**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)





ý
            Quarterly
                Report under Section 13 or 15(d) of the Securities Exchange Act of
                1934





For
      the
      quarterly period ended March 31, 2008


or





 ̈
            Transition
                Report under Section 13 or 15(d) of the Securities Exchange Act of
                1934





For
      the
      transition period from _______ to _______





Commission
      file number: 000-50532




**S****OLOMON****T****ECHNOLOGIES,****I****NC.**


(Exact
      name of small business issuer as specified in its charter)




**Delaware**
            
            **52-1812208**(State
                or other jurisdiction of incorporation or organization)
            
            (I.R.S.
                Employer
              Identification
                No.)





**14
      Commerce Drive**


**Danbury,
      CT 06810**


(Address
      of principal executive offices)





**(203)
      797-9586**


Issuer’s
      telephone number





Check
      whether the issuer: (1) filed all reports required to be filed by Section 13
      or
      15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
      for
      such shorter period that the registrant was required to file such reports),
      and
      (2) has been subject to such filing requirements for the past 90 days. Yes ý 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 Securities Exchange Act of 1934.




Large
                accelerated filero
            
            Accelerated
                filero
            
            Non-accelerated
                filero
              (Do
                not check if a smaller
              reporting
                company)
            
            Smaller
                reporting
              companyý





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Securities Exchange Act of 1934). Yes  ̈ No ý





Indicate
      the number of shares outstanding of each of the issuer's classes of common
      stock, as of the latest practicable date: Common
      Stock, $.001 Par Value - 86,234,485 shares outstanding at May 14,
      2008.










**INDEX**


PageNumber**PART
                  I. FINANCIAL INFORMATION**Item
                  1. Financial Statements
              1Condensed
                  Consolidated Balance Sheets at March 31, 2008 (Unaudited) and December
                  31,
                  2007
              1Condensed
                  Consolidated Statements of Operations - Three months ended March
                  31, 2008
                  and 2007 (Unaudited)
              2Condensed
                  Consolidated Statements of Cash Flows - Three months ended March
                  31, 2008
                  and 2007 (Unaudited)
              3Condensed
                  Consolidated Statement of Deficiency in Assets at March 31, 2008
                  (Unaudited)
              4Notes
                  to Condensed Consolidated Financial Statements (Unaudited)
              5Item
                  2. Management’s Discussion and Analysis of Financial Condition and Results
                  of Operations
              20Item
                  4T. Controls and Procedures
              26**PART
                  II. OTHER INFORMATION**Item
                  1. Legal Proceedings
              28Item
                  1A. Risk Factors.
              28Item
                  2. Unregistered Sales of Equity Securities and Use of
                  Proceeds.
              28Item
                  3. Defaults Upon Senior Securities.
              28Item
                  4. Submission of Matters to a Vote of Security Holders.
              28Item
                  5. Other Information
              28Item
                  6. Exhibits
              29**SIGNATURE
                  PAGE**
              32





**Introductory
      Comment**





Throughout
      this Quarterly Report on Form 10-Q as amended, the terms “we,” “us,” “our,”
“Solomon” and “our company” refer to Solomon Technologies, Inc., a Delaware
      corporation, and, unless the context indicates otherwise, includes our
      wholly-owned subsidiary, Town Creek Industries, Inc.









**PART
      I** **FINANCIAL INFORMATION**


**ITEM
        1****.
        Financial Statements**


**Solomon
        Technologies, Inc.**


Condensed
      Consolidated Balance Sheets


(Note
        8)


**March
                31,**
            
            **December
                31,****2008**
            
            **2007****(Unaudited)**AssetsCurrent
                assetsCash
            
            $
            158,198
            
            $
            425,401Accounts
                receivable, net of allowance for doubtful accounts of
                $2,200
            
            
            1,410,130
            
            
            1,435,754Inventories,
                net
            
            
            2,143,983
            
            
            1,962,817Due
                from related parties
            
            
            73,871
            
            
            54,041Prepaid
                expenses and other current assets
            
            
            138,975
            
            
            134,933Total
                current assets
            
            
            3,925,157
            
            
            4,012,946Noncurrent
                assetsProperty
                and equipment, net
            
            
            1,677,673
            
            
            1,712,618Goodwill
            
            
            1,625,576
            
            
            1,625,576Intangible
                assets, net
            
            
            1,582,596
            
            
            1,717,011Deferred
                debt costs, net
            
            
            283,516
            
            
            453,2255,169,361
            
            
            5,508,430$
            9,094,518
            
            $
            9,521,376Liabilities
                and Capital DeficiencyCurrent
                liabilitiesRevolving
                note payable to bank
            
            $
            1,180,000
            
            $
            1,100,000Accounts
                payable
            
            
            1,836,666
            
            
            1,402,546Accrued
                compensation (including $2,012,143 and $2,137,851 past
                due)
            
            
            2,373,914
            
            
            2,442,150Other
                accrued expenses
            
            
            1,347,546
            
            
            1,304,203Notes
                payable
            
            
            564,566
            
            
            564,566Notes
                payable to related parties (including $125,000 past due)
            
            
            4,706,931
            
            
            4,706,931Convertible
                debentures payable, net of debt discount of $106,733 and
                $168,506
            
            
            3,229,482
            
            
            4,815,278Total
                current liabilities
            
            
            15,239,105
            
            
            16,335,674Capital
                DeficiencyPreferred
                stock, par value $0.001 per share;authorized
                20,000,000 shares; 7,450,000 sharesavailable;
                none outstanding
            
            
            -
            
            
            -Common
                stock, par value $0.001 pershare;
                authorized 100,000,000 shares;69,594,291
                and 48,492,569 shares issued and outstanding
            
            
            69,594
            
            
            48,492Additional
                paid-in capital
            
            
            50,574,433
            
            
            48,503,156Accumulated
                deficit
            
            
            (56,788,614
            )
            
            (55,365,946
            )(6,144,587
            )
            
            (6,814,298
            )$
            9,094,518
            
            $
            9,521,376See
                accompanying notes to condensed financial
                statements.


1




**Solomon
        Technologies, Inc.**
 Condensed
        Consolidated Statements of Operations
 (Unaudited)


**Three
                  Months Ended March 31,****2008**
              
              **2007**Net
                  sales
              
              $
              2,490,784
              
              $
              1,431,597Cost
                  of goods sold
              
              
              1,516,397
              
              
              779,287Gross
                  profit
              
              
              974,387
              
              
              652,310Operating
                  expenses:Selling,
                  general and administrative
              
              
              1,000,447
              
              
              1,251,938Research
                  and development
              
              
              392,257
              
              
              253,664Amortization
                  of acquired intangible assets
              
              
              113,508
              
              
              -1,506,212
              
              
              1,505,602Operating
                  loss
              
              
              (531,825
              )
              
              (853,292
              )Other
                  expensesInterest
                  expense
              
              
              (855,045
              )
              
              (2,193,940
              )Other
                  income (expenses)
              
              
              (35,798
              )
              
              -(890,843
              )
              
              (2,193,940
              )Net
                  loss
              
              
              (1,422,668
              )
              
              (3,047,232
              )Preferred
                  stock dividends
              
              
              -
              
              
              (1,413,031
              )Loss
                  applicable to commonstockholders
              
              $
              (1,422,668
              )
              $
              (4,460,263
              )Basic
                  and diluted net loss percommon
                  share
              
              $
              (0.03
              )
              $
              (0.13
              )Weighted
                  average common sharesoutstanding
                  - basic and diluted
              
              
              55,835,765
              
              
              35,465,709See
                  accompanying notes to condensed financial
                  statements.




2




**Solomon
        Technologies, Inc.**
 Condensed
        Consolidated Statements of Cash Flows
 (Unaudited)
  **Three
                  Months Ended March 31,****2008**
              
              **2007****Operating
                  activities**Net
                  loss
              
              $
              (1,422,668
              )
              $
              (3,047,232
              )Adjustments
                  to reconcile net loss to cash used by operationsCommon
                  shares issued to employees and directors as compensation
              
              
              173,613
              
              
              -Stock
                  grants to employees
              
              
              (84,830
              )
              
              9,928Stock
                  option grants
              
              
              (354,053
              )
              
              194,701Common
                  stock and warrants issued for services
              
              
              126,664
              
              
              156,765Accretion
                  and amortization of debt costs included ininterest
                  expense
              
              
              651,644
              
              
              1,931,660Depreciation
              
              
              38,867
              
              
              10,328Amortization
              
              
              134,415
              
              
              98,581Change
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              25,624
              
              
              6,135Inventories
              
              
              (181,166
              )
              
              (32,863
              )Prepaid
                  expenses and other current assets
              
              
              (4,042
              )
              
              (101,515
              )Accounts
                  payable and accrued expenses
              
              
              614,869
              
              
              301,834Accrued
                  payroll and payroll taxes
              
              
              (42,388
              )
              
              -Net
                  cash used by operating activities
              
              
              (323,451
              )
              
              (471,678
              )**Investing
                  Activities**Purchase
                  of equipment
              
              
              (3,922
              )
              
              (21,533
              )Net
                  cash (used) provided by investing activities
              
              
              (3,922
              )
              
              (21,533
              )**Financing
                  Activities**Repayments
                  of notes payable to related parties
              
              
              -
              
              
              (40,000
              )Proceeds
                  from revolving note payable
              
              
              80,000
              
              
              200,000Proceeds
                  from issuance of converible debentures
              
              
              -
              
              
              5,135,913Repayments
                  of notes payable
              
              
              -
              
              
              (526,150
              )Redemption
                  of preferred stock
              
              
              -
              
              
              (3,350,020
              )Proceeds
                  from Rule 16B
              
              
              -
              
              
              32,950Repayments
                  from related parties
              
              
              -
              
              
              52,489Advances
                  to related parties
              
              
              (19,830
              )
              
              -Repayment
                  of capital lease obligations
              
              
              -
              
              
              (3,734
              )Net
                  cash provided by financing activities
              
              
              60,170
              
              
              1,501,448**Change
                  in cash**
              
              
              (267,203
              )
              
              1,008,237**Cash
                  at beginning of period**
              
              
              425,401
              
              
              97,777**Cash
                  at end of period**
              
              $
              158,198
              
              $
              1,106,014Supplemental
                  disclosure:Cash
                  paid for interest
              
              **$**
              **52,921**
              
              **$**
              **23,467**See
                  accompanying notes to condensed financial
                  statements.




3




**Solomon
        Technologies, Inc.**
 Condensed
        Consolidated Statements of Changes in Capital Deficiency
 
 **Series
                  C****Convertible**
              
              
              
              
              
              **Additional****Preferred
                  Stock**
              
              **Common
                  Stock**
              
              **Paid-In**
              
              **Accumulated****Shares**
              
              **Amount**
              
              **Shares**
              
              **Amount**
              
              **Capital**
              
              **Deficit**
              
              **Total****Balance
                  at December 31, 2007**
              
              
              **-**
              
              **$**
              **0**
              
              
              **48,492,569**
              
              **$**
              **48,492**
              
              **$**
              **48,503,156**
              
              
              **($55,365,946**
              **)**
              
              **($6,814,298**
              **)**Common
                  shares issued as payment for convertible debt and interest
              
              
              
              
              
              
              
              
              18,537,895
              
              
              18,538
              
              
              2,075,413
              
              
              
              
              
              2,093,951Common
                  shares issued as incentive for debenture amendment and
                  waivers
              
              
              
              
              
              
              
              
              432,533
              
              
              433
              
              
              51,217
              
              
              
              
              
              51,650Common
                  shares issued for fees and services
              
              
              
              
              
              
              
              
              706,294
              
              
              706
              
              
              125,958
              
              
              
              
              
              126,664Common
                  shares issued to employees and directors as compensation
              
              
              
              
              
              
              
              
              1,495,000
              
              
              1,495
              
              
              257,502
              
              
              
              
              
              258,997Stock
                  grants to employees
              
              
              
              
              
              
              
              
              40,000
              
              
              40
              
              
              53,368
              
              
              
              
              
              53,408Forfeitures
                  of stock grant to employee
              
              
              
              
              
              
              
              
              (110,000
              )
              
              (110
              )
              
              (138,128
              )
              
              
              
              
              (138,238
              )Stock
                  option grants and forfeitures
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (354,053
              )
              
              
              
              
              (354,053
              )Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (1,422,668
              )
              
              (1,422,668
              )**Balance
                  at March 31, 2008 (unaudited)**
              
              
              -
              
              $
              -
              
              
              69,594,291
              
              $
              69,594
              
              $
              50,574,433
              
              $
              (56,788,614
              )
              $
              (6,144,587
              )See
                  accompanying notes to condensed financial
                  statements.




4





**Notes
        to Condensed Consolidated Financial Statements (unaudited)**
 
 **NOTE
        1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION**
 
 The
        historical business of Solomon Technologies, Inc. (“STI”, “Solomon” or the
“Company”) has been the development, engineering, manufacturing, licensing and
        sale of electric power drive systems in the marine, industrial and automotive
        markets. In August 2006, the Company acquired Technipower LLC, a manufacturer
        of
        power supplies and related equipment for the defense, aerospace and commercial
        markets. On September 5, 2007, the Company, through its wholly-owned subsidiary,
        Deltron LLC (formerly known as Del-Inc Acquisition LLC), acquired substantially
        all of the assets and liabilities of Deltron Inc., a North Wales, Pennsylvania
        based manufacturer of power supplies and related equipment with manufacturing
        operations in Reynosa, Mexico (See Note 4). As a result of these acquisitions,
        the Company now operates in two segments, the Motive Power Division, which
        encompasses the historical business of STI, and the Power Electronics Division
        which encompasses the business of Technipower LLC and Deltron LLC.
 
 The
        accompanying unaudited condensed consolidated financial statements have been
        prepared assuming that the Company will continue as a going concern. The
        Company
        has incurred significant operating losses and has not generated cash from
        its
        operating activities for several years. For the three-months ended March
        31,
        2008, the Company had a net loss of $1,422,668 and used cash of $323,451
        in
        operating activities. As of March 31, 2008, the Company has a working capital
        deficiency of $11,313,948. In addition, the Company is delinquent for the
        payment of payroll taxes (Note 10), a note payable of $125,000 to a related
        party (Note 8) and balances to certain employees. These conditions raise
        substantial doubt about the Company’s ability to continue as a going
        concern.
 
 Management
        is continuing to implement a plan to broaden its market and product base
        and
        exploit its intellectual property that it expects will generate cash flow
        from
        operations. As part of this plan, management intends to grow its business
        through licensing of its proprietary and patented technologies and through
        the
        acquisition of businesses that fit its strategy. Management is identifying
        licensing opportunities that leverage its existing or acquired knowledge
        and
        provide substantial positive current financial impact while it also aggressively
        pursues infringers of its existing patents. Management is also identifying
        acquisition targets that augment its existing intellectual property, marketing
        channels and human resources and provide strong cash flow. Additionally,
        management is actively seeking additional sources of capital. There can be
        no
        assurance that management can successfully implement its business plan or
        raise
        sufficient capital. Without sufficient additional capital or long term debt
        and
        ultimately profitable operating results the Company will not be able to continue
        as a going concern. The accompanying condensed consolidated financial statements
        do not include any adjustments relating to the recoverability and classification
        of asset carrying amounts or the amounts and classification of liabilities
        that
        may result from the outcome of this uncertainty.
 
 The
        accompanying condensed consolidated financial statements have been prepared
        in
        accordance with U.S. generally accepted accounting principles for interim
        financial information and pursuant to the rules and regulations of the
        Securities and Exchange Commission (“SEC”). Accordingly, they do not include all
        information and disclosures required by accounting principles generally accepted
        in the United States of America for complete financial statements. In the
        opinion of management, all adjustments (consisting of normal recurring
        adjustments) considered necessary for a fair presentation have been included.
        These financial statements should be read in conjunction with the financial
        statements and related footnotes for the year ended December 31, 2007 contained
        in the annual report on Form 10-KSB as filed with the SEC. Operating results
        for
        interim periods are not necessarily indicative of the results for the full
        year.
 
 **NOTE
        2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**
 
 **Principles
        of consolidation**
 
 The
        condensed consolidated financial statements include the accounts of the Company
        and its wholly-owned subsidiaries, Technipower LLC (“Technipower”) and Deltron
        LLC (“Deltron”), from their dates of acquisition. All material intercompany
        accounts and transactions have been eliminated in consolidation.
  5
  **Use
        of Estimates**
 
 The
        preparation of the Company’s condensed consolidated financial statements in
        conformity with accounting principles generally accepted in the United States
        of
        America and pursuant to the rules and regulations of the SEC requires management
        to make estimates and assumptions that affect the reported amount of assets
        and
        liabilities at the date of the financial statements and the reported amount
        of
        net revenue and expenses during the reporting period. The Company bases
        estimates on historical experience and on various assumptions about the future
        that are believed to be reasonable based on available information. The Company’s
        reported financial position or results of operations may be materially different
        under different conditions or when using different estimates or assumptions,
        particularly with respect to significant accounting policies. In the event
        that
        estimates or assumptions prove to differ from actual results, adjustments
        are
        made in subsequent periods to reflect more current information.
  Estimates
        are primarily used in determining the valuation of goodwill and other intangible
        assets and their impairment, provisions for losses on accounts receivable,
        allowances for inventory obsolescence, useful lives of property, equipment
        and
        intangible assets, accounting for stock-based transactions and certain accrued
        liabilities.
 
 **Revenue
        Recognition**
 
 The
        Company recognizes revenue when it is realized or realizable and earned.
        The
        Company considers revenue realized or realizable and earned when it has
        persuasive evidence of an arrangement, delivery has occurred, the sales price
        is
        fixed or determinable, and collectibility is reasonably assured. Delivery
        does
        not occur until products have been shipped or services have been provided
        to the
        client, risk of loss has transferred to the client and client acceptance
        has
        been obtained, client acceptance provisions have lapsed, or the Company has
        objective evidence that the criteria specified in the client acceptance
        provisions have been satisfied. In situations where a formal acceptance is
        required but the acceptance only relates to whether the product meets its
        published specifications, revenue is generally recognized upon shipment provided
        all other revenue recognition criteria are met. The sales price is not
        considered to be fixed or determinable until all contingencies related to
        the
        sale have been resolved.
 
 **Stock-based
        Compensation**
 
 Commencing
        January 1, 2006, the Company adopted Statement of Financial Accounting Standards
        No. 123R, “Share Based Payment” (“SFAS 123R”), which requires all share based
        payments, including grants of stock options, to be recognized in the income
        statement as an operating expense, based on their fair values which is estimated
        on the date of grant using the Black-Scholes option-pricing model.
 
 **Income
        Taxes**
 
 Deferred
        tax assets and liabilities are recognized for the expected future tax
        consequences attributed to differences between the financial statement carrying
        amounts of existing asset and liabilities and their respective tax basis.
        Deferred tax assets and liabilities are measured using the enacted tax rates
        expected to be applied to taxable income in the years in which those temporary
        differences are expected to reverse. Valuation allowances are recorded to
        reduce
        deferred tax assets when it is more likely than not that a tax benefit will
        not
        be realized. The Company  adopted the  provisions  of
        Financial  Standards  Accounting  Board Interpretation  No.
        48 "Accounting  for Uncertainty in Income Taxes" ("FIN 48"), an
        interpretation of FASB Statement No. 109 ("SFAS 109"), effective January
        1,
        2007. The Company has not completed its evaluation of net operating loss
        carryforward and the related full valuation allowance. Additionally the Company
        may be subject to Section 382 limitations of the Internal Revenue Code in
        connection with a change in ownership. The management of the Company believes
        these factors will not have a significant impact on the financial position
        of
        the Company. As the Federal income tax returns remain subject to normal review
        and adjustment for up to three years, the Company's 2003, 2004, 2005 and
        2006
        returns remain open and available to the Internal Revenue Service for the
        purpose of review and possible adjustment. Management believes that an
        audit or review of the prior years, would result in no material tax liability
        and therefore no income tax penalties or interest accruals have been
        recognized.
  6
 
 **Loss
        per Share**
 
 Loss
        per
        share is computed by dividing the loss available to common shareholders by
        the
        weighted average number of common shares outstanding. For the three months
        ended
        March 31, 2008 and 2007, the following securities were not included in the
        computation of diluted net loss per share as their effect would have been
        anti-dilutive:
  *2008*
              
              *2007*Options
                  to purchase common stock
              
              
              1,020,000
              
              
              1,620,000Warrants
                  to purchase common stock
              
              
              3,292,000
              
              
              2,006,000Convertible
                  debentures (a)
              
              
              9,532,000
              
              
              2,675,000Notes
                  payable (convertible)
              
              
              6,850,000
              
              
              -20,694,000
              
              
              6,301,000
 
 The
        convertible debentures are reflected above at the conversion price of $0.35
        per
        share under the terms of the debentures. The Company may make monthly
        redemptions in cash or shares of common stock at its option (Note 8). During
        the
        first quarter of 2008 the Company has made the required monthly redemptions
        in
        common stock shares.
 
 (a)
            Based
                on the March 31, 2008 market price of the Company’s common stock shares,
                the Company would need to issue approximately 50 million shares to
                redeem
                the entire outstanding principal balance of the convertible debentures
                at
                March 31, 2008. Subsequent to March 31, 2008, the Company has made
                additional redemptions by issuing shares of common stock (Note
                14). 
 **Reclassifications**
 
 Certain
        comparative information balances have been reclassified to conform to the
        current period presentation.
 
 **Recent
        Accounting Pronouncements Adopted**
 
 In
        February 2007, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financials Accounting Standard (“SFAS”) No. 159, “The
        Fair  Value Option for Financial Assets and Financial Liabilities,
        Including an amendment of FASB Statement No. 115,” which became effective
        January 1, 2008. SFAS No. 159 permits entities to measure eligible
        financial assets, financial liabilities and firm commitments at fair value,
        on
        an instrument-by-instrument basis, that are otherwise not permitted to be
        accounted for at fair value under other generally accepted accounting
        principles. The fair value measurement election is irrevocable and subsequent
        changes in fair value must be recorded in earnings. The company adopted this
        Statement as of January 1, 2008 and the adoption of this Statement did not
        have a material effect on the condensed consolidated financial
        statements.
  In
        September 2006, the FASB issued SFAS No. 157 which became effective
        January 1, 2008 except as amended by FSP FAS 157-1 and FSP FAS 157-2 as
        described below. This Statement defines fair value, establishes a framework
        for
        measuring fair value and expands disclosures about fair value measurements;
        however, it does not require any new fair value measurements. The provisions
        of
        SFAS No. 157 were applied prospectively to fair value measurements and
        disclosures for financial assets and financial liabilities and nonfinancial
        assets and nonfinancial liabilities recognized or disclosed at fair value
        in the
        financial statements on at least an annual basis beginning in the first quarter
        of 2008. In February 2008, the FASB issued FASB Staff Position (FSP)
        Financial Accounting Standard (FAS) 157-1, “Application of FASB Statement
        No. 157 to FASB Statement No. 13 and Its Related Interpretive
        Accounting Pronouncements That Address Leasing Transactions,” and FSP FAS 157-2,
“Effective Date of FASB Statement No. 157.” FSP FAS 157-1 removes leasing
        from the scope of SFAS No. 157, “Fair Value Measurements.” FSP FAS 157-2
        delays the effective date of SFAS No. 157 from 2008 to 2009 for all
        nonfinancial assets and nonfinancial liabilities, except those that are
        recognized or disclosed at fair value in the financial statements on a recurring
        basis (at least annually). The adoption of this Statement did not have a
        material effect on the condensed consolidated financial statements.
  7
 
 **Recent
        Accounting Pronouncements Issued**
 
 In
        March 2008, the FASB SFAS No. 161, “Disclosures about Derivative
        Instruments and Hedging Activities-an amendment of FASB Statement No. 133.”
SFAS No. 161 expands the current disclosure requirements of SFAS
        No. 133, “Accounting for Derivative Instruments and Hedging Activities,”
such that entities must now provide enhanced disclosures on a quarterly basis
        regarding how and why the entity uses derivatives; how derivatives and related
        hedged items are accounted for under SFAS No. 133 and how derivatives and
        related hedged items affect the entity’s financial position, performance and
        cash flow. Pursuant to the transition provisions of the Statement, the company
        will adopt SFAS No. 161 in fiscal year 2009 and will present the required
        disclosures in the prescribed format on a prospective basis. This Statement
        will
        not impact the Consolidated Financial Statements as it is disclosure-only
        in
        nature.
  In
        December 2007, the FASB issued SFAS No. 141(R), “Business
        Combinations,” which will become effective in 2009 via prospective application
        to new business combinations. This Statement requires that the acquisition
        method of accounting be applied to a broader set of business combinations,
        amends the definition of a business combination, provides a definition of
        a
        business, requires an acquirer to recognize an acquired business at its fair
        value at the acquisition date and requires the assets and liabilities assumed
        in
        a business combination to be measured and recognized at their fair values
        as of
        the acquisition date (with limited exceptions). The company will adopt this
        Statement in fiscal year 2009 and its effects on future periods will depend
        on
        the nature and significance of any acquisitions subject to this
        statement.
 
 In
        December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
        in Consolidated Financial Statements — an amendment of ARB No. 51.” This
        Statement requires that the noncontrolling interest in the equity of a
        subsidiary be accounted for and reported as equity, provides revised guidance
        on
        the treatment of net income and losses attributable to the noncontrolling
        interest and changes in ownership interests in a subsidiary and requires
        additional disclosures that identify and distinguish between the interests
        of
        the controlling and noncontrolling owners. Pursuant to the transition provisions
        of SFAS No. 160, the company will adopt the Statement in fiscal year 2009
        via retrospective application of the presentation and disclosure requirements.
        The company does not expect the adoption of this Statement to have a material
        effect on the Consolidated Financial Statements.
 
 **NOTE
        3 - STOCK BASED COMPENSATION**
 
 **Stock
        Options**
 
 Stock-based
        compensation expense related to options to purchase the Company’s common shares
        granted to employees for the three month period ended March 31, 2008 and
        2007
        was ($354,053) and 194,701, respectively. Such compensation expense for the
        three months ended March 31, 2008 was effected by a forfeiture of 500,000
        options granted to the Company’s former CEO (Note 7), which amounted to
        ($370,920).
 
 A
        summary
        of the changes in stock options outstanding for the three months ended March
        31,
        2008 is as follows:
 
 WeightedAverageShares
              
              Exercise
                  PriceOutstanding
                  at January 1, 2008
              
              
              1,770,335
              
              $
              1.43Granted
              
              
              -
              
              
              -Forfeited
              
              
              (750,000
              )
              
              1.95Outstanding
                  at March 31, 2008
              
              
              1,020,335
              
              $
              1.05
  8
  The
        intrinsic value of outstanding and exercisable options was $0 at March 31,
        2008.
        Total compensation expense related to non-vested awards not yet recognized
        is
        $43,276 and the weighted average period over which it is expected to be
        recognized is 1.42 years. Management expects that all non-vested awards will
        vest.
 
 The
        following table summarizes the Company's stock options at March 31, 2008:
 
 Options
                  Outstanding
              
              Options
                  ExercisableWeighted
              
              Weighted
              
              
              
              WeightedAverage
              
              Average
              
              
              
              AverageRange
                  of
              
              
              
              Remaining
              
              Exercise
              
              
              
              ExerciseExercise
                  Prices
              
              Number
              
              Life
              
              Price
              
              Number
              
              Price$.22
                  to $1.00
              
              
              615,335
              
              
              3.23
              
              $
              .60
              
              
              455,335
              
              $
              0.73$1.45
                  to $2.09
              
              
              405,000
              
              
              3.25
              
              $
              1.74
              
              
              405,000
              
              $
              1.741,020,335
              
              
              
              
              
              
              
              
              860,335
 
 **Stock
        Warrants**
 
 During
        the three months ended March 31, 2008, the Company had outstanding 3,292,250
        fully vested and exercisable warrants to purchase the Company’s common stock
        with weighted average exercise price $0.50 per share.
 
 **Stock
        Grants**
 
 For
        the
        three months ended March 31, 2008 and 2007, the Company recognized expenses
        related to grants of the Company’s common stock of ($84,830) and $9,928
        respectively. Stock grants compensation expense for the three months ended
        March
        31, 2008 was affected by forfeiture of 110,000 the Company’s restricted common
        shares granted in 2007 to a former CEO, which resulted in reduction of
        $138,238.
 
 **NOTE
        4 - BUSINESS ACQUISITIONS**
 
 **Deltron
        LLC**
 
 On
        September 5, 2007, the Company, through its wholly-owned subsidiary Deltron
        LLC
        (formerly known as Del-Inc Acquisition LLC) completed the acquisition of
        substantially all of the assets of Deltron Inc., a privately-held corporation
        based in North Wales, Pennsylvania, as well as the stock of its wholly-owned
        subsidiary Corporacion Delinc, S.A. de C.V., a Reynosa, Tamaulipas, Mexico
        corporation (Deltron). The purchase price of $2,930,000 consisted of $1,508,000
        in cash for Deltron’s assets, plus $600,000 in cash for the stock of Delinc,
        S.A., $495,000 in acquisition related costs, and the assumption of certain
        liabilities totaling approximately $327,000. Solomon also agreed to pay the
        sellers an earn-out payment equal to the excess of the product of net sales
        of
        the purchased business during the year following the closing multiplied by
        a
        profit margin determined by subtracting from net sales the cost of goods
        sold
        divided by net sales, over $1,570,000. The earn-out payment cannot exceed
        $300,000 and is due 55 days following the one-year anniversary of the closing.
 
 To
        fund
        the purchase price, Deltron LLC borrowed a total of $2,750,000 under a secured
        promissory note provided by an affiliate of Michael D’Amelio, a director of the
        Company and incurred approximately $219,000 in debt issuance costs. The Company
        issued 284,000 shares of common stock valued at $88,238 and the balance was
        paid
        in cash. The note bears interest at 12% annually, plus quarterly investment
        fees
        of 1% of the amounts then outstanding. The note matures on September 5,
        2008 (Note 8).
  9
 
 This
        acquisition was recorded under the purchase method of accounting with the
        total
        consideration allocated to the assets acquired and liabilities assumed based
        on
        estimates of fair value. The fair value of the customer list, trade name
        and
        customer backlog were determined by an independent appraisal firm based on
        estimates of future cash flows associated with those assets. In accordance
        with
        the provisions of paragraph 46 of SFAS 141 regarding accounting for contingent
        consideration in a business combination, an amount equal to the lesser of
        the
        maximum amount of contingent consideration or the excess of the net assets
        acquired over the purchase price has been recorded as a liability to the
        seller,
        which is included in accrued expenses, until such time as the contingency
        is
        resolved.
 
 The
        purchase accounting for this acquisition is summarized as follows:
  **Amount**
              
              **Estimated**
                **Useful
                  Life**Net
                  tangible assets
              
              $
              2,683,923Identifiable
                  intangible assets:Customer
                  relationships
              
              
              115,000
              
              
              3
                  yearsTrade
                  name
              
              
              75,000
              
              
              3
                  yearsCustomer
                  backlog
              
              
              60,000
              
              
              6
                  monthsDue
                  to seller (included in Other Accrued Expenses)
              
              
              (3,923
              )Total
                  purchase price
              
              $
              2,930,000
  The
        results of operations of Deltron LLC have been included in the Company’s
        condensed consolidated financial statements from the date of acquisition.
 
 The
        financial information in the table below summarizes the combined results
        of
        operations of the Company and Deltron LLC, on a pro forma basis, as though
        Deltron LLC had been acquired as of January 1, 2007:
  Three
                      Months EndedMarch
                        31,2007Net
                      revenues
                  
                  $
                  2,566,807Net
                      loss
                  
                  $
                  (3,463,930
                  )Net
                      loss applicable to common stockholders
                  
                  $
                  (4,876,961
                  )Basic
                      and diluted net loss per share
                  
                  $
                  (0.13
                  )
 The
        pro
        forma financial information is presented for informational purposes only
        and is
        not necessarily indicative of the results of operations that would have been
        achieved if the acquisitions had taken place at the beginning of each of
        the
        periods presented.
  10
 **NOTE
        5 - INTANGIBLE ASSETS**
 
 The
        following table presents the details of the Company’s intangible assets at March
        31, 2008:
  Cost
              
              Accumulated
                Amortization
              
              Net
                  Book
                ValueAmortizable:Customer
                  relationship
              
              $
              1,325,000
              
              $
              (414,635
              )
              $
              910,365Trade
                  name
              
              
              442,000
              
              
              (74,073
              )
              
              367,927Non-compete
                  agreement
              
              
              160,000
              
              
              (51,871
              )
              
              108,129Customer
                  backlog
              
              
              60,000
              
              
              (60,000
              )
              
              0Patents
              
              
              814,162
              
              
              (617,987
              )
              
              196,175$
              2,801,162
              
              $
              (1,218,566
              )
              $
              1,582,596
  Total
        amortization expense was $134,415 and $98,581 for the three month periods
        ended
        March 31, 2008 and 2007, respectively.
  **NOTE
        6 - INVENTORIES**
 
 Inventories
        at March 31, 2008 consist of the following:
 
 Raw
                  materials
              
              $
              922,680Work-in-process
              
              
              1,026,122Finished
                  goods
              
              
              195,181$
              2,143,983
  **NOTE
        7 - CAPITAL TRANSACTIONS**
 
 During
        the three months ended March 31, 2008, the Company issued an aggregate of
        18,537,895 shares of common stock with an estimated fair value of $2,093,951
        to
        the amended January 2007 Debentures and August 2007 Debentures holders
        (collectively “Debentures Holders”) (Note 8) as redemption of principal and
        related accrued interest of $1,647,569 and $281,862, respectively. The Company
        recorded additional interest expense of approximately $165,000 for the
        difference between the principal and accrued interest redeemed and the fair
        market value of the common stock issued. The shares issued for redemption
        include 4,267,220 shares which were issued as full redemption of outstanding
        principal and interest of certain amended January 2007 Debentures with an
        outstanding principal balance of $343,132 under an agreement to accelerate
        the
        maturity of such debentures (Note 8).
 
 During
        the three months ended March 31, 2008, the Company issued an aggregate of
        82,533
        shares of common stock with an estimated fair value of $16,650 to Debentures
        Holders to enter into agreements to waive the Company’s redemption defaults as
        well as certain provisions of the registration rights agreements and certain
        equity conditions covering the Company’s right to use shares of common stock
        rather than cash to make monthly redemptions. The Company also issued 350,000
        shares of common stock with an estimated fair value of $35,000 to certain
        Debentures Holders to induce the holders to enter into an Amendment and Waiver
        Agreement As more fully described in Note 8, the agreements modified various
        terms of the Debentures including the deferment of certain monthly
        redemptions.
 
 During
        the three months ended March 31, 2008, the Company issued 706,294 shares
        of
        common stock, with a fair value of $126,664 at the time of issuance, for
        fees
        and services.
 
 The
        Company issued an aggregate 1,535,000 shares of common stock with an estimated
        fair value of $312,405 to employees and directors during the three months
        ended
        March 31, 2008. Theses shares included 750,000 shares issued to two officers
        pursuant to employment agreements for current and past due compensation,
        120,000
        shares issued to Directors as compensation for service on Board Committees,
        40,000 of restricted shares to the Company’s President pursuant to his amended
        employment contract, 500,000 to the Company’s former CEO (as discussed below)
        and 125,000 shares to a former employee in connection with his
        resignation.
  Gary
        G.
        Brandt, the Company's Chief Executive Officer, resigned effective at the
        close
        of business on January 3, 2008. Mr. Brandt agreed to serve as a consultant
        to
        the Company until March 31, 2008. During the three months ended March 31,
        2008
        the Company issued to Mr. Brandt 167,000 shares of its common stock pursuant
        to
        the consulting agreement and the Company also issued 333,000 shares of its
        common stock to reimburse Mr. Brandt for expenses incurred on behalf of the
        Company. The 110,000 shares of restricted common stock previously issued
        to Mr.
        Brandt pursuant to his employment agreement were returned to the Company
        and
        cancelled and the Company reversed compensation expense of $138,238 during
        the
        three months ended March 31, 2008 that it previously recognized for this
        award.
        Additionally, 500,000 options to purchase the Company’s common stock were
        forfeitured which resulted in reduction of expenses of ($370,920) (Note
        3).
 11
  **NOTE
        8 - DEBT**
 
 **Notes
        Payable to Related Parties**
 
 On
        July
        28, 2006, the Company borrowed $125,000 from an affiliate of Michael D’Amelio, a
        director of the Company and issued a promissory note. The note bears interest
        at
        a rate of 15% per annum and matured on August 28, 2006. The note is currently
        in
        default and carries a default interest rate of 18% per annum, which amounted
        to
        $5,609 and $5,548 for the three months period ended March 31, 2008 and 2007,
        respectively.
 
 In
        2006,
        the Company issued various notes for $1,712,085 to parties, related to the
        Company through its executives and common management. On December 31, 2006,
        the
        Company entered into an agreement with holders of notes to extend the maturity
        dates of the notes to September 30, 2007. To induce the noteholders to extend
        the notes, the Company agreed to issue at the noteholders’ option either shares
        of common stock at a rate of 10,000 shares for each $100,000 of principal
        or
        cash equal to five percent of the principal amounts of the notes. Noteholders
        received 79,009 shares of common stock with a fair value of $179,363 and
        $48,100
        in cash which were included in deferred debt costs and amortized to interest
        expense through September 30, 2007. On
        September 28, 2007, the Company entered into an agreement with the noteholders
        pursuant to which the maturity date of the notes was extended from September
        30,
        2007, to September 7, 2008. To induce the holders to extend the notes, the
        Company agreed to compensate the noteholders by an amount equal to 7% of
        the
        principal balance or $119,846, which was capitalized to the principal amount
        of
        the notes and included in deferred debt costs which will be amortized to
        interest expense through September 7, 2008. The noteholders were also offered
        the opportunity to buy, for $100, the right (subject to certain restrictions)
        to
        convert their notes to common stock in the future at a conversion price of
        $0.35
        per common stock share. The notes are subject to further extension through
        April
        17, 2009 based on the effective date of certain future registration statements
        related to the Company’s convertible debentures and accrual or payment of
        additional extension fees. The principal balance outstanding under the notes
        was
        $1,831,931 and $1,712,085 at March 31, 2008 and 2007, respectively and the
        Company incurred interest expense of $54,808 and $50,659 for the three months
        ended March 31, 2008 and 2007, respectively.
 
 **Note
        Payable to Related Party under Acquisition Credit Facility**
 
 On
        August
        24, 2007, the Company entered into an agreement with JMC Venture Partners
        LLC
        (“JMC”), pursuant to which JMC agreed to provide Solomon with a line of credit,
        the aggregate principal amount of which may not exceed $15,000,000 that is
        to be
        used exclusively for acquisitions (the “Acquisition Credit Facility”). The line
        of credit is available through August 24, 2008. Any amounts loaned under
        the
        line of credit will accrue interest at a rate of 12% per annum, plus quarterly
        investment fees of 1% of the amounts then outstanding and monitoring fees
        of
        2.5% of the amounts advanced under the line of credit. Upon execution of
        the
        line of credit agreement, the Company incurred a 2.5% commitment fee on the
        full
        amount of the line of credit. The monitoring fees and commitment fee are
        each
        payable in shares of common stock. The number of shares issued was calculated
        by
        dividing the dollar amount of the fee by the average closing price of a share
        of
        common stock for the 10 business days preceding the date of payment. The
        Company
        has agreed to register the shares for resale under the Securities Act of
        1933,
        as amended, within 120 days. In the event of a default, the interest rate
        will
        increase to 18% per annum. Loans made under the line of credit will be
        conditioned upon the approval of the proposed acquisition by the lender's
        investment committee and will be subject to the lender's normal due diligence
        and will mature on the last day of the twelfth month after they are made.
        The
        loans will be made to acquisition subsidiaries and unconditionally guaranteed
        by
        Solomon. The line of credit is subject to ordinary documentation requirements
        for each closing. The lender, JMC, is an affiliate of Michael A. D'Amelio,
        a
        director and officer of Solomon.
  As
        payment for the commitment fee on the full amount of the line of credit,
        The
        Company issued an aggregate of 974,026 shares of common stock to JMC on August
        27, 2007.
 
 On
        September 7, 2007, the Company issued an aggregate of 284,638 shares of common
        stock to JMC in payment of the monitoring fee and perfection fee pertaining
        to
        the loan made by JMC under the Acquisition Credit Facility in connection
        with
        the September 5, 2007 acquisition of Deltron, Inc.
  12
 
 At
        March
        31, 2008, Deltron, LLC had a note payable of $2,750,000 to JMC used to finance
        acquisition of Deltron Inc. (Note 4). The note bears interest at 12% per
        annum
        plus a quarterly investment fee of 1%. Interest expense amounted to $164,689
        for
        the three months ended March 31, 2008. The note matures on September 5, 2008,
        is
        collateralized by substantially all assets of Deltron, LLC and its subsidiary
        Delinc, and guaranteed by Solomon. The loan agreement also contains certain
        financial covenants.
 
 **Revolving
        Note Payable to Bank**
 
 Pursuant
        to Technipower LLC’s revolving note payable (the “Note”) with a bank,
        Technipower LLC can borrow up to $1,500,000 based on a collateral formula
        inclusive of accounts receivable and certain classes of inventory. The Note
        bears interest at the prime rate (5.25% at March 31, 2008), requires no
        principal amortization, and has a maturity date of June 1, 2008. Amounts
        outstanding under the Note were $1,180,000 March 31, 2008 with an additional
        availability of $60,367. Interest expense for the Note was $17,410 and $20,943
        for the three months ended March 31, 2008 and 2007, respectively.
 
 Substantially
        all of Technipower LLC’s assets have been pledged as collateral for the
        Note.
  **Notes
        Payable to Davis & Gilbert LLP**
 
 On
        November 17, 2006, the Company converted $526,149 of trade accounts payable
        to
        Davis & Gilbert LLP (“D&G”), the Company’s general counsel, to a
        promissory note payable (the “Promissory Note”) with an original principal of
        $529,149. The Promissory Note and accrued and unpaid interest at 12% was
        payable
        the earlier of the Company’s receipt of any proceeds from litigation, or
        receipts from an equity financing of at least $5 million, or March 31, 2007.
        To
        induce D&G to enter into this agreement, the Company issued a warrant to
        purchase 200,000 shares of the Company’s common stock at $1.73 a share. The
        exercise price was adjusted on May 14, 2007 to $1.00, when the underlying
        shares
        were registered for resale in accordance with the provisions of the warrants.
        The fair value of the warrant of $320,000 was initially recorded as deferred
        debt costs and was amortized over the Promissory Note’s term. The Company repaid
        substantially all of the Promissory Note in 2007 with proceeds from the January
        22, 2007 debenture transaction described below.
 
 On
        January 19, 2007, the Company converted approximately $163,000 of trade accounts
        payable and the remaining balance and unpaid interest on the Promissory Note
        to
        D & G to a new promissory note payable (the “January 2007 Promissory Note”)
        with an original principal of $182,000. The January 2007 Promissory Note
        and
        accrued and unpaid interest at 12% is payable the earlier of the Company’s
        receipt of any proceeds from litigation, or receipts from an equity financing
        of
        at least $3 million, or September 30, 2007.
  On
        October 12, 2007, the Company converted the balance of the January 2007
        Promissory Note of $182,000 plus unpaid interest of approximately $16,000
        and
        approximately $330,000 of trade accounts payable to a new promissory note
        payable (the “October 2007 Promissory Note”) with an original principal of
        $564,566. The original principal also includes an additional 7% of the above
        amounts as an inducement. The note bears interest at 12% and is payable on
        September 7, 2008 unless an event occurs which requires a Mandatory Prepayment
        as described in the October 2007 Promissory Note. S ubject
        to
        certain restrictions, any of the unpaid principal and interest may be converted
        to shares of common stock at a conversion price of $0.35 per common stock
        share,
        at any time. The principal balance outstanding under the October 2007 Promissory
        note and the January 2007 Promissory Note were $564,566 and $182,000 at March
        31, 2008 and 2007, respectively and the Company incurred interest expenses
        of
        $16,891 and $221,773 for the three months then ended, respectively.
  13
  **January
        2007 Debentures**
 
 On
        January 22, 2007, the Company sold an aggregate of $5,350,000 principal amount
        of Variable Rate Self-Liquidating Senior Secured Convertible Debentures (the
        “January 2007 Debentures”) due March 17, 2008. The Company used approximately
        $3,350,000 of the net proceeds of the Debentures to redeem 2,873,500 shares
        of
        Series C preferred stock, approximately $768,250 of the net proceeds to pay
        down
        a promissory note and other obligations, and retained approximately $1,018,000
        of the net proceeds as working capital.
  Initially,
        the January 2007 Debentures were convertible at any time at the option of
        the
        holder into shares of common stock at $2.00 per share, subject to adjustment
        for
        stock splits, stock dividends, and the like. In accordance with EITF 98-5,
        “Accounting for Convertible Securities with Beneficial Conversion Features
        or
        Contingently Adjustable Conversion Ratios” the intrinsic value of the imbedded
        conversion feature within the Debentures, which was determined by the Company
        to
        be approximately $2,778,229, was recorded as an additional discount to the
        debt.
        In accordance with EITF 00-27, “Application of Issue No. 98-5 to Certain
        Convertible Instruments”, the debt discount was amortized over the term of the
        Debentures. Additionally, as a part of the sale of the January 2007 Debentures,
        the Company issued common stock purchase warrants (the January 2007 Warrants)
        to
        the purchasers of the January 2007 Debentures giving them the right to purchase
        up to an aggregate of 2,006,250 shares of common stock at an exercise price
        of
        $2.00 per share. In accordance with APB 14, “Accounting for Convertible Debt and
        Debt Issued with Stock Purchase Warrants”, the relative fair value of these
        January 2007 Warrants on their date of grant, which was determined to be
        approximately $2,571,771 was recorded as a discount to the underlying debt
        and
        as an addition to additional paid-in capital. The discount was amortized
        to
        interest expense over the term of the underlying debt. The fair value of
        the
        January 2007 Warrants was computed using the Black-Scholes option pricing
        model.
        The Company assumed a risk-free interest rate of 4.78%, no dividends, expected
        volatility of approximately 179% and an expected warrant life of approximately
        3
        years.
 
 On
        August
        24, 2007, the Company entered into an Amendment Agreement to amend certain
        terms
        of the January 2007 Debentures, including conversion price and exercise price
        of
        the January Warrants, and to extend the maturity date until April 17, 2009.
        As a
        result of the amendment, the Company determined that a debt extinguishment
        had
        occurred in accordance with guidance in FASB’s Emerging Issues Task Force
        (“EITF”) Abstract, Issue No. 96-19, *“* Debtor’s
        Accounting for a Modification or Exchange of Debt Instruments *”* (EITF
        96-19) *.* In
        August
        2007, the debt extinguishment was calculated by comparing the carrying value
        of
        the January 2007 Debentures to the carrying value of the amended January
        2007
        Debentures. The Company recognized a loss on debt extinguishment of
        approximately $2.5 million, which includes the value of the modified January
        Warrants of $97,000, the unamortized part of the debt issuance costs of
        $246,000, the unamortized part of the beneficial conversion feature and the
        modified January Warrants of $1,348,000, the intrinsic value of the modified
        imbedded conversion feature $646,000  and
        liquidated damages of $161,000, and recorded the modified debt at the fair
        value
        of approximately $5.2 million. **
 
 Prior
        to
        its amendment, the January 2007 Debentures and related accrued interest in
        the
        amount of $1,023,816 and $71,333, respectively were redeemed with registered
        common stock. Upon redemption the Company recorded additional interest expense
        in the amount of approximately $429,000 for the difference between the principal
        and accrued interest redeemed and the fair market value of the common stock
        issued. In connection with the amended January 2007 Debentures, accrued interest
        of $32,100, as well as liquidated damages in the amount of $160,500, were
        added
        to the principal balance of the amended January 2007 Debentures.
 
 As
        part
        of the Amendment, the Company reduced conversion price of the January 2007
        Debenture from $2.00 per share to $0.35 per share. In accordance with EITF
        98-5
        the intrinsic value of the imbedded conversion feature within the amended
        January 2007 Debentures, which was determined by the Company to be approximately
        $646,000 was recorded as a discount to the fair value of the amended January
        2007 Debentures and was included in the loss on debt extinguishment.  In
        November 2007, $35,000 of the principal balance was converted into 100,000
        shares of common stock based on the $0.35 per share conversion
        price.
  14
 
 Also,
        as
        a part of the modification of the January 2007 Debentures, the exercise price
        of
        the January Warrants has been reduced to $0.35 per share (the Amended Warrants).
        On August 24, 2007, the fair value of the Amended Warrants was determined
        to be
        approximately $97,000 using the Black-Scholes option pricing model and has
        been
        recorded as an additional fee and included in the loss on extinguishment
        of
        debt. The Company determined the fair value of the warrants using a risk-free
        interest rate of 4.31%, no dividends, expected volatility of approximately
        183%
        and an expected warrant life of approximately 3 years, respectively. The
        Amended
        Warrant exercise price is subject to adjustment for stock splits, stock
        dividends, and the like. In the event that the Company issues or grants any
        rights to purchase any common stock, or other security convertible into common
        stock, for a per share price less than the exercise price then in effect,
        the
        exercise price of the Amended Warrants with respect to shares of common stock
        will be reduced to equal such lower price and the number of shares of common
        stock for which the warrants may be exercised will be increased so that the
        total aggregate exercise price remains constant. The foregoing adjustment
        to the
        exercise price for common stock will not apply to certain exempt issuances,
        as
        defined below. All of the Amended Warrants will expire January 17, 2012.
        100,000
        of the warrants issued in connection with the amended January 2007 Debentures
        were exercised in 2007.
 
 In
        the
        event that the Company issues or grants any rights to purchase any of its
        common
        stock, or other securities convertible into its common stock, for an effective
        per share price less than the conversion price then in effect, the conversion
        price of all unconverted amended January 2007 Debentures will be decreased
        to
        equal such lower price. The conversion price adjustment will not apply to
        certain exempt issuances (“exempt issuances”) including the issuance of (a)
        shares of Common Stock or options to employees, officers or directors of
        the
        Company pursuant to any stock or option plan duly adopted for such purpose
        by a
        majority of the non-employee members of the Board of Directors of the Company
        or
        a majority of the members of a committee of non-employee directors, (b) up
        to,
        in the aggregate, 250,000 shares of Common Stock or options (subject to reverse
        and forward stock splits and the like) during any 12 month period issued
        to the
        officers, directors or employees of the Company or its Subsidiaries and approved
        by a majority of the members of the Board of Directors of the Company, (c)
        up
        to, in the aggregate, $200,000 of Common Stock during any 6 month period
        approved by a majority of the members of the Board of Directors of the Company,
        (d) securities upon the exercise or exchange of or conversion of any Securities
        issued hereunder and/or other securities exercisable or exchangeable for
        or
        convertible into shares of Common Stock issued and outstanding on the date
        of
        the amendment of January 2007 Debentures, (e) securities issued pursuant
        to
        acquisitions or strategic transactions approved by a majority of the
        disinterested directors of the Company, (f) up to 160,000 shares of Common
        Stock
        to be issued to Ardour Capital Investments LLC or its designees in partial
        consideration for its services to the Company in connection with the amended
        January 2007 Debentures, (g) up to $375,000 of Common Stock to be issued
        to JMC
        or its assigns as a commitment fee for a $15 million acquisition line of
        credit
        to be entered into between the Company and JMC and an additional $100,000
        of
        Common Stock per quarter to be issued to JMC as a monitoring fee, which shares
        shall be issued for an effective per share price of at least the fair market
        value of the Common Stock on the date of issuance of the applicable share
        as
        determined by the Company's board of directors in good faith.
 
 Prior
        to
        maturity, the amended January 2007 Debentures will bear interest at the higher
        of (i) 8% per annum or (ii) the six-month London Interbank Offered Rate plus
        2%,
        payable quarterly in arrears in cash, or, at the Company’s option, in shares of
        common stock. During the three month ended March 31, 2008, the Company incurred
        interest expense at 8% rate. The Company’s ability to pay interest with shares
        of common stock will be subject to specified conditions, including the existence
        of an effective registration statement covering the resale of the shares
        issued
        in payment of interest and certain minimum trading volumes in the common
        stock.
        All overdue and accrued interest will accrue a late fee equal to the lesser
        of
        15% per annum or the maximum rate permitted by applicable law. From and after
        an
        event of default under the amended January 2007 Debentures and for so long
        as
        the event of default is continuing, the amended January 2007 Debentures will
        bear default interest at a rate of the lesser of 15% per annum or the maximum
        rate permitted by applicable law.
 
 Under
        the
        terms of January 2007 Debentures, beginning on the earlier of the first day
        of
        the first month immediately following the effectiveness of a registration
        statement covering the resale of the shares of common stock issuable upon
        conversion of the amended January 2007 Debentures or January 1, 2008, and
        on the
        first day of each month thereafter, the Company is required to redeem 1/16th
        of
        the outstanding principal balance in cash or, at the Company’s options, with
        shares of common stock. The redemption in shares of common stock will be
        subject
        to certain conditions, including the existence of an effective registration
        statement, unless waived. Any common stock issued in connection with this
        redemption will be valued at 82.5% of the average of the daily volume weighted
        average price for the 10 trading days prior to the redemption.
  15
  The
        Company’s obligations under the amended January 2007 Debentures are secured by a
        security interest in substantially all of the Company’s assets pursuant to a
        Security Agreement dated as of January 17, 2007 between the Company and the
        purchasers of the amended January 2007 Debentures. The Company has agreed
        that
        in the event that it forms any new subsidiaries and moves assets to those
        subsidiaries, those subsidiaries will become guarantors of the amended January
        2007 Debentures.
 
 At
        December 31, 2007 the Company was in default of the amended January 2007
        Debentures and the August Debentures for failure to make the redemption payments
        and to make effective a registration statement required with respect to those
        debentures. In the first quarter of 2008, all debenture holders waived the
        Company’s redemption defaults, requirements for filling and effectiveness of
        registration statement as well as certain provisions of the registration
        rights
        agreements and certain equity conditions governing the Company’s right to use
        shares of common stock rather than cash to make monthly
        redemptions.
 
 During
        the three months ended March 31, 2008, the Company redeemed $1,553,820 of
        the
        January 2007 Debentures plus the related accrued interest through the issuance
        of common stock shares and recorded the difference between fair value of
        shares
        issued and principal amount of January 2007 Debentures and related accrued
        interest as additional interest expense (Note 7). As of March 31, 2008 and
        2007
        the outstanding principal of the January 2007 Debentures amounted to $2,929,964
        and $5,350,000, respectively. The
        Company intends to redeem the amended January 2007 Debentures prior
        to their maturity and therefore they are classified as current
        liabilities. Interest
        expense on the Company’s amended January 2007 Debentures and August 2007
        Debentures amounted
        to $498,291 and $1,726,768 for the three months ended March 31, 2008 and
        2007,
        respectively.
 
 **August
        2007 Debentures**
 
 On
        August
        30, 2007, the Company sold an aggregate of $500,000 principal amount of Variable
        Rate Self-Liquidating Senior Secured Convertible Debentures (the “August 2007
        Debentures”) due April 17, 2009, under the same terms and conditions as the
        amended January 2007 Debentures. Additionally, the Company issued common
        stock
        purchase warrants to the purchasers of the August 2007 Debentures giving
        them
        the right to purchase up to an aggregate of 1,000,000 shares of common stock
        at
        exercise price of $0.35 per share. In accordance with APB 14, “Accounting for
        Convertible Debt and Debt Issued with Stock Purchase Warrants”, the relative
        fair value of these warrants on their date of grant, which was determined
        to be
        approximately $174,000, was recorded as a discount to the underlying debt
        and as
        an addition to additional paid-in capital. The discount is being amortized
        to
        interest expense over the term of the underlying debt. The fair value of
        the
        warrants was computed using the Black-Scholes option pricing model. The Company
        assumed a risk-free interest rate of 4.30%, no dividends, expected volatility
        of
        approximately 184% and an expected warrant life of approximately 3 years.
        As of
        March 31, 2008, the unamortized discount relating to the warrants on the
        August
        2007 Debentures amounted to $67,747.
 
 The
        August 2007 Debentures are convertible at any time at the option of the holder
        into shares of common stock at $0.35 per share, subject to adjustment for
        stock
        splits, stock dividends, and the like, and subject to the terms and provisions
        of the amended January 2007 Debentures. In accordance with EITF 98-5 the
        intrinsic value of the imbedded conversion feature within the August 2007
        Debentures, which was determined by the Company to be approximately $100,000,
        was recorded as a discount to the August 2007 Debentures and is amortized
        over
        the term of the August 2007 Debentures in accordance with EITF 00-27.
 
 At
        December 31, 2007 the Company was in default of the amended January 2007
        Debentures and the August Debentures for failure to make the redemption payments
        and to make effective a registration statement required with respect to
        those debentures. In the first quarter of 2008, all debentures holders waived
        the Company’s redemption defaults, requirements for filling and effectiveness of
        registration statement as well as certain provisions of the registration
        rights
        agreements and certain equity conditions governing the Company’s right to use
        shares of common stock rather than cash to make monthly
        redemptions.
  16
 
 During
        the three months ended March 31, 2008, the Company redeemed $93,750 of the
        August 2007 Debentures plus the related accrued interest through the issuance
        of
        common stock shares and recorded the difference between fair value of shares
        issued and principal amount of August 2007 Debentures and accrued interest
        as
        additional interest expense (Note 7). As of March 31, 2008 the outstanding
        principal of the August 2007 Debentures amounted to $406,250. The
        Company is intended to redeem the August 2007 Debentures prior to its maturity
        and therefore its classified as current liabilities.
 
 Interest
        expense on the Company’s amended January 2007 Debentures and August 2007
        Debentures amounted
        to $498,291 and $1,726,798 for the three months ended March 31, 2008 and
        2007,
        respectively.
 
 **Modifications
        to the amended January 2007 Debentures and August 2007
        Debentures**
  During
        the three months ended March 31, 2008, the Company had an early redemption
        of
        amended January 2007 Debenture with a face value of $343,132 issued 4,267,220
        common shares to the holder, valued at $401,514 and recorded the difference
        as
        additional interest expense. The Company also agreed to accelerate redemption
        $370,000 of amended January 2007 Debentures to May 30, 2008.
  Additionally,
        during the three months ended March 31, 2008 the Company agreed with two
        holders
        of both amended January 2007 Debentures and August 2007 Debentures and one
        holder of amended January 2007 Debentures to defer the monthly redemptions
        of
        $179,061 for January 2008 and March of 2008 until May and June of 2009,
        respectively. The Company granted an option to the holders to defer up to
        three
        additional monthly redemptions until July, August and September of 2009,
        respectively at the holders’ election. To induce each of the holder to enter
        into the Agreement, the Company issued an aggregate of 350,000 restricted
        shares
        of the Company’s common stock (see Note 7). The Company has accounted for this
        transaction as a debt modification and has recorded the fair value of the
        inducement shares of $35,000 as additional interest expense.
  **NOTE
        9 - PATENT LITIGATION**
 
 The
        Company is involved in litigation against Toyota Motor Corporation and certain
        of its affiliates (collectively, “Toyota”) for infringement of its Electric
        Wheel patent. On January 10, 2006, the Company filed a complaint with the
        United
        States International Trade Commission (“ITC”) in Washington D.C. seeking an
        exclusion order prohibiting the importation of infringing
        technology.
 
 On
        April
        30, 2007, the ITC terminated the investigation with a finding of no violation
        of
        Section 337 of the Tariff Act of 1930. On June 1, 2007, the Company announced
        that it will appeal the determination of the ITC to the Court of Appeals
        for the
        Federal Circuit in Washington, DC (CAFC). The Company believes that the ITC’s
        findings are not binding on other courts and that the CAFC is the appropriate
        forum by which to establish the proper interpretation of its patent claims
        and
        to provide future options to pursue full and fair remedies.
 
 On
        April
        11 2008, oral arguments in the Company’s appeal of the decision by the ITC were
        heard at the Court of Appeals for the Federal Circuit in Washington D.C.
        On May
        7, 2008, the Court of Appeals for the Federal Circuit in Washington, DC ruled
        in
        favor of Toyota Motor Corporation and certain of its affiliates on the Company’s
        appeal of the decision by the International Trade Commission alleging patent
        infringement by Toyota.  The
        Company will review the Court’s decision in detail. The Company has made no
        determination as to further steps it may take in this case.
  17
 
 **NOTE
        10 - ACCRUED AND UNPAID PAYROLL TAXES**
 
 At
        March
        31, 2008, the Company has accrued interest and penalties of $135,270 related
        to
        payroll taxes. This amount includes additional interest of approximately
        $80,000
        charged to operations in the first three months of 2007. The interest and
        penalties were the subject of a delinquency proceeding with the U.S. Internal
        Revenue Service for tax years ending December 31, 2003 and prior. During
        the
        first quarter of 2007, the Company signed an agreement with the IRS to settle
        the outstanding interest and penalties. The agreement provides for the Company’s
        payment of the accrued interest and penalties in monthly installments of
        $10,000.
 
 **NOTE
        11 - OTHER TRANSACTIONS WITH RELATED PARTIES**
 
 In
        2008
        and 2007, Bril Corporation provided bookkeeping services for $5,000 a month.
        Two
        principals of Bril Corporation are also directors and stockholders of
        the Company. Total expense for the three months ended March 31, 2008 and
        2007
        was $15,000 for each three-month period.
 
 At
        March
        31, 2008, other accrued expenses include $150,000 due to
        JMC .
        This
        amount was advanced by JMC to pay expenses of a potential acquisition which
        the
        Company has elected not to pursue.
  **NOTE
        12 - SEGMENTS**
 
 The
        segments the Company operates are the Motive Power Division which encompasses
        the electric power drive technologies and the Power Electronics Division
        which
        represents the business of Technipower LLC and Deltron LLC and specializes
        in
        the design, development and production of customer power systems, chassis
        and
        power supply products for defense related markets.
  Segment
        financial information follows:
 
 THREE
                  MONTHS ENDEDMarch
                  31,
                2008
              
              March
                  31,
                2007Revenues:Sales
                  to unaffiliated customers:Power
                  Electronics
              
              $
              2,437,610
              
              $
              1,399,919Motive
                  Power
              
              
              53,174
              
              
              31,678$
              2,490,784
              
              $
              1,431,597Net
                  Loss:Power
                  Electronics
              
              $
              (19,041
              )
              $
              48,800Motive
                  Power
              
              
              (512,784
              )
              
              (902,092
              )Operating
                  Loss
              
              
              (531,825
              )
              
              (853,292
              )Interest
                  expense
              
              
              (855,045
              )
              
              (2,193,940
              )Other
                  income (expense)
              
              
              (35,798
              )
              
              0Net
                  Loss
              
              
              (1,422,668
              )
              
              (3,047,232
              )Preferred
                  stock dividends
              
              
              0
              
              
              (1,413,031
              )Loss
                  applicable to common stockholders
              
              $
              (1,422,668
              )
              $
              (4,460,263
              )
  18
  **NOTE
        13 - COMMITMENTS AND CONTINGENCIES**
 
 In
        connection with the Company’s acquisition of Deltron LLC in August 2007, the
        Company agreed to pay the sellers an earn-out payment equal to the excess
        of the
        product of net sales of the purchased business during the year following
        the
        closing multiplied by a profit margin determined by subtracting from net
        sales
        the cost of goods sold divided by net sales, over $1,570,000. The earn-out
        payment cannot exceed $300,000. The fair value of assets acquired will be
        adjusted at the time the contingency is ultimately resolved. As of March
        31,
        2008, the earn-out has not been met and based on current projection, the
        Company
        does not expect that it will achieve the target and therefore no provision
        for
        earn-out has been made in these financial statements.
 
 The
        number of common shares issuable upon conversion of the amended January 2007
        Debentures and August 2007 Debentures vary with market price of the Company’s
        common stock. This condition requires to evaluate at each reporting period
        weather the Company has sufficient number of authorized and unissued shares
        available to settle its obligations after considering all other potential
        equity
        commitments that may require the issuance of stock. If the Company does not
        have
        sufficient number of authorized and unissued shares, the Company will be
        in
        default under the amended January 2007 Debentures and August 2007
        Debentures.
 
 **Note
        14 - SUBSEQUENT EVENTS**
  Through
        May 15, 2008, we redeemed the principal amount and accrued interest due to
        four
        of the amended January 2007 Debentures holders through the issuance of
        approximately 12,148,219 shares of common stock valued at $943,461. At March
        31,
        2008, the aggregate principal amount due to these debentures holders was
        approximately $692,000. The difference between the fair value of common stock
        and amount of debt redeemed was recorded as additional interest
        expense.
  On
        May 2,
        2008, the Company agreed to accelerate the maturity date from April 2009
        to July
        2008 of an amended January 2007 Debenture held by one debenture holder.
        The outstanding principal amount due to this debenture holder was approximately
        $253,000 at March 31, 2008.
 
 In
        May
        2008, January 2007 Debentures and August 2007 Debentures holders agreed to
        exercise all of their warrants at a reduced exercise price of $.001
        per share from $0.35 per share. As an inducement to so exercise
        the
        warrants, we agreed to issue to each debenture holder one restricted share
        of
        common stock for each share acquired upon the warrant exercise. In addition,
        each warrant holder that continues to hold debentures agreed to fix permanently
        the conversion price of the debentures at $.35 per share (subject to customary
        adjustments resulting from stock dividends, stock splits and the like). As
        an
        inducement for this agreement, each such holder, who continues to hold debentures
        after July 1, 2008, will receive an additional
        one-half restricted share for each share received upon
        exercise of its warrants.
  19





**ITEM
                2.**
            **Management’s
                Discussion And Analysis Of Financial Condition And Results Of Operations**





*The
      following discussion and analysis of our consolidated financial condition and
      results of operations for the quarters ended March 31, 2008 and 2007 should
      be
      read in conjunction with our consolidated financial statements included
      elsewhere in this Quarterly Report.*





**Overview**




We
      operate our business in two divisions. Our Power Electronics Division makes
      products used to convert power from alternating current to direct current and
      adapt voltages to specific applications for use in telecommunications, defense,
      aerospace, marine and commercial applications. Our Motive Power Division
      develops electric motor/wheel/transaxle systems that regenerate and store power
      using kinetic energy. We have proprietary, patented technology in this area
      and
      are challenging Toyota’s unauthorized use of the technology as an integral
      component of the Toyota Hybrid Synergy Drive.





Our
      historical business has been the development, engineering, manufacturing,
      licensing and sale of electric power drive systems, which now constitutes our
      Motive Power Division. In August 2006, we acquired Technipower LLC, a
      manufacturer of power supplies and related equipment for the defense, aerospace
      and commercial markets. We further expanded our business in September 2007
      by
      acquiring Deltron Inc., a manufacturer of power supplies and related equipment
      with manufacturing operations in Pennsylvania and Mexico. Our Power Electronics
      Division encompasses the businesses of Technipower and Deltron.




We
      are
      working to combine our Motive Power Division’s patented technologies with the
      engineering and manufacturing capabilities of our Power Electronics Division.
      We
      believe that these synergies should allow the Motive Power Division to expand
      its application-specific technology development. We believe there are other
      synergies between our two divisions, including:





·
            The
                addition of the Power Electronics Division should enhance our ability
                to
                license our patented technology to a broader array of
                customers.·
            Technipower’s
                extensive military contacts should provide a natural outlet for the
                Motive
                Power Division’s proprietary electro/mechanical
                technologies.·
            The
                two divisions should achieve substantial operational and overhead
                cost
                savings by consolidating all finance and administrative functions
                in one
                location.





Our
      principal challenges in 2008 are the consolidation and growth of our Power
      Electronics Division, exploiting the synergies between our two divisions,
      generating revenue in our Motive Power Division and raising additional capital
      to implement our business plan. Without sufficient additional capital or
      and ultimately profitable operating results, we will not be able to continue
      as
      a going concern. *See* “Liquidity
      and Capital Resources”, below.




20





**Results
      of Operations**





The
      following discussion should be read in conjunction with our financial statements
      and the related notes thereto included elsewhere herein.





*Three
      months ended March 31, 2008 compared with three months ended March 31,
      2007.*





For
      the
      three months ended March 31, 2008 we generated revenues of $2,490,784 as
      compared to $1,431,597 for the three months ended March 31, 2007, an increase
      of
      $1,059,187. Cost of products sold for the three months ended March 31, 2008
      was
      $1,516,397, generating a gross margin of $974,387. Cost of products sold for
      the
      three months ended March 31, 2007 was $779,287, generating a gross margin of
      $652,310. The increase in our revenues is attributable entirely to the results
      of our Power Electronics Division, which consists of Technipower LLC (acquired
      in August 2006), and Deltron Inc. (acquired in September 2007). We believe
      that
      with these addition, revenue levels will continue to equal or exceed those
      of
      previous quarters.





Research
      and Development costs were $392,257 for the three months ended March 31, 2008
      as
      compared to $253,664 for the three months ended March 31, 2007. The increase
      was
      solely the result of continued R&D expenditures in our Power Electronics
      Division in the amount of $392,257.





Selling,
      general and administrative expenses were $1,000,447 for the three months ended
      March 31, 2008 as compared to $1,251,938 for the three months ended March 31,
      2007, a decrease of $251,491 or 20%. This decrease was primarily due various
      corporate overhead and staffing reductions offset by the additional selling
      and
      administrative expenses incurred by the two businesses that comprise our Power
      Electronics Division.




We
      incurred interest expense of $855,045 for the three months ended March 31,
      2008.
      Interest expense incurred for the three months ended March 31, 2007 was
      $2,193,940. The decrease of $1,338,895 in interest expense was primarily due
      to
      a decrease in accrued cash and non-cash interest charges related to the variable
      rate self-liquidating senior secured convertible debentures sold in January
      2007.





The
      elements of interest expense including amortization of deferred costs for the
      quarters ended March 31, 2008 and 2007 were as follows:


Three
                Months Ended March 31,2008
            
            2007Notes
                payable
            
            $
            339,343
            
            $
            365,539Bank
                debt
            
            
            17,410
            
            
            20,943Unpaid
                payroll taxes and penalties
            
            
            -
            
            
            80,690Variable
                rate self-liquidating senior secured convertible
                debentures
            
            
            498,292
            
            
            1,726,768**Total
                interest expense**
            
            $
            855,045
            
            $
            2,193,940





We
      reported a net loss for the three months ended March 31, 2008 of $1,422,668.
      Our
      net loss for the three months ended March 31, 2007 was $3,047,232. Loss
      applicable to common stockholders for the three months ended March 31, 2008
      was
      $1,422,668. Loss applicable to common stockholders for the three months ended
      March 31, 2007 was $4,460,263, which reflected dividends of $1,413,031 relating
      to the redemption of the Series C preferred stock issued in August
      2006.





**Liquidity
      and Capital Resources**




Our
      available cash balance at March 31, 2008 was $158,198. During the three months
      ended March 31, 2008, we used net cash of $323,451 for operations. This
      consisted of a net loss of $1,422,668 augmented by net non-cash charges of
      $686,320. Additionally, we used $3,922 of cash for investing activities.
      Financing activities provided net cash in the amount of $60,170 consisting
      primarily of borrowings under our revolving bank note payable.





We
      have
      incurred significant operating losses and used cash in our operating activities
      for several consecutive years. As of March 31, 2008, we have negative working
      capital and a capital deficiency. These conditions raise substantial doubt
      about
      our ability to continue as a going concern. In the past we have been able to
      obtain financing to fund our losses. We expect to seek additional capital
      through the sale of debt and/or equity in 2008 in order to fund our operating
      and capital needs, although there can be no assurance that we will be
      successful. Our ability to continue is dependent on obtaining additional
      long-term financing and ultimately achieving profitable operating results.
      With
      the addition of Deltron to Technipower in our Power Electronics Division, we
      believe our ability to achieve profitability has been enhanced.




21





Although
      Technipower has historically generated positive cash flow, we have not yet
      fully
      integrated Deltron Inc., acquired in September 2007, into Technipower
      operations. Accordingly, the prior experience of our Power Electronics Division,
      which consists of Technipower and Deltron, may be different in the future.
      The
      Motive Power Division has historically generated limited operating revenues.
      In
      order for us to market our existing products of both divisions successfully
      on a
      national and international level, we will be required to close public or private
      offerings of our equity or debt securities successfully. If we are unable to
      obtain necessary financing, we will expand our operations only as cash flow
      from
      operations allows.




*Acquisitions* .
      We have
      used a combination of our securities and cash to acquire the two companies
      that
      comprise our Power Electronics Division.





·
            We
                purchased Technipower LLC in August 2006 for 4,615,381 shares of
                our
                Series C convertible redeemable preferred stock, 4,461,537 shares
                of our
                common stock and the assumption of certain liabilities totaling
                approximately $850,000, including approximately $700,000 outstanding
                under
                Technipower’s $1.5 million revolving credit facility. The share amounts
                were calculated using an agreed $.65 per share price, but we issued
                4,833,562 additional shares to the sellers of Technipower at the
                one year
                anniversary of the closing as a result of a required stock price
                adjustment. In January 2007, we redeemed 2,873,500 shares of our
                Series C
                preferred stock for an aggregate of $3,350,000 and converted the
                remaining
                1,741,881 shares of Series C preferred stock into 1,741,881 shares
                of
                common stock into cash based on the market price of our common stock
                on
                the date of the transaction.*See*Item
                12, “Certain Relationships and Related
                Transactions”.





·
            On
                September 2007, we acquired the assets of Deltron, Inc for cash.
                The purchase price of $2,860,000 consisted of $1,508,000 in cash
                for
                Deltron’s assets, plus $600,000 in cash for the stock of Delinc, S.A.,
                $495,000in
                acquisition related costs, and the assumption of certain liabilities
                in
                the amount of approximately $327,000. We also agreed to pay the sellers
                an
                earn-out payment equal to the product of net sales of the purchased
                business during the year following the closing multiplied by a profit
                margin determined by subtracting from net sales the cost of goods
                sold
                divided by net sales. The earn-out payment cannot exceed $300,000.





To
      fund
      the acquisition of Deltron, our subsidiary Del-Inc Acquisition LLC borrowed
      a
      total of $2,750,000 from JMC Venture Partners LLC (“JMC”) under an acquisition
      line of credit, discussed below. The loan was made pursuant to the terms of
      a
      Secured Promissory Note Loan Security and Pledge Agreement dated as of September
      5, 2007, between Del-Inc and JMC and a related promissory note issued by Del-Inc
      to JMC on September 5, 2007. We guaranteed the loan fully and unconditionally
      pursuant to a Guaranty Agreement with JMC dated September 5, 2007. The loan
      matures on September 5, 2008. Our default under this note in the first quarter
      of 2008 for non-payment of interest and failure to comply with certain financial
      and negative debt covenants has been waived by the note holder.





*Acquisition
      Line of Credit.* On
      August 24, 2007, we entered into an agreement with JMC pursuant to which JMC
      agreed to provide Solomon with a line of credit for one year of up to
      $15,000,000 that is to be used exclusively for acquisitions .
      We used
      $2,750,000 of this line to purchase Deltron. As payment for the commitment
      fee
      on the full amount of the line of credit, we issued 974,026 shares of our common
      stock to JMC. We also issued 284,638 shares of common stock to JMC with respect
      to loan monitoring and perfection fees.




*Variable
      Rate Debentures* .
      On
      January 22, 2007, we sold $5,350,000 principal amount of Variable Rate
      Self-Liquidating Senior Secured Convertible Debentures due March 17 2008. We
      used $3,350,000 of the net proceeds of the debentures to redeem approximately
      2,873,492 shares of our Series C preferred stock issued to acquire Technipower
      LLC, $768,250 of the net proceeds to pay down a promissory note and other
      obligations and retained approximately $1,018,000 of the net proceeds as working
      capital.




22





We
      entered into a registration rights agreement with the purchasers of the
      debentures pursuant to which we filed a registration statement with the
      Securities and Exchange Commission covering the resale of the shares of common
      stock issuable pursuant to the conversion of the debentures and exercise of
      warrants. The registration statement was declared effective by the Commission
      on
      May 14, 2007.





On
      August
      24, 2007, we agreed with the holders of the debentures to amend the terms of
      the
      debentures and several related agreements. Under the terms of the amendment
      agreement,





·
            the
                maturity of all of the debentures was extended to April 17,
                2009;





·
            redemptions
                of principal of the debentures were temporarily
                suspended;





·
            once
                redemptions recommence, they will be required to continue on a monthly
                basis through the new maturity date of the debentures, at an amount
                equal
                to the principal amount of the debentures on the date the redemptions
                recommence divided by the number of months remaining to maturity
                of the
                debentures;





·
            the
                conversion price of the debentures and the exercise price of the
                related
                warrants were each reduced from $2.00 per share of common stock to
                $0.35
                per share of common stock;





·
            we
                agreed to file a new registration statement by October 1, 2007, and
                cause
                such registration statement to be declared effective by January 22,
                2008;





·
            we
                are entitled to issue shares of common stock in payment of fees in
                connection with certain proposed transactions without such shares
                triggering an adjustment to the conversion price of the January debentures
                or the exercise price of the related
                warrants;





·
            we
                issued $160,500 in new debentures to the holders in satisfaction
                of
                liquidated damages incurred through the date of the amendment agreement
                under the registration rights
                agreement;





·
            we
                issued an aggregate of 1,747,267 shares of common stock in partial
                satisfaction of the redemption payment that was due on July 1, 2007,
                with
                the balance of the redemption payment carried forward and payable
                when
                redemption payments recommence; and





·
            the
                holders waived certain restrictions to enable us to raise up to $1
                million
                of additional financing through private placements of
                securities.





Separately,
      to induce the holders of the debentures to enter into the amendment agreement,
      we issued to the holders an aggregate of 401,250 restricted shares of common
      stock on August 27, 2007.





On
      August
      30, 2007, we sold an additional $500,000 principal amount of Debentures. We
      used
      the net proceeds of the debentures to provide operating capital. The terms
      of
      these debentures are substantially the same as the terms of the debentures
      and
      warrants sold in January 2007, as amended by the amendment agreement dated
      August 24, 2007.





Pursuant
      to the terms of the debentures that we sold in January and August 2007, we
      agreed to redeem their face value plus accrued interest pro rata over their
      term
      each month in cash or, at our election, with shares of our common stock after
      the effectiveness of a registration statement covering the resale of the shares
      of common stock issuable upon conversion of the debentures. Shares used to
      make
      a monthly redemption are valued at 82.5% of the average of the daily volume
      weighted average price of the applicable shares for the 10 trading days before
      the amortization payment. We redeemed 10% of the principal amount of the
      debentures issued in January 2007 on June 1, 2007, but we failed to make the
      redemption payments due in July and thereafter in 2007 with respect to any
      of
      the debentures.




23





In
      the
      first quarter of 2008, all of the holders of the debentures waived our failures
      to redeem the debentures in accordance with their terms. They also waived
      certain provisions of the registration rights agreement as well as several
      of
      the equity conditions that govern our right to use shares of our common stock
      rather than cash to make monthly debenture reredemptions. Despite these waivers,
      it is still possible that, with respect to some debenture holders, we will
      not
      be able to redeem their debentures in the future with our common stock. Not
      all
      of the terms of the waivers by the debenture holders were identical. We issued
      a
      total of 432,533 shares of our common stock to induce the debentures holders
      to
      enter into waiver and amendment agreements.





In
      February 2008, we redeemed the entire principal amount and accrued interest
      of
      two of the debenture holders and accelerated the maturity date of a third
      holder’s debenture to June 2008 from April 2009. We also agreed with three
      debenture holders to allow them to defer monthly redemptions of their debentures
      until after the original maturity date. As of May 2008, each of these three
      holders had deferred three monthly redemptions, until May, June and July, 2009,
      respectively.





In
      the
      second quarter of 2008, we redeemed the entire principal amount and accrued
      interest of four of the debenture holders and accelerated the maturity date
      of a
      fifth holder’s debenture to July 2008 from April 2009.





As
      of May
      15, 2008, there are four holders of debentures which have an aggregate
      outstanding principal amount of $2,439,071.




In
      the
      first quarter of 2008, we issued a total of 18,537,895 shares of our common
      stock in redemption of $1,647,569 in principal amount of debentures, plus
      accrued interest. The shares issued included the full redemption of the
      debentures of two holders and the accelerated redemption of the debenture of
      one
      holder. The sale of these securities was determined to be exempt from
      registration under Section 4(2) of the Securities Act of 1933 as transactions
      by
      an issuer not involving a public offering.





Between
      April 1 and May 15, 2008, we have issued a total of 17,837,110 shares of our
      common stock in redemption of $897,143 in principal amount of debentures, plus
      accrued interest. The shares issued included the full redemption of the
      debentures of three holders and the accelerated redemption of the debenture
      of
      one other holder. The sale of these securities was determined to be exempt
      from
      registration under Section 4(2) of the Securities Act of 1933 as transactions
      by
      an issuer not involving a public offering.





Our
      obligations under the debentures are secured by a security interest in
      substantially all of our assets pursuant to a security agreements dated January
      17, 2007 and August 30, 2007, between us and the purchasers of the debentures.
      In the event that we form any new subsidiaries and move assets to those
      subsidiaries, those subsidiaries will become guarantors of the
      debentures.





As
      a part
      of the sale of the debentures, we issued common stock purchase warrants to
      the
      purchasers of the debentures giving them the right to purchase up to an
      aggregate of 2,006,250 shares of our common stock at an initial exercise price
      of $2.00 per share. In August 2007, the warrant exercise price was reduced
      to
      $.35 in connection with the issuance of $500,000 of additional debentures,
      at
      which time we also issued an additional 1,000,000 warrants, also exercisable
      at
      $.35 per share. Subsequently, one holder exercised 100,000
      warrants.





In
      May
      2008, each warrant holder agreed upon receipt from us of written notice to
      exercise all of its warrants at a reduced exercise price of $.001 per share.
      As
      an inducement to so exercise the warrants, we agreed to issue to each warrant
      holder one restricted share of common stock for each share acquired upon the
      warrant exercise. In addition, each warrant holder that continues to hold
      debentures after July 1, 2008 agreed to fix permanently the conversion price
      of
      the debentures at $.35 per share (subject to customary adjustments resulting
      from stock dividends, stock splits and the like). As an inducement for this
      agreement, each such holder received one-half restricted share for each share
      received upon exercise of its warrants.





Pursuant
      to these agreements, we will issue 6,806,250 shares of our common stock,
      3,900,000 shares of which will be restricted under Rule 144. We expect to issue
      these shares before June 1, 2008.




24





*Other
      Financing* .
      Since
      March 2005, we have entered into various loan transactions with third parties
      as
      well as affiliates pursuant to which we raised capital to refinance debt, redeem
      preferred stock and provide working capital. We borrowed $1,877,085 in
      short-term debt financing from certain of our principal stockholders and other
      investors from March 2005 through December 2006. The current balance of these
      loans, the repayment of which has been extended until September 2008, including
      accrued interest through May 15, 2008, is $2,272,734. These notes are secured
      by
      liens on all of our tangible and intangible assets.





In
      November, 2006, we converted $526,149 of trade accounts payable to Davis &
Gilbert LLP (“D&G”), our outside counsel, to a promissory note payable in
      the same amount. This note and accrued and unpaid interest at 12% was payable
      the earlier of our receipt of any proceeds from litigation, receipts from an
      equity financing of at least $5 million or March 31, 2007. To induce D&G to
      accept our note, we issued a warrant to purchase 200,000 shares of our common
      stock at $1.73 a share. The exercise price was adjusted on May 14, 2007 to
      $1.00, when we registered the underlying shares for resale in accordance with
      the provisions of the warrants. We repaid substantially all of this note in
      2007
      with proceeds from the sale of our debentures in January 2007, described
      above.





On
      January 19, 2007, we converted approximately $163,000 of trade accounts payable
      and the remaining balance and unpaid interest on the November 2006 promissory
      note to D & G to a new promissory note payable with an original principal of
      $182,000. This note and accrued and unpaid interest at 12% was payable on the
      earlier of our receipt of any proceeds from litigation, receipts from an equity
      financing of at least $3 million or September 30, 2007.




On
      October 12, 2007, we converted the $182,000 balance of the 2007 note plus unpaid
      interest of approximately $16,000 and approximately $330,000 of additional
      trade
      accounts payable to a new promissory note payable to D&G with an original
      principal balance of $564,566, which included 7% additional principal as an
      inducement. This note bears interest at 12% and is payable on September 7,
      2008
      unless we receive at any earlier date any proceeds from litigation or from
      an
      equity financing of at least $3 million. Subject to certain restrictions,
      D&G may convert any of the unpaid principal and interest at any time to
      shares of our common stock at a conversion price of $0.35 per share. The
      principal balance outstanding under this note was $564,566 on May 15,
      2008.





*Acquisitions* .
      In
      order to fund future acquisitions we may effect one or more private sales of
      equity or debt securities. We have not yet determined the terms or amount of
      the
      securities to be sold. However, any such securities will be offered and sold
      without registration under the Securities Act of 1933, as amended, and may
      not
      be reoffered or resold by the purchasers in the United States absent
      registration or an applicable exemption from the registration requirements
      of
      the Securities Act.





*Funding
      of Toyota Litigation* .
      In
      November 2005, we entered into an agreement with Oliver Street Finance LLC
      in
      which Oliver Street agreed to provide funding to us to prosecute our litigation
      against Toyota Motor Corporation, Toyota Motor Sales U.S.A., Inc. and Toyota
      Motor Manufacturing North America. Oliver Street is owned by Michael D’Amelio,
      one of our directors. Oliver Street agreed to pay all legal fees and out-of
      pocket expenses billed by our special patent counsel, Mintz, Levin, Cohn,
      Ferris, Glovsky & Popeo, P.C., in connection with the litigation and
      approved by us in exchange for a portion of any recovery that we receive in
      the
      litigation equal to the greater of 40% of the recovery or the actual amount
      of
      legal fees and expenses Oliver Street pays on our behalf. We are paying,
      however, the fees incurred by us for legal counsel in connection with
      our appeal of the ITC’s adverse decision to the Court of Appeals for the Federal
      Circuit. *See* Part II,
      Item 1, “Legal Proceedings.”





*Continuing
      Dilution.* We
      are
      required to redeem a pro rata portion of the debentures each month until their
      maturity in 2009. We have been unable to redeem any debentures in cash, and
      w e
      continue to issue a significant amount of our common stock to redeem the
      debentures. ** Because
      the price of our common stock has declined substantially since January 1, 2008,
      and because
      the number of shares issuable for monthly redemptions increases as our stock
      price declines, and because
      we have agreed to issue our common stock at a 17.5% discount to market over
      a
      rolling ten day period in redemption of the debentures, we have been required
      to
      issue a substantial number of shares each month to redeem the applicable portion
      of the debentures. Since January 1, 2008, we have issued in excess of 37
      million shares of common stock to redeem $2,544,713 in principal amount of
      the
      debentures, plus interest, and the outstanding balance of the debentures on
      May
      15, 2008 was $2,439,071.Accordingly, our stockholders have experienced
      substantial dilution to date in connection with these redemptions, and it is
      probable that they will experience substantial continuing dilution until the
      debentures after been fully redeemed.




25





We
      are
      asking our stockholders at our Annual Meeting on May 22, 2008 to approve the
      authorization of additional shares of common stock partly to accommodate this
      projected need.





**ITEM
                4T.**
            **Controls
                and Procedures**




**Evaluation
      of Disclosure Controls and Procedures**





We
      maintain a system of disclosure controls and procedures that is designed to
      provide reasonable assurance that information we are required to disclose in
      the
      reports we file or submit under the Securities Exchange Act of 1934, is
      accumulated and communicated to management in a timely manner. Our Acting
      Principal Executive Officer and Chief Financial Officer have evaluated this
      system of disclosure controls and procedures as of the end of the period covered
      by this quarterly report, and believe that the system is not operating
      effectively to ensure appropriate disclosure. This conclusion was based on
      the
      following:




Our
      Acting Principal Executive Officer and Chief Financial Officer, together with
      the Chairman of our Audit Committee, conducted evaluations of our systems of
      internal control over financial reporting and disclosure control for the year
      ended December 31, 2007 and concluded at that time that our system of internal
      controls was not operating effectively primarily because we did not maintain
      a
      sufficient complement of personnel with the appropriate level of knowledge,
      experience and training in the application of accounting principles generally
      accepted in the United States (referred to as GAAP) and in internal control
      over
      financial reporting commensurate with our financial reporting obligations under
      the Exchange Act. We also did not maintain effective controls over the
      presentation of our consolidated financial statements and related disclosures
      as
      they related to the accounting for goodwill and general disclosures under
      GAAP.





There
      were no significant changes in our internal control over financial reporting
      between the aforementioned evaluation and the end of the most recent fiscal
      quarter that have materially affected, or are reasonably likely to materially
      affect, our internal control over financial reporting. Under the direction
      of
      our Acting Principal Executive Officer and Chairman of the Audit Committee
      together with an outside consulting firm, we continue to develop a plan to
      remediate these weaknesses, which is likely to include additional employees
      who
      are trained in the preparation of financial statements in accordance with GAAP
      and who can supplement the experience of our current personnel that is necessary
      to ensure that we have in place appropriate internal control over financial
      reporting.





**Inherent
      Limitations on Effectiveness of Controls**




Our
      management does not expect that our Disclosure Controls or our internal control
      over financial reporting will prevent or detect all error and all fraud. A
      control system, no matter how well designed and operated, can provide only
      reasonable, not absolute, assurance that the control system’s objectives will be
      met. The design of a control system must reflect the fact that there are
      resource constraints, and the benefits of controls must be considered relative
      to their costs. Further, because of the inherent limitations in all control
      systems, no evaluation of controls can provide absolute assurance that
      misstatements due to error or fraud will not occur or that all control issues
      and instances of fraud, if any, within the company have been detected. These
      inherent limitations include the realities that judgments in decision-making
      can
      be faulty and that breakdowns can occur because of simple error or mistake.
      Controls can also be circumvented by the individual acts of some persons, by
      collusion of two or more people, or by management override of the controls.
      The
      design of any system of controls is based in part on certain assumptions about
      the likelihood of future events, and there can be no assurance that any design
      will succeed in achieving its stated goals under all potential future
      conditions. Projections of any evaluation of controls effectiveness to future
      periods are subject to risks. Over time, controls may become inadequate because
      of changes in conditions or deterioration in the degree of compliance with
      policies or procedures.




26




**Special
      Note Regarding Forward-Looking Statements**





This
      Quarterly Report contains “forward-looking statements,” which include
      information relating to future events, future financial performance, strategies,
      expectations, competitive environment, regulation and availability of resources.
      These forward-looking statements include, without limitation, statements
      regarding





•
            expectations
                as to market acceptance of our
                products,





•
            expectations
                as to revenue growth and earnings,





•
            the
                time by which certain objectives will be
                achieved,





•
            proposed
                new products,





•
            our
                ability to protect our proprietary and intellectual property
                rights,





•
            statements
                concerning projections, predictions, expectations, estimates or forecasts
                as to our business, financial and operational results and future
                economic
                performance, and





•
            statements
                of management’s goals and objectives and other similar expressions
                concerning matters that are not historical
                facts.





Words
      such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,”
“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates”
and similar expressions, as well as statements in future tense, identify
      forward-looking statements.





Forward-looking
      statements should not be read as a guarantee of future performance or results,
      and will not necessarily be accurate indications of the times at, or by which,
      such performance or results will be achieved. Forward-looking information is
      based on information available at the time and/or management’s good faith belief
      with respect to future events, and is subject to risks and uncertainties that
      could cause actual performance or results to differ materially from those
      expressed in the statements. Important factors that could cause such differences
      include, but are not limited to





•
            industry
                competition, conditions, performance and
                consolidation,





•
            legislative
                and/or regulatory developments,





•
            the
                effects of adverse general economic conditions, both within the United
                States and globally,





•
            any
                adverse economic or operational repercussions from recent terrorist
                activities, any government response thereto and any future terrorist
                activities, war or other armed conflicts,
                and





•
            other
                factors described in the “Risk Factors” contained in Exhibit 99.1 to our
                Annual Report on Form 10-KSB for the year ended December 31,
                2006.





Forward-looking
      statements speak only as of the date the statements are made. We assume no
      obligation to update forward-looking statements to reflect actual results,
      changes in assumptions or changes in other factors affecting forward-looking
      information except to the extent required by applicable securities laws. If
      we
      update one or more forward-looking statements, no inference should be drawn
      that
      we will make additional updates with respect thereto or with respect to other
      forward-looking statements.




27





**Part
      II. OTHER INFORMATION**





**Item
      1. Legal Proceedings**





On
      September 12, 2005, we filed a lawsuit against Toyota Motor Corporation, Toyota
      Motor Sales U.S.A., Inc. and Toyota Motor Manufacturing North America in the
      United States District Court for the Middle District of Florida, Tampa Division,
      for infringement of our Electric Wheel patent. In the lawsuit we allege that
      the
      hybrid transmission drive in the Toyota Prius and Highlander infringes a number
      of claims contained in our U.S. Patent No. 5,067,932, and we are asking for
      an
      injunction barring further infringement as well as damages for the unauthorized
      use of our patent by Toyota and its affiliates.





On
      January 10, 2006, we filed a complaint with the United States International
      Trade Commission (“ITC”) in Washington D.C. seeking an exclusion order
      prohibiting the importation of infringing technology. The ITC held a hearing
      on
      our complaint from October 30 through November 3, 2006. On February 13, 2007,
      the ITC Administrative Law Judge who conducted the hearing issued a final
      initial determination in favor of Toyota. In the order, the Administrative
      Law
      Judge decided that the hybrid transmission drive in the Toyota Prius and
      Highlander vehicles did not infringe Claim 7 in our U.S. Patent No. 5,067,932
      and that we had not satisfied certain other legal requirements that would
      support an exclusion order against Toyota. On review of the final initial
      determination, the full ITC decided to take no position on the Administrative
      Law Judge’s findings concerning the economic prong of the domestic industry
      requirement. The remainder of the initial determination became the ITC final
      determination. On April 30, 2007, the ITC terminated the investigation with
      a
      finding of no violation of Section 337 of the Tariff Act of
      1930.





On
      September 19, 2007, we filed an appeal of the ITC’s decision with the Court of
      Appeals for the Federal Circuit (“CAFC”) which heard oral arguments on April 11,
      2008. In May 2008, the CAFC generally affirmed the ITC’s decision. We are
      currently reviewing with counsel as to further steps that we may take in this
      case. Until we complete this review, our patent infringement action brought
      in
      the United States District Court in Florida is stayed.





We
      do not
      believe there are any pending or threatened legal proceedings against us that,
      if adversely determined, would have a material adverse effect on
      us.





**Item
      1A. Risk Factors.**




There
      have been no material changes in our risk factors since the filing of our annual
      report for the year ended December 31, 2007 on Form 10-KSB.




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




None.




**Item
      3. Defaults Upon Senior Securities.**




None.




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




None.




**Item
      5. Other Information.**




None.




28








**Item
              6.**
            **Exhibits****Exhibit
                No.**
            
            **Description**3.10
            
            Certificate
                of Elimination of Series C Preferred Stock. (1)10.1
            
            Securities
                Purchase Agreement dated as of January 17, 2007 among Solomon
                Technologies, Inc. and each purchaser identified on the signature
                pages
                thereto. (2)10.2
            
            Form
                of Variable Rate Self-Liquidating Senior Secured Convertible Debentures.
                (2)10.3
            
            Registration
                Rights Agreement, dated as of January 17, 2007, among Solomon
                Technologies, Inc. and each purchaser identified on the signature
                pages
                thereto. (2)10.4
            
            Form
                of Common Stock Warrant. (2)10.5
            
            Security
                Agreement dated as of January 17, 2007 among Solomon Technologies,
                Inc.
                and each purchaser identified on the signature pages thereto.
                (2)10.6
            
            Redemption
                and Conversion Agreement dated as of January 17, 2007 among Solomon
                Technologies, Inc. and the holders of Series C preferred stock.
                (2)10.7
            
            Employment
                Agreement, dated as of January 27, 2007, by and between Solomon
                Technologies, Inc. and Gary G. Brandt. (3)10.8
            
            Option
                Agreements, dated as of February 5, 2007, by and between Solomon
                Technologies, Inc. and Gary G. Brandt.(3)10.9
            
            Stock
                Restriction Agreement, dated as of February 5, 2007, by and between
                Solomon Technologies, Inc. and Gary G. Brandt. (3)10.10
            
            Incentive
                Compensation Agreement dated May 1, 2007 by and between Solomon
                Technologies, Inc. and Peter W. DeVecchis, Jr.(4)10.11
            
            Employment
                Agreement, dated as of May 31, 2007, by and between Solomon Technologies,
                Inc. and Jack Worthen. (4)10.12
            
            Asset
                Purchase Agreement, dated as of June 1, 2007 by and among Solomon
                Technologies, Inc. and DEL-INC Acquisition LLC and Deltron, Inc.
                and its
                subsidiaries and shareholders, and related
                amendments.(4)10.13
            
            Option
                Agreements, dated as of June 4, 2007, by and between Solomon Technologies,
                Inc. and Jack Worthen.(4)10.14
            
            Amendments
                dated as of August 9, 2007, August 16, 2007, August 24, 2007, August
                31,
                2007, and September 4, 2007 to the Asset Purchase Agreement, dated
                as of
                June 1, 2007, by and among Solomon Technologies, Inc. and DEL-INC
                Acquisition LLC and Deltron, Inc. and its subsidiaries and shareholders.
                (5)10.15
            
            Amendment
                Agreement, dated as of August 24, 2007, between Solomon Technologies,
                Inc.
                and each debenture purchaser identified on the signature pages thereto.
                (5)10.16
            
            Acquisition
                Line of Credit Agreement, dated as of August 24, 2007, between Solomon
                Technologies, Inc. and JMC Venture Partners LLC. (5)10.17
            
            Securities
                Purchase Agreement dated as of August 30, 2007, between Solomon
                Technologies, Inc. and each purchaser identified on the signature
                pages
                thereto. (5)10.18
            
            Form
                of Variable Rate Self-Liquidating Senior Secured Convertible Debentures.
                (5)10.19
            
            Registration
                Rights Agreement, dated as of August 30, 2007, between Solomon
                Technologies, Inc. and each purchaser identified on the signature
                pages
                thereto. (5)10.20
            
            Form
                of Common Stock Warrant. (5)10.21
            
            Form
                of Legal Opinion. (5)10.22
            
            Security
                Agreement dated as of August 30, 2007, between Solomon Technologies,
                Inc.
                and each purchaser identified on the signature pages thereto.
                (5)10.23
            
            Form
                of Subsidiary Guarantee. (5)10.24
            
            Form
                of Lock-Up Agreement. (5)10.25
            
            Escrow
                Agreement dated as of August 30, 2007, among Solomon Technologies,
                Inc.
                and each purchaser identified on the signature pages thereto and
                Davis
                & Gilbert LLP. (5)10.26
            
            Secured
                Promissory Note Loan, Security and Pledge Agreement dated as of September
                5, 2007, between Del-Inc Acquisition LLC and JMC Venture Partners
                LLC.
                (5)




29





10.27
            
            Secured
                Promissory Note dated September 5, 2007, issued to JMC Venture Partners
                LLC. (5)10.28
            
            Guaranty
                Agreement dated as of September 5, 2007, by Solomon Technologies,
                Inc. in
                favor of JMC Venture Partners LLC. (5)10.29
            
            Guaranty
                Agreement dated as of September 5, 2007, by Corporacion Delinc, S.A.
                de
                C.V. in favor of JMC Venture Partners LLC. (5)10.30
            
            Pledge
                and Security Agreement dated as of September 5, 2007, by Corporacion
                Delinc, S.A. de C.V. and JMC Venture Partners LLC. (5)10.31
            
            Agreement
                dated as of September 18, 2007, among Solomon Technologies, Inc.,
                Woodlaken LLC, Jezebel Management Corporation, Pinetree (Barbados),
                Inc.,
                Coady Family LLC, Jezebel Management Corporation, Pinetree (Barbados),
                Inc., Coady Family LLC, F. Jay Leonard, Peter and Barbara Carpenter,
                Pascal Partners, LLC, Steven Kilponen, Millennium Trust Company LLC
                Custodian FBO Joseph Cooper Rollover IRA 90M020013 and Millenium
                Trust
                Company LLC Custodian FBO Steven Kilponen, Millennium Company LLC
                Custodian FBO Steven Kilponen IRA Rollover Account #90N727012.
                (5)10.32
            
            Amendment
                Agreement by and among Solomon Technologies, Inc. dated as of October
                25,
                2007 and each debenture purchaser identified on the signature pages
                thereto. (6)10.33
            
            Amendment
                Agreement dated August 17, 2007 to Securities Purchase Agreement
                dated
                August 16, 2006 among Solomon Technologies, Inc. and each purchaser
                identified on the signature page thereto. (6)10.34
            
            Audited
                Financial Statements of Deltron Inc. as of and for the years ended
                December 31, 2006 and 2005 (7)10.35
            
            Unaudited
                Interim Financial Statements of Deltron Inc. as of and for the six
                months ended June 30, 2007 and 2006 (7)10.36
            
            Unaudited
                Pro Forma Condensed Combined Financial Statements of Solomon
                Technologies, Inc. and Deltron, Inc. (7)10.37
            
            Agreement
                and Mutual Release between Gary G. Brandt and Solomon Technologies,
                Inc.
                dated January 10, 2008 (8)10.38
            
            Gary
                G. Brandt 2008 Consulting Agreement and Plan between Gary G. Brandt
                and
                Solomon Technologies, Inc. dated January 10, 2008 (8)10.39
            
            2008
                Employment Agreement and Plan between Gary M. Laskowski and Solomon
                Technologies, Inc. dated January 15, 2008 (8)10.40
            
            2008
                Employment Agreement and Plan between Michael A. D’Amelio and Solomon
                Technologies, Inc. dated January 15, 2008 (8)10.41
            
            Waiver
                Agreement between Alpha Capital Anstalt and Solomon Technologies,
                Inc.
                dated January 2008 (8)10.42
            
            Waiver
                Agreement between Double U Master Fund, LP and Solomon Technologies,
                Inc.
                dated January 2008 (8)10.43
            
            Waiver
                Agreement between Cornix Management, LLC and Solomon Technologies,
                Inc.
                dated January 2008 (8)10.44
            
            Waiver
                Agreement between Harborview Master Fund LP and Solomon Technologies,
                Inc.
                dated January 2008 (8)10.45
            
            Waiver
                Agreement between Nite Capital LP and Solomon Technologies, Inc.
                dated
                January 2008 (8)10.46
            
            Waiver
                Agreement between Rockmore Investment Master Fund Ltd. and Solomon
                Technologies, Inc. dated January 2008 (8)10.47
            
            Waiver
                and Amendment Agreement between Bridgepoint Master Fund Ltd. and
                Solomon
                Technologies, Inc. dated February 4, 2008 (8)10.48
            
            Amendment
                Agreement between Harborview Master Fund LP as successor-in-interest
                to
                Nite Capital LP and Solomon Technologies, Inc. dated February 29,
                2008
                (8)10.49
            
            Amendment
                Agreement between Harborview Master Fund LP and Solomon Technologies,
                Inc.
                dated March 3, 2008 (8)10.50
            
            Second
                Amendment Agreement by and among Truk Opportunity Fund, LLC, Truk
                International Fund, LP and Shelter Island Opportunity Fund, Ltd.
                and
                Solomon Technologies, Inc. dated March 27, 2008 (8)10.51
            
            Amendment
                and Waiver Agreement between Iroquois Master Fund, Ltd. and Solomon
                Technologies, Inc. dated February 5, 2008 (8)10.52
            
            Amendment
                Agreement between Alpha Capital Anstalt and Solomon Technologies,
                Inc.
                dated April 15, 2008 (9)10.53
            
            Warrant
                Exercise Agreement between Alpha Capital Anstalt and Solomon Technologies,
                Inc. dated April 15, 2008 (9)10.54
            
            Amendment
                Agreement between Iroquois Master Fund, Ltd and Solomon Technologies,
                Inc.
                dated April 15, 2008 (9)10.55
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Shelter Island Opportunity Fund, LLC. and Solomon Technologies, Inc.
                dated
                May 2, 2008 (9)10.56
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Truk
                Opportunity Fund, LLC. and Solomon Technologies, Inc. dated May 2,
                2008
                (9)10.57
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Truk
                International Fund, LLC. and Solomon Technologies, Inc. dated May
                2, 2008
                (9)10.58
            
            Amendment
                Agreement between Cornix Management LLC and Solomon Technologies,
                Inc.
                dated May 2, 2008 (9)10.59
            
            Amendment
                Agreement between Double U Master Fund, LP and Solomon Technologies,
                Inc.
                dated May 2, 2008 (9)




30




10.60
            
            Amendment
                Agreement between Rockmore Investment Master Fund Ltd and Solomon
                Technologies, Inc. dated May 2, 2008 (9)10.61
            
            Warrant
                Exercise Agreements between Fort Mason Partners, L.P. and Fort Mason
                Master, L.P. and Solomon Technologies, Inc. May 2, 2008
                (9)10.62
            
            Warrant
                Exercise Agreement between Harborview Master Fund LP. and Solomon
                Technologies, Inc. May 2, 2008 (9)10.63
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                BridgePointe Master Fund Ltd. and Solomon Technologies, Inc. dated
                May 13,
                2008 (9)10.64
            
            Professional
                Services Agreement between Bryan Delano and Solomon Technologies,
                Inc.
                dated May 15, 2008 (9)10.65
            
            Professional
                Services Agreement between Patrick Rowland and Solomon Technologies,
                Inc.
                dated May 15, 2008 (9)10.66
            
            Professional
                Services Agreement between John Iacobelli and Solomon Technologies,
                Inc.
                dated May 15, 2008 (9)10.67
            
            Supplemental
                Employment Agreement between and Peter W. DeVecchis, Jr. and Solomon
                Technologies, Inc. dated May 19, 2008 (9)10.68
            
            Consulting
                Project: Strategic and Marketing Analysis of Deltron and Technipower
                subsidiaries of Solomon Technologies, Inc. by Thomas Kell dated March
                24,
                2008 (9)16.1
            
            Letter
                from UHY LLP to the Securities and Exchange Commission dated May
                31, 2007
                (5)31.1
            
            Certification
                by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002( 9)31.2
            
            Certification
                by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 (9)32.1
            
            Certification
                by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 (9)32.2
            
            Certification
                by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 (9)





(1)
            Incorporated
                by reference from Amendment No. 4 to the Registration Statement on
                Form
                SB-2, File No. 333-13820, filed on May 9, 2007.(2)
            Incorporated
                by reference from the Current Report on Form 8-K filed on January
                18,
                2007.(3)
            Incorporated
                by reference from Amendment No. 4 to the Registration Statement on
                Form
                SB-2, File No. 333-13820, filed on May 9, 2007.(4)
            Incorporated
                by reference from the Quarterly Report on Form 10-QSB dated August
                20,
                2007.(5)
            Incorporated
                by reference from the Registration Statement on Form SB-2, File No.
                333-146424, filed on October 1, 2007.(6)
            Incorporated
                by reference from the Quarterly Report on Form 10-QSB dated November
                15,
                2007.(7)
            Incorporated
                by reference from the Current Report on Form 8-K/A filed on November
                19,
                2007.(8)
            Incorporated
                by reference from the Annual Report on Form 10-KSB filed April 15,
                2008.(9)
            Filed
                herewith.





**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934,
      as amended, Solomon Technologies, Inc. has duly caused this report to be signed
      on its behalf by the undersigned thereunto duly authorized.





Dated:
      May 20, 2008





**SOLOMON
      TECHNOLOGIES, INC.**






By:
            
            /s/ Gary M. LaskowskiGary
                M. Laskowski
              Acting
                Principal Executive Officer
              (principal
                executive officer)By:
            
            /s/ Samuel F. OcchipintiSamuel
                F. Occhipinti
              Chief
                Financial Officer
              (principal
                financial and accounting officer)




31




**Exhibit
      Index**





**Exhibit
                No.**
            
            **Description**10.52
            
            Amendment
                Agreement between Alpha Capital Anstalt and Solomon Technologies,
                Inc.
                dated April 15, 200810.53
            
            Warrant
                Exercise Agreement between Alpha Capital Anstalt and Solomon Technologies,
                Inc. dated April 15, 200810.54
            
            Amendment
                Agreement between Iroquois Master Fund, Ltd and Solomon Technologies,
                Inc.
                dated April 15, 200810.55
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Shelter Island Opportunity Fund, LLC. and Solomon Technologies, Inc.
                dated
                May 2, 200810.56
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Truk
                Opportunity Fund, LLC. and Solomon Technologies, Inc. dated May 2,
                200810.57
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                Truk
                International Fund, LLC. and Solomon Technologies, Inc. dated May
                2,
                200810.58
            
            Amendment
                Agreement between Cornix Management LLC and Solomon Technologies,
                Inc.
                dated May 2, 200810.59
            
            Amendment
                Agreement between Double U Master Fund, LP and Solomon Technologies,
                Inc.
                dated May 2, 200810.60
            
            Amendment
                Agreement between Rockmore Investment Master Fund Ltd and Solomon
                Technologies, Inc. dated May 2, 200810.61
            
            Warrant
                Exercise Agreements between Fort Mason Partners, L.P. and Fort Mason
                Master, L.P. and Solomon Technologies, Inc. May 2, 200810.62
            
            Warrant
                Exercise Agreement between Harborview Master Fund LP. and Solomon
                Technologies, Inc. May 2, 200810.63
            
            Reduction
                in Exercise Price of Warrants and Notice of Cashless Exercise between
                BridgePointe Master Fund Ltd. and Solomon Technologies, Inc. dated
                May 13,
                200810.64
            
            Professional
                Services Agreement between Bryan Delano and Solomon Technologies,
                Inc.
                dated May 15, 200810.65
            
            Professional
                Services Agreement between Patrick Rowland and Solomon Technologies,
                Inc.
                dated May 15, 200810.66
            
            Professional
                Services Agreement between John Iacobelli and Solomon Technologies,
                Inc.
                dated May 15, 200810.67
            
            Supplemental
                Employment Agreement between and Peter W. DeVecchis, Jr. and Solomon
                Technologies, Inc. dated May 19, 200810.68
            
            Consulting
                Project: Strategic and Marketing Analysis of Deltron and Technipower
                subsidiaries of Solomon Technologies, Inc. by Thomas Kell dated March
                24,
                200831.1
            
            Certification
                by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200231.2
            
            Certification
                by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 200232.1
            
            Certification
                by Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 200232.2
            
            Certification
                by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002




32