARDS AT FISCAL YEAR-END   
|---------------------------------------------------
|OPTION
    AWARDS                                  
|Name                                               
|Zhijian (James) Zhang, President, CEO, and Director
|Mandy Chung, CFO, Secretary, and reasurer          
|Hangbo (Henry) Yu, General Manager and Director    
|Fang Xu, CTO                                       
|Shirley Liao, Director of Administration           
|Marco Bastidas, former sole officer                

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Compensation of Directors Table



The table below summarizes all compensation paid to our directors for our last completed
fiscal year.



|DIRECTOR COMPENSATION          
|-------------------------------
|Name                           
|Zhijian (James) Zhang          
|Hangbo (Henry) Yu              
|Anyork Lee                     
|Marco Bastidas, former director





Narrative Disclosure to the Director Compensation
Table



We do not currently provide any compensation to directors for their service as directors.



Employment Agreements with Current Management



We do not currently have any employment agreements in place with any of our executive
officers.



38


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Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters



Security Ownership of Certain Beneficial
Owners and Management



The following table sets forth the beneficial ownership of our capital stock by each
executive officer and director, by each person known by us to beneficially own more than 5% of any class of stock and by the executive
officers and directors as a group. Except as otherwise indicated, all Shares are owned directly and the percentage shown is based
on 803,068,420 shares common stock issued and outstanding as of March 25, 2011.



|Title
    of class                           | Name and address
        of beneficial owner (1)                             | Amount of
        beneficial ownership | Percent
        of class
|-------------------------------------------- | ---------------------------------------------------------------------------- | -------------------------------------- | ------------------------
|Current
    Executive Officers & Directors: 
|Common Stock                                 | Zhijian (James) Zhang
        12161 Salix Way
        San Diego CA 92129     | 88,075,400 shares                      | 10.97%                  
|Common Stock                                 | Hangbo (Henry) Yu
        3309 S. Gauntlet Dr.
        West Covina, CA 91792 | 70,621,050 shares                      | 8.79%                   
|Common Stock                                 | Anyork Lee
        1050 Yorba Linda Blvd.
        Placentia, CA 92870        | 30,664,190 shares                      | 3.82%                   
|Common Stock                                 | Shirley Liao
        3309 S Gauntlet Dr.
        West Covina, CA 91792       | 17,734,000 shares                      | 2.21%                   
|Common Stock                                 | Mandy Chung
        1059 Moreno Way
        Placentia, CA 92870              | 6,899,360 shares                       | 0.86%                   
|Common Stock                                 | Fang Xu
        11239 Vandemen Way
        San Diego, CA 92131               | 127,700 shares                         | 0.02%                   
|Total of All Current Directors and Officers: |                                                                              |                                       
|Common Stock                                 |                                                                              | 214,124,700 shares                     | 26.67%                  
|More than 5% Beneficial Owners              
|Common Stock                                 | Haibo Yu
        38499 Berkeley Common
        Fremont  CA  94536            | 59,888,520 shares                      | 7.46%                   
|                                             |                                                                              |                                        |                         



|(1) | As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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Securities Authorized for Issuance Under
Equity Compensation Plans



To date, we have not adopted a stock option plan or other equity compensation plan and
have not issued any stock, options, or other securities as compensation.



Disclosure of Commission Position of Indemnification
for Securities Act Liabilities



In accordance with the provisions in our articles of incorporation, we will indemnify
an officer, director, or former officer or director, to the full extent permitted by law.



Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise,
we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful
defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.



Item 13. Certain Relationships and Related
Transactions, and Director Independence



Except as set forth below,none of our directors or executive officers, nor any proposed nominee for election
as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings,
and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation
or in any presently proposed transaction which, in either case, has or will materially affect us:



1.	We previously borrowed the sum of $100,000 from our President, James Zhang. This loan bore interest
at a rate of 6.5% per annum. The principal of $100,000, plus interest of $9,941.44, was repaid in 2010.



2.	We previously borrowed the sum of $75,000 from our General Manager, Hangbo (Henry) Yu. This loan also
bore interest at a rate of 6.5% per annum. The principal of $75,000, plus interest of $9,205.68, was repaid in 2010.



Director Independence



We are not a “listed issuer” within the meaning of Item 407 of Regulation S-K and there are no
applicable listing standards for determining the independence of our directors. Applying the definition of independence set forth
in Rule 4200(a)(15) of The Nasdaq Stock Market, Inc., we believe that Anyork Lee is our only independent director.



Item 14. Principal Accounting Fees and Services



Below is the table of Audit Fees (amounts in US$) billed by our auditor in connection with the audit of the
Company’s annual financial statements for the years ended:



|Financial Statements for the Year Ended December 31 | Audit Services | Audit Related Fees | Tax Fees | Other Fees
|--------------------------------------------------- | -------------- | ------------------ | -------- | ----------
|2010                                                | $15,000        | $12,000            | $0       | $0        
|2009                                                | $13,000        | $0                 | $0       | $0        

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PART IV



Item 15. Exhibits, Financial Statements Schedules



|(a) | Financial Statements and Schedules
|--- | ----------------------------------



The following financial statements and schedules listed below are included in this Form 10-K.



Financial Statements (See Item 8)



|(b) | Exhibits
|--- | --------



|Exhibit
    Number | Description                                                                                                                                                                  
|------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1                | Articles of Incorporation                                                                                                                                                    
|3.2                | Bylaws                                                                                                                                                                       
|3.3                | Certificate of Amendment filed June 22, 2010                                                                                                                                 
|3.4                | Articles of Merger filed July 6, 2010                                                                                                                                        
|3.5                | Certificate of Change filed August 12, 2010                                                                                                                                  
|3.6                | Certificate of Amendment filed January 21, 2011                                                                                                                              
|31.1               | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  
|31.2               | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002  
|32.1               | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES



In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



Sunvalley Solar, Inc.



|By: | /s/
    James Zhang                                                         
|--- | ----------------------------------------------------------------------------
|    | James Zhang
        President, Chief Executive Officer,
        and Director
|    | March 31, 2011                                                              



In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:



|By: | /s/ James Zhang                                                             
|--- | ----------------------------------------------------------------------------
|    | James Zhang
        President, Chief Executive Officer,
        and Director
|    | March 31, 2011                                                              



|By: | /s/
    Mandy Chung                                                                                
|--- | ---------------------------------------------------------------------------------------------------
|    | Mandy Chung
        Chief Financial Officer, Principal Accounting Officer, Secretary, and Treasurer
|    | March 31, 2011                                                                                     



|By: | /s/
    Hangbo (Henry) Yu                          
|--- | ---------------------------------------------------
|    | Hangbo (Henry) Yu
        General Manager, Director
|    | March 31, 2011