##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON D.C. 20549
 
 FORM
10-Q/A
 (Amendment No. 1)
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from:  to
 Commission File Number: 000-53105
 CLEAR SKIES SOLAR, INC.
  DELAWARE
    
    30-0401535(State or Other Jurisdiction of Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)200 Old Country Road, Suite 610Mineola, New York
    
    11501(Address of Principal Executive Offices)
    
    (Zip code)
 (516) 282-7652
 (Registrants Telephone Number, Including Area Code)
 (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
  þ o
  o þ
   Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)




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##### 



Explanatory Note This Amendment No. 1 on Form
10-Q/A amends our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2008, filed on May 15, 2008.  We have concluded that
it was necessary to restate our financial results for the quarter ended
March 31, 2008 to reflect the reclassification of our obligations to issue
shares of our common stock and an option to purchase our common stock to two
consultants.  We had previously classified the value of these obligations
as a current liability.  After further review, we have determined that
these obligations are not liabilities as defined by Generally Accepted
Accounting Principles (“GAAP”) and therefore should not be
reflected on our balance sheet and therefore the recording of the offsetting
prepaid expenses should also have not been recorded as assets.  We have
also restated our financial results for the fiscal year ended December 31,
2007 and filed Amendment No.2 to our Annual Report on Form 10-KSB/A for such
period on July 21, 2008.  These
restatements have no effect on our cash flow or liquidity, and their effects on
our financial position at the ends of the respective restated periods are
immaterial. Table of Contents
 PagePART I FINANCIAL INFORMATION
    
    
    1Item 1. Financial Statements (Unaudited)
    
    
    1Condensed Consolidated Balance Sheet as at March 31, 2008
(unaudited) and Condensed Consolidated Balance Sheet as at
December 31, 2007
    
    
    1Unaudited Condensed Consolidated Statements of Operations for
the three-month periods ended March 31, 2008 and March 31,
2007
    
    
    2Unaudited Condensed Consolidated Statements of Cash Flows for
the three-month periods ended March 31, 2008 and March 31,
2007
    
    
    3Notes to Unaudited Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4T. Controls and Procedures
    
    
    20PART II OTHER INFORMATION
    
    
    21Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    21Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 6. Exhibits
    
    
    22Section 302 Certification of Principal Executive OfficerSection 302 Certification of Principal Financial OfficerSection 906 Certification of Principal Executive Officer and Principal Financial Officer




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PART I
 FINANCIAL INFORMATION
 
 Item
1. Financial Statements
 CLEAR SKIES SOLAR, INC.
 
 Condensed Consolidated Balance Sheets
 March 31, 2008
    
    
    December 31, 2007(Unaudited)
    
    
    
    (Restated)(Restated)ASSETSCurrent assetsCash and cash equivalents
    
    $
    3,372,302
    
    
    $
    4,866,842Accounts receivable, less allowance for doubtful
accounts of $41,775 and $32,775 at March 31, 2008
and December 31, 2007, respectively
    
    
    214,698
    
    
    
    92,291Other receivable
    
    
    167,988
    
    
    
    Costs and estimated earnings in excess of billings
    
    
    35,885
    
    
    
    27,641Total current assets
    
    $
    3,790,874
    
    
    $
    4,986,774Property and equipment, net
    
    
    20,114
    
    
    
    13,293Prepaid expenses and investor relations fees
    
    
    185,906
    
    
    
    645,644Other Assets
    
    
    53,735
    
    
    
    54,017$
    4,050,629
    
    
    $
    5,699,728LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable and accrued expenses
    
    $
    800,652
    
    
    $
    788,468Billings in excess of costs and estimated earnings
    
    
    36,434
    
    
    
    35,007Due to related parties
    
    
    
    
    
    
    104,410Customer deposits
    
    
    
    
    
    
    5,000Obligation to issue options and warrants
    
    
    41,363
    
    
    
    9,401Payroll liabilities
    
    
    41,354
    
    
    
    140,729Installation warranty liability
    
    
    7,742
    
    
    
    7,743Estimated loss on uncompleted contracts
    
    
    27,969
    
    
    
    Total current liabilities
    
    $
    955,514
    
    
    $
    1,090,758Stockholders equityPreferred stock, $.001 par value, 10,000,000
shares authorized, none issued and outstandingCommon stock, $.001 par value, 100,000,000 shares
authorized, 30,925,097 and 30,883,723 issued and
outstanding at March 31, 2008 and December 31,
2007, respectively
    
    
    30,925
    
    
    
    30,883Additional paid-in capital
    
    
    9,386,021
    
    
    
    9,247,682Accumulated deficit
    
    
    (6,321,831
    )
    
    
    (4,669,595
    )Total stockholders equity
    
    $
    3,095,115
    
    
    $
    4,608,970$
    4,050,629
    
    
    $
    5,699,728
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CLEAR SKIES SOLAR , INC.
 
 Unaudited Condensed Consolidated Statements of Operations
For the three months ended March 31,
 2008
    
    
    2007(Restated)RevenuesContract revenue
    
    $
    138,224
    
    
    $
    12,600Subcontractor revenue
    
    
    
    
    
    
    223,633Other
    
    
    15,000
    
    
    
    Total revenues
    
    
    153,224
    
    
    
    236,233Cost of revenues
    
    
    193,348
    
    
    
    257,593Gross margin
    
    
    (40,124
    )
    
    
    (21,360
    )Operating expensesSelling expenses
    
    
    233,959
    
    
    
    61,813General and administrative expenses
    
    
    1,404,571
    
    
    
    198,5171,638,530
    
    
    
    260,330Loss from operations
    
    
    (1,678,654
    )
    
    
    (281,690
    )Other revenue (expense)Interest income
    
    
    32,347
    
    
    
    Interest expense
    
    
    (5,930
    )
    
    
    Net (loss)
    
    $
    (1,652,237
    )
    
    $
    (281,690
    )Weighted average common shares outstanding, basic and diluted
    
    
    30,886,678
    
    
    
    4,427,269Loss per share, basic and diluted
    
    
    (0.05
    )
    
    
    (0.06
    )
   - 2 -




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CLEAR SKIES SOLAR, INC.
 
 Unaudited Condensed Consolidated Statements of Cash Flows
For the three months ended March 31,
 2008
    
    
    2007(Restated)Net Loss
    
    $
    (1,652,237
    )
    
    $
    (281,690
    )Adjustment to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    2,120
    
    
    
    Stock-based compensation
    
    
    156,843
    
    
    
    Estimated loss on contracts
    
    
    27,969
    
    
    
    Bad debt expense
    
    
    9,000
    
    
    
    68,000Increase (decrease) in cash and cash equivalents attributable to changes
in operating assets and liabilities:Accounts receivable
    
    
    (131,407
    )
    
    
    (72,419
    )Costs and estimated earnings in excess of billings
    
    
    (8,244
    )
    
    
    51,210Prepaid expenses and investor relations fees
    
    
    291,752
    
    
    
    (220
    )Other assets
    
    
    282
    
    
    
    (978
    )Accounts payable and accrued expenses
    
    
    25,684
    
    
    
    114,549Customer deposits
    
    
    (5,000
    )
    
    
    Billings in excess of costs and estimated earnings
    
    
    1,427
    
    
    
    Payroll liabilities
    
    
    (99,376
    )
    
    
    35,541Net cash used in operating activities
    
    $
    (1,381,189
    )
    
    $
    (86,007
    )Net cash flows used in investing activities:Purchases of equipment
    
    
    (8,941
    )
    
    
    Net cash flows from financing activities:Advances from related party
    
    
    (104,410
    )
    
    
    Net decrease in cash and cash equivalents
    
    
    (1,494,540
    )
    
    
    (86,006
    )Cash and cash equivalents, beginning of period
    
    $
    4,866,842
    
    
    $
    111,439Cash and cash equivalents, end of period
    
    $
    3,372,302
    
    
    $
    25,433Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    5,930
    
    
    $
    Supplemental disclosure of non-cash financing and investing activities:Value of shares of common stock issued to consultants
    
    $
    13,500
    
    
    $
    Reclassification of prepaid investor relations to other receivable
    
    $
    167,988
    
    
    $
    Issuance of stock out of obligation to issue stock
    
    $
    
    
    
    $
    894,000
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. Basis of presentation and nature of operations
   Nature of Operations
 ®
  1a. Restatement and reclassifications of previously issued financial statements
 Summary of Restatement Items
   - 4 -




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Balance Sheet Impact
 AsOriginally
    
    
    
    
    
    
    AsReported
    
    
    Changes
    
    
    RestatedCash and cash equivalents
    
    $
    3,372,302
    
    
    
    
    
    
    $
    3,372,302Accounts receivable, less allowance for
doubtful accounts of $41,775
    
    
    214,698
    
    
    
    
    
    
    
    214,698Other receivable
    
    
    167,988
    
    
    
    
    
    
    
    167,988Costs and estimated earnings in excess
of billings
    
    
    35,886
    
    
    
    
    
    
    
    35,886Total current assets
    
    
    3,790,874
    
    
    
    
    
    
    
    3,790,874Property and equipment, net
    
    
    20,114
    
    
    
    
    
    
    
    20,114Prepaid expenses and
investor relations fees
    
    
    385,074
    
    
    $
    199,168
    
    
    
    185,906Other assets
    
    
    53,735
    
    
    
    
    
    
    
    53,735$
    4,249,797
    
    
    $
    199,168
    
    
    $
    4,050,629Accounts payable and accrued expenses
    
    $
    800,652
    
    
    
    
    
    
    $
    800,652Billings in excess of costs and
estimated earnings
    
    
    36,434
    
    
    
    
    
    
    
    36,434Obligations to issue options
and warrants
    
    
    327,650
    
    
    
    286,287
    
    
    
    41,363Estimated loss on uncompleted contracts
    
    
    27,969
    
    
    
    
    
    
    
    27,969Payroll liabilities
    
    
    41,354
    
    
    
    
    
    
    
    41,354Installation warranty
    
    
    7,742
    
    
    
    
    
    
    
    7,742Total current liabilities
    
    
    1,241,801
    
    
    
    286,287
    
    
    
    955,514Total stockholders equity
    
    
    3,007,996
    
    
    
    87,119
    
    
    
    3,095,115$
    4,249,797
    
    
    $
    199,168
    
    
    $
    4,050,629
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Impact on the Statement of Operations
  AsOriginally
    
    
    
    
    
    
    AsReported
    
    
    Changes
    
    
    RestatedRevenuesContract revenue
    
    $
    138,224
    
    
    
    
    
    
    $
    138,224Subcontract revenue
    
    
    15,000
    
    
    
    
    
    
    
    15,000Total revenues
    
    
    153,224
    
    
    
    
    
    
    
    153,224Cost of revenues
    
    
    193,348
    
    
    
    
    
    
    
    193,348Gross margin
    
    
    -40,124
    
    
    
    
    
    
    
    -40,124Operating expensesSelling expenses
    
    
    233,959
    
    
    
    
    
    
    
    233,959General and administrative expenses
    
    
    1,488,302
    
    
    
    83,731
    
    
    
    1,404,5711,722,261
    
    
    
    83,731
    
    
    
    1,638,530Loss from operations
    
    
    (1,762,385
    )
    
    
    (83,731
    )
    
    
    (1,678,654
    )Other revenue (expenses)Interest income
    
    
    32,347
    
    
    
    
    
    
    
    32,347Interest expense
    
    
    -5,930
    
    
    
    
    
    
    
    -5,93026,417
    
    
    
    
    
    
    
    26,417Net loss
    
    $
    (1,735,968
    )
    
    $
    (83,731
    )
    
    $
    (1,652,237
    )Weighted average common shares outstanding,
basis and diluted
    
    
    30,886,678
    
    
    
    
    
    
    
    30,886,678Loss per share, basic and diluted
    
    $
    (0.06
    )
    
    
    
    
    
    $
    (0.05
    )
  - 6 -




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2. Business combination and subsequent financing
 The reverse merger
       The private placement
   - 7 -




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3. Summary of significant accounting policies
 Accounts Receivable and Allowance for Doubtful Accounts
  Revenue Recognition
    Cost Recognition
    - 8 -




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Earnings Per Share
  Recent Accounting Pronouncements
   Stock Based Compensation
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4. Liquidity and capital resources
  5. Prepaid expenses and investor relations fees
  March 31,2008
    
    

December 31,2007Payments to US public and investor relations firms
    
    
    
    
    
    $
    14,000Payment to a European investor relations firm
    
    
    
    
    
    
    394,790Prepayment of compensation to be amortized over the
periods in which the services will be rendered
    
    
    148,812
    
    
    
    201,610Prepaid insurance premiums
    
    
    37,094
    
    
    
    35,244Total
    
    $
    185,906
    
    
    $
    645,644
  6. Stock-based compensation and common stock issued and agreed to be issued
    - 10 -




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7. Related party transactions
   - 11 -




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8. Stock Options and Warrants
    - 12 -




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WeightedWeighted
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregateNumber of
    
    
    Price per
    
    
    Term
    
    
    IntrinsicOptions
    
    
    Option
    
    
    (Years)
    
    
    ValueOutstanding, January 1, 2008
    
    
    0Granted February 6, 2008
    
    
    1,045,000
    
    
    $
    1.58
    
    
    
    8.64
    
    
    $
    1,491,754Granted March 31, 2008
    
    
    500,000
    
    
    $
    1.25
    
    
    
    8.00
    
    
    $
    1,052,833Cancelled/forfeited
    
    
    0Outstanding, March 31, 2008
    
    
    1,455,000
  Risk free rate
    
    
    4.51% - 4.65%Stock price volatility
    
    
    121%Dividend yield
    
    
    0
   9. Contracts
   - 13 -




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As of March 31, 2008 and December 31, 2007
    
    2008
    
    
    2007Costs Incurred on Contracts
    
    $
    524,692
    
    
    
    355,183Estimated Earnings, less foreseeable losses
    
    
    9,325
    
    
    
    30,610534,017
    
    
    
    385,793Billings to Date
    
    
    (534,566
    )
    
    
    (393,159
    )Net costs and estimated earnings/losses in excess of billings
    
    $
    (549
    )
    
    
    (7,366
    )These amounts are included in the accompanying
March 31, 2008 balance sheet under the following captions:Costs and estimated earnings in excess of billings
    
    $
    35,885
    
    
    
    27,641Billings in excess of costs and estimated earnings
    
    
    (36,434
    )
    
    
    (35,007
    )$
    (549
    )
    
    
    (7,366
    )
 10. Commitments and Contingencies
 Litigation
   - 14 -




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Lease commitments
  Employment agreements
  11. Fair Value Measurements
 Fair Value Measurement Effective Date of FASB Statement No. 157,
    - 15 -




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 This discussion should be read in conjunction with our unaudited condensed consolidated
financial statements included in this Quarterly Report on Form 10-Q and the notes thereto, as well
as the other sections of this Quarterly Report on Form 10-Q and our Annual Report for the year
ended December 31, 2007 on Form 10-KSB , including the Certain Risks and Uncertainties and
Description of Business sections thereof. This discussion contains a number of forward-looking
statements, all of which are based on our current expectations and could be affected by the
uncertainties and risk factors described throughout this Quarterly Report and our Annual Report for
the year ended December 31, 2007 on Form 10-KSB . Our actual results may differ materially.
 Overview
 ®
     - 16 -




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®
 Results of Operations: Comparison of Three Month Periods Ended March 31, 2008 and 2007
      - 17 -




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Liquidity and Capital Resources
      - 18 -




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
    
    towards our $500,000 budget for the engagement of investor relations and public
relations firms for the twelve months following the closing of the reverse merger;
    
    possibly for strategic acquisitions, if and to the extent we determine appropriate;
    
    completion of beta testing and commercialization of XTRAX®; and
    
    for general working capital purposes.
 Commitments and Contingencies
 
  
 Recently Issued Accounting Pronouncements
    - 19 -




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Certain Risks and Uncertainties
  Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4T. Controls and Procedures.
   Remediation Plans
  
    
    Hiring additional accounting personnel (a full time CFO was hired
January 21, 2008 and another full time senior level accountant was
hired February 11, 2008);
    
    Establish a detailed timeline for review and completion of
financial reports to be included in our Forms 10-Q and 10-K
(established in connection with this Form 10-Q);
    
    Engage the use of a third party accounting service provider as
needed to further support and supplement our internal staff in
accounting and related areas when necessary; and
    
    Employ the use of appropriate supplemental SEC and U.S. GAAP
checklists in connection with our closing process and the
preparation of our Forms 10-Q and 10-K.
   - 20 -




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Changes in Internal Control over Financial Reporting
  
    
    The hiring of a full time CFO on January 21, 2008 and another full
time senior level accountant on February 11, 2008; and
    
    Establishing a timeline for review and completion of the financial
reports to be included in our Forms 10-Q and 10-K.
 
 PART II
OTHER INFORMATION
 
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
    - 21 -




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Item 4. Submission of Matters to a Vote of Security Holders.
  
 Item 6. Exhibits.
  ExhibitNo.
    
    Description3.1
    (a)
    
    Certificate of Incorporation (1)3.1
    (b)
    
    Certificate of Amendment to Certificate of Incorporation (3)10.1
    
    
    Form of Directors and Officers Indemnification Agreement (2)10.2
    
    
    Summary sheet of amendment, dated February 6, 2008, to the terms of Employment
Agreement, dated December 20, 2007, by and between Clear Skies Holdings, Inc. and Ezra
J. Green (4)10.3
    
    
    Employment Agreement, dated March 19 2008, by and between Clear Skies Solar, Inc. and
Thomas J. Oliveri (5)31.1
    *
    
    Section 302 Certification of Principal Executive Officer31.2
    *
    
    Section 302 Certification of Principal Financial Officer32.1
    *
    
    Section 906 Certification of Principal Executive Officer and Principal Financial Officer
 
 *
    
    Filed herewith.(1)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on December 19, 2007.(2)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on December 26, 2007.(3)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on January 30, 2008.(4)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Registration Statement on Form S-1 filed on March 27, 2008.(5)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Annual Report on Form 10-KSB filed on March 31, 2008.  - 22 -




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SIGNATURES
  CLEAR SKIES SOLAR, INC.Date: July 21, 2008
    By:
    /s/ Ezra J. GreenName:
    Ezra J. GreenTitle:
    Chairman & Chief Executive Officer 
(Principal Executive Officer)Date: July 21, 2008
    By:
    /s/ Arthur L. GoldbergName:
    Arthur L. GoldbergTitle:
    Chief Financial Officer 
(Principal Financial and Accounting Officer)  - 23 -




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EXHIBIT INDEX
 ExhibitNo.
    
    Description3.1
    (a)
    
    Certificate of Incorporation (1)3.1
    (b)
    
    Certificate of Amendment to Certificate of Incorporation (3)10.1
    
    
    Form of Directors and Officers Indemnification Agreement (2)10.2
    
    
    Summary sheet of amendment, dated February 6, 2008, to the terms of Employment
Agreement, dated December 20, 2007, by and between Clear Skies Holdings, Inc. and Ezra
J. Green (4)10.3
    
    
    Employment Agreement, dated March 19 2008, by and between Clear Skies Solar, Inc. and
Thomas J. Oliveri (5)31.1
    *
    
    Section 302 Certification of Principal Executive Officer31.2
    *
    
    Section 302 Certification of Principal Financial Officer32.1
    *
    
    Section 906 Certification of Principal Executive Officer and Principal Financial Officer
 
 *
    
    Filed herewith.(1)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on December 19, 2007.(2)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on December 26, 2007.(3)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Current Report on Form 8-K filed on January 30, 2008.(4)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Registration Statement on Form S-1 filed on March 27, 2008.(5)
    
    Incorporated herein by reference to the copy of such document included as an exhibit to our
Annual Report on Form 10-KSB filed on March 31, 2008.  - 24 -