**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
      10-Q**


(Mark
      One)





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





For
      the
      quarterly period ended June 30, 2008


or





o
            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 x No  ̈





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company. *See* the
      definitions of "large accelerated filer," "accelerated filer" and "smaller
      reporting company" in Rule 12b-2 of the Securities Exchange Act of 1934.




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





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
x





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, 135,082,207 shares outstanding at August 8,
      2008









**INDEX**





Page
              Number**PART
                I. FINANCIAL INFORMATION**Item
                1. Financial Statements
            
            1Condensed
                Consolidated Balance Sheets at June 30, 2008 (Unaudited) and December
                31,
                2007
            
            1Condensed
                Consolidated Statements of Operations - Three months and six months
                ended
                June 30, 2008 and 2007 (Unaudited)
            
            2Condensed
                Consolidated Statements of Cash Flows - Six months ended June 30,
                2008 and
                2007 (Unaudited)
            
            3Condensed
                Consolidated Statement of Changes in Capital Deficiency at June 30,
                2008
                (Unaudited)
            
            4Notes
                to Condensed Consolidated Financial Statements (Unaudited)
            
            5Item
                2.Management’s
                Discussion and Analysis of Financial Condition and Results of 
                Operations
            
            23Item
                4T. Controls
                and Procedures
            
            30**PART
                II. OTHER INFORMATION**Item
                1. Legal Proceedings
            
            33Item
                1A. Risk Factors.
            
            33Item
                2. Unregistered Sales of Equity Securities and Use of
                Proceeds.
            
            33Item
                3. Defaults Upon Senior Securities.
            
            33Item
                4. Submission of Matters to a Vote of Security Holders.
            
            34Item
                5. Other Information
            
            34Item
                6. Exhibits
            
            34**SIGNATURE
                PAGE**
            
            37




**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 subsidiaries, Technipower LLC, Deltron Inc. and Town Creek
      Industries, Inc.







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




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




**Solomon
        Technologies, Inc.**
 Condensed
        Consolidated Balance Sheets
 (Note
        7)
  **June
                  30,**
              
              **December
                  31,****2008**
              
              **2007**(Unaudited)AssetsCurrent
                  assetsCash
              
              $
              1,425,919
              
              $
              425,401Accounts
                  receivable, net of allowance for doubtful accounts of
                  $2,200
              
              
              1,237,079
              
              
              1,435,754Inventories,
                  net
              
              
              1,816,820
              
              
              1,962,817Due
                  from related parties
              
              
              112,130
              
              
              54,041Prepaid
                  expenses and other current assets
              
              
              229,379
              
              
              134,933Total
                  current assets
              
              
              4,821,327
              
              
              4,012,946Noncurrent
                  assetsProperty
                  and equipment, net
              
              
              1,650,042
              
              
              1,712,618Goodwill
              
              
              1,625,576
              
              
              1,625,576Intangible
                  assets, net
              
              
              1,468,181
              
              
              1,717,011Deferred
                  debt costs, net
              
              
              147,500
              
              
              453,225Other
                  assets
              
              
              -
              
              
              -4,891,299
              
              
              5,508,430$
              9,712,626
              
              $
              9,521,376Liabilities
                  and Capital DeficiencyCurrent
                  liabilitiesRevolving
                  note payable to bank
              
              $
              1,200,000
              
              $
              1,100,000Accounts
                  payable
              
              
              1,532,807
              
              
              1,402,546Accrued
                  compensation (including $1,935,998 and $2,137,851 past
                  due)
              
              
              2,185,469
              
              
              2,442,150Other
                  accrued expenses
              
              
              1,632,338
              
              
              1,304,203Notes
                  payable (including $204,420 and $0 past due)
              
              
              768,986
              
              
              564,566Notes
                  payable to related parties (including $2,875,000 and $125,000 past
                  due)
              
              
              4,706,931
              
              
              4,706,931Convertible
                  debentures payable, (net of debt discount of $833,954 and
                  $168,506)
              
              
              2,343,693
              
              
              4,815,278Total
                  current liabilities
              
              
              14,370,224
              
              
              16,335,674Capital
                  DeficiencyPreferred
                  stock, par value $0.001 per share;authorized
                  20,000,000 shares; 7,450,000 sharesavailable;
                  2,400 shares designated as series D convertiblepreferred
                  stock; 1,500 issued and outstanding
              
              
              2
              
              
              -Common
                  stock, par value $0.001 pershare;
                  authorized 500,000,000 shares;120,823,896
                  and 48,492,569 shares issued and outstanding
              
              
              120,824
              
              
              48,492Additional
                  paid-in capital
              
              
              53,923,279
              
              
              48,503,156Accumulated
                  deficit
              
              
              (58,701,703
              )
              
              (55,365,946
              )Capital
                  Deficiency
              
              
              (4,657,598
              )
              
              (6,814,298
              )$
              9,712,626
              
              $
              9,521,376


See
        accompanying notes to condensed financial statements.
  1




**Solomon
        Technologies, Inc.**
 Condensed
      Consolidated Statements of Operations


(Unaudited)




**Three
                Months Ended June 30,**
            
            **Six
                Months Ended June 30,****2008**
            
            **2007**
            
            **2008**
            
            **2007**Net
                sales
            
            $
            2,554,642
            
            $
            1,638,413
            
            $
            5,045,426
            
            $
            3,070,010Cost
                of goods sold
            
            
            1,706,014
            
            
            836,658
            
            
            3,222,411
            
            
            1,615,945Gross
                profit
            
            
            848,628
            
            
            801,755
            
            
            1,823,015
            
            
            1,454,065Operating
                expenses:Selling,
                general and administrative
            
            
            1,112,934
            
            
            1,294,800
            
            
            2,226,889
            
            
            2,546,738Research
                and development
            
            
            306,160
            
            
            305,462
            
            
            698,417
            
            
            559,1261,419,094
            
            
            1,600,262
            
            
            2,925,306
            
            
            3,105,864-Operating
                loss
            
            
            (570,466
            )
            
            (798,507
            )
            
            (1,102,291
            )
            
            (1,651,799
            )Other
                expensesInterest
                expense
            
            
            (1,342,466
            )
            
            (2,682,060
            )
            
            (2,197,511
            )
            
            (4,876,000
            )Other
                income (expenses)
            
            
            (157
            )
            
            18,684
            
            
            (35,955
            )
            
            18,684(1,342,623
            )
            
            (2,663,376
            )
            
            (2,233,466
            )
            
            (4,857,316
            )Net
                loss
            
            
            (1,913,089
            )
            
            (3,461,883
            )
            
            (3,335,757
            )
            
            (6,509,115
            )Preferred
                stock dividends
            
            
            -
            
            
            -
            
            
            -
            
            
            (1,413,031
            )Loss
                applicable to commonstockholders
            
            $
            (1,913,089
            )
            $
            (3,461,883
            )
            $
            (3,335,757
            )
            $
            (7,922,146
            )Basic
                and diluted net loss percommon
                share
            
            $
            (0.02
            )
            $
            (0.09
            )
            $
            (0.04
            )
            $
            (0.22
            )Weighted
                average common sharesoutstanding
                - basic and diluted
            
            
            94,396,119
            
            
            37,271,366
            
            
            75,115,942
            
            
            36,368,537




See
        accompanying notes to condensed financial statements.
  2




**Solomon
      Technologies, Inc.**


Condensed
      Consolidated Statement of Changes in Capital Deficiency





**Series
                D****Convertible**
              **Preferred**
            
            **Common**
            
            **Additional****Stock**
            
            **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**
            **)**Issuance
                of Series D convertible preferred stock
            
            
            300
            
            
            
            
            
            
            
            
            
            
            
            250,000
            
            
            
            
            
            250,000Issuance
                of Series D convertible preferred stock associated withissuance
                of convertible debentures
            
            
            1,200
            
            
            2
            
            
            
            
            
            
            
            
            489,737
            
            
            
            
            
            489,739Repricing
                of common stock warrants
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            28,288
            
            
            
            
            
            28,288Cashless
                exercise of common stock warrants
            
            
            
            
            
            
            
            
            2,877,189
            
            
            2,877
            
            
            (2,877
            )
            
            
            
            
            -Common
                shares issued as inducement to exercise common stock
                warrants
            
            
            
            
            
            
            
            
            2,906,250
            
            
            2,906
            
            
            98,813
            
            
            
            
            
            101,719Common
                shares issued as payment for convertible debt and interest
            
            
            
            
            
            
            
            
            57,827,604
            
            
            57,828
            
            
            4,207,221
            
            
            
            
            
            4,265,049Common
                shares issued as incentive for debenture amendment and
                waivers
            
            
            
            
            
            
            
            
            432,533
            
            
            433
            
            
            51,217
            
            
            
            
            
            51,650Common
                shares issued for fees and services
            
            
            
            
            
            
            
            
            4,757,751
            
            
            4,758
            
            
            281,783
            
            
            
            
            
            286,541Common
                shares issued to employees and directors as compensation
            
            
            
            
            
            
            
            
            3,600,000
            
            
            3,600
            
            
            442,302
            
            
            
            
            
            445,902Stock
                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
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (341,601
            )
            
            
            
            
            (341,601
            )Net
                loss
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            (3,335,757
            )
            
            (3,335,757
            )**Balance
                at June 30, 2008 (unaudited)**
            
            
            1,500
            
            $
            2
            
            
            120,823,896
            
            $
            120,824
            
            $
            53,923,279
            
            $
            (58,701,703
            )
            $
            (4,657,598
            )




See
      accompanying notes to condensed financial statements.




3


**Solomon
        Technologies, Inc.**


Condensed
        Consolidated Statements of Cash Flows
 (Unaudited)
  **Six
                  Months Ended June 30,****2008**
              
              **2007****Operating
                  activities**Net
                  loss
              
              $
              (3,335,757
              )
              $
              (6,509,115
              )Adjustments
                  to reconcile net loss to cash used in operating activitiesCommon
                  shares issued to employees and directors as compensation
              
              
              361,072
              
              
              524,426Stock
                  option grants
              
              
              (341,601
              )
              
              -Common
                  stock and warrants issued for services
              
              
              286,541
              
              
              157,115Accretion
                  and amortization of debt costs included ininterest
                  expense
              
              
              1,848,877
              
              
              4,341,143Loss
                  on disposal of assets
              
              
              -
              
              
              1,226Depreciation
              
              
              77,888
              
              
              21,177Amortization
              
              
              248,831
              
              
              197,164Change
                  in operating assets and liabilitiesAccounts
                  receivable
              
              
              198,675
              
              
              75,885Inventories
              
              
              145,997
              
              
              (6,568
              )Prepaid
                  expenses and other current assets
              
              
              (94,443
              )
              
              (80,869
              )Accounts
                  payable and accrued expenses
              
              
              421,134
              
              
              691,225Net
                  cash used in operating activities
              
              
              (182,786
              )
              
              (587,191
              )**Investing
                  Activities**Purchase
                  of equipment
              
              
              (15,314
              )
              
              (81,013
              )Net
                  cash used in investing activities
              
              
              (15,314
              )
              
              (81,013
              )**Financing
                  Activities**Proceeds
                  from revolving note payable
              
              
              100,000
              
              
              250,000Proceeds
                  from issuance of converible debentures
              
              
              965,000
              
              
              5,135,913Repayments
                  of notes payable
              
              
              (15,000
              )
              
              (566,150
              )Proceeds
                  from issuance of preferred stock
              
              
              250,000
              
              
              -Redemption
                  of preferred stock
              
              
              -
              
              
              (3,350,020
              )Proceeds
                  from Rule 16B
              
              
              -
              
              
              32,950Repayments
                  from related parties
              
              
              -
              
              
              31,860Advances
                  to related parties
              
              
              (58,089
              )
              
              -Debt
                  issuance costs
              
              
              (43,293
              )
              
              (220,621
              )Repayment
                  of capital lease obligations
              
              
              -
              
              
              (7,546
              )Net
                  cash provided by financing activities
              
              
              1,198,618
              
              
              1,306,386**Change
                  in cash**
              
              
              1,000,518
              
              
              638,182**Cash
                  at beginning of period**
              
              
              425,401
              
              
              97,777**Cash
                  at end of period**
              
              $
              1,425,919
              
              $
              735,959Supplemental
                  disclosure:Cash
                  paid for interest
              
              **$**
              **79,336**
              
              **$**
              **136,072**


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 six-months ended June 30,
        2008,
        the Company had a net loss of $3,335,757 and used cash of $197,786 in operating
        activities. As of June 30, 2008, the Company has a working capital deficiency
        of
        $9,548,897. In addition, the Company is delinquent for the payment of payroll
        taxes (Note 9), a note payable of $125,000 to a related party (Note 7) ),
        a
        monthly redemption payment to a holder of its Variable Rate Self-Liquidating
        Senior Secured Convertible Debentures (Note 13) and compensation 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 and is currently
        in
        discussion with certain of its lenders regarding various note maturities.
        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 consolidated condensed balance sheet as of June 30, 2008 and
        the
        consolidated condensed statements of operations for the three and six month
        periods ended June 30, 2008 and 2007, cash flows for the six month periods
        ended
        June 30, 2008 and 2007 and changes in capital deficiency for the six month
        period ended June 30, 2008 have not been audited, but have been prepared
        in
        conformity with accounting principles generally accepted in the United States
        for interim financial information and with the instructions to Form
        10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”).
        The Consolidated Condensed Balance Sheet as of December 31, 2007 has been
        derived from audited financial statements. Certain information and note
        disclosures normally included in annual financial statements prepared in
        accordance with generally accepted accounting principles have been condensed
        or
        omitted pursuant to those rules and regulations, although the company believes
        that the disclosures made are adequate to make the information not
        misleading.  In
        the
        opinion of management, this interim information includes all material
        adjustments, which are of a normal and recurring nature, necessary for a
        fair
        presentation.  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.
  5
  **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.
 
 **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 are
        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
        carryforwards 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 from the filing date, the Company's,
        2004,
        2005, 2006 and 2007 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 applicable to common shareholders
        by the
        weighted average number of common shares outstanding. At June 30, 2008 and
        2007,
        the following securities were not included in the computation of diluted
        net
        loss per share, on as converted / exercised basis as their effect would have
        been anti-dilutive:
  *2008*
              
              *2007*Options
                  to purchase common stock
              
              
              1,020,000
              
              
              1805,000Warrants
                  to purchase common stock
              
              
              386,000
              
              
              2,392,000Series
                  D Convertible Preferred Stock
              
              
              30,000,000
              
              
              -Convertible
                  debentures (a)
              
              
              9,079,000
              
              
              2,675,000Notes
                  payable (convertible)
              
              
              7,431,000
              
              
              -47,916,000
              
              
              6,872,000
 
 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 and second quarters of 2008 the Company has made the required monthly
        redemptions in common stock shares.
 
 (a)
              Based
                  on the June 30, 2008 market price of the Company’s common stock shares,
                  the Company would need to issue approximately 186 million shares
                  to redeem
                  the entire outstanding principal balance of the convertible debentures
                  at
                  June 30, 2008. Subsequent to June 30, 2008, the Company has made
                  additional redemptions by issuing shares of common stock (Note
                  13).
  **Recent
        Accounting Pronouncements Adopted**
 
 In
        February 2007, the Financial Accounting Standards Board (“FASB”) issued
        Statement of Financial Accounting Standards (“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 has not elected
        to fair value its financial assets and liabilities under SFAS No. 159 and
        therefore 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 issued 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 is not expected to have a material effect on the
        Consolidated Financial Statements.
  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.
  8
  **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 six month period ended June 30, 2008 and 2007
        was
        ($341,601) and 459,266, respectively. Such compensation expense for the six
        months ended June 30, 2008 was affected by a forfeiture of 500,000 options
        granted to the Company’s former CEO (Note 6), which amounted to
        ($370,920).
 
 A
        summary
        of the changes in stock options outstanding for the six months ended June
        30,
        2008 is as follows:
  WeightedAverageShares
              
              Exercise
                  PriceOutstanding
                  at January 1, 2008
              
              
              1,770,335
              
              $
              1.43Granted
              
              
              -
              
              
              -Forfeited
              
              
              (750,000
              )
              
              1.95Outstanding
                  at June 30, 2008
              
              
              1,020,335
              
              $
              1.05
  The
        intrinsic value of outstanding and exercisable options was $0 at June 30,
        2008.
        Total compensation expense related to non-vested awards not yet recognized
        is
        $30,825 and the weighted average period over which it is expected to be
        recognized is 1.37 years. Management expects that all non-vested awards will
        vest.
 
 The
        following table summarizes the Company's stock options at June 30, 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
              
              
              2.98
              
              $
              .60
              
              
              455,335
              
              $
              0.73$1.45
                  to $2.09
              
              
              405,000
              
              
              3.00
              
              $
              1.74
              
              
              405,000
              
              $
              1.741,020,335
              
              
              
              
              
              
              
              
              860,335
 
 9
  **Stock
        Warrants**
 
 A
        summary
        of the changes in warrants outstanding for the six-months ended June 30,
        2008
        follows:
  **Number
                  of**
              
              **Weighted****Average****Exercise****Warrants**
              
              **Price**Outstanding
                  and exercisable at December 31, 2007
              
              
              3,292,250
              
              $
              0.50Issued
              
              
              -
              
              
              -Cashless
                  exercise (Note 6)
              
              
              (2,906,250
              )
              
              0.001Outstanding
                  and exercisable at June 30, 2008
              
              
              386,000
              
              $
              1.67
 
 As
        further discussed in Note 6,  i n
        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,
        the Company 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 continued to hold
        debentures after July 1, 2008, received 993,751 shares for which the Company
        recognized a liability and interest expense as of June 30, 2008.
 
 **Stock
        Grants**
 
 For
        the
        six months ended June 30, 2008 and 2007, the Company recognized (income)
        expenses related to grants of the Company’s common stock of ($84,830) and
        $65,160 respectively. Stock grants compensation expense for the six months
        ended
        June 30, 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.
  10
  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 7).
 
 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
              
              $
              2,682,620Identifiable
                  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)
              
              
              (2,620
              )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
                Ended
                June
                  30,
                2007
              
              Six
                  Months Ended
                June
                  30,
                2007Net
                  revenues
              
              $
              2,857,365
              
              $
              5,424,172Net
                  loss
              
              $
              (3,972,788
              )
              $
              (7,341,419
              )Net
                  loss applicable to common stockholders
              
              $
              (3,972,788
              )
              $
              (8,754,450
              )Basic
                  and diluted net loss per share
              
              $
              (0.10
              )
              $
              (0.23
              )
  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.
  11
 
 **NOTE
        5 - INVENTORIES**
 
 Inventories
        at June 30, 2008 consist of the following:
 
 Raw
                  materials
              
              $
              856,631Work-in-process
              
              
              705,247Finished
                  goods
              
              
              254,942$
              1,816,820
  **NOTE
        6 - CAPITAL TRANSACTIONS**
 
 **Common
        Stock**
 
 During
        the six months ended June 30, 2008, the Company issued an aggregate of
        57,827,604 shares of common stock with an estimated fair value of $4,265,049
        to
        the amended January 2007 Debentures and August 2007 Debentures holders
        (collectively “Debentures Holders”) (Note7) as redemption of principal and
        related accrued interest of $3,056,139 and $1,208,910, respectively. The
        Company
        recorded additional interest expense of approximately $871,000 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 27,653,322 shares which were issued as full redemption of
        outstanding principal and interest of certain amended January 2007 Debentures
        with an outstanding principal balance of $1,253,898 under agreements to
        accelerate the maturity of such debentures (Note 7).
 
 During
        the six months ended June 30, 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 7, the agreements modified various
        terms of the Debentures including the deferment of certain monthly
        redemptions.
 
 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 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, received an additional one-half restricted share for each share received
        upon exercise of its warrants.
 
 The
        Company recorded a charge of $28,288, as interest expense, related to the
        change
        in the estimated fair value of the warrants due to the reduction in the exercise
        price of the warrants. The fair value of the warrants was computed using
        the
        Black-Scholes option pricing model. The Company assumed a risk-free interest
        rate of 3.36%, no dividends, expected volatility of approximately 176% and
        an
        expected warrant life of approximately 3 years. The warrant holders received
        an
        aggregate 2,877,189 shares of common stock in cashless exercise transactions
        for
        2,906,250 warrants. In accordance with the terms of the agreements, the Company
        also issued 2,906,250 common stock shares with a fair value of $101,719 as
        an
        inducement to exercise the warrants. The value of these inducement shares
        has
        been recorded as interest expense.
  12
  During
        the six months ended June 30, 2008, the Company issued 4,757,751 shares of
        common stock, with a fair value of $286,541 at the time of issuance, for
        fees
        and services.
 
 The
        Company issued an aggregate 3,640,000 shares of common stock with an estimated
        fair value of $499,310 to employees and directors during the six months ended
        June 30, 2008. Theses shares included 1,750,000 shares issued to two officers
        pursuant to employment agreements for current and past due compensation,
        495,000
        shares issued to directors as compensation for service on Board Committees,
        290,000 of restricted shares and 180,000 unrestricted shares to the Company’s
        President, 300,000 restricted shares to the Company’s Chief Financial Officer,
        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 six months ended June 30, 2008
        the
        Company issued to Mr. Brandt 167,000 shares of its common stock pursuant
        to the
        consulting agreement and 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 six months ended June
        30,
        2008 that it previously recognized for this award. Additionally, 500,000
        options
        to purchase the Company’s common stock were forfeited which resulted in
        reduction of expenses of ($370,920) (Note 3).
 
 **Preferred
        Stock**
 
 In
        June
        2008, in connection with the sale of the June 2008 Debentures (Note 7), the
        Company issued 1,200 shares of its Series D 0% Convertible Preferred Stock
        $0.001 Par Value (Preferred Stock). Each share of Preferred Stock has a stated
        value of $1,000 and is convertible into shares of common stock at $0.05 per
        share based on the stated value with potential conversion price resets based
        on
        the daily volume weighted average price of the common stock for 20 consecutive
        trading days prior to the sixteenth, nineteenth and twenty-four month
        anniversaries of the original issue date. The shares of Preferred Stock are
        convertible by the holders at any time into shares of the Company’s common
        stock. On or after January 1, 2009, the Company may force the conversion
        of
        Preferred Stock into its common stock if the daily volume weighted average
        price
        of the common stock for any 20 consecutive trading days equals or exceeds
        $0.25
        per share, subject to certain conditions. The Company may redeem outstanding
        shares of Preferred Stock by paying 110% its stated value. Shares of Preferred
        Stock do not have separate voting rights as a class (but do vote on an
“as-converted” to common stock basis), do not pay a dividend and do not have a
        liquidation preference.
 
 Also
        in
        June 2008, the Company issued 300 shares of its Preferred Stock to a purchaser
        that did not also purchase June 2008 Debentures. The aggregate purchase price
        for these shares was $250,000. These shares of Preferred Stock were otherwise
        issued on substantially the same terms and conditions of the Preferred Stock
        issued to the purchasers of the June 2008 Debentures.
 
 **NOTE
        7 - 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 in that amount. 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 $7,993 for the three months and $ 11,219
        and
        $15,986 for the six months ended June 30, 2008 and 2007, respectively. At
        June
        30, 2008 and December 31, 2007, the outstanding loan balance was $125,000
        and
        accrued interest of $32,813 and $21,594, 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 these notes to extend their
        maturity dates until September 30, 2007. To induce the noteholders to so
        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 note 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.
  13
 
 On
        September 28, 2007, the Company entered into an agreement with the noteholders
        pursuant to which the maturity date of the notes was extended to September
        7, 2008. To induce the holders to so extend the notes, the Company agreed
        to
        compensate the noteholders by an amount equal to 7% of the principal balance
        of
        the notes 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 share of common stock. 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 at June 30, 2008 and December 31, 2007, and the
        Company incurred interest expense of $54,807 and $51,220 for the three months
        and $109,615 and $ 101,881 for the six months ended June 30, 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”), an affiliate of Michael A. D'Amelio, a director and officer of Solomon,
        pursuant to which JMC agreed to provide the Company 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 one-time 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 agreed to register the shares for resale under the
        Securities Act of 1933, as amended, but has not yet done so. 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.
 
 At
        June
        30, 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 $164,688
        for
        the three months and $329,377 for the six months ended June 30, 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. JMC has waived defaults
        under this note through May 31, 2008 for certain covenants and through July
        31,
        2008 for certain other covenants. The Company is currently in discussion
        with
        JMC regarding the maturity of this note.
  14
  **Revolving
        Note Payable to Bank**
 
 Pursuant
        to Technipower LLC’s revolving note payable with a bank, which was modifided in
        June, 2008, Technipower LLC can borrow up to $1,200,000 based on a collateral
        formula inclusive of accounts receivable and certain classes of inventory.
        The
        note bears interest at the prime rate (5% at June 30, 2008), requires no
        principal amortization, and has a maturity date of August 30, 2008. The Company
        is currently in discussion with Citizens Bank regarding the maturity of this
        note. Amounts outstanding under the note were $1,200,000 at June 30, 2008
        with
        no additional availability. Interest expense for the Note was $27,729 and
        $16,119 for the three months and $45,139 and $36,573 for the six months ended
        June 30, 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 outside counsel, to a note
        payable (the “Note”). The 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 accept the note, the Company issued a warrant to purchase
        200,000 shares of the its 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 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 Note to D & G
        to a new note payable (the “January 2007 Promissory Note”) with an original
        principal of $182,000. The January 2007 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 Note
        of
        $182,000 plus unpaid interest of approximately $16,000 and approximately
        $330,000 of additional trade accounts payable to a new note payable (the
        “October 2007 Note”) with an original principal of $564,566. The original
        principal also includes an additional 7% (approximately $36,000) of the
        above amounts as an inducement. The October 2007 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 Note. Subject 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 Note
        was $564,566 at June 30, 2008 and December 31, 2007. The Company incurred
        interest expense of $16,891 and $5,445 for the three months and $ 33,782
        and
        $227,218 for the six months ended June 30, 2008 and 2007,
        respectively.
 
 **Note
        Payable to UHY LLP**
 
 On
        April
        16, 2008, the Company converted $219,420 of trade accounts payable to UHY
        LLP
        (“UHY”), the Company’s former auditors, to a promissory note payable (the “UHY
        Note”) with an original principal of $219,420. The principal balance of the UHY
        Note is payable as follows: $15,000 simultaneously with the execution of
        the
        note, twelve bi-weekly installments of $10,000 commencing May 23, 2008 and
        concluding on October 24, 2008 and a single final payment in the amount of
        $84,420 on October 10, 2008. No interest accrues on the principal balance
        unless
        an event of default occurs, in which case the principal balance will bear
        interest at 10% per annum from the date of default until a written waiver
        is
        obtained or the principal balance is paid in full. UHY may convert the unpaid
        principal amount at any time into shares of the Company’s common stock at a
        conversion price of $0.35 per share. The UHY Note also provides a 25% discount
        for prepayment in full prior to September 1, 2008.
  15
 
 The
        Company paid the initial $15,000 upon execution of the UHY Note but has not
        paid
        the subsequent bi-weekly installments. UHY, LLP has waived the default for
        the
        Company’s failure to make bi-weekly payments in through August 14,
        2008.
 
 At
        June
        30, 2008, the principal balance outstanding was $204,420. Interest expense
        for
        the three months and six months ended June 30, 2008 was $2,128.
  **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.
 The
        January 2007 Debentures bears 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 and six months ended June 30, 2008 and 2007, the Company incurred
        interest expense at 8% . The Company’s ability to pay interest with shares of
        common stock is 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 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 and for so long as the event of default is continuing, the January
        2007 Debentures bears default interest at a rate of the lesser of 15% per
        annum
        or the maximum rate permitted by applicable law.
  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 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 January 2007 Debentures will be decreased to equal such lower
        price.
        The foregoing adjustment to the conversion price does not apply to certain
        exempt issuances. 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 January 2007 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 through the redemption
        date of the January 2007 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 January 2007
        Debenture. 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. **
  16
 
 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 shares
        of
        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 the 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.
  Also,
        as
        a part of the modification of the January 2007 Debentures, the exercise price
        of
        the January Warrants was 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 warrants life of approximately 3 years. The exercise price
        of
        the Amended Warrants 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 does not apply to certain exempt issuances. All of the Amended
        Warrants were to expire January 17, 2012. 100,000 of the warrants issued
        in
        connection with the amended January 2007 Debentures were exercised in 2007.
  Under
        the
        terms of amended 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 or January 1, 2008, and on the first day of each month thereafter,
        the Company was required to redeem 1/16th of the outstanding principal balance
        in cash or, at the Company’s options, with shares of common stock. In June 2008,
        the required monthly redemption amount was amended to be 1/15 of the principal
        balance outstanding at July 1, 2008 (see below). The redemption in shares
        of
        common stock is subject to certain conditions, including the existence of
        an
        effective registration statement, unless waived. Any shares of common stock
        issued in connection with this redemption are valued at 82.5% of the average
        of
        the daily volume weighted average price for the 10 trading days prior to
        the
        redemption.
  17
 
 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 2007 Debentures (see below) 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 six months ended June 30, 2008 and 2007, the Company redeemed $2,884,261
        and
        $535,000 of the January 2007 Debentures plus the related accrued interest,
        respectively, 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 6). As of June 30, 2008 and December 31, 2007 the outstanding principal
        of
        the amended January 2007 Debentures amounted to $1,599,523 and $4,483,784,
        respectively. At June 30, 2008 debt discount relating to the amended January
        2007 Debentures has been fully expensed.
 
 Interest
        expense on the Company’s amended January 2007 Debentures and August 2007
        Debentures amounted to $969,899 and $2,520,254 for the three months and
        $1,468,190 and $ 4,247,022 for the six months ended June 30, 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 August 2007 Debenture. 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 June 30, 2008 and December 31, 2007, the unamortized discount
        relating to the warrants on the August 2007 Debentures amounted to $59,215
        and
        $168,506, respectively.
 
 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. 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
        through the redemption date of the August 2007 Debentures in accordance with
        EITF 00-27.
  18
 
 At
        December 31, 2007 the Company was in default of the August 2007 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.
 
 During
        the six months ended June 30, 2008, the Company redeemed $171,875 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 6). As of June 30, 2008 and December 31, 2007 the
        outstanding principal of the August 2007 Debentures amounted to $328,125
        and
        $500,000, respectively. Interest expense on the Company’s amended January 2007
        Debentures and August 2007 Debentures amounted to $969,899 and $2,520,254
        for
        the three months and $1,468,190 and $ 4,247,022 for the six months ended
        June
        30, 2008 and 2007, respectively.
 .
 **June
        2008 Debentures**
 
 On
        June
        26, 2008, the Company sold an aggregate of $1,250,000 principal amount of
        Variable Rate Self-Liquidating Senior Secured Convertible Debentures (the
“June
        2008 Debentures”) due October 1, 2009 at a discount of $250,000. Additionally,
        the Company issued 1,200 shares of Series D 0% Convertible Preferred Stock
        $0.001 par value, $1,000 stated value (“Series D Preferred Shares”) to the
        purchasers of the June 2008 Debentures (Note 6). The Company received gross
        proceeds of $1,000,000 from the issuance of the June 2008 Debentures and
        1,200
        Series D Preferred Shares, which were allocated to the June 2008 Debentures
        and
        Series D Preferred Shares based on the relative fair value of each instrument.
        The fair value of the June 2008 Debentures was determined using the the present
        value of expected cash flows discounted at related effective interest rate.
        The
        fair value of the Series D Preferred Stock was based on share price realized
        in
        a separate transaction (Note 6). The relative fair value of the preferred
        shares
        of $489,739 was recorded as an additional debt discount along with the original
        issue discount of $250,000 and fees paid directly to the lender of $35,000.
        At
        June 30, 2008, the unamortized debt discount related to the June 2008 Debentures
        was $774,739.
 
 The
        June
        2008 Debentures were issued under similar terms and conditions as the amended
        January 2007 and August 2007 Debentures, except if the Company elects to
        make
        monthly principal redemptions in common shares, the conversion price is based
        on
        80% of the volume weighted average price for ten consecutive trading days
        prior
        to the redemption. Interest is payable at the higher of 8% or LIBOR plus
        2%.
        Principal redemptions, which may be made in cash or common stock shares,
        commences on January 1, 2009 at one-tenth of the outstanding principal balance
        and continues on the first of each month through October 1, 2009.
 
 The
        June
        2008 Debentures are convertible at any time at the option of the holder into
        shares of common stock at $0.35 per share. Based and the conversion price
        and
        the closing market price for the Company’s common shares on the transaction
        date, the Company determined that the June 2008 Debentures did not contain
        a
        beneficial conversion feature.
 
 **Modifications
        to the amended January 2007 Debentures and August 2007
        Debentures**
  During
        the six months ended June 30, 2008, the Company had early redemptions of
        amended
        January 2007 Debenture with an aggregate face value of $1,253,898 by issuance
        of 27,653,322 common shares to the holders, valued at $1,684,499 and
        recorded the difference as additional interest expense.
  19
  Additionally,
        during the six months ended June 30, 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 holders to enter into the Agreement,
        the Company issued an aggregate of 350,000 restricted shares of the Company’s
        common stock (see Note 6). 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.
 In
          May
          2008, the amended 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, the Company issued to each debenture holder one restricted share
          of
          common stock for each share acquired upon the warrant exercise. In addition,
          each warrant holder that continued 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 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), each such holder, who continued to hold debentures
          after
          July 1, 2008, received an additional one-half restricted share for each
          share
          received upon exercise of its warrants. See Note 6 for the financial impact
          of
          this modification. This modification is considered not to be an extinguishment
          of debt.
  In
          June
          2008, in connection with the sale of the June 2008 Debentures, 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 amend and
          restate the maturity date of the amended January 2007 Debentures and August
          2007
          Debentures to September 1, 2009 and to adjust the Monthly Redemption Amount
          to
          1/15 of the outstanding principal amount as of July 1, 2008 plus accrued
          interest of the amended January 2007 Debentures and August 2007 Debentures.
          Certain Equity Conditions relating to the Company’s right to make monthly
          redemption payments in shares of common stock were also amended.
  **NOTE
        8 - 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 September 19, 2007, the Company
        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. On July 18, 2008, the Company
        requested that the stay imposed on the patent infringement action we brought
        in
        the United States District Court in Florida be stayed and the case
        was reopened.
  **NOTE
        9 - ACCRUED AND UNPAID PAYROLL TAXES**
 
 At
        June
        30, 2008 and December 31, 2007, the Company has accrued interest and penalties
        of $126,394 and $169,000, respectively related to payroll taxes. This amount
        includes additional interest of approximately $80,000 charged to
        operations during the six month period ended June 30, 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. The Company failed to make certain payments during 2008,
        however in July 2008, the Company made those
        missed payments.
 
 **NOTE
        10 - 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 six months ended June 30, 2008 and 2007
        was
        $30,000 for each six-month period. Total expense for the three months ended
        June
        30, 2008 and 2007 was $15,000 for each three-month period.
 
 At
        June
        30, 2008, other accrued expenses include $150,000 due to Jezebel Management
        Corp. This amount was advanced by Jezebel Management Corp. to pay expenses
        of a
        potential acquisition which the Company has elected not to pursue. This amount
        was repaid in July 2008.
  20
  **NOTE
        11 - 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 and commercial markets.
  Segment
        financial information follows:
  THREE
                  MONTHS ENDED
              
              
              SIX
                  MONTHS ENDEDJune
                  30,
                2008
              
              
              June
                  30,
                2007
              
              
              June
                  30,
                2008
              
              
              June
                  30,
                2007Revenues:Sales
                  to unaffiliated customers:Power
                  Electronics
              
              $
              2,504,559
              
              $
              1,638,413
              
              $
              4,942,169
              
              $
              3,038,332Motive
                  Power
              
              
              50,083
              
              
              0
              
              
              103,257
              
              
              31,678$
              2,554,642
              
              $
              1,638,413
              
              $
              5,045,426
              
              $
              3,070,010Net
                  Profit (Loss):Power
                  Electronics
              
              $
              (113,701
              )
              $
              199,521
              
              $
              (132,742
              )
              $
              248,321Motive
                  Power
              
              
              (456,765
              )
              
              (998,028
              )
              
              (969,549
              )
              
              (1,900,120
              )Operating
                  Loss
              
              
              (570,466
              )
              
              (798,507
              )
              
              (1,102,291
              )
              
              (1,651,799
              )Interest
                  expense
              
              
              (1,342,466
              )
              
              (2,682,060
              )
              
              (2,197,511
              )
              
              (4,876,000
              )Other
                  expense
              
              
              (157
              )
              
              18,684
              
              
              (35,955
              )
              
              18,684Net
                  Loss
              
              
              (1,913,089
              )
              
              (3,461,883
              )
              
              (3,335,757
              )
              
              (6,509,115
              )Preferred
                  stock dividends
              
              
              0
              
              
              0
              
              
              (0
              )
              
              (1,413,031
              )Loss
                  applicable to common stockholders
              
              $
              (1,913,089
              )
              $
              (3,461,883
              )
              $
              (3,335,757
              )
              $
              (7,922,146
              )
 
 **NOTE
        12 - 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 June 30,
        2008, the earn-out criteria have 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, August 2007 Debentures, and June 2008 Debentures vary with market
        price of the Company’s common stock. This condition requires the Company to
        evaluate at each reporting period whether 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, August 2007 Debentures and June 2008 Debentures. The Company’s
        stockholders recently approved an amendment to the Company’s Certificate of
        Incorporation to increase the number of authorized shares of common stock
        that
        may be issued to 500,000,000 from 100,000,000.
  21
 
 **Note
        13 - SUBSEQUENT EVENTS**
 
 The
        Company’s tender of shares of its common stock to one of the holders of the
        Company’s January 2007 Debentures and August 2007 Debentures, with
        respect to the August 2008 monthly redemption was rejected by the
        holder based on its assertion that the Company failed to meet its
        minimum trading volume requirement of such Debentures. The holder has not
        declared a default, and the Company is currently in discussions with the
        holder regarding the accelerated redemption of the remaining principal
        amount of such Debentures.
  22


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 and six-months ended June 30, 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.





**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 June 30, 2008 compared with three months ended June 30,
      2007.*





For
      the
      three months ended June 30, 2008 we generated revenues of $2,554,842 as compared
      to $1,638,413 for the three months ended June 30, 2007, an increase of $916,429,
      or 56%. Cost of products sold for the three months ended June 30, 2008 was
      $1,706,014, generating a gross margin of $848,628. Cost of products sold for
      the
      three months ended June 30, 2007 was $836,658, generating a gross margin of
      $801,755. The gross margin of the Power Electronics division is dependent on
      the
      mix of products sold during any given period. Such margins will continue to
      fluctuate in the future based primarily on the mix of sold in any given period.
      The increase in our revenues is attributable principally to improved results
      of
      our Power Electronics Division, including the introduction by Technipower of
      its
      Cobalt15 line of power solutions to enhance its legacy product lines, and
      the acquisition of Deltron. We believe that revenue of the Power
      Electronics Division will continue to equal or exceed those of previous
      quarters.




23





Research
      and Development costs were $306,160 for the three months ended June 30, 2008
      as
      compared to $305,462 for the three months ended June 30, 2007.





Selling,
      general and administrative expenses were $1,112,934 for the three months ended
      June 30, 2008 as compared to $1,294,800 for the three months ended June 30,
      2007, a decrease of $181,866 or 14%. This decrease was primarily due to various
      corporate overhead and staffing reductions and cost savings from consolidation
      efforts within our Power Electronics Division, including reductions in overhead
      associated with the Company’s public company status.




We
      incurred interest expense of $1,342,466 for the three months ended June 30,
      2008. Interest expense incurred for the three months ended June 30, 2007 was
      $2,682,060. The decrease of $1,339,594 in interest expense was due in part
      to a
      decrease in the principal amount outstanding of variable rate self-liquidating
      senior secured convertible debentures sold in January and August 2007, with
      a
      corresponding reduction in accrued cash and non-cash interest charges related
      thereto.





The
      elements of interest expense including amortization of deferred costs for the
      three month ended June 30, 2008 and 2007 were as follows:




Three
                Months Ended June 30,2008
            
            2007Interest
                on notes payable
            
            $
            371,829
            
            $
            131,214Interest
                on bank debt
            
            
            27,729
            
            
            16,426Interest
                on variable rate self-liquidating senior secured convertible
                debentures
            
            
            942,908
            
            
            2,520,254**Total
                interest expense**
            
            $
            1,342,466
            
            $
            2,682,060





We
      reported a net loss and loss applicable to common stockholders for the three
      months ended June 30, 2008 of $1,913,089. Our net loss and loss applicable
      to
      the common stockholders for the three months ended June 30, 2007 was $3,461,883.
      The reduction in net loss was attributable principally to the reduction in
      interest expense and reduced selling, general and administrative
      expenses.





*Six
      months ended June 30, 2008 compared with six months ended June 30,
      2008.*





For
      the
      six months ended June 30, 2008 we generated revenues of $5,045,426 as compared
      to $3,070,010 for the six months ended June 30, 2007, an increase of $1,975,416,
      or 64%. Cost of products sold for the six months ended June 30, 2008 was
      $3,222,411, generating a gross margin of $1,823,015. Cost of products sold
      for
      the six months ended June 30, 2007 was $1,615,945, generating a gross margin
      of
      $1,454,065. The gross margin of the Power Electronics division is dependent
      on
      the mix of products sold during any given period. Such margins will continue
      to
      fluctuate in the future based primarily on the mix of sold in any given period.
      The increase in our revenues is attributable principally to improved results
      of
      our Power Electronics Division, including the introduction by Technipower of
      its
      Cobalt15 line of power solutions to enhance its legacy product lines and the
      addition to this Division of Deltron.




24





Research
      and Development costs were $698,417 for the six months ended June 30, 2008
      as
      compared to $559,126 for the six months ended June 30, 2007. The increase was
      the result of our continued focus on the development of new products in our
      Power Electronics Division.





Selling,
      general and administrative expenses were $2,226,889 for the six months ended
      June 30, 2008 as compared to $2,546,738 for the six months ended June 30, 2007,
      an decrease of $319,489, or 13%. This decrease was primarily due various
      corporate overhead and staffing reductions and cost savings from consolidation
      efforts within our Power Electronics Division, including reductions in overhead
      associated with the Company’s public company status. .




We
      incurred interest expense of $2,197,511 for the six months ended June 30, 2008.
      Interest expense incurred for the six months ended June 30, 2007 was $4,876,000.
      The decrease of $2,678,489 in interest expense was due in part to a decrease
      in
      the principal amount outstanding of variable rate self-liquidating senior
      secured convertible debentures sold in January and August 2007, with a
      corresponding reduction in accrued cash and non-cash interest charges related
      thereto.




.The
      elements of interest expense for the six months ended June 30, 2008 and 2007
      were as follows:




Six
                  Months Ended June 30,2008
              
              
              2007Interest
                  on notes payable
              
              $
              684,182
              
              $
              496,753Interest
                  on bank debt
              
              
              45,139
              
              
              37,369Interest
                  on unpaid payroll taxes and penalties
              
              
              
              
              
              94,856Interest
                  on variable rate self-liquidating senior secured convertible
                  debentures
              
              
              1,468,190
              
              
              4,247,022**Total
                  interest expense**
              
              $
              2,197,511
              
              $
              4,876,000
  We
          reported a net loss and loss applicable to common stockholders for the
          six
          months ended June 30, 2008 of $3,335,757. Our net loss for the six months
          ended
          June 30, 2007 was $6,509,115. Loss applicable to common stockholders for
          the six
          months ended June 30, 2007 was $7,922,146, reflecting dividends of $1,413,031
          relating to the redemption of the Series C preferred stock issued in August
          2007.





**Liquidity
      and Capital Resources**




Our
      available cash balance at June 30, 2008 was $1,425,919. During the six months
      ended June 30, 2008, we used net cash of $182,786 for operations. This consisted
      of a net loss of $3,335,757 augmented by net non-cash charges of $3,152,971.
      Additionally, we used $15,314 of cash for investing activities. Financing
      activities provided net cash in the amount of $1,198,618 consisting principally
      of the issuance of convertible debentures and Series D Convertible Preferred
      Stock .





We
      have
      incurred significant operating losses and used cash in our operating activities
      for several consecutive years. As of June 30, 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, including approximately $1,200,000 of
      debenture and equity financing in the quarter ended June 30, 2008. 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 and to refinance debt, although
      there can be no assurance that we will be successful. Our ability to continue
      as
      a going concern is dependent on obtaining additional long-term financing and
      ultimately achieving profitable operating results.




25





The
      prior
      experience of our Power Electronics Division may not accurately predict the
      results of future operations. Although Technipower has historically generated
      positive cash flow, we have not yet fully integrated Deltron Inc., acquired
      in
      September 2007, into Technipower’s operations. We are consolidating Deltron’s
      Pennsylvania operations into our headquarters in Connecticut, and in July 2008
      we reduced the Deltron workforce in our facility in Mexico by approximately
      44%
      (to 36 employees), which required that we pay 28 employees approximately
      $150,000 under Mexican employment laws. Our 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. 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 based on the market price of our common stock on the
                date of
                the transaction.





·
            On
                September 2007, we acquired the assets of Deltron, Inc for cash.
                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.,
                $495,000in
                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 defaults under this note in the first and
      second quarter of 2008 for non-payment of interest and failure to comply with
      certain financial and negative debt covenants have been waived by JMC. The
      Company is currently in discussion with JMC regarding the maturity of this
      note.





*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 originally 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.





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.




26





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
                (which requirement was subsequently
                waived);





·
            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.





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 redemptions. 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.




27





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 August 11, 2008,
      four investors (three of which are under common control) hold debentures that
      we
      issued in January and August 2007 with an approximate aggregate principal
      balance of $1,927,648.





As
      a part
      of the sale of the January and August 2007 debentures, we issued common stock
      purchase warrants to the purchasers 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.
      The
      total number of warrants exercised was 2,906,250. 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.





On
      June
      27, 2008, we entered into definitive agreements with the three prior debenture
      holders that are under common control relating to a private placement of
      $1,250,000 in principal amount of additional debentures due October 1, 2009.
      The
      placement generated gross proceeds of $948,611 after taking into an original
      issue discount of $250,000, legal fees and other expenses associated with the
      placement but before placement agent fees.




These
      debentures are required to be redeemed ratably over 10 months beginning January
      2009. In connection with this placement, the prior debentures issued to these
      investors were modified to extend the maturity date until September 2009, to
      modify the ratable monthly redemption schedule consistent therewith and to
      make
      other changes related to our ability to make monthly redemption payments in
      shares of our common stock. In other material respects, these debentures are
      substantially similar to the debentures we issued in January and August
      2007.




As
      a part
      of the June 2008 placement, we also issued to the purchasers of the debentures
      1,200 shares of our newly created Series D 0% Convertible Preferred Stock
      (“Preferred Stock”). Shares of Preferred Stock are restricted under the
      securities laws, do not pay a dividend, do not vote separately as a class (but
      do vote on an “as-converted” to common stock basis) and do not have a
      liquidation preference. Each share of Preferred Stock has a stated value of
      $1,000 and is convertible into shares of the our common stock at $.05 per share
      based on stated value with potential conversion price resets based on the
      average of the daily volume weighted average price of the applicable shares
      for
      the 20 consecutive trading days prior to the sixteenth, nineteenth and
      twenty-fourth month anniversaries of the original issue date. Shares of
      Preferred Stock are convertible by the holders at any time into shares of the
      our common stock. On or after January 1, 2009, we may force conversion of shares
      of Preferred Stock into its common stock if the average of the daily volume
      weighted average price of shares of common stock for any 20 consecutive trading
      days equals or exceeds $.25 per share, subject to certain other conditions
      being
      satisfied with respect to such period.





Separately,
      on June 30, 2008 we issued 300 shares of Preferred Stock to an unaffiliated
      purchaser that did not also purchase Debentures. The aggregate purchase price
      for these shares of Preferred Stock was $250,000. These shares of Preferred
      Stock were otherwise issued on substantially the same terms and conditions
      as
      the Preferred Stock issued to the purchasers of Debentures.




28





In
      the
      first two quarters of 2008, we issued a total of 57,827,604 shares of our common
      stock in redemption of $4,265,049 in principal amount of debentures plus accrued
      interest. 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 January and August 2007 and June 2008 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.





*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 $1,712,085 in
      short-term debt financing from certain of our principal stockholders and other
      investors from March 2005 through December 2006, which amount was subsequently
      increased to $1,831,931 as an inducement for these stockholders and investors
      to
      extend the maturity of their notes until September 2008. The current balance
      of
      these loans, including accrued interest through June 30, 2008, is $2,300,438.
      These notes are secured by liens on all of our tangible and intangible assets.
      The Company is currently in discussion with these stockholders and investors
      regarding the maturity of their notes.




Our
      Technipower subsidiary has a $1,200,000 revolving credit facility with Citizens
      Bank of Massachusetts which expires on August 30, 2008. As of the date hereof,
      $1,200,000 is outstanding under the facility. In connection with the facility,
      Citizens Bank has a continuing security interest in all tangible and intangible
      personal property of Technipower. The Company is currently in discussion with
      Citizens Bank regarding the maturity of this credit facility.





On
      October 12, 2007, we converted the $198,000 principal and interest balance
      of a
      prior promissory note and approximately $330,000 of trade accounts payable
      to a
      new promissory note payable to Davis & Gilbert LLP (“D&G”), our outside
      counsel, 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.





On
      April
      16, 2008, we converted trade accounts payable in the amount of $219,420 due
      to
      UHY LLC, our former firm of independent auditors, to a non-interest bearing
      promissory note in that amount due on October 10, 2008. This note required
      an
      initial payment of $15,000 followed thereby bi-weekly installments of $10,000
      commencing May 23, 2008 through October 24, 2008 with a balloon payment of
      $84,420 on October 10, 2008. Our defaults for failure to make weekly payments
      in
      May, June , July and August 2008 have been waived by UHY LLC.





*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, all of the legal fees incurred by us in connection with our appeal
      of
      the ITC’s adverse decision to the Court of Appeals for the Federal Circuit
      (“CAFC”) and any further appeal we may pursue as a result of the adverse
      decision of the CAFC on May 7, 2008. *See* Part II,
      Item 1, “Legal Proceedings.”




29





*Continuing
      Dilution.* We
      are
      required to redeem a pro rata portion of the debentures each month until their
      maturities in September and October 2009. We have been unable to redeem a
      minimal dollar amount of 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% (20% for the debentures
      issued in June 2008) 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 nearly 58
      million shares of common stock to redeem $4,265,049 in principal amount of
      the
      debentures, plus interest, and the outstanding balance of the debentures on
      June
      30, 2008 (including the $1,250,000 of debentures issued on June 30, 2008) was
      $3,177,648. 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.





**Critical
      Accounting Policies and Estimates**





There
      have been no material changes in the accounting policies and estimates that
      the
      Company considers to be "critical" from those disclosed in the Company's Annual
      Report on Form 10-KSB for the year ended December 31, 2007.





**Recently
      Issued Accounting Pronouncements**





*See* Note (2)
      to the consolidated financial statements for a summary of recently issued
      accounting pronouncements and their impact on the Company.





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 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
      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.




30





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 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.




31


**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,
                2007.





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.





32


**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. On July 18,
      2008, we requested that the stay imposed on the patent infringement action
      we
      brought in the United States District Court in Florida be removed and the case
      reopened.





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.**




The
      Company’s tender of shares of its common stock to BridgePointe Master Fund Ltd,
      a holder of the Company’s Variable Rate Self-Liquidating Senior Secured
      Convertible Debentures (“Debentures”), with respect to the August 2008 monthly
      redemption was rejected by BridgePointe based on its assertion that the Company
      failed to meet all of the equity conditions required for such a redemption
      by
      the terms of the Debenture. BridgePointe has not declared a default, and the
      Company is currently in discussions with BridgePointe regarding the accelerated
      redemption of the remaining principal amount of its Debentures.




33




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




We
      held
      our Annual Meeting of Stockholders on May 22, 2008 in Hartford, Connecticut.
      We
      solicited proxies from our stockholders in accordance with the Securities
      Exchange Act of 1934, there were no solicitation in opposition to management’s
      nominees as set forth in the proxy statement, and all nominees for directors
      proposed for election were elected by the stockholders.





In
      addition, our stockholders approved a proposal to increase the number of shares
      of common stock we are authorized to issue to 500,000,000 from 100,000,000.
      There were 47,018,982 votes in favor, 6,389,611 votes against, 102,484
      abstentions and zero non-votes with respect to this proposal.





Our
      stockholders also ratified the appointment of Eisner LLP as our independent
      registered public accounting firm. There were 52,470,676 votes in favor, 591,425
      votes against and 448,976 abstentions with respect to this
      proposal.




**Item
      5. Other Information.**




None.




**Item
          6.** **Exhibits**




**Exhibit
                No.**
            
            **Description**3.10
            
            Certificate
                of Elimination of Series C Preferred Stock. (1)3.11
            
            Certificate
                of Designation of Preferences, Rights and Limitations of Series D
                0%
                Convertible Preferred Stock (10)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)


34


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)


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)




35




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)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)10.69
            
            Form
                of Securities Purchase Agreement dated as of June 27, 2007 by and
                among
                Solomon Technologies, Inc. and each purchaser identified on the signature
                pages thereto (10)10.70
            
            Form
                of Variable Rate Self-Liquidating Senior Secured Convertible Debentures
                (10)10.71
            
            Form
                of Securities Purchase Agreement dated as of June 30, 2007 by and
                among
                Solomon Technologies, Inc. and each purchaser identified on the signature
                pages thereto (10)10.72
            
            Form
                of Legal Opinion (10)16.1
            
            Letter
                from UHY LLP to the Securities and Exchange Commission dated May
                31, 2007
                (5)31.1
            
            Certification
                by Principal Executive Officer pursuant to Section 302 of the
                Sarbanes-Oxley Act of 2002( 11)31.2
            
            Certification
                by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
                Act of 2002 (11)32.1
            
            Certification
                by Principal Executive Officer pursuant to Section 906 of the
                Sarbanes-Oxley Act of 2002 (11)32.2
            
            Certification
                by Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley
                Act of 2002 (11)





(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)
            Incorporated
                by reference from the Quarterly Report on Form 10-Q dated May 20,
                2008.(10)
            Incorporated
                by reference from the Current Report on Form 8-K/A filed on July
                8,
                2008(11)
            Filed
                herewith.




36




**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:
                August 13, 2008**SOLOMON
                TECHNOLOGIES, INC.**By:
            /s/ Peter
              W.
              DeVecchis, Jr.Peter
                W. DeVecchis
              President
              (principal
                executive officer)




By:
              /s/ Samuel
                F.
                OcchipintiSamuel
                    F. Occhipinti
                  Chief
                    Financial Officer
                  (principal
                    financial and accounting officer)
  37


**Exhibit
      Index**





**Exhibit
                No.**
            
            **Description**


31.1
            
            Certification
                by Principal 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 Principal 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





38