**UNITEDSTATES**
**SECURITIES AND EXCHANGECOMMISSION**
Washington D. C. 20549 
**FORM 10-QSB** 
[X]  Quarterly report pursuant to Section 13 or 15(d)of the Securities and
Exchange Act of 1934. 
For the quarterly period ended June 30,2009 
[   ]  Transition report pursuant toSection 13 or 15(d) of the Exchange Act for
the transition period from _________ to_________. 
*Commission File Number:001-32528* 
**SOLARGY SYSTEMS INC** 
 (Exact name of registrant as specified incharter)

NEVADA
20-4357915
(State of or other jurisdiction of
(IRS Employer I.D. No.)
incorporation or organization)
 

6464 NW`5th Way,
Ft Lauderdale Florida 33309
(Address of Principal ExecutiveOffices) 
(305) 603-8380
(Registrant’s Telephone Number, Including AreaCode) 
Check whether the registrant: (1) has filed all reports requiredto be filed by Section by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.
 
YES  [   ]    NO [X]
 
Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act.
 
YES  [   ]    NO [X]
 
Indicate the number of shares outstanding of each of theissuer’s classes of stock as of June 30, 2009
 
**5 Common Shares**
 
**Transitional Small Business Disclosure Format:**
 
YES  [   ]    NO [X] 
**EXPLANATION**
 
**This unaudited and not reviewed interim statement is presentedfor preliminary basic information only. The information contained here in willbe revised and corrected in due course. The financial information is notintended to be used as a basis for any investment decision, but simply forinformation only.**
 
**Audited and reviewed statements will be published in duecourse**.

1

**SOLARGY SYSTEMS INC.**
(FORMERLY KNOWN AS SBD INTERNATIONAL INC. ANDSUBSIDIARY) 
INDEX TO FORM10-QSB
 

 

Page
 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

Condensed Consolidated Financial Statements(unaudited)

 

 

 

 

 

Condensed Consolidated Balance Sheet as of September 30,2006

3

 

 

 

 

Condensed Consolidated Statements of Operations for the three andnine months ended September 30, 2006 and 2005

4

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the three andnine months ended September 30, 2006 and 2005

5

 

 

 

 

Notes to Condensed Consolidated Financial Statements

6

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Conditionand Results of Operations (including cautionary statement)

11

 

 

 

Item 3.

Controls and Procedures

18

 

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

19

 

 

 

Item 2.

Changes in Securities

19

 

 

 

Item 3.

Defaults Upon Senior Securities

19

 

 

 

Item 4.

Submission of Matters to a Vote of Securities Holders

19

 

 

 

Item 5.

Other Information

19

 

 

 

Item 6.

Exhibits

19

 

 

 

Signature

20

 

 

Certification

 

2

Item 1. CONDENSED CONSOLIDATED FINANCIALSTATEMENTS. 
**SOLARGY SYSTEMS INC** 
**CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEET AS OF JUNE 30,2009** 
(Unaudited) 
ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

Cash 

 

$

31,450
 

Trade receivables

 

 

73,322
 

Prepaid

 

 

4,750

 

Total current assets

 

 

109,522
 

 

 

 

 
 

PROPERTY AND EQUIPMENT (net of accumulated depreciation of$8,547)

 

 

27,214
 

 

 

 

 
 

LONG TERM INVESTMENTS

 

 

37,934
 

 

 

 

 
 

DEPOSITS

 

 

17,470
 

NOTES RECEIVABLE

 

 

170,150

 

TOTAL ASSETS

 

$

359,560

 

 

 

 

 
 

LIABILITIES ANDSTOCKHOLDERS’ DEFICIT

 

 

 
 

 

 

 

 
 

CURRENT LIABILITIES:

 

 

 
 

Accounts payable

 

$

104,618
 

Due to related parties

 

 

293,459
 

Accrued payroll and other liabilities

 

 

210.648

 

Total current liabilities

 

 

608,725

 

 

 

 

 
 

LONG-TERM LIABILITIES

 

 

 
 

Convertible not payable (net of unamortized discount of$348,361)

 

 

1,582,410
 

Derivative financial instruments and warrant liability

 

 

1,328,305
 

Accrued liabilities

 

 

41,187

 

Total liabilities

 

 

2,951,902

 

 

 

 

 
 

STOCKHOLDERS’ DEFICIT:

 

 

 
 

Convertible Preferred Stock, Series A, $0.001 par value20,000,000 shares authorized and 0 shares issued and outstanding

 

 

5,200
 

Convertible Preferred Stock, Series B, $1.00 par value 20,000,000shares authorized and 1,100,000 shares issued and outstanding

 

 

1,100,000
 

Common stock, $0.001 par value, 750,000,000 shares authorized,525,529,714 shares issued and outstanding

 

 

525,526
 

Additional paid-in-capital

 

 

4,204,237
 

Accumulated deficit

 

 

(11,594,172

)

Total stockholders’ deficit

 

 

(7,389,935

)

 

 

 

 
 

TOTAL

 

$

359,560

 

See notes to consolidated financialstatements.

3

**SOLARGYSYSTEMS , INC**
(FORMERLY KNOWN AS SBD INTERNATIONAL INC , ANDSUBSIDIARY) 
**CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS** 
(Unaudited) 
 

 

For the
 

For the
 

For the
 

For the
 

 

 

Six months
 

Six months
 

Three months
 

Three months
 

 

 

Ended June.
 

Ended June.
 

Ended Mar.
 

Ended Mar.
 

 

 

30, 2009

 

30, 2008

 

30, 2009

 

30, 2008

 

REVENUES

 

$

5,714.00 
 

$

4,100,000 
 

$

2,313.00 
 

$

4,100,000 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF REVENUES

 

 

(15,400)
 
 

(1,663,445)
 
 

(4,354.00)
 
 

100,712 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

(9,686.00)

 

 

2,436,555 

 

 

(2,041)

 

 

122,606 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock based employee and consultant compensation

 

 

       147,920  
 

201,299 
 

 

124,299 
 

 

784,502 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General & Administrative

 

 

130,974  
 

10,086 
 

 

65,209 
 

 

842,085 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketing

 

 

80,410 

 

 

5,410 

 

 

5,912 

 

 

0 

 

Total operating expenses

 

 

359,304 

 

 

216,790 

 

 

195,420 

 

 

807,240 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT (LOSS) FROM OPERATIONS

 

 

(368,990)
 

 

2,218,761  
 

(197,461) 
 

(807,240) 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative (income) expense

 

 

717,210 
 

 

503,195 
 

 

690,234 
 

 

503,195 
 

Interest expense/settlement cost

 

 

(6,400)
 
 

(1,154,047)
 
 

(5,914)
 
 

(44,742)
 
NET GAIN/LOSS

 

$

(348,220)

 

$

(561,519)
 
$

(498,687)
 
$

(851,982)
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT/LOSS /COMMON SHARE -BASIC/DILUTED

 

$

(.0006)

 

$

(0.019)
 
$

(0.002)
 
$

(0.17)
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC ANDDILUTED

 

 

570,529,714 
 
 

286,930,782 

 

 

232,045,919 

 

 

5,085,218 

 

See notes to consolidated financialstatements.

4

**SOLARGYSYSTEMS, INC**
(FORMERLY KNOWN AS SBD INTERNATIONAL INC. ANDSUBSIDIARY) 
**CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS** 
(Unaudited)
 

 

For the
 

For the
 

 

 

Six months
 

Six months
 

 

 

Ended June
 

Ended June
 

 

 

30, 2009

 

30, 2008

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net gain/loss

 
 
 (348,220.00)
 

 

561,519 
 

Adjustments to reconcile net loss to net cash used in operatingactivities:

 

 

 

 

 

 

 

Depreciation and amortization

 

 

8,547.00 
 

 

41,855 
 

Stock issued for employee and consultant compensation

 

 

147,920.00 
 

 

201,299 
 

Amortization of beneficial interest and change in derivativevalue

 

 

214,015.00 
 

 

101,741 
 

Changes in assets and liabilities, net:

 

 

 

 

 

 

 

Accounts receivable

 

 
  
 

(95,283) 
Deposits

 

 
 
)

 

5,520  
Accounts payable and other liabilities

 

 
 
 

 

174,973 
 

Accrued and other liabilities

 

 
 
 

 

366,405 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

  

)

 

   (105,066)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of vehicles, furniture and equipment

 

 

(

)

 

(19,604)
 
CASH USED IN INVESTING ACTIVITIES

 

 

(

)

 

(19,504)
 
 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Receipt of advances

 

 

2,317 
 .0

 

46,800 
 

Proceeds from subscription receivable

 

 

31,650 
 

 

23,550 
 

Proceeds from sale of common stock

 

 

24,670 
 

 

75,917 
 

Proceeds from mortgage refinancing

 

 

0 
 

 

150,325  
Payment of Mortgage Note

 

 

(

0)

 

(2,275,000)
 

Loan from related party

 

 

351,475 

 

 

351,475 

 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

(

)

 

(1,773,200)

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

 

0 
 

 

442,700 
 

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

 

9 

 

 

5,119 

 

CASH AND RESTRICTED CASH AT END OF PERIOD

 

$

1 

 

$

71,711 

 

See notes to consolidated financialstatements.

5

**SOLARGY SYSTEMS,INC**
UNAUDITED 
**NOTES TOCONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**June 30, 2009 AND June 30, 2008** 
**NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION**

 

The condensed consolidated unaudited interim financial statementsincluded herein have been prepared, without audit, pursuant to the rules andregulations of the Securities and Exchange Commission ("SEC"). The condensedconsolidated unaudited financial statements and notes are presented as permittedon form 10-QSB and do not contain information included in the Company’sannual consolidated statements and notes. Certain information and footnotedisclosures normally included in the consolidated unaudited financial statementsprepared in accordance with accounting principles generally accepted in theUnited States of America have been or omitted pursuant to such rules andregulations, although the company believes that the disclosures are adequate tomake the information presented not misleading. It is suggested that theseconsolidated unaudited financial statements be read in conjunction with theDecember 31, 2008 audited financial statements and the accompanying notesthereto. While management believes the procedures followed in preparing theseconsolidated unaudited financial statements are reasonable, the accuracy of theamounts are in some respects dependent upon the facts that will exist, andprocedures that will be accomplished by the company later in theyear.
 
In September of 2008 SBD amended its name to Solargy Systems Incand reorganized as an alternative energy producer and systemsintegrator.
 
On August 1, 2006, the Company merged with SBD International(SBD), with SBD being the surviving entity. Upon execution of the merger anexchange of one share of SBD common stock was made for every 25 shares of TheCompany’s common stock. This reduced the outstanding shares toapproximately 8,794,000 shares of common stock.
 
**Basis of Presentation** 
Our accompanying unaudited consolidated financial statements havebeen prepared in accordance with accounting principles generally accepted in theUnited States of America for interim financial information and the instructionsto Form 10-QSB and Rule 10-1 of Regulation S-X of the Securities and ExchangeCommission (the "SEC"). Accordingly, these consolidated financial statements donot include all of the footnotes required by accounting principles generallyaccepted in the United States of America. In our opinion, all adjustments(consisting of normal and recurring adjustments) considered necessary for a fairpresentation have been included. Operating results for the three and nine monthsended June 30, 2009 are not necessarily indicative of the results that may beexpected for the year ended December 31, 2008. The accompanying consolidatedfinancial statements and the notes thereto should be read in conjunction withour (un)audited consolidated financial statements as of December 31, 2008 andfor the years ended December 31, 2007 and 2006 contained in our Form10-KSB.
 
**NOTE 2 - DUE TO RELATED PARTY**
 
The Company had outstanding debt of $46,276 to anofficer/stockholder for expenses advanced on behalf of the Company at June 30,2008. The Company also received cash advances from a shareholder. Theoutstanding debt to this shareholder was $305,469 at June 30, 2009 There are nospecific repayment terms on either of these debts.
 
**NOTE 3 - MORTGAGE PAYABLE**
 
The company retired all of its outstanding mortgages with thesale of its Chiefland properties.

6

**SOLARGY SYSTEMSINC** 
**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**September 30, 2009 AND 2008** 
**NOTE 4 - PROVISION FOR INCOME TAXES**
 
Deferred income taxes will be determined using the liabilitymethod for the temporary differences between the financial reporting basis andincome tax basis of the Company’s assets and liabilities. Deferred incometaxes will be measured based on the tax rates expected to be in effect when thetemporary differences are included in the Company’s consolidated taxreturn. Deferred tax assets and liabilities are recognized based on anticipatedfuture tax consequences attributable to differences between financial statementcarrying amounts of assets and liabilities and their respective taxbases.
 
At June 30, 2008 the Company had deficits accumulatedapproximating $11,627,172 available to offset future taxable income through2026. The Company established valuation allowances equal to the full amount ofthe deferred tax assets due to the uncertainty of the utilization of theoperating losses in future periods.
 
**NOTE 5- CONVERTIBLE NOTES PAYABLE, COMMON STOCK WARRANTS ANDDERIVATIVE FINANCIAL INTRUMENTS**
 
At June 30, 2009, the convertible note payable is comprised ofthe following:
 
8% Callable Secured Convertible Term Notes totaling$1,400,000:,
 
due from September 27, 2009 $ 500,000,   200,000,  200,000, due Jan 2011 150,000
 
Less: unamortized discount related to closingcosts and bifurcated embedded derivative instruments and freestanding warrants(348,361)
 
**Convertible Note Payable $151,639** 
On September 28, 2006, we issued a $500,000 8% Callable SecuredConvertible Term Note, due September 27, 2009, unless sooner converted or calledas discussed below and 5,000,000 Common Stock Purchase Warrants ("Warrants"),for aggregate consideration of $500,000 less $90,000 in closing costs. The Note,together with accrued and unpaid interest, is convertible at any time at theoption of the holder into shares of our common stock at the lesser of i) $0.06per share or ii) the average of the lowest 3 trading days during the last 20trading days. Interest is paid quarterly but no interest is due for any month inwhich the trading price is greater than $.10 for each trading day of the month.The fixed conversion price is adjusted for stock splits, stock dividends, mergerand similar events. The company is required to have authorized and reservedshares 2 times the number of shares that are actually issuable upon fullconversion of the notes and warrants.

7

**SOLARGY SYSTEMSINC**  
**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**September 30, 2009AND 2008** 
**NOTE 5- CONVERTIBLE NOTES PAYABLE, COMMON STOCK WARRANTS ANDDERIVATIVE FINANCIAL INTRUMENTS (CONTINUED)**
 
The instruments are subject to a Registration Rights Agreementwhereby we are required to file a registration statement with the Securities andExchange Commission within 30 days of closing, registering the common stockunderlying the secured convertible notes. The registration statement is to beeffective within 120 days of funding (180 days in the event of SEC comments). Weare required to maintain the effectiveness of the registration statement untilall registered securities have been sold or until they may be sold withoutrestriction under Rule 144(k). In the event that we fail to do so, we areobligated to pay, to the holders of the Note, damages of 2% of the face amountof the Notes per month.
 
If an Event of Default, as defined in the Note, occurs and iscontinuing, the holders of the Note may declare the entire unpaid principalbalance of the Note, together with all interest accrued, due and payable and theinterest rate increases from 8% to 15%. In the event that we breach anyrepresentation or warranty in the Securities Purchase Agreement, we may berequired to pay liquidated damages in shares or cash, at our election, equal totwo percent of the outstanding principal amount of the secured convertible notesper month plus accrued and unpaid interest.
 
The company has the option to redeem the note in cash, if thestock is trading below $.06 or greater than $3.50, by paying
- 125% of the principal, interest and penalty outstanding forprepayments within 30 days of issue
- 130% of the principal, interest and penalty outstanding forprepayments within 31 days of issue to 60 days or
- 140% of the principal, interest and penalty outstanding forprepayments greater 61 days of issue
- Plus an amount equal to the difference between the marketprice and $3.50, if the market price is greater than $3.50, times the number ofshares that could have been converted.

The company has the option, if the market price is below $.06 foreach trading day of the month, to prepay 104% of the outstanding principaldivided by 36 plus one month’s interest.
 
The Warrants, which are exercisable at any time had initial termsas follows:
 - 50,000,000 warrants, expiring September 28, 2013, at anexercise price of $0.10/share.
 
The warrants require that, if we issue common stock or other securities convertible into common stock at a price per share lower than the market price, the exercise price of the warrants will be reduced to that lower price.
 
Because the conversion price of the Note and the exercise priceof the warrants will be lowered if we sell securities at a lower conversion orexercise price, the number of shares that we may have to issue on conversion ofthe Note or exercise of the warrants is not fixed or determinable. As a result,the Note is not considered to be "conventional convertible debt", as that termis used by EITF Issue 00-19. Accordingly, the embedded conversion option in theNote is subject to the requirements of EITF Issue 00-19. Because the number ofshares we may have to issue is indeterminate, we are required by EITF Issue00-19 to bifurcate the embedded conversion option of the Note and account forit, as well as the warrants, as derivative financial instrument liabilities. Thederivative financial instrument liabilities are initially recorded at their fairvalue and are then adjusted to fair value at the end of each subsequent period,with any changes in the fair value charged or credited to income in the periodof change.

8

**SOLARGY SYSTEMS,INC**
(FORMERLY KNOWN AS SITEWORKS INC. ANDSUBSIDIARY) 
**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**June 30, 2009 AND 2008** 
**NOTE 5- CONVERTIBLE NOTES PAYABLE, COMMON STOCK WARRANTS ANDDERIVATIVE FINANCIAL INTRUMENTS (CONTINUED)**
 
We use the Black-Scholes option pricing model to value thewarrants, and the embedded conversion option component of the bifurcatedembedded derivative instrument. In valuing these derivative instruments, both atinception and at each quarter end, we use the market price of our common stockon the date of valuation, an expected dividend yield of 0%, and the remainingperiod to the expiration date of the warrants or repayment date of the Note.Because of the limited historical trading period of our common stock and thechange in the industry of the company, the expected volatility of our commonstock over the remaining life of the warrants and the Note has been estimated at19.3%, by comparison to the average volatility of companies considered bymanagement as comparable. The risk-free rates of return used ranged from 4.60%to 4.62%, based on constant maturity rates published by the U.S. FederalReserve, applicable to the remaining life of the warrants and theNote.
 
The Note is being accreted using an effective interest method, toits redemption value of $500,00 over the 36 month period to its maturity onSeptember 28, 2009.
 
At June 30, 2008, the following liabilities related to theWarrants and the embedded derivative instrument in the Note wereoutstanding:
 
Fair Value of the warrant is: 

Issue 
Expiry   
Exercise 
Value
 

Date
 
Date
 
Instrument
 
Price/Share
 
9/30/2006
 
9/28/2005 
9/28/2013
 

Warrant 5,000,000

 

$

0.10

 

 

15,594

 

Fair value of embedded derivatives: 

Issue 
Expiry   
Exercise 
Value
 

Date
 
Date
 
Instrument
 
Price/Share
 
9/30/2006
 
9/28/2005 
9/28/09
 

Convertible Note- Conversion Feature

 

$

0.10

 

 

70,915

 

9/28/2005 
9/28/09
 

Convertible Note Interest- ConversionFeature

 

$

0.10

 

 

15,232

 

The carrying value of the note is: 

Issue
 
Expiry
 
 
 

Value
 

Date

 

Date

 

 Instrument

 

9/30/2006

 

9/28/2005  
9/28/2009
 

$ 500,000 Convertible Term Note

 
 
151,639
 

**NOTE- 6 ISSUANCE AND CHANGES TO COMMON STOCK**
 
During the six months ended June 30, 2009, The Company issued60,000,000 shares of stock at fair value of $128,400 for compensation to anemployee. Additionally the company issued 60,400,000 shares of stock at fairvalue of $240,600 for consulting services
 
On August 1, 2006, the Company merged with SBD International(SBD), with SBD being the surviving entity. Upon execution of the merger anexchange of one share of SBD common stock was issued for every 25 shares of TheCompany’s common stock. This reduced the outstanding shares toapproximately 8,794,000 shares of common stock.
 
On August 17, 2006 5,100,000 shares, the entire outstandingSeries A Preferred Stock, was converted into 265,200,000 shares of common stockat an exchange ratio of 1 to 52. These shares were subsequently returned totreasury, and the preferred reissued in an amount of 5,200,000 in Dec2007.
 
On August 31, 2006 an employee shareholder returned 143,000shares of stock for no compensation.

9

**SOLARGY SYSTEMSINC**
(FORMERLY KNOWN AS SBD INTERNATIONAL INC. ANDSUBSIDIARY) 
**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**June 30, 2009 AND 2008** 
**NOTE 7- CONTINGENCY/UNCERTAINTY**
 
In June 2005, the Company issued 1,100,000 shares of preferredstock Series B value at $1.00 a share. The Company also issued 35,000,000 sharesof common stock par value valued at $1,000,000 in order to purchase propertyfrom Munich LLC. The property was appraised at $2,100,000. Subsequent to thepurchase, the Company discovered that the property wasn’t free and clearof mortgages and/or liens. The Company had  recorded a contingent liability inthe amount of $1,146,544 for this lien although the holder is current on thepayments on this note. The project was sold in march of 2008 and have repaid allits mortgage debt including contingencies.
 
**NOTE 8 - GOING CONCERN**
 
As shown in the accompanying consolidated unaudited financialstatements, the Company incurred substantial net losses since inception anddoesn’t have the revenue stream to support itself. There is no guaranteeas to whether the Company will be able to generate enough revenue and/or raisecapital to support those operations. This raises substantial doubt about theCompany’s ability to continue as a going concern.
 
Management also states that they are confident that they canacquire projects and raise the appropriate funds needed either through a debt orequity offering to operate.
 
The consolidated unaudited financial statements do not includeany adjustments that might results from the outcome of these uncertainties.
 
**Note 9- SUBSEQUENTEVENTS**
 
**On Sept 30, 2008, the company filed a form 14 indicating aname change to Solargy Systems Inc and also indicating that the company stockwill be reversed of a 2500 to one basis.**
 
**This is in keeping with a fundamental change in what thecompany does and how it will operate going forward. Solargy Systems inc is haschanged its mission to that of an alternative energy systems integrator. Solargywill engage in the production of photovoltaic panels and in the sales andinstallation of power systems using alternative energy products, includingsolar, wind and waste to energy.**
 
The company was required to file a registration statement, by theterms of a registration rights agreement, with the SEC on October 27, 2006. Asof the date of this filing, the registration statement has not been filed. Inthe event that we fail to file this statement, we are obligated to pay, to theholders of the Note, damages of 2% of the face amount of the Notes permonth.
 
In April of 2009 Solargy executed a Build operate contract withMardan Province in Pakistan for the construction of a 30 MW alternative energypower plant. The company is currently actively seeking funding for theproject.
 
**END OF FINANCIAL STATEMENTS**

10

 
**SOLARGY SYSTEMS,INC**
(FORMERLY KNOWN AS SBD INTERNATIONAL INC. ANDSUBSIDIARY) 
**NOTES TO CONDENSEDCONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)**
**June 30, 2009 AND 200****8** 
**Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS**
 
**COMPANY OVERVIEW**

 

Solargy Systems Inc Inc currently traded as an OTC pink sheets(SLGS) , merged with Site Works Building & Development Co, in August of 2006..(which was incorporated in Florida in 2001 as a construction and real estatedevelopment company). The Company has  refocussed to be an alternative systemsintegrator, providing alternative energy solutions in emergingmarkets.

 

**Alternative Systems Integration Services**

 

The company has established relationships with manufacturers ofalternative energy equipment suppliers and designers. These relationships enablethe company to offer integrated solution to the high cost of electrical power inemerging markets. Currently the company is seeking power purchase agreements inthe Caribbean .Solutions proposed to full fill the PP include hybrid systemsincluding wind with solar and waste to energy with wind turbines. Additionalinformation can be found at www.solargysystemsinc.com Areas being explored bythe company include waste to energy plants, Solar farms and windturbines.

 

**Preconstruction Planning Services**

 

As part of its preconstruction services, the Company offers apreconstruction package that includes: Establishment of a realistic budget;design and permitting assistance; value engineering alternatives; weeklymeetings with all parties; schedules for both preconstruction and constructionstages; subcontractor pricing; recommendations regarding the purchase of longlead items; and calculation of a guaranteed maximum price.

 

**Construction Management Services**

 

The Company offers construction management services throughoutthe building cycle and such services include, but are not limited to: assistancein all phases of permit processing; preparation of all subcontractors’and/or suppliers’ purchase orders required in connection with the work;scheduling, coordination and supervision of the physical construction;establishment of a realistic budget; monitoring of compliance with assignedresponsibilities; preparation and submission of all necessary documentation;preparation and maintenance of the project schedule; and training of the ownerin mechanical and other systems operation.

 

The Company strives to ensure that all parties’ roles andresponsibilities are clearly defined and that all parties are focused oncompleting the project. Depending on the customer’s needs, some of thepreconstruction planning services to be offered by the Company may overlap withthe Company’s construction management services.

 

**Strategic Plan**

 

The Company intends to pursue a strategy of: securing Powerpurchase agreements with utility companies, and then using he income stream fromthe power purchase agreements to securitized funding from alternative energyfunds.

 

**Projects**

 

The company is currently pursuing a number of Power purchaseagreements with utility services I the Caribbean and South east Asia.

 

Management is also planning to use 50 acres of land it has accessto as a joint venture to build a solar farm in Chiefland Florida

11

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

 

Our discussion and analysis of our financial condition and theresults of our operations are based upon our financial statements and the dataused to prepare them. Our financials have been prepared in accordance withaccounting principles generally accepted in the United States of America forinterim financial information and the instructions to Form 10-QSB and Rule 10-1of Regulation S-X of the Securities and Exchange Commission (the "SEC").Estimates that are critical to our consolidated financial statements relateprincipally to the determination and valuation of derivative financialinstruments and restricted securities, and the recoverability of long-livedassets. The markets for our services are characterized by intense competitionwhich could impact the future realization of our assets. Estimates andassumptions are reviewed periodically and the effects of revisions are reflectedin the period that they are determined to be necessary. It is at leastreasonably possible that our estimates could change in the near term withrespect to these matters.
  
Revenue recognition:

 

Our revenue recognition policy is consistent with the criteriaset forth in Staff Accounting Bulletin 104 - Revenue Recognition in FinancialStatements ("SAB 104") for determining when revenue is realized or realizableand earned. In accordance with the requirements of SAB 104 we recognize revenuewhen (1) persuasive evidence of an arrangement exists; (2) delivery of ourservices has occurred; (3) our price to our customer is fixed or determinable;and (4) collectibility of the sales price is reasonably assured. As such, werecognize revenues as services are rendered. Sales of real estate are generallyrecognized under the full accrual method when each of the criteria in paragraph5 of SFAS 66 is met. Under that method, gain is not recognized until thecollectibility of the sales price is reasonably assured and the earnings processis virtually complete. When a sale does not meet the requirements for incomerecognition a gain is deferred until those requirements are met.

 

The Company recorded the sale of property under the cost recoverymethod. When this method is used, no profit is recognized on the salestransaction until the cost of the property sold is recovered.

 

Revenues from fixed-price and modified fixed-priced constructioncontracts are anticipated to be recognized on the percentage-of-completionmethod, measured by the percentage of costs incurred to date compared toestimated total costs for each contract.

 

Contract costs will include all direct material and labor costsand those indirect costs related to contract performance, such as indirectlabor, supplies, tools, repairs depreciation. General and administrative costsare charged to expense as incurred. Provisions for estimated losses onuncompleted contracts are recognized in the period in which such losses aredetermined. Changes in job performance, job conditions and estimatedprofitability may result in revisions to costs and income, which are recognizedin the period in which the revisions are determined.

 

Revenues from time and material contracts are recognizedcurrently as the work is performed.

 

**Stock Based Compensation**

 

Prior to December 31,2005, we used Statement of Financial Accounting Standards No. 148 "Accountingfor Stock-Based Compensation - Transition and Disclosure" (SFAS No. 148) toaccount for our stock based compensation arrangements. This statement amendedthe disclosure provisions of FASB statement No. 123 to require prominentdisclosure about the effects on reported net income of an entity’saccounting policy decisions with respect to stock-based employee compensation.As permitted by SFAS No. 123 and amended by SFAS No. 148, we would have used theintrinsic value method under Accounting Principles Board Opinion No. 25,"Accounting for Stock Issued to Employees," to account for any of ourstock-based employee compensation arrangements (no such arrangements wereapplicable through September 30, 2006).

 

In December 2004, the Financial Accounting Standards Board issuedStatement Number 123 ("FAS 123 (R)"), Share-Based Payments, which becameeffective on January 1, 2006. The statement requires us to recognizecompensation expense in an amount equal to the fair value of share-basedpayments such as stock options granted to employees. Since we have not issuedany stock options through September 30, 2006, the adoption of this statement didnot have an effect on our consolidated financial statements.

12

**RESULTS OF OPERATIONS**

 

**SIX AND THREE MONTHS ENDED JUNE 30, 2009 COMPARED TO SIX ANDTHREE MONTHS ENDED MARCH 30, 2008**

 

**Revenues**

 

The 2009 revenues to date are 5,714, primarily from our CEOacting as an estimating consultant., The company has secured a constructioncontract for the construction of a 30 MW project but operations have not yetbegun. Revenues totaled $4,100,000 and $173,548 for the six and three monthsended June 30, 2008. 

 

**Cost of Revenues**

 

Cost of revenues consists of materials, labor, equipment rentaland other expenses related to the site preparation project. Cost of revenuestotaled $210,910.. and $85,670. for the six and three months ended June 30,2009. The cost of revenues for the same periods last year was 1,663,445 becausethe Chiefland  project was being worked on. 

 

**Operating Expenses**

 

General and administrative expense consists of property taxes,office expenses, rent, phones was for the period ending June 30, 2009, $29,650compared to $10,086  in the six months ended June 30, 2008. 

 

Included in stock based employee and consultant compensation isthe expense of issuing stock to an employee of $128,400 and $56,610 for the sixand three months ended June 30, 2009. Consultants also received stock basedcompensation of $124,800 and $56,410 for the six and three months ended June 30,2009 which is included in General and Administrative Expense.

 

**Other Expenses**

 

Interest expense for the six and three months ended June 30, 2009of $6404.00 and $4670 is primarily attributable to interest on credit lines . Anon-cash derivative income was recognized in the amount of $156,867 for thequarter and the year. This income was primarily caused by the decrease in thefair value of the conversion due to the market price dropping below theconversion price at the end of the quarter. Due to the adjustable conversionprice of the note, this amount will most likely reverse in the nextquarter.

 

**LIQUIDITY AND CAPITAL RESOURCES**

 

At June 30, 2009, we had cash of approximately $9,800, a decreaseof $62,911 from June 30, 2008. 

 

We believe that we will need to raise between $1 million and $5million through the sale of debt and/or equity securities in order to fundworking capital needs of the Company. If we are successful in raising thesefunds in a timely manner, we anticipate our revenues to exceed $1,000,000 andour general and administrative expense we be approximately $900,000. However,this estimate is a forward-looking statement that involves risks anduncertainties and is subject to a number of factors so there can be no assuranceof such.

 

We are optimistic about our long term business prospects,however, raising these funds is not guaranteed. We cannot assure you that wewill be able to raise such funds or that such funds will be available to us onfavorable terms. If we raise additional funds for the issuance of oursecurities, such securities may have rights, preferences or privileges senior tothose of the rights of our common stock and our stockholders may experienceadditional dilution.

 

**MANAGEMENT’S GOALS**

 

In our opinion we need to achieve the following events or milestones;
- Start Construction of BOT Hybrid solar project in Mardan Byend of fiscal 2009
- Raise additional capital of  to execute our project in MardanPakistan

13

**RISK FACTORS AND RELATED DISCLOSURES**
 
Unless the context indicated otherwise, all references to "we,""us," "our" or the "Company" in this subsection "Risk Factors" refer to theCompany. We are subject to a number of risks listed below, which could have amaterial adverse effect on our financial condition, results of operations andvalue of our Common Stock.
   
**Risks and Related Disclosures Relatingto Our Business**
 
Because of losses incurred by us to date and our generalfinancial condition, we received a going concern qualification in theauditors’ report related to our financial statements for the fiscal yearended December 31, 2005,and 2006  that raises doubt about our ability tocontinue our operations during the next 12 months.
 
We had net losses of approximately $950,000.. and$......................... for the fiscal years ended December 31, 2008 and2007, respectively, and generated $4,100,000 and$................................ (restated) in revenues during the fiscal yearsended December 31, 2008 and 2007, respectively. Our auditors will include agoing concern qualification in their report on our financial statements for thefiscal year ended December 31, 2008. We cannot assure you that we will be ableto generate enough revenue or raise sufficient capital to operate our businessduring the next 12 months. Our existence is dependent upon ourmanagement’s ability to develop profitable operations and resolve ourliquidity problems. We cannot assure you that we will ever achieve profitableoperations or generate significant revenues. We may continue to have operatinglosses in the foreseeable future. If we are unable to continue as a goingconcern, we may cease to operate and our investors may lose some or all of theirinvestment.
 
We may be unable to obtain adequate financing to implement ourbusiness plan, which will negatively impact our liquidity and ability tocontinue our operations.
 
We have very limited financial resources. We will need to obtainfunding for our working capital needs and business development. Our ability toobtain financing depends, in part, upon prevailing capital market conditions aswell as our operating results which may impact our efforts to arrange financingon terms satisfactory to us. Moreover, we may not be able to obtain additionalfinancing by the issuance of additional shares of our capital stock due to thefact that our authorized capital stock may not have been properly approved byour shareholders. Certain shares of our stock issued by us since incorporationmay be invalidly issued under the Florida Business Corporation Act and, as aresult, our shareholders may have rescission rights under federal and/or statesecurities laws." If adequate funds are not available, or are not available onacceptable terms, we may not be able to make future investments, take advantageof other opportunities, or otherwise respond to competitive challenges. Ourfailure to obtain capital on acceptable terms will also negatively impact ourliquidity and our ability to continue our operations.
 
We depend on the services of our President to implement ourbusiness strategy and the loss of his services will have an adverse effect onour business.
 
The extensive experience and contacts of our President, Mr.Nurse, within the construction industry are a critical component of our businessstrategy. The growth of our operations is dependent upon the personal effortsand abilities of our President to evaluate and pursue our businessopportunities. The loss of the services of our President, for any reason, willadversely affect our business.
 
We may be unable to hire and retain qualified employees whichwill have an adverse effect on our financial condition and result ofoperations.
 
We believe that our business strategy is substantially dependentupon our ability to attract, hire, retain and motivate qualified employees. Wecannot assure you that we will be successful in hiring or retaining the servicesof qualified managerial, technical or administrative personnel necessary tosupport our business. Our inability to hire and retain qualified employees willhave an adverse effect on our financial condition and results ofoperations.
 
We will encounter intense competition from substantially largerand better financed companies which may have a negative impact on our ability toachieve profitable operations.
 
Our success depends upon our ability to penetrate the market forgeneral contracting, pre-construction management and construction managementservices. Our company will compete with more established entities with greaterfinancial resources, longer operating histories and more recognition in themarket place than we do. It is also possible that previously unidentifiedcompetitors may enter the market place and decrease our chance of acquiring therequisite market share. Our future success will depend upon our ability topenetrate the market quickly and efficiently. Our ability to respond to theevolving demands of the marketplace will play a key role in our success. If weare unable to respond and compete in these markets, it will have a materialadverse effect on our results of operations and financial condition and willnegatively impact our ability to achieve profitable operations.
 
If we fail to maintain an effective system of internal controlover financial reporting and disclosure controls and procedures, we may beunable to accurately report our financial results and comply with the reportingrequirements under the Exchange Act. As a result, current and potentialshareholders may lose confidence in our financial reporting and disclosurerequired under the Exchange Act, which could adversely affect our business andwe could be subject to regulatory scrutiny.

14

Pursuant to Section 404 of theSarbanes-Oxley Act of 2002 ("Section 404"), we will be required, beginning withour annual report on Form 10-KSB for the fiscal year ending December 31, 2009,to include in our annual reports on Form 10-KSB, our management’s reporton internal control over financial reporting and the registered publicaccounting firm’s attestation report on our management’s assessmentof our internal control over financial reporting. We are in the process ofpreparing an internal plan of action for compliance with the requirements ofSection 404. As a result, we cannot guarantee that we will not have any"significant deficiencies" or "material weaknesses" reported by our independentregistered public accounting firm. Compliance with the requirements of Section404 is expected to be expensive and time-consuming. If we fail to complete thisevaluation in a timely manner, or if our independent registered publicaccounting firm cannot timely attest to our evaluation, we could be subject toregulatory scrutiny and a loss of public confidence in our internal control overfinancial reporting. In addition, any failure to establish an effective systemof disclosure controls and procedures could cause our current and potentialshareholders and customers to lose confidence in our financial reporting anddisclosure required under the Exchange Act, which could adversely affect ourbusiness.
 
We may be unable to implement our business and growth strategywhich will negatively impact our financial condition and results ofoperations.
 
Our growth strategy and ability to generate revenues is largelydependent upon our ability to: (i) develop and provide general contracting,pre-construction planning and construction management services; (ii) hire highlyskilled subcontractors; (iii) obtain adequate financing on acceptable terms tofund our growth strategy; (iv) develop and expand our customer base; and (v)negotiate agreements on terms that will permit us to generate adequate profitmargins. Our failure with respect to any or all of these factors could impairour ability to successfully implement our growth strategy, which will have anadverse effect on our financial condition and results of operations.
 
If we are unable to accurately estimate the overall risks,revenues or costs on a contract, we may incur a loss on the contract which willhave an adverse effect on our financial condition and results ofoperations.
 
We expect that will mostly enter into fixed price contracts whichrequire us to perform the contract for a fixed price irrespective of our actualcosts. As a result, we may realize a profit on these contracts only if wesuccessfully control our costs and avoid cost overruns. We may also enter intocost plus award fee contracts which provide for reimbursement of the costsrequired to complete a project, but generally have a lower base fee and anincentive fee based on cost and/or schedule performance. If our costs exceed therevenues available under such a contract or are not allowable under theprovisions of the contract, we may not receive reimbursement for these costs.Guaranteed maximum price contracts that we may enter into provide for a costplus fee arrangement up to a maximum agreed-upon price. These contracts alsoplace the risk on us for cost overruns that exceed the guaranteed maximum price.Pre-construction planning and construction management contracts are those underwhich we agree to manage a project for the customer for an agreed upon fee,which may be fixed or may vary based upon negotiated factors. Profitability onthese types of contracts is driven by changes in the scope of work, which couldcause cost overruns beyond our control and limit profits on these contracts.Cost overruns, whether due to inefficiency, faulty estimates or other factors,result in lower profit or a loss on a project. We expect that our contracts willbe based, in part, on cost estimates that are subject to a number ofassumptions. If our estimates of the overall risks, revenues or costs proveinaccurate or circumstances change, we may incur a lower profit or a loss on thecontract which will negatively impact our financial condition and results ofoperations.
 
We may fail to meet schedule requirements of our contracts whichcould adversely affect our reputation and/or expose us to financialliability.
 
The construction services industry is highly schedule driven andour contracts are likely to be subject to specific completion schedulerequirements with liquidated damages charged to us in the event the constructionschedules are not achieved. Failure to meet any such schedule requirements couldcause us to suffer damage to our reputation within the construction industry andcustomer base, as well as pay significant liquidated damages which will have anadverse effect on our financial condition and results of operation.
 
Compliance with regulations affecting our business could cause usto incur substantial costs both in time and money.
 
We are subject to extensive and complex laws and regulations thataffect the construction industry, including, but not limited to, laws andregulations related to zoning, permitted land uses, levels of density, buildingdesign, warranties, storm water and use of open spaces. We generally may berequired to obtain permits and approvals from local authorities to commence andcomplete various construction projects. Such permits and approvals may, fromtime-to-time, be opposed or challenged by local governments, neighboringproperty owners or other interested parties, adding delays, costs and risks ofnon-approval to the process. This process is further complicated by the factthat certain of our projects may be located in foreign countries where we may beunfamiliar with all regulatory requirements and approvals established by foreigngovernments. Economic, political and other risks associated with ourinternational operations involve risks that could adversely affect our financialcondition and results of operations." Our obligation to comply with the laws andregulations under which we operate, and the obligation of our subcontractors andother agents to comply with these and other laws and regulations, could resultin delays in the performance of our service, and cause us to incur substantialcosts.
 
We could incur significant costs as a result of liability underenvironmental laws which will have an adverse effect on our financial conditionand results of operations.

15

Our operations are subject to environmental laws and regulationsgoverning, among other matters, the discharge of pollutants into air and water,the handling, storage and disposal of solid or hazardous materials or wastes andthe remediation of contamination, sometimes associated with leaks or releases ofhazardous substances. Various federal, state and local environmental laws andregulations may impose liability for the entire cost of investigation andclean-up of hazardous or toxic substances. These laws may impose liabilitywithout regard to ownership at the time of the contamination or whether or notwe caused the presence of contaminants. Violations of these environmental lawsand regulations could subject us and our management to fines, civil and criminalpenalties, cleanup costs and third party property damage or personal injuryclaims which will have an adverse affect on our financial condition and resultsof operations.

  

Work stoppages and other labor problemscould adversely affect our financial condition and results ofoperations.

 

We intend to rely mostly on subcontractors in providing ourgeneral contracting services. Certain subcontractors in the constructionindustry are members of various labor unions. If the unionized workers engage ina strike or other work stoppage, or other subcontractors become unionized, wecould experience a disruption of our operations and higher ongoing labor costs,which could adversely affect our financial condition and results ofoperations.Timing of the award of a new contract and performance of a newcontract may have an adverse effect on our financial condition and results ofoperation in a particular fiscal quarter.

 

It is generally very difficult to predict whether and when wewill receive an award of a new contract as these contracts frequently involve alengthy and complex bidding and selection process which is affected by a numberof factors, including, but not limited to, market conditions, financingarrangements and governmental approvals. Our results of operations can fluctuatefrom quarter to quarter depending on the timing of new contractawards.

 

In addition, timing of the revenues and cash flows from ourprojects can be delayed by a number of factors, including, but not limited to,weather conditions, delays in receiving material and equipment from vendors andchanges in the scope of work to be performed. Such delays, if they occur, couldhave an adverse effect on our financial condition and operating results for aparticular fiscal quarter.

 

We may not be able to fully realize the revenue reported in ourbacklog which will have an adverse affect on our financial condition and resultsof operation.

 

We include a construction project in our backlog at such time asa contract is awarded or a firm letter of commitment is obtained and funding isin place. The revenue projected in our backlog may not be realized or, ifrealized, may not result in profits. For example, if a project reflected in ourbacklog is terminated, suspended or reduced in scope, it would result in areduction to our backlog which would reduce, potentially to a material extent,the revenue and profit we actually receive from contracts in backlog. If acustomer cancels a project, we may be reimbursed for certain costs but typicallyhave no contractual right to the total revenues reflected in our backlog.Significant cancellations or delays of projects in our backlog could have anadverse effect on our financial condition and results of operations.

 

Deterioration in economic conditions generally or in the marketregions where we intend to operate could decrease demand and pricing in theseareas and adversely affect our financial condition and results ofoperations.

 

The construction industry is sensitive to changes in regional andnational economic conditions such as job growth, interest rates and consumerconfidence. Material adverse changes in any of these conditions generally, or inthe market regions where we intend to operate, could decrease demand and pricingfor new construction projects in these areas or result in customer defaults onpending contracts, which could adversely affect the number of deliveries we makeor reduce the prices we can charge, either of which could adversely affect ourfinancial condition and results of operations.

 

Natural disasters and adverse weather conditions could delaydeliveries or increase costs of construction projects in affectedareas.

16

The occurrence of natural disasters or adverse weather conditionsin the areas in which we intend to operate can delay deliveries, increase costsand negatively impact the demand for construction projects in affected areas.When natural disasters such as hurricanes, tornadoes, earthquakes, floods andfires affect an area in which we intend to operate or one nearby, there can be adiversion of labor and materials in such area from existing constructionprojects to rebuilding or repairing the buildings that were either destroyed ordamaged in the natural disaster. This can cause delays in construction anddelivery of projects in which we may be involved and reduce our revenues, ifany.

 

Economic, political and other risks associated with ourinternational operations involve risks that could adversely affect our financialcondition and results of operations.

 

We intend to be involved as a general contractor in non-U.S.construction projects. Our international operations may expose us to risksinherent in doing business outside the United States, including, but not limitedto:

 
- political risks, including risks of loss due to civildisturbances, acts of terrorism or acts of war;
- unstable economic, financial and marketconditions;
- potential incompatibility with foreign joint venturepartners;
- foreign currency controls and fluctuations in currencyexchange rates;
- trade restrictions;
- increases in taxes and the effect of local regulations;and
- changes in labor conditions, labor strikes and difficultiesin staffing and managing international operations.

  

Any of these factors could harm ourpotential international operations. Specifically, failure to successfully manageinternational growth could result in higher operating costs than anticipated orcould delay or preclude altogether our ability to generate revenues which willhave an adverse effect on our results of operations and financial condition andresults of operations.

 

**Risks Relating to Our Common Stock**

 

Our stock price has been and may continue to be volatile and mayresult in substantial losses for investors.

 

The trading price of our Common Stock could be subject to widefluctuations in response to:

 
- our prospects as perceived by others;
- our operating results;
- differences between our reported results and those expectedby investors;
- announcements of new contracts by us or our competitors;and
- general economic or stock market conditions unrelated to ouroperating performance.

Fluctuations in our stock price as a result of any of theforegoing factors may result in substantial losses for investors.

 

Limited trading volume of our Common Stock may contribute to itsprice volatility.

17

Through June  30, 2008, the average daily trading volume during2009 for our Common Stock was approximately 400,000 shares. We cannot assure youthat a more active trading market in our Common Stock will develop. As a result,relatively small trades may have a significant impact on the price of our CommonStock.

 

We have never paid dividends and do not anticipate paying any inthe foreseeable future.

 

We have never declared or paid a cash dividend and we do notexpect to have any cash with which to pay cash dividends in the foreseeablefuture. If we do have available cash, we intend to use it to grow ourbusiness.

 

We will be subject to the penny stock rules which may adverselyaffect trading in our Common Stock.

 

On June 30, 2009, the closing price of Common Stock was $0.007bid . Our Common Stock is a "penny stock" security under the rules promulgatedunder the Exchange Act. In accordance with these rules, broker-dealersparticipating in certain transactions involving penny stocks must first delivera disclosure document that describes, among other matters, the risks associatedwith trading in penny stocks. Furthermore, the broker-dealer must make asuitability determination approving the customer for penny stock transactionsbased on the customer’s financial situation, investment experience andobjectives. Broker-dealers must also disclose these determinations in writing tothe customer and obtain specific written consent from the customer. The effectof these restrictions will probably decrease the willingness of broker-dealersto make a market in our Common Stock, decrease liquidity of our Common Stock andincrease transaction costs for sales and purchases of our Common Stock ascompared to other securities.

 

**CAUTIONARY STATEMENT**

 

This Form 10-QSB, press releases and certain information providedperiodically in writing or orally by our officers or our agents containstatements which constitute forward-looking statements within the meaning ofSection 27A of the Securities Act, as amended and Section 21E of the SecuritiesExchange Act of 1934. The words expect, anticipate, believe, goal, plan, intend,estimate and similar expressions and variations thereof if used are intended tospecifically identify forward-looking statements. Those statements appear in anumber of places in this Form 10-QSB and in other places, particularly,Management’s Discussion and Analysis or Results of Operations, and includestatements regarding the intent, belief or current expectations us, ourdirectors or our officers with respect to, among other things: (i) our liquidityand capital resources; (ii) our financing opportunities and plans and (iii) ourfuture performance and operating results. Investors and prospective investorsare cautioned that any such forward-looking statements are not guarantees offuture performance and involve risks and uncertainties and that actual resultsmay differ materially from those projected in the forward-looking statements asa result of various factors. The factors that might cause such differencesinclude, among others, the following: (i) the validity of the Company’sissued shares of stock; (ii) the Company’s ability to continue as a goingconcern;

 

(iii) the availability of financing on terms acceptable to theCompany; (iv) the management’s ability to implement the Company’sbusiness and growth strategy;

 

(v) the validity of the underlying assumptions and estimates ofprojected costs and revenues on a contract; (vi) the management’s abilityto maintain an effective system of internal control over financial reporting anddisclosure controls and procedures; (vii) any inability of us to successfullyconduct our business in new markets; and (viii) other risks including thoseidentified in our filings with the Securities and Exchange Commission. Weundertake no obligation to publicly update or revise the forward lookingstatements made in this Form 10-QSB to reflect events or circumstances after thedate of this Form 10-QSB or to reflect the occurrence of unanticipated events.

 

**Item 3. CONTROLS ANDPROCEDURES**

 

(a) Evaluation of disclosure controls and procedures.

 

Within ninety (90) days prior to the filing of this report, underthe supervision and with the participation of our management, including ourprincipal executive officer and principal financial officer, we conducted anevaluation of the effectiveness of the design and operations of our disclosurecontrols and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under theSecurities Exchange Act of 1934, as of September 30, 2006. Based on thisevaluation, our principal executive officer and principal financial officerconcluded that our disclosure controls and procedures were effective such thatthe material information required to be included in our Securities andExchange

Commission ("SEC") reports is recorded, processed, summarized andreported within the time periods specified in SEC rules and forms, and that suchinformation is accumulated and communicated to our management and our Board ofDirectors, as appropriate, to allow timely decisions regarding disclosure. Indesigning and evaluating the disclosure controls and procedures, managementrecognizes that any controls and procedures, no matter how well designed andoperated, can provide only reasonable assurance of achieving the desiredobjectives, and management necessarily is required to apply its judgment inevaluating the cost-benefit relationship of possible controls andprocedures.

18

Our management, including the principal executive officer andprincipal financial officer, do not expect that our disclosure controls andprocedures will prevent all error and fraud. A control system, no matter howwell conceived and operated, can only provide reasonable, not absolute,assurance that the objectives of the control system are met. Further, the designof a control system must reflect the fact that there are resource constraints,and the benefits of controls must be considered relative to their costs. Becauseof the inherent limitations in all control systems, no evaluation of controlscan provide absolute assurance that all control issues and instances of fraud,if any, within our Company have been detected. These inherent limitationsinclude the realities that judgments in decision-making can be faulty, and thatbreakdowns can occur because of simple error or mistake. Additionally, controlscan be circumvented by the individual acts of some persons, collusion of two ormore people, or by management override of the control. The design of any systemof controls also is based in part upon certain assumptions about the likelihoodof future events, and there can be no assurance that any design will succeed inachieving its stated goals under all potential future conditions.

 

(b) Changes in internal controls over financialreporting.

 

There were no significant changes in our internal control overfinancial reporting that could significantly affect our controls during quarterended June  30, 2009. We have not identified any significant deficiency ormaterial weaknesses in our internal controls, and therefore there were nocorrective actions taken. 

 

**PART II. - OTHERINFORMATION**
 

**Item 1. Legal Proceedings-**

 

Solargy System Inc does not have any current legalproceedings

 

**Item 2. Changes inSecurities -**

 

During the six months ended June 30, 2009, The Company issued6,700,000 shares of stock at fair value of $18,400 for compensation to anemployee. Additionally the company issued 71,400,000 shares of stock at fairvalue of $420,600 for consulting services

 

On August 1, 2006, the Company merged with SBD International(SBD), with SBD being the surviving entity. Upon execution of the merger anexchange of one share of SBD common stock was issued for every 25 shares of TheCompany’s common stock. This reduced the outstanding shares toapproximately 8,794,000 shares of common stock.

 

On August 17, 2006 5,100,000 shares, the entire outstandingSeries A Preferred Stock, was converted into 265,200,000 shares of common stockat an exchange ratio of 1 to 52.

 

On August 31, 2006 an employee shareholder returned 143,000shares of stock for no compensation. 

 

**Item 3. Defaults UponSenior Securities - NONE**

 

**Item 4. Submission ofMatters to a Vote of Securities Holders - NONE**

 

**Item 5. Other Information- NONE**

 

**Item 6.Exhibits**

**Exhibits**

**   **

 
 
31 13a-14(a)/15d-14(a)

Certification of Chief Executive Officer and Acting ChiefAccounting Officer, Carl Nurse

 
 
32 Section 1350

 Certification, Carl Nurse - Chief Executive Officer and ChiefAccounting Officer

 
19

 
**SIGNATURE**
 

Pursuant to the requirements of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.
 
**SOLARGY SYSTEMS INC**
  
 

By

/s/ Carl Nurse

 

 

Carl Nurse, Chief Executive Officer and

 

 

Chief Financial Officer

June  30, 2009

 

 

 
20

 
 
**Exhibit 31**
 

Certification
 

by Chief Executive Officer and Acting Chief Accounting OfficerPursuant to Rule 13a-14
 

I, Carl Nurse, certify that:

 

I have reviewed this quarterly report on Form 10-QSB of SOLARGYSYSTEMS INC

 

Based on my knowledge, this report does not contain any untruestatement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by thisreport;

 

Based on my knowledge, the unaudited financial statements, andother financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flowsof the registrant as of, and for, the periods presented in thisreport;

 

I am responsible for establishing and maintaining disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and15d-15(e) for the registrant and have:

 

       (a) Designed suchdisclosure controls and procedures, or caused such disclosure controls andprocedures to be designed under my supervision, to ensure that materialinformation relating to the registrant, including its consolidated subsidiaries,is made known to me by others within those entities, particularly during theperiod in which this report is being prepared;

 

       (b) Evaluated theeffectiveness of the registrant’s disclosure controls and procedures andpresented in this report my conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by thisreport based on such evaluation; and

 

       (c) Disclosed in thisreport any change in the registrant’s internal control over financialreporting that occurred during the registrant’s most recent fiscal quarter(the registrant’s fourth fiscal quarter in the case of an annual report)that has materially affected, or is reasonably likely to materially affect, theregistrant’s internal control over financial reporting; and

 

I have disclosed, based on my most recent evaluation of internalcontrol over financial reporting, to the registrant’s auditors and theaudit committee of the registrant’s board of directors (or personsperforming the equivalent functions):

 

       (a) All significantdeficiencies and material weaknesses in the design or operation of internalcontrol over financial reporting which are reasonably likely to adversely affectthe registrant’s ability to record, process, summarize and reportfinancial information;

 

       (b) Any fraud, whetheror not material, that involves management or other employees who have asignificant role in the registrant’s internal control over financialreporting.

 

June 30, 2009

 

 

s/ Carl Nurse
 
 

Carl Nurse
 
 

Chief Executive Officer and Chief Accounting Officer

 

 
**Exhibit 32**
 

**Certification Pursuant to**
**18 U.S.C. Section 1350,**
**as Adopted Pursuant to**
**Section 906 of the Sarbanes-Oxley Act of2002**
 
 
In connection with the Quarterly Report of SOLARGY SYSTEMS INC .(the "Company") on Form 10-QSB for the period ended June 30, 2009 as filed withthe Securities and Exchange Commission on the date hereof (the "Report"), I,Carl Nurse as Chief Executive Officer and Chief Accounting Officer of theCompany, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906of the Sarbanes-Oxley Act of 2002, that:

 

       (1) The Report may notfully comply with the requirements of section 13(a) or 15(d) of the SecuritiesExchange Act of 1934; and

 

       (2) The informationcontained in the Report might not fairly presents, in all material respects, thefinancial condition and results of operations of the Company.
 
By:

/s/ Carl Nurse

 

 

Carl Nurse

 

 

Chief Executive Officer and Chief Accounting Officer

 

 

 

June 30, 2009