UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K


(Mark
One)




xANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934





For
the fiscal year ended August 31, 2009





OR





oTRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934





For the
transition period from __________ to ______________





Commission
File Number 333-138989








Sea 2 Sky
Corporation


(Exact
name of registrant as specified in its charter)





Nevada
            98-0479847State
      or other jurisdiction of incorporation
      or organization
            (I.R.S.
      Employer Identification
      No.)





2287 Slater Road, Ferndale,
WA  98248


(Address
of principal executive offices) (Zip Code)


Registrant’s
telephone number, including area code:  1 (877) 732-2759





Formerly





RPO 75156, White Rock, BC
V4B 5L4







Securities
registered pursuant to Section 12(b) of the Act:


Title
      of each class
            Name
      of each exchange on which registeredCommon
      Stock, par value $0.001 per share
            OTCBB




Securities
registered pursuant to Section 12(g) of the Act:None




Indicate
by check mark if the Registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.Yes oNo þ




Indicate
by check mark if the Registrant is not required to file reports pursuant to
Rule 13 or Section 15(d) of the Exchange Act.Yes oNo þ




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




Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).Yes oNo o





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






Larger accelerated
      filer o
            Accelerated filer
      oNon-accelerated
      filer o
            Smaller reporting
      company þ




Indicate
by check mark whether registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act). Yes oNo þ




As of
December 8, 2009, the registrant had 81,391,811shares of its common
stock issued and outstanding. The aggregate market value of the common stock
held by non-affiliates of the Registrant, computed by reference to the $0.07
closing price as of December 8, 2009, was approximately $3,277,177.





Authorized
share capital of the registrant: 225,000,000 common shares, par value of
$0.001.  The Registrant has no non-voting stock.




Documents
incorporated by reference :  None











TABLE OF
CONTENTS




PART
      IITEM
      1.
            Business
            3ITEM
      1A.
            Risk Factors
            10ITEM
      1B.
            Unresolved Staff Comments
            13ITEM
      2.
            Properties
            13ITEM
      3.
            Legal Proceedings
            13ITEM
      4.
            Submission Of Matters To a Vote Of Securities
      Holders
            14PART
      IIITEM
      5.
            Market For Registrant's Common Equity, Related
      Stockholder Matters And IssuerPurchases Of Equity Securities
            14ITEM
      6.
            Selected Financial Data
            16ITEM
      7.
            Management’s Discussion And Analysis Of Financial
      Condition And ResultsOf
      Operation
            16ITEM
      7A
            Quantitative And Qualitative Disclosures About
      Market Risk
            22ITEM
      8.
            Financial Statements
            F-1ITEM
      9.
            Changes In And Disagreements With Accountants On
      Accounting And FinancialDisclosure
            23ITEM
      9A.
            Controls And Procedures (ITEM
      9A(T))
            23ITEM
      9B.
            Other Information
            23PART
      IIIITEM
      10.
            Directors, Executive Officers And Corporate
      Governance
            24ITEM
      11.
            Executive Compensation
            25ITEM
      12.
            Security Ownership Of Certain Beneficial Owners
      And Management And RelatedStockholder Matters
            27ITEM
      13.
            Certain Relationships And Related Transactions,
      And Director Independence
            27ITEM
      14.
            Principal Accounting Fees And
      Services
            27PART
      IVITEM
      15.
            Exhibits, Financial Statements
      Schedules
            28SIGNATURES
            
            29





CERTIFICATION
PURSUANT TO SECTION 302 (A) OF THE SARBANES-OXLEY ACT OF 2002





CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002





2




Information
Relating to Forward-Looking Statements





This
Annual Report on Form 10-K contains forward-looking statements within the
meaning of the Securities Exchange Act of 1934, which are subject to risks,
uncertainties and assumptions that are difficult to predict. All statements in
this Annual Report on Form 10-K, other than statements of historical fact,
are forward-looking statements. These forward-looking statements are made
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. The forward-looking statements include statements, among other
things, concerning our business strategy, including anticipated trends and
developments in and management plans for, our business and the markets in which
we operate; future financial results, operating results, revenues, gross margin,
operating expenses, products, projected costs and capital expenditures; research
and development programs; sales and marketing initiatives; and competition. In
some cases, you can identify these statements by forward-looking words, such as
"estimate", "expect", "anticipate", "project", "plan", "intend", "believe",
"forecast", "foresee", "likely", "may", "should", "goal", "target", "might",
"will", "could", "predict" and "continue", the negative or plural of these words
and other comparable terminology. These statements are not guarantees of future
performance and are subject to risks, uncertainties, potentially inaccurate
assumptions, and other factors, some of which are beyond our control and
difficult to predict. If known or unknown risks materialize, or should
underlying assumptions prove inaccurate, our actual results could differ
materially from past results and from those expressed in the forward-looking
statements. Important factors that could cause our actual results to differ
materially from those expressed in our forward-looking statements are described
in "Item 1A—Risk Factors" in this Annual Report on Form 10-K. From
time to time, we also provide forward-looking statements in other materials we
release to the public and in oral statements made by authorized
officers.




The
forward-looking statements are only predictions based on our current
expectations and our projections about future events. All forward-looking
statements included in this Annual Report on Form 10-K are based upon
information available to us as of the filing date of this Annual Report on
Form 10-K. You should not place undue reliance on these forward-looking
statements. We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise,
except as required by law. These forward-looking statements involve known and
unknown risks, uncertainties and other factors that may cause our actual
results, levels of activity, performance, or achievements to differ materially
from those expressed or implied by these statements. These factors include the
matters discussed in the section entitled "Item 1A—Risk Factors" and
elsewhere in this Annual Report on Form 10-K. You should carefully consider
the risks and uncertainties described under this section.




Investors
are advised to consult any further disclosures we make on related subjects in
our 10-Q and 8-K reports filed with the Securities and Exchange Commission (the
"SEC").




ITEM
1. DESCRIPTION OF BUSINESS




As used
in this annual report, “we”, “us”, “our”, “Sea 2 Sky”, or “Company” refers to
Sea 2 Sky Corporation.




COMPANY
HISTORY




Our
Company




Sea 2 Sky
Corporation (or “Sea 2 Sky”, the “Company”) is a development-stage company which
intends to sources biomass supply streams and convert them into "green or
alternative fuel energy" products. We intend to focus on creating sustainable
and environmentally responsible alternative energy products from underutilized
resources, responding to a global market demand for a viable option to reduce
the world's climate "greenhouse effect" and the dependence on fossil
fuel.




Company
History




Sea 2 Sky
was incorporated in Nevada on November 16, 2005.  The Company's fiscal
year-end is August 31st.  The Company was initially established to
provide travel related services to tourists in Canada and other countries;
however, due to an economic downturn, the Company abandoned its travel-related
services during the first half of fiscal year 2009.  As a result,
assets and expenses related to the travel business have been reclassified from
continuing operations to discontinued operations for proper financial
presentation.  The total net loss from these discontinued operations
since November 16, 2005 is $19,304.




Effective
March 1, 2009 (“Inception”), the Company transitioned from its initial business
focus to that of a world-wide renewable energy provider, and entered an emerging
opportunity in the alternative fuel, biomass sector of the forest
industry.  The Company is currently seeking acquisition rights to
biomass supplies around the world so that we may begin the manufacturing and
global distribution of environmentally-friendly alternative fuel
sources.




3




Sea 2 Sky
is a development-stage renewable bio-energy company headquartered in a HUB Zone
in Ferndale, Washington. Backed by a “Special Category Minority Business”
designation, the Company is better enabled to compete effectively in a growing
market. The Company’s primary focus is to deliver alternative energy solutions
to Fortune 1000 companies, government agencies and countries around the
globe.  Sea 2 Sky is developing manufacturing and fulfillment
processes to achieve this goal. The Company is continually seeking and securing
the rights to large concentrations of biomass material (presently in North
America), and is working to develop partnership relationships with creators of
the most recent technologies in areas related to the torrefaction /
carbonization process involved in the manufacturing of “Green Coal” and related
energy products.




After
obtaining new technology, Sea 2 Sky intends to convert surplus decaying biomass
into environmentally-sustainable products such as activated carbon, densified
high-energy char (bio-char), and electricity.  This process allows for
environmental benefits including the reduction of carbon emissions and the
related “greenhouse effect”, depleting the decaying timber which is known to be
a forest fire hazard.




What
is Biomass




Prior to
the Industrial Revolution, woody biomass satisfied nearly all of mankind’s
energy needs.  Currently, one-seventh of total energy consumption is
from biomass which is the main energy resource for over 1.5 billion people in
the world.  Biomass energy is the only one which has both the property
of fossil fuel and characteristics which means that it can be stored, renewed
and transferred. It is less restricted by natural conditions.  Biomass
energy can be transferred to useful thermal energy, electrical energy and the
fuel as power by means of direct combustion, gasification and
liquidation.  High-grade combustible gas like CO, H2 and methane can
be formed by the gasification of biomass.  Bio-gas can be produced by
anaerobic digestion of biomass and liquid fuel using, for example,
thermalization, biochemistry, machinery and chemistry.  Biomass is the
most renewable energy resource in the world. Like a great solar chemical
industry plant, it spreads in plants all over land and water throughout the
world which transfer continuously solar energy into chemical energy which is
stored in the inner part of plants in the form of organic matter.




The
biomass energy resource has many advantages such as greater resource capacity,
lower price, less sulphur composition, less ash content and the feature of
renewability.  However, it also has some unfavorable aspects such as
higher water content, lower unit thermal output, large volume, decentralized
resource and unsuitable for collection, storage and
transportation.  These disadvantages can be overcome with proper
planning and application of technology.  Biomass resources can be used
efficiently.




About 120
billion tons of biomass, the energy capacity of which is five times the total
present energy consumption in the world, is formed each year by means of
photosynthesis.  But only 1% of the total energy capacity has been
used as energy.  It can supply about 14% of total energy consumption
in the world.




Declining
oil reserves, growing environmental awareness and political issues surrounding
fossil fuels have renewed the interest in and demand for our original source of
energy, biomass.  Through new technology, we are able to maximize the
energy output of biomass, particularly in the form of wood pellets and minimize
emissions which makes it economically and ecologically one of the most desirable
sources of energy.




In the
past it was not ecologically or economically viable to burn biomass. The
transportation of unprocessed biomass to the populated centers was too
expensive, and the high moisture content of firewood, as well as the inefficient
conversion of wood to energy in traditional wood stoves caused unacceptable
pollution. The solution to both problems is pellets. Because of their low
moisture contents and density, wood pellets burn at a very high heat with
minimal emissions.




Until
recently, processing wood, such as sawing and planing, produced waste in the
form of sawdust and shavings.  In the past, these piles of wood waste
were left to rot, releasing in the process carbon and methane gases into the
atmosphere and often causing contamination of the ground water.  In
the 1970's, an idea was born in North America to utilize this waste product for
the generation of energy.  Machinery was developed to take sawdust and
compress it into a pelletized form so that it could be conveniently and
effectively transported and burned in a controlled manner to produce heat and
electricity.




Cordwood,  wood  pellets,  wood  chips,  waste  paper,  along
with a dozen other agricultural  byproducts  capable of
being burned for heat,  are all examples of biomass that
is  renewable.  Given proper forest and agricultural
management, biomass is limitless, and has historically proven to be price stable
in the marketplace.  The environmental soundness of the fuel is that
it essentially turns waste products into energy and is in ample supply in the
areas hardest to reach with oil and gas.




4




Biomass
Supply




In order
to fully evaluate the emerging opportunity, the Company intends to proceed in
various stages.  The first stage is to establish itself in the supply
chain marketplace by establishing long-term agreements with sources of woody
biomass (“fiber baskets”) including tree farm licenses (“TFL’s”), government
agencies, and Indigenous Peoples (i.e., First Nations) to secure ownership or
long-term usage rights to this fiber.





British
Columbia


British
Columbia has tremendous untapped potential for woody biomass. This includes
unused sawmill waste (sawdust, shavings) as well as residues from existing
forestry operations such as logging slash, and trees unusable for the
productions of construction lumber. In addition to this, since the late 1990's,
a large portion of the pine forests in B.C. have been infested with the Mountain
Pine Beetle, a pest that quickly makes the tree unusable for construction
lumber. The Pine Beetle killed wood is perfectly suitable for biomass processes
and wood pellet production. Based on a government funded study, between mountain
pine beetle infected wood, mill residue, current timber harvesting, and improved
forest practices, the combined sustainable volume available for woody biomass
processing in BC is a total of approximately 28,000,000 tons (being potentially
upwards of 6.4 billion dollars in current market value) per year for the next 15
to 20 years. Considering that currently only about 3 million tons per year are
used to produce wood pellets, the potential supply is enormous.




Traditionally,
BC’s wood supply has been controlled by the government of BC and major wood
producers. In 1997, the Supreme Court of Canada pronounced a line of reasoning
that inserted a 3rd stakeholder into the ownership of the wood supply: the
indigenous people of Canada (often referred to as the First Nations). Over the
last ten years, these three groups have been searching for ways to
collaborate.




Sea 2 Sky
is one of the first public companies in the North American biomass industry
focused on access to indigenous controlled biomass due to its indigenous
connections and professional native management practices.  It intends
to bring those resources into the international energy sector, providing a way
for indigenous groups to participate in a global marketplace.






●
            During
      October 2009, the Company received the endorsement of the Lake Babine
      Indian Nation of Burns Lake, British Columbia Canada (LBN) to proceed with
      agreements to develop the biomass resources of the Lake Babine area for
      alternative energy uses in North America. Sea 2 Sky’s presentation
      involved Sea 2 Sky being able to process locally the beetle-wood biomass
      for sale into the North American alternative energy market. The resolution
      provides a framework to Sea 2 Sky that LBN will provide a sufficient
      amount of biomass annually on a long-term basis for local processing via
      the torrefaction method. We are in the process of negotiating a formal
      fiber agreement which, if successful, could provide substantial
      tonnage woody biomass per year for a term of 20
  years.Lake Babine resides
      in central British Columbia and the LBN has substantial volumes of biomass
      under its control. The LBN and other indigenous peoples have been in
      consultations with the British Columbia Department of Forestry and various
      industry sectors to develop these resources for the improvement of its
      local economy, salvaging the pine beetle epidemic to lower greenhouse
      gasses and global warming and to provide employment for its local people
      in the new alternative energy industry (see
      http://www.for.gov.bc.ca/hfp/mountain_pine_beetle/ for more government
      details).





Europe


In order
to meet the Kyoto protocols, Europe has been diversifying its energy needs.
Biomass is a significant part of European energy production for both heating and
electricity needs. Over the last year, Russia has exerted some political
pressure in the energy sector by shutting off natural gas supplies to vast areas
of western, central and Eastern Europe. With the increasing demand, many
European countries and companies are looking for other areas of secure supply,
and biomass is well established as a reliable source of renewable energy in
Europe. Due to the goals in place in Europe for the reduction of greenhouse
gases, and the mandate to increase the portion of renewable energy used, biomass
(wood pellets in particular) is in an ideal position to take a large share of
that market.





China


China is
relatively rich in biomass energy resources.  Five billion tons of
biomass could be produced in the country annually (700 million tons of it is
from the agricultural sector alone). In rural China, biomass energy consumption
represents about 70% of production.




Torrefaction
Technology




Torrefaction
is the thermo chemical treatment of biomass at 200 to 300 °C, carried
out under atmospheric conditions and in the absence of oxygen. During the
process the biomass partly decomposes, giving off various types of volatiles.
The final product is the remaining solid, which is often referred to as
torrefied biomass, or torrefied wood when produced from woody
biomass.




5




Typically,
70% of the mass is retained as a solid product, containing approximately 90% of
the initial energy content. The remaining 30% of the mass is converted into
torrefaction gases, but contains only approximately 10% of the energy content of
the biomass. Hence a considerable energy densification can be achieved,
typically by a factor of 1.3 on mass basis. This example points out one of the
fundamental advantages of the process, which is the high transition of the
chemical energy from the feedstock to the torrefied product, while concurrently
the fuel properties are improved.




In the
1930’s, the principles of torrefaction were first reported in relation to woody
biomass.  Research in France proved this application to produce a gassifier
fuel. Since then, the process received only attention again when it was
discovered that torrefied wood could be used as a reducing agent in metallurgic
applications. This led to a demonstration plant, which was operated during the
1980's, but was dismantled again in the beginning of the 1990's. During the
last five years, torrefaction has received new attention - now as pretreatment
technology to upgrade biomass for energy production chains (co-combustion and
gasification).




The key
property that makes torrefied biomass attractive for co-firing in existing
coal-fired power stations is its superior grind ability compared to untreated or
fresh biomass. After torrefaction biomass has lost its tenacious nature and
partly its fibrous structure. Through torrefaction, biomass becomes more alike
coal and so its size reduction characteristics. Torrefied biomass is more
brittle of nature compared the biomass it was derived from. This is crucial for
establishing the desired grind ability, allowing torrefied biomass to run
simultaneously with coal in existing coal-fired facilities.




Torrefaction
can potentially be applied to a wide variety of biomass (softwood, hardwood,
herbaceous, wastes) so that the range of biomass feedstock for torrefied wood
pellets can be greatly increased.  Sea 2 Sky plans to apply
torrefaction technology to increase the energy output in biomass products and to
provide a coal-like product with significant environmental
advantages.




Torrefaction
is a scientifically proven method for improving the properties of biomass
as a fuel. The torrefied biomass has also proven to have hydrophobic (resistant
to or avoiding wetting) properties which are welcome during storage. From the
pelletization viewpoint, the implementation of torrefaction within the
pelletization process offers theoretical solutions to the problems encountered
with the durability and biological degradation of wood pellets.






●
            Currently,
      the Company has been working with various technology companies which have
      created and piloted advanced torrefaction processes which can be used to
      alter the chemical characteristics of wood, retaining increased amounts of
      stored energy and providing an environmentally-friendly bio-mass base for
      creating various streams of energy.  We hope to have an
      agreement in place by early December
2009.




Plant
Sites




The
Company has identified numerous plant sites across British Columbia and other
areas in North America which are in close proximity to the sought-after fiber
baskets; some of which have existing wood mills which could be easily
retrofitted to accommodate the new technology.  These plant sites are
in various stages of evaluation by reputable engineering firms to establish
necessary capital requirements.


Distribution
Channels




Sea 2 Sky
plans to brand itself as a quality supplier of renewable biomass products
(torrefied biomass, synthetic gas, and bio-liquids) for product delivery to the
US, Europe, and beyond.  We are beginning to negotiate with various
utility companies, bio-char distributors, and consumer groups within North
America, Europe and Asia.  Market potential exists for well over 1,500,000
tons of torrefied biomass products commencing delivery in 2011. The production
constraint is the capitalization required to establish plants to manufacture
torrefied pellets and other biomass products.




Once the
supply and market positions are secured, the Company will seek and secure
financing for the construction of these plants in North America.  This
would provide much needed jobs in these depressed areas, and labor is readily
available.  Based on current  research,  the
Company  is aware of and has leads
into  approximately  20  different  locations
suitable for manufacturing plants within British
Columbia,  Ontario,  and Alberta,  Canada; and
three states within the United States of America.  While New Zealand
also provides many opportunities, the Company plans to focus their manufacturing
in North America initially.




6




MARKET
& INDUSTRY




Studies
show that fossil fuels such as coal, oil and natural gas are used to generate
over 60% of the world’s electricity. However, a variety of factors are
contributing to the increasing development of renewable energy systems that
capture energy from replenishable natural resources, including wind, sunlight,
and especially biomass, and convert it into electricity.




Global
demand for electric power is expected to grow at a an average rate of almost 3%
per year, which mean that the current demand will double during the next 20
years to approximately 30 trillion megawatts, according to the Energy
Information Administration (“EIA”). While in 2008, biomass renewable energy
accounted for less than 4% of energy sources used in the US, the EIA forecasts
that the renewable energy generating capacity and generation from wood and other
biomass will increase on average by 5.2% and 8.1% annually,
respectively.




The
biomass energy market is considerable in size internationally with Europe and
Asia having substantial multi-Billion dollar product requirements. The North
American market demand is vast and growing daily with increased pressure from
industry and governments to reduce energy waste and carbon emissions. One method
that is increasingly being evaluated and implemented is the use of wood pellets
both commercially and residentially to heat/cool and provide energy requirements
in a carbon- neutral manner. In addition the use of “carbon credits” is now
international in scope and provides many opportunities to the industry to become
socially responsible and reduce their "Carbon Footprint". With the Kyoto
Protocol framework in place and the United Nations Framework Convention on
Climate Change (UNFCCC) mandates and administration in effect, Sea 2 Sky is
committed to bringing ethical standards and production methods to this growing
market.




Factors
contributing to a global shift towards renewable energy sources
include:






●
            The
      cost of fossil fuel used to generate electricity has been generally rising
      and is likely to continue to rise in the future.●
            Many
      countries, including the U.S., depend on foreign resources for a majority
      of their domestic energy needs. Concerns over political and economic
      instability in some of the leading energy producing regions of the world
      are encouraging consuming countries to diversify their sources of
      energy.●
            Environmental
      concerns regarding the by-products of fossil fuels have led many countries
      and several US states to agree to reduce emissions of carbon dioxide and
      other gases associated with the use of fossil fuels and to adopt policies
      promoting the development of cleaner technologies.●
            Many
      countries have adopted policies to provide government incentives for the
      development and use of renewable energy sources, such as subsidies to
      encourage the commercialization of renewable energy power
      generation.●
            In
      many parts of the world, the existing electricity infrastructure is
      insufficient to meet projected, and in some places existing, demand.
      Expansion of generating capacity from existing energy sources is
      frequently hindered by significant regulatory, political and economic
      constraints.




As a
result of these and other factors, the EIA projects that grid-connected
renewable generating capacity will continue to grow over the next
25 years.




Renewable
energy is on the top of the list of needs in many countries around the world.
There are constant discussions about peak oil, global warming and many political
issues affecting secure supply of affordable and environmentally-responsible
energy for the future. World events like the dispute over natural gas between
Russia and the Ukraine in early 2009, as well as the continuing uncertainty in
the Middle East have alerted us in the West to the fragility of our supply for
energy, while the need to devastate vast areas of the Arctic in order to extract
oil from the earth have highlighted the environmental toll of the continued
reliance on fossil fuels.




The world
is searching for alternatives.  While it will take a combination of
renewable energy options to reduce our total dependence on fossil fuel, biomass
represents the most readily available and cost effective one. The ability to
market our products internationally provides an exceptional opportunity for Sea
2 Sky to become a successful and financially-sound alternative energy
company.




PRODUCTS




Initially,
our plan was to focus on manufacturing and distributing densified biomass for
industrial use to co-generate the energy necessary to run and operate large
plants and for the needs required by utility companies.  With the
continuously evolving torrefaction technology, we have learned that this new
technology opens many new opportunities to further exploit the benefits of using
biomass (especially woody biomass) to generate energy products.




7




Torrefaction
is the thermo chemical treatment of biomass at 200 to 300 °C, carried
out under atmospheric conditions and in the absence of oxygen. During the
process the biomass partly decomposes, giving off various types of volatiles –
some gaseous, others liquid. The final product is the remaining solid, which is
often referred to as torrefied biomass, or torrefied wood when produced from
woody biomass.  Torrefaction is a scientifically proven method for
improving the properties of biomass as a fuel and can potentially be applied to
a wide variety of biomass.




The
latest torrefaction technologies provide a means in which the resulting solids,
liquids and gases may be used to generate energy products. Some examples of
these are:


●
              Electricity –Through a
      gasification process, gases generated during torrefaction are harnessed
      and converted to electricity for direct grid application.Using biomass to
      produce electricity is 80 percent more efficient than transforming the
      biomass into biofuel. In addition, the electricity option would be twice
      as effective at reducing greenhouse-gas
emissions.●
              Activated Carbon –The torrefied biomass (or bio-carbon, bio-char) can be converted
      into “activated carbon”. Through its porous structure and large surface
      area, activated carbon is a traditional technology used to trap trace
      contaminants during air and water treatment.  Activated carbon
      from biomass allows us to produce renewable-environmental products that
      are in many ways superior to their fossil fuel-based competitor
      products.●
              Charcoal (Torrefied) pellets –The torrefied biomass, also known as “Green Coal”, can also be
      converted via a chipper and pelletizer into torrefied pellets, which offer
      many conveniences for specific applications.  In
      Austria,  the leading  market for
      pellet  central  heating
      furnaces  (relative  to
      its  population),  it
      is  estimated  that 2/3 of all new
      domestic  heating  furnaces  are
      pellet  burners.  In Italy, a large market for
      automatically-fed pellet stoves has developed.●
              Wood Pellets (or “White
      Pellets”) – White pellets are the end product of pelletized woody
      biomass; no torrefaction process is involved.  These pellets
      have been most widely used as an alternative to oil-fired central heating
      via pellet-burning furnaces.  From its initial research,
      management believes that the marketplace for wood pellets is
      increasing.  Wood pellet biomass is the most accepted and most
      feasible source of this energy and demand for wood pellets in Europe is
      forecast to increase exponentially by 2020.●
              Bio-char –Torrefied
      biomass has a remarkable ability to act as an agricultural catalyst. In
      this application, often called “terra preta,” the biocarbon is neither a
      nutrient nor a fertilizer yet it enhances plant growth by 30% to 300%.
      Even more remarkable, the carbon is not consumed, and thus has to be
      applied only once. The growth promotion takes place from the absorbent
      carbon acting as a slow-release agent for nutrients and fertilizers and/or
      host for soil microbes. The end result is more food production, while the
      biocarbon placed in the ground is sequestered and is now carbon
      negative.




COMPETITION




The basis
of our product offerings primarily relies upon the torrefaction technology we
plan to use.  Although this technology is not new, it has been
considered cost-prohibitive for energy production until currently.  As
a result, there are no public company manufacturers of torrefied bio-energy that
we are aware of.  Competition faced by the Company will include
existing energy technologies (coal burning, petroleum, etc.), other alternative
energy manufacturers such as solar and wind-powered energy providers, and those
manufacturers of wood pellets.




Although
there are many competitors who are selling wood pellets, manufacturers will face
continuing difficulty in finding a supply of wood product to convert to wood
pellets.  The steep decline in the North American housing market has
resulted in a decrease in the supply of wood fiber.  Cost of the
pellets has begun to rise as less wood by-products are being created due to the
slowing of the housing boom.




GOVERNMENT
MANDATES / REGULATIONS




In the
United States,  the current  administration has announced
plans to increase the use of renewable  biomass energy starting 2009
and the Department of Energy is issuing  over
$200  million  in  requests  from
industry  for small  biomass projects, and another $80
Billion for larger federal institutional procurement.




President
Obama has issued a mandate that 20% of the US energy needs to come from
renewable sources within 5 years and is ready to fund the research to do so.
Many states within the US have established their own benchmarks (California at
33%) to diversify their energy sources and offset carbon emissions.




The
European Union and other countries now legally mandate the use of biomass
sources of energy for domestic and industrial use. For example,  in
some regions of  Austria,  up to 80% of new
homes  already  use  biomass  for  heating,  and
the UK building code for sustainable housing mandates 100% of new homes by 2012
to use renewable  technologies.  Wood pellet biomass is the
most accepted and most feasible source of this energy and demand for wood
pellets in Europe is forecast to increase exponentially by 2020.




8




Each of
the member states of the EU has a country-specific target for the level of
consumption of electricity from renewable sources that it should attain by 2010.
The United Kingdom Renewables Obligation of April 2002 included a target of 10%
of electricity generation to come from renewable sources by 2010 and 15% by
2015, which will continue until 2027. Electricity suppliers that are unable to
otherwise meet their renewables obligation have to pay a buy-out price
(currently £0.033 per kilowatt hour) or purchase Renewables Obligation
Certificates from companies that generate electricity from renewable
resources.




SUBSIDIES
AND INCENTIVES




Several
governments have enacted subsidies and incentives designed to encourage the
development of renewable energy resources.  Under a tariff subsidy,
the government sets price subsidies to be paid to electricity producers for
renewable electricity generated by them. The prices are set above market rates
and may be differentiated based on system size or application. Under a renewable
portfolio standard, the government requires regulated utilities to supply a
portion of their total electricity in the form of renewable electricity. Some
programs further specify that a portion of the renewable energy quota must be
from a particular renewable energy source, although none have specific quotas
for wave energy. Several governments also facilitate low interest loans for
renewable energy systems, either through direct lending, credit enhancement or
other programs.




In 2008,
the US enacted the Energy Improvement and Extension Act of 2008, a bill which
enables owners of biomass facilities in the US to receive federal tax credits,
thereby improving the long-term economics of biomass as a renewable energy
source.  Furthermore, the bill authorizes $800 million of new clean
renewable energy bonds to finance facilities that generate electricity from
renewable energy sources – including biomass.




Further,
the State of Oregon has enacted the Business Energy Tax Credit program that
allows companies that invest in renewable energy capital projects an Oregon
State income tax credit of up to 50% of the first $20.0 million of capital
costs.




Countries
in Europe and Asia and several states in the United States have adopted a
variety of government subsidies to allow renewable sources of electricity to
compete with conventional sources of electricity, such as fossil fuels.
Government subsidies and incentives generally focus on grid-connected systems
and take several forms, including tariff subsidies, renewable portfolio
standards, rebates, tax incentives and low interest loans. In addition, the
adoption by governments of limits on carbon dioxide emissions and targets for
renewable energy production has spurred a market for trading of surplus carbon
credits and renewable energy certificates.




Many
countries and other local jurisdictions have established limits on carbon
dioxide emissions. In particular, a key component of the Kyoto Protocol is the
commitments made by certain countries to reduce carbon dioxide emissions. The
country, locality or companies within the jurisdiction are given carbon emission
allowances, or carbon credits, which represent the right to emit a specific
amount of carbon dioxide.  A country, locality or company having
emissions that exceed its allocated carbon credits may purchase unused carbon
credits from a country, locality or company that has reduced its emissions
beyond its requirements to do so. The carbon dioxide emissions from burning
biomass are minimal when compared to those emitted from fossil fuels.
Particularly pellets,  when burned in the
correct  combustion  environment,  are the
cleanest burning  forms of
biomass,  emitting  virtually  zero  emissions
due to the low moisture  content and
high  burning  temperature.  A pellet for domestic
use is strictly regulated for ash content (.5% or less) and particulate
emissions are negligible.   Therefore, those using biomass to
generate energy may generate carbon credits that could be used and
sold.  Torrefied products exhibit similar attributes.




Sea 2
Sky is targeting incentive programs offered under all of the following, and
updating this list as additional incentives are offered by local, federal and
international governments:


●
                Energy
      Improvement and Extension Act of 2008;●
                International
      Carbon Credits;●
                Province
      of British Columbia incentives, Carbon Credits, and other tax
      credits;●
                Research
      grants and initiatives;●
                First
      Nations incentives; and,●
                US
      Government Alternative Energy Stimulus grants and homeowner conversion
      grants.


OUR
ADVANTAGE




Sea 2 Sky
is headquartered in a HUB zone in Ferndale, WA. The Company intends to
secure the largest concentration of biomass material globally and is backed
by a “Special Category Minority Business” which will enable it to compete
effectively in a substantially growing market.




The US
government has created various incentive programs for certain demographic and
minority based businesses in the institutional marketplace to compete with
mandates of up to 23% of the US Federal Procurement Budget of $425 Billion for a
total market window of $97 Billion. Within these mandates, requirements have
been established to provide a strategic plan to have 3% mandated purchase
requirements for Service-Disabled Veteran Owned Small Business (SDVOSB) from the
Federal US Budget. Businesses located on a HUB zone are eligible for Federal
contracting preferences with the government having a further 3% for contract
set-asides to HUB zone-certified companies. Furthermore, small businesses are
eligible for Federal contracting preferences with the government having up to a
further 13% for contract set-asides to small business companies. Businesses
owned and operated by Native Americans are eligible for Federal contracting
preferences with the government having a further 5% for contract
set-asides.




9




On June
3, 2009, Sea 2 Sky entered into a comprehensive joint venture agreement with
Gateway Associates LLC, a Company controlled by Mr. Henry James of the Lummi
Nation. This agreement brings together distinctive market access rights to
manufacture and distribute biomass energy products to institutional
and industrial markets for Sea 2 Sky in a manner that has never been achieved to
date. As part of this agreement, Gateway's network will facilitate access to the
institutional and industrial markets based on its and others Special Category
Businesses Rights designations and its status in the Foreign Trade Zones Act of
1934. Institutional access to markets includes cumulative mandates set by the
United States of America Federal Government guidelines that amount to 23% of the
total US Federal budget. Industrial market access often requires similar
percentages as the Institutional market guidelines to be eligible for continued
contracting with the US Government. Both Sea 2 Sky and Gateway have determined
that a substantial opportunity exists in the biomass energy
products market and are jointly co-operating to satisfy the unmet market
demand. Based on current market evaluations, up to 17 percent of the US Federal
procurement budget ($425 Billion approx.) is yet open to be met by Special
Category Business businesses like those contained in Gateway's network. The
Industrial market of unmet market demand is of similar size.




LIMITED
OPERATING HISTORY




To date
we have generated limited financial information, no revenues and we have not
demonstrated that we will be able to commence our business through an investment
in our product line and/or marketing efforts. We cannot guarantee that our
business plan as described in this quarterly report will be successful. Our
business is subject to risks inherent in growing an enterprise, including
limited capital resources and possible rejection of our new products and/or
sales methods.




If
financing is not available on satisfactory terms, we may be unable to continue
expanding our operations. Equity financing will result in a dilution to existing
shareholders.  We cannot make any assurances that we will be able to
secure financing.




ITEM
1A. RISK FACTORS




This
annual report contains forward-looking statements that involve risks and
uncertainties. These statements can be identified by the use of forward-looking
terminology such as “believes,” “expects,” “intends,” “plans,” “may,” “will,”
“should,” or “anticipation” or the negative thereof or other variations thereon
or comparable terminology. Actual results could differ materially from those
discussed in the forward-looking statements as a result of certain factors,
including those set forth below and elsewhere in this annual report. The
following risk factors should be considered carefully in addition to the other
information in this annual report, before purchasing any of the Company’s
securities.





RISKS RELATED TO OUR
BUSINESS AND INDUSTRY




SINCE
INCEPTION, WE HAVE HAD LIMITED OPERATIONS AND HAVE INCURRED NET LOSSES OF
$820,679 AND WE NEED ADDITIONAL CAPITAL TO EXECUTE OUR BUSINESS
PLAN.




We have
had limited operations and have incurred net losses of $820,679 for the period
from March 1, 2009 (Inception) through August 31, 2009. We have not yet
generated revenues from continuing operations, as we are still in development
stage. We have yet to begin biomass energy production or construction of biomass
energy producing plants. Since the change in business focus on March 1, 2009, we
have been engaged in organizational activities, including developing a strategic
operating plan, negotiating long-term agreements biomass feedstock, evaluating
different torrefaction technologies and developing a partnership plan with one
particular company, searching for land sites appropriate for building our
production plants, entering into contracts, hiring personnel, and raising
private capital. Our continued existence is dependent upon our ability to obtain
additional debt and/or equity financing. We estimate the total cost including
contingencies to be approximately $50 million for our first plant.  We
plan to raise additional funds through project financings, grants and/or loan
guarantees, or through future sales of our common stock, until such time as our
revenues are sufficient to meet our cost structure, and ultimately achieve
profitable operations. There is no assurance we will be successful in raising
additional capital or achieving profitable operations. At times, our Board of
Directors will attempt to use non-cash consideration to satisfy obligations. In
many instances, we believe that the non-cash consideration will consist of
restricted shares of our common stock. These actions will result in dilution of
the ownership interests of existing shareholders may further dilute common stock
book value, and that dilution may be material.




10


THE
COMPANY WILL NEED ADDITIONAL FINANCING FOR WHICH SEA 2 SKY HAS NO COMMITMENTS,
AND THIS MAY JEOPARDIZE EXECUTION OF THE COMPANY’S BUSINESS PLAN.





Sea 2 Sky
has limited funds, and such funds may not be adequate to carry out the business
plan in the energy business.  The Company’s ultimate success depends
upon its ability to raise additional capital.  The Company has not
investigated the availability, source, or terms that might govern the
acquisition of additional capital and will not do so until it determines a need
for additional financing.  If the Company needs additional capital, it
has no assurance that funds will be available from any source or, if available,
that they can be obtained on terms acceptable to the Company.  If not
available, the Companys operations will be limited to those that can be financed
with its modest capital.





THE
COMPANY’S OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS AS TO CORPORATE
OPPORTUNITIES WHICH IT MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE
IN.





Presently
there is no requirement contained in the Company’s Articles of Incorporation,
Bylaws, or minutes which requires officers and directors of its business to
disclose to the Company’s business opportunities which come to their
attention.  Sea 2 Sky officers and directors do, however, have a
fiduciary duty of loyalty to the Company to disclose to it any business
opportunities which come to their attention, in their capacity as an officer
and/or director or otherwise.  Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company.




THE
TORREFICATION TECHNOLOGIES WE ARE REVIEWING ARE UNPROVEN ON A LARGE-SCALE
COMMERCIAL BASIS AND PERFORMANCE COULD FAIL TO MEET PROJECTIONS, WHICH COULD
HAVE A DETRIMENTAL EFFECT ON THE LONG-TERM CAPITAL APPRECIATION OF OUR
STOCK.




While
wood pellet production is a mature technology, newer technologies such as
torrefaction have not been built at large commercial scales. The technologies
being utilized by us for alternative energy production from biomass have not
been demonstrated on a commercial scale. All of the tests conducted to date by
us with respect to a specific torrefaction technology have been performed on
limited quantities of feedstocks, and we cannot assure you that the same or
similar results could be obtained at competitive costs on a large-scale
commercial basis. We have never utilized these technologies under the conditions
or in the volumes that will be required to be profitable and cannot predict all
of the difficulties that may arise. It is possible that the technologies, when
used, may require further research, development, design and testing prior to
larger-scale commercialization. Accordingly, we cannot assure you that these
technologies will perform successfully on a large-scale commercial basis or at
all.




COMPETITION
FROM LARGE PRODUCERS OF TORREFIED BIOMASS ENERGY PRODUCTS AND OTHER COMPETITIVE
RENEWABLE ENERGY PRODUCTS MAY IMPACT OUR PROFITABILITY.




Although
we are not aware of any large commercial operations which convert biomass into
energy via the torrefaction technology, we expect others to follow our
lead.  In addition, manufacturers of other sources of alternative
energy (from wind, water, sun, etc.) are considered competitors in our industry.
Our proposed torrefaction plants will compete with all of these competitors at
varying levels.




OUR
BUSINESS PROSPECTS WILL BE IMPACTED BY WOODY BIOMASS SUPPLY.




Our
Torrefied biomass energy products will be produced from woody biomass, and
currently we have agreements for sufficient woody biomass to accommodate up to
two plants.  However, should these resources be affected by weather,
governmental restraints, and other conditions, we might experience a shortage of
raw material which would hinder operations.




OUR
BUSINESS PLAN CALLS FOR EXTENSIVE AMOUNTS OF FUNDING TO CONSTRUCT AND OPERATE
OUR TORREFIED ENERGY PLANTS AND WE MAY NOT BE ABLE TO OBTAIN SUCH FUNDING WHICH
COULD ADVERSELY AFFECT OUR BUSINESS, OPERATIONS AND FINANCIAL
CONDITION.




Our
business plan depends on the completion of multiple torrefaction plants.
Although each facility will have specific funding requirements, our proposed
first plant will require approximately $50 million to fund. We will be relying
on additional financing, and also funding from such sources as Federal and State
grants and loan guarantee programs.  We are currently in discussions
with potential sources of financing but no definitive agreements are in place.
If we cannot achieve the requisite financing or complete the plants as
anticipated, this could adversely affect our business, the results of our
operations, prospects and financial condition.




11




RISKS RELATED TO GOVERNMENT
REGULATION AND SUBSIDIZATION




FEDERAL
REGULATIONS CONCERNING GRANTS AND TAX INCENTIVES COULD EXPIRE OR CHANGE, WHICH
COULD CAUSE AN EROSION OF THE CURRENT COMPETITIVE STRENGTH OF THE BIOMASS
RENEWABLE ENERGY INDUSTRY.




The US
Congress currently provides certain federal tax credits for alternative energy
manufacturers, distributors, and end-users.  The current alternative
energy industry and our business initially depend on the continuation of these
credits. The credits have supported a market for renewable energy sources
(specifically biomass) that might disappear without the credits. These credits
may not continue beyond their scheduled expiration date or, if they continue,
the incentives may not be at the same level. The revocation or amendment of any
one or more of these tax incentives could adversely affect the future use of
biomass alternative energy in a material way, and we cannot assure investors
that any of these tax incentives will be continued. The elimination or reduction
of federal tax incentives to the renewable energy industry could have a material
adverse impact on the industry as a whole.




LAX
ENFORCEMENT OF ENVIRONMENTAL AND ENERGY POLICY REGULATIONS MAY ADVERSELY AFFECT
DEMAND FOR RENEWABLE ALTERNATIVE ENERGY SOURCES SUCH AS THOSE PROVIDED BY THE
CONVERSION OF WOODY BIOMASS.




Our
success will depend in part on effective enforcement of existing environmental
and energy policy regulations. Many of our potential customers are unlikely to
switch from the use of conventional fossil fuels unless compliance with
applicable regulatory requirements leads, directly or indirectly, to the use of
environmentally-friendly alternatives. Both additional regulation and
enforcement of such regulatory provisions are likely to be vigorously opposed by
the entities affected by such requirements. If existing emissions-reducing
standards are weakened, or if governments are not active and effective in
enforcing such standards, our business and results of operations could be
adversely affected.  Even if the current trend toward more stringent
emission standards continues, we will depend on the ability of biomass
alternative energy to satisfy these emissions standards more efficiently than
other alternative technologies. Certain standards imposed by regulatory programs
may limit or preclude the use of our products to comply with environmental or
energy requirements. Any decrease in the emission standards or the failure to
enforce existing emission standards and other regulations could result in a
reduced demand for our products. A significant decrease in the demand will
reduce the price of our products, adversely affect our profitability and
decrease the value of your stock.




OUR
PROPOSED NEW TORREFICATION PLANTS WILL ALSO BE SUBJECT TO FEDERAL, STATE AND
PROVINCIAL LAWS REGARDING OCCUPATIONAL SAFETY.




Risks of
substantial compliance costs and liabilities are inherent in the conversion
process leading to the production of Torrefied biomass energy products. We may
be subject to costs and liabilities related to worker safety and job related
injuries, some of which may be significant. Possible future developments,
including stricter safety laws for workers and other individuals, regulations
and enforcement policies and claims for personal or property damages resulting
from operation of the torrefaction plants could reduce the amount of cash that
would otherwise be available to further enhance our business.




RISKS RELATED TO OUR COMMON
STOCK




THERE
IS NO LIQUID MARKET FOR OUR COMMON STOCK.




Our
shares are traded on the OTCBB and the trading volume has historically been very
low. An active trading market for our shares may not develop or be sustained. We
cannot predict at this time how actively our shares will trade in the public
market or whether the price of our shares in the public market will reflect our
actual financial performance.




OUR
COMMON STOCK MAY BE CONSIDERED “A PENNY STOCK” AND MAY BE DIFFICULT FOR YOU TO
SELL.




The SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to specific exemptions. The market
price of our common stock has been and may continue to be less than $5.00 per
share, and therefore may be designated as a “penny stock” according to SEC
rules. This designation requires any broker or dealer selling these securities
to disclose certain information concerning the transaction, obtain a written
agreement from the purchaser and determine that the purchaser is reasonably
suitable to purchase the securities. These rules may restrict the ability of
brokers or dealers to sell our common stock and may affect the ability of
investors to sell their shares.




12




FAILURE
TO ACHIEVE AND MAINTAIN EFFECTIVE INTERNAL CONTROLS IN ACCORDANCE WITH SECTION
404 OF THE SARBANES-OXLEY ACT OF 2002 COULD HAVE A MATERIAL ADVERSE EFFECT ON
OUR BUSINESS AND OPERATING RESULTS.




It may be
time consuming, difficult and costly for us to develop and implement the
additional internal controls, processes and reporting procedures required by the
Sarbanes-Oxley Act. If we are unable to comply with these requirements of the
Sarbanes-Oxley Act, we may not be able to obtain the independent accountant
certifications that the Sarbanes-Oxley Act requires of publicly traded
companies.




If we
fail to comply in a timely manner with the requirements of Section 404 of the
Sarbanes-Oxley Act regarding internal control over financial reporting or to
remedy any material weaknesses in our internal controls that we may identify,
such failure could result in material misstatements in our financial statements,
cause investors to lose confidence in our reported financial information and
have a negative effect on the trading price of our common stock.




In
addition, in connection with our on-going assessment of the effectiveness of our
internal control over financial reporting, we may discover “material weaknesses”
in our internal controls as defined in standards established by the Public
Company Accounting Oversight Board, or the PCAOB. A material weakness is a
significant deficiency, or combination of significant deficiencies, that results
in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. The PCAOB
defines “significant deficiency” as a deficiency that results in more than a
remote likelihood that a misstatement of the financial statements that is more
than inconsequential will not be prevented or detected.




In the
event that a material weakness is identified, we will employ qualified personnel
and adopt and implement policies and procedures to address any material
weaknesses that we identify. However, the process of designing and implementing
effective internal controls is a continuous effort that requires us to
anticipate and react to changes in our business and the economic and regulatory
environments and to expend significant resources to maintain a system of
internal controls that is adequate to satisfy our reporting obligations as a
public company. We cannot assure you that the measures we will take will
remediate any material weaknesses that we may identify or that we will implement
and maintain adequate controls over our financial process and reporting in the
future.




Any
failure to remediate any material weaknesses that we may identify or to
implement new or improved controls, or difficulties encountered in their
implementation, could harm our operating results, cause us to fail to meet our
reporting obligations or result in material misstatements in our financial
statements. Any such failure could also adversely affect the results of the
periodic management evaluations of our internal controls and, in the case of a
failure to remediate any material weaknesses that we may identify, would
adversely affect the annual auditor attestation reports regarding the
effectiveness of our internal control over financial reporting that are required
under Section 404 of the Sarbanes-Oxley Act of 2002. Inadequate internal
controls could also cause investors to lose confidence in our reported financial
information, which could have a negative effect on the trading price of our
common stock.




YOU
COULD BE DILUTED FROM THE ISSUANCE OF ADDITIONAL COMMON STOCK.




As of
August 31, 2009, we had 80,629,311shares of common stock
outstanding and no shares of preferred stock outstanding.  We are
authorized to issue up to 225,000,000 shares of common stock. To the extent of
such authorization, our Board of Directors will have the ability, without
seeking stockholder approval, to issue additional shares of common stock in the
future for such consideration as the Board of Directors may consider sufficient.
The issuance of additional common stock in the future may reduce your
proportionate ownership and voting power.




ITEM 1B. UNRESOLVED STAFF COMMENTS




Not
applicable.




ITEM 2. PROPERTIES




Sea 2 Sky
is headquartered in Ferndale Washington, on an Indian
reservation.  The Company has a sub-lease agreement with our Chairman
for $1 per year, renewable annually.




ITEM
3. LEGAL PROCEEDINGS




We are
not currently involved in any legal proceedings nor do we have any knowledge of
any threatened litigation.




13




ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS




No
matters were submitted to a vote of security holders during the fiscal year
ended August 31, 2009.




PART
II






ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS




Market
Information and Holders of Our Common Stock




Sea 2
Sky’s common stock is listed on the OTCBB under the symbol
“SSKY.”  The Company has authorized 225,000,000 shares of common stock
with a par value of $.001, and no preferred stock. On December 28, 2008,
the Company announced a 30-1 forward stock split which has been reflected for
all periods throughout this Form 10-K.  As of August 31, 2009 and
2008, the Company had issued and outstanding common stock totaling
80,629,311 and 131,400,000, respectively.  On February 10, 2009, the
previous CEO returned 48,000,000 shares common stock to the Company treasury for
no consideration.  As of December ___, 2009, there were 56 active holders
of record of our common stock and 81,391,811 shares issued and outstanding. The
following table sets forth, for the periods indicated, the high and low sale
prices, as reported on the OTCBB.  There have been no cash dividends
paid since inception.





Sale
      PricesHigh
            
            
            LowFiscal
      Year Ended August 31, 2009First
      Quarter
            
            $
            0.003
            
            
            $
            0.001Second
      Quarter
            
            
            -
            
            
            
            -Third
      Quarter
            
            
            0.64
            
            
            
            0.55Fourth
      Quarter
            
            
            0.65
            
            
            
            0.07Fiscal
      Year Ended August 31, 2008First
      Quarter
            
            $
            -
            
            
            $
            -Second
      Quarter
            
            
            -
            
            
            
            -Third
      Quarter
            
            
            0.003
            
            
            
            0.003Fourth
      Quarter
            
            
            0.10
            
            
            
            0.034Note:all
      prices have been adjusted to account for the 30-1
      split





Dividend
Policy




We have
never declared or paid any cash dividends on our common stock, and we do not
currently anticipate declaring or paying cash dividends on our common stock in
the foreseeable future. We currently intend to retain all of our future
earnings, if any, to finance the growth and development of our business. Any
future determination relating to our dividend policy will be made at the
discretion of our board of directors and will depend on a number of factors,
including future earnings, capital requirements, financial conditions, future
prospects, contractual restrictions and covenants and other factors that our
board of directors may deem relevant.





Redistribution
of shares by directors




On August
17, 2009, David Siebenga resigned his position of President and CEO, however,
retained his position on the Board.  The Board unanimously elected
Erik Odeen, CFO, to be CEO of the Company – in addition to his current
role.  Mr. Siebenga relinquished 21,000,000 shares of previously
issued restricted common stock back to the Company
treasury.  Subsequently, 13,500,000 shares were redistributed as
follows:






Redistributed
      sharesErik Odeen, CEO/CFO,
      Secretary, Treasurer
            7,500,000Henry James,
      Chairman
            3,000,000Doug Robertson,
      COO
            3,000,000David Siebenga,
      Director
            (21,000,000)




See Notes
5 in this Form 10-K for additional information pertaining to this change in
officers.




14





UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS




During
the fiscal year ended August 31, 2008, the Company did not make any sales or
issuances of its equity securities.




On
December 30, 2008, our Board of Directors authorized a 30-for-1 stock split of
our $0.001 par value common stock.  This share dividend became
effective February 17, 2009.  As a result of the split, 127,020,000
additional shares were issued.  Capital and additional paid-in capital
have been adjusted accordingly.




On April
25, 2009, the board of directors approved the issuance of 4,000,000 warrants to
a consulting group in exchange for consulting services provided to the
Company.  These warrants were fully vested upon issuance, have an
exercise price of $0.30, and have a three-year term which expires April 24,
2012.




On August
17, 2009, the Company issued 4,050,000 fully vested restricted shares common
stock to three consultants for services rendered, valued at approximately $0.076
per share.




See Notes
5 & 6 for additional information related to compensation expense recorded as
a result of the above transactions.




Recent
Sales of Unregistered Securities




During
April and May 2009, subscription agreements were sold to seven accredited
investors totaling 454,311 shares of common stock for $0.30 per share for total
cash proceeds of $136,233.




During
June 2009, subscription agreements were sold to three accredited investors
totaling 75,000 restricted shares common stock for $0.30 per share for cash
proceeds of $22,500.




During
August 2009, subscription agreements were sold to one accredited investor for
75,000 restricted shares common stock for $0.08 per share for cash proceeds of
$6,000.




All of
these offerings were undertaken pursuant to the limited offering exemption from
registration under the Securities Act of 1933 as provided in Rule 504 under
Regulation D as promulgated by the U.S. Securities and Exchange Commission.
These offerings met the requirements of Rule 504 in that: (a) the total of funds
raised in these offerings does not exceed $1,000,000; and (b) the offer and sale
of the Shares was not accomplished by means of any general advertising or
general solicitation.




The class
of persons to whom these offerings were made was "sophisticated investors." As a
result, offers were made only to persons that the Company believed, and had
reasonable grounds to believe, either (a) have such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of the proposed investment, or (b) can bear the economic risks of the
proposed investment (that is, at the time of investment, could afford a complete
loss). Additionally, sales were made only to persons whom the Company believed,
and had reasonable grounds to believe immediately prior to such sale and upon
making reasonable inquiry, (a) are capable of bearing the economic risk of the
investment, and (b) either personally possess the requisite knowledge and
experience, or, together with their offeree's representative, have such
knowledge and experience.




Purchases
of Equity Securities by the Issuer and Affiliate Purchases




On August
28, Mr. Odeen, CEO/CFO, purchased 75,000 shares common stock for $0.08 per share
in a cash transaction for $6,000 cash.





Securities
Authorized for Issuance under Equity Compensation Plans




We do not
have any equity compensation plans and accordingly we have no securities
authorized for issuance thereunder.





Purchases
of Equity Securities by the Registrant and Affiliated Purchasers




We did
not purchase any of our shares of common stock or other securities during the
years ended August 31, 2009 and 2008.




15




ITEM
6. SELECTED FINANCIAL DATA




The
following selected consolidated financial data should be read together with
"Item 7. Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and our consolidated financial statements and the
accompanying notes thereto included elsewhere in this Annual Report on
Form 10-K.  Note: the financial data below has been adjusted for
operations discontinued during February 2009.





From
      InceptionYear Ended
            
            
            Year Ended
            
            
            (March
      1, 2009)August
      31,
            
            
            August
      31,
            
            
            to2009
            
            
            2008
            
            
            August
      31, 2009Revenues
            
            $
            -
            
            
            $
            -
            
            
            $
            -Net
      Loss from Continuing Operations
            
            
            (857,212
            )
            
            
            (33,953
            )
            
            
            (820,679
            )Net
      Loss from Discontinued Operations
            
            
            (180
            )
            
            
            (18,061
            )
            
            
            -Net
      cash provided by financing activities
            
            
            159,349
            
            
            
            -
            
            
            
            159,349Net
      cash used in investing activities
            
            
            (998
            )
            
            
            (9,809
            )
            
            
            -Net
      cash used in operating activities
            
            
            (179,101
            )
            
            
            (48,195
            )
            
            
            (153,674
            )Cash
      on hand
            
            
            12,687
            
            
            
            36,465
            
            
            
            N/ANet
      loss per basic and diluted shares - continuing operations
            
            
            (0.00
            )
            
            
            (0.00
            )
            
            
            N/AWeighted
      average number of common shares outstanding:Basic
      and Diluted
            
            
            106,610,176
            
            
            
            131,400,000
            
            
            
            N/AStockholders’
      equity (deficit)
            
            $
            (268,418
            )
            
            $
            35,676
            
            
            
            N/A





ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS




The
following discussion should be read in conjunction with our unaudited financial
statements and notes thereto included herein. In connection with, and because we
desire to take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, we caution readers regarding certain
forward looking statements in the following discussion and elsewhere in this
report and in any other statement made by, or on our behalf, whether or not in
future filings with the Securities and Exchange
Commission.  Forward-looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results, or other developments.  Forward-looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic, and competitive, uncertainties and
contingencies, many of which are beyond our control and many of which, with
respect to future business decisions, are subject to change.  These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward-looking
statements made by, or on our behalf.  We disclaim any obligation to
update forward-looking statements.





The
following discussion of the plan of operations, financial condition, results of
operations, cash flows and changes in financial position of our Company should
be read in conjunction with our most recent financial statements and notes
appearing elsewhere in this Form 10-K, in our Forms 10-Q filed April 20, and
July 15, 2009, and in our Form 10-K filed on November 25, 2008.




Original
Plan of Operations




Sea 2 Sky
has had limited operations over the last three years.  Our original
business plan focused on providing a professional and personalized all-inclusive
travel package to tourists visiting western Canada and specifically the Province
of Alberta.  A personal assistant would be assigned to each client to
ensure that every aspect of the trip was considered and addressed and to bridge
the language barrier in order to prevent frustration for travelers.




16




We had
planned to establish a travel agency affiliate in a major city in Japan and
eventually develop in five major cities overseas while continuing marketing
efforts through the Internet.  The intent was to create strategic
partnerships with travel and special-event companies in order to grow the
customer base.  The desired results were not achieved.  As a
result, we decided to abandon the travel business; assets and expenses related
to the travel business were reclassified from current operations to that of
discontinued operations for proper financial presentation.  The total
net loss from these discontinued operations is $19,304.




Change
in Management




As a
result of continuing limited revenues from travel operations in a difficult
economic environment, management had to consider other business growth
opportunities.





The
Company expanded the number of Board members from three (3) to seven (7) members
to broaden the experience base.  In December 2008, Messrs. Henry James
and Doug Robertson, both having extensive experience in the forestry sector,
were appointed to the Company's Board of Directors.  Messrs. James and
Robertson have worked in the forestry sector together and have been involved
with forestry issues between Canada and the United States and cross border
shipping of forest products.  As a Native American, Henry James
suggested the Company begin to investigate opportunities in working between
indigenous groups in Canada to see if opportunities existed for forest products
trading in United States, Canada or abroad.





Due to
their legal, accounting and international business experience, on February 23,
2009, Messrs. David Siebenga, and Erik Odeen were appointed to the Board of
Directors to continue investigations of trading wood supplies between United
States, Canada and abroad.  David Siebenga was appointed the Company's
Chief Executive Officer on February 26, 2009, and is an attorney from the
Province of British Columbia, who over the 20 plus years of his career, has
dealt with companies in different international contexts.  The Board
accepted the resignation of Irene Getty who had served as the Company’s Chief
Executive Officer since November 2005.  Erik Odeen, who was appointed
the Company's new Chief Financial Officer on February 26, 2009, is a Certified
Public Accountant in the State of California and a Certified Fraud Examiner,
with over 20 years experience in manufacturing operations, financial management,
and public accounting.  The Board accepted the resignation of Dennis
Cox who had served as the Company’s Chief Financial Officer since July
2008.





Also on
February 23, 2009, Mr. Ira Steiner was appointed to the Board of Directors to
provide the Company with contacts in the European marketplace. An Austrian
native with long-term wood sales experience, Mr. Steiner's role within the
Company is to source markets and contacts to sell biomass and alternative fuels
in Europe and other countries. Erwin Steiner resigned from the Board effective
August 10, 2009, for personal reasons.





On August
17, 2009, due to personal issues and his growing law practice, David Siebenga
resigned as President and CEO effective August 17, 2009, however, still remains
a director on the Company’s Board of Directors.  Erik Odeen, CFO, was
appointed CEO by the Board immediately thereafter.




Change
of Operational Focus




The
Company is exploring an emerging opportunity in the alternative fuel, biomass
sector of the forest industry.  As a result of the native to native
contacts, the Canadian First Nations people have shown great interest in
developing a working relationship with the Company by providing long term
biomass (wood supply) contracts, provided that those First Nations could obtain
jobs in their local community.





The
Company’s business intention is to source biomass supply streams that it can use
to convert into "green energy" products. We intend to focus on creating
sustainable and environmentally responsible alternative energy products from
underutilized resources.  Sea2Sky is responding to a global market
demanding viable options to reduce the world's climate "greenhouse effect" and
the dependence on fossil fuel.





Using our
global network and through strategic business and community alliances, Sea 2 Sky
plans to acquire biomass resources and a torrefaction technology that when
processed through this torrefaction technology is converted to
"high-value" products. The product value is generated through:






●
            Creation
      of specific, high demand, and saleable products("green" electricity,
      carbon, activated carbon, bio-liquids, synthetic gas) for our
      customers;●
            Feeding
      ancillary manufacturing and community needs with surplus
      by-products;●
            Use
      of waste, surplus, or underutilized organic materials contributing to
      environmental degradation.




17




New
Plan of Operations




Sea 2 Sky
is targeting multiple biomass supply streams in Canada, the USA, and other
countries rich in fiber supply. Sea 2 Sky’s policy to cooperate with indigenous
peoples, communities, and other owners of biomass has generated interest by
most of those we approach. We have received expressions-of-interest to
purchase our end-products that will quickly exceed the capacity of our first
processing plant.





We
anticipate that these expressions of interest can be turned into binding
purchase agreements for our entire production capacity. We are now negotiating
with Canadian First Nation Bands for significant sustainable quantities of woody
biomass (i.e., 1,000,000 tons or more per year for 20 years).  We are
also researching pilot-tested technology that can be best suited to the selected
biomass supply streams and aligned to our final customer needs that can be
incorporated into the processing plant design.  Work and processing
facilities creating jobs and increasing economic activity for these communities
is planned to start by late 2010.





Currently,
our development stage operations have been funded through the sale of our stock
in private equity transactions.  We plan to raise additional funds
through joint venture partnerships, Federal or State grants or loan guarantees,
project debt financings or through future sales of our common stock, until such
time as our revenues are sufficient to meet our cost structure, and ultimately
achieve profitable operations.  There is no assurance that we will be
successful in raising additional capital or achieving profitable operations. Our
financial statements do not include any adjustments that might result from the
outcome of these uncertainties. We will need financing within 12 months to
execute our business plan.





We have
not developed our own proprietary technology but rather we are currently
reviewing and negotiating with developers and owners of a patented new state-of
the art torrefaction technologies to partner with us.  These
torrefaction technologies have been developed over the past three to four years,
and have been pilot-tested on a small scale basis (approximately 500 tons per
month) during the past year.





Our
business will encompass development activities culminating in the construction
and long-term operation of biomass energy production plants.  As such,
we are currently in the development-stage of finding suitable locations,
securing proper financing for building plants, and deploying project
opportunities for converting woody biomass feedstock into
torrefied  bio-energy products such as electricity via gasification
process, activated carbon, and “green coal” via pelletization
process.  As we build these plants, we intend to increase our number
of employees appropriately.





During
the next 12 months, our Plan of Operations is as follows:


●
                Obtain
      additional operating capital from joint venture partnerships, Federal or
      State grants or loan guarantees, debt financing or equity financing to
      fund our ongoing operations and the development of initial plants in
      British Columbia, Canada.●
                Pursue
      funding opportunities offered under various government programs, including
      the Energy Policy Act of 2005 (“EPAct 2005”), which provides for grants
      and loan guarantee programs to incentivize the growth of the [biomass]
      alternative energy market. These programs include programs under which the
      U.S. Department of Energy (“DOE”) could provide loan guarantees up to $250
      million per qualified project.  Sea 2 Sky plans to pursue all
      available opportunities within the EPAct
  2005.●
                We
      plan to purchase a torrefaction unit (a smaller scale commercial unit) so
      that we are able to better market our products, which may tend to have
      very specific requirements depending on the specific application by the
      Buyer.●
                We
      plan to begin construction of a facility in British Columbia which is
      capable of processing approximately 20,000 tons of biomass per month to
      produce electricity, activated carbon, and torrefied pellets for
      energy.●
                We
      are targeting large utility companies in North America (initially) for
      long-term electricity contracts.●
                Additionally,
      we are discussing distribution opportunities for activated carbon in North
      America and Internationally.●
                With
      the advent of global warming and accompanying government mandated
      environmental initiatives, there is also an opportunity for Sea 2 Sky to
      obtain carbon credits for developing biomass processing facilities. These
      renewable energy incentives encourage sustainable, environmentally
      friendly and naturally occurring fuel alternatives from biomass. We are
      engaging in discussions with authorities related to the management and
      utilization of carbon credits, so that the Company may benefit fully when
      they become available.
  18





RESULTS
OF OPERATIONS




We have
not generated revenues from our renewable energy operations since Inception and
have incurred $820,679 in related expenses through August 30, 2009.




Discontinued
Operations




The
Company’s decision to discontinue the operations of its travel business resulted
in all financial data pertaining directly to the operations relative to that
business to be collapsed with the net amount reported separately from the
continuing operations.  This collapsing effect was used to restate the
financials for all periods presented.  For the year ended August 31,
2009, losses from discontinued operations were $(180).  Losses from
discontinued operations from November 2005 through the year ended August 31,
2009 were $(19,304).  Loss from discontinued operations per weighted
average share for the years ended August 31, 2009 and August 31, 2008 were
$(0.00) and $(0.00), respectively.




Operating
and General & Administrative Expenses




Operating
expenses consisting of stock-compensation expenses of $396,977 for external
consultants; consulting expenses of $155,857; payroll and directors’ consulting
fees totaling 205,007; travel expenses of $30,318; professional fees of $32,693;
and other general administrative expenses totaling $857,212 for the year ended
August 31, 2009, compared to a total of $33,953 for the year ended August 31,
2008.




Net
Losses





Net
losses from continuing operations were  $857,212 for the year ended August
31, 2009, compared to $33,953 for the year ended August 31,
2008.  Loss from continuing operations per share was $0.00 for the
year ended August 31, 2009, compared to $0.00 for the year ended August 31,
2008.




Income
Taxes




The
Company does not anticipate having to pay income taxes in the upcoming years due
to our absence of net profits.




CAPITAL AND
LIQUIDITY




The
following table provides selected financial data about our company for the years
ended August 31, 2009 and 2008, respectively.





Balance Sheet Data
            
            August
      31, 2009
            
            
            August
      31, 2008Cash
            
            
            12,687
            
            
            
            36,465Total
      Current Assets
            
            
            12,745
            
            
            
            36,882Total
      Assets
            
            
            13,550
            
            
            
            44,176Total
      Liabilities
            
            
            281,968
            
            
            
            8,500Stockholders'
      Equity (Deficit)
            
            
            (268,418)
            
            
            
            35,676





As of
August 31, 2009 and 2008, we had total current assets of $12,745 and $36,882,
and total current liabilities of $281,968 and $8,500, respectively.




During
the year ended August 31, 2009, the Company received $159,409 in net cash from
the sale of its common stock. These proceeds are being used for operating and
general and administrative expenses to sustain the Company through its
development stage until it establishes profitable operations or receives cash
from the issuance of additional common stock.




We had
cash on hand of $12,687 and $36,465 as of August 31, 2009 and 2008,
respectively.




19




To the
extent we are unable to meet our operating expenses, we may borrow funds from
our current management or other affiliates, or we may attempt to raise capital
from private individuals or institutional investment equity funds. Any funds
generated from product sales if any, in our company that exceeds our operating
expenses and debt repayments will be used to expand our operations.




We have
developed a plan of operations reflecting our objectives and anticipated growth
for the next 12 months and beyond. In our plan, we identify our cash
requirements, our anticipated operating and product development projections, and
our required staffing and additional funding requirements to fulfill our
business objectives.





Net cash
used in operating activities of $179,101 for the year ended August 31, 2009,
represents wages paid to employees, fees paid for accounting and legal related
services, and fees paid to consultants for services rendered and travel expense
reimbursement.





Net cash
used in investing activities of $998 for the year ended August 31, 2009,
represents a website developed for the Company, which is being amortized over
its useful life of three years.





Net cash
provided by financing activities of $159,349 during the year ended August 31,
2009, represents cash raised through the sales of common stock subscription
agreements during the year, net of commissions paid to a consulting firm for
raising these funds of $11,384.




EQUITY
EVENTS




On
December 30, 2008, our Board of Directors authorized a
30-for-1  forward stock split of our $0.001 par value common
stock.  This share dividend became effective February 17,
2009.  As a result of the forward stock split, 127,020,000 additional
shares were issued.  Capital and additional paid-in capital have been
adjusted accordingly.  All references in the accompanying financial
statements to the number of common shares and per share amounts have been
retroactively restated to reflect the forward stock split.




On
February 10, 2009, our Articles of Incorporation were amended to change the
aggregate number of shares which we have authority to issue to 225,000,000
shares of common stock, par value $0.001 per share.  Also, on February
10, 2009, our Board of Directors authorized the cancellation of 48,000,000 post
forward-split common shares for no consideration.




On March
6, 2009, our board of directors ratified an action made by the prior directors
to sell 40 million of their restricted shares to the new directors in a private
transaction.  This was done on condition that the new directors would
accept positions on the Board in order to develop a working business plan for
the Company.  The restricted shares are non-transferable without being
unanimously approved by the Board. Under
guidelines provided by SFAS No. 141R, “Business Combinations”, the New Directors, who received
48% of the then issued and outstanding stock, were considered to be the largest
minority voting interest owner (group of organized owners) without the existence
of any single majority owner (or organized group of owners).  These New
Directors controlled the Board.  Although an
auditable “business” as defined under Regulation S-X was not brought in, we
believe that a “business” as defined under ASC 805-10-65-1(formerly SFAS
No. 141R) was introduced by these five New Directors.  Under this
definition, a “business” may be an integrated set of activities and assets in
the development stage, which might not have outputs.  If no outputs, then
one must consider if the integrated set:




1.
            Has
      begun planned principal activities;


2.
            Has
      employees, intellectual property, and other inputs and processes that
      could be applied to those inputs;


3.
            Is
      pursuing a plan to produce outputs;
and/or,


4.
            Will
      be able to obtain access to customers that will purchase the
      outputs.





The New
Directors brought a business plan reflecting a viable business in the renewable
alternative energy industry, which meets a large and timely demand.  These
directors possess the industry knowledge and relative experience necessary to
accomplish their plan.  Each of the directors has unique skills and
strategic relationships which are directly in line with the objectives of this
plan. As a
result of these factors, a change of control was recognized, which triggered
recapitalization accounting.  The shares issued to the New Directors were
valued at the carry-over basis value of the Company’s net assets and
liabilities.  Since there were no assets or outstanding liabilities
contributed at the time of the change of control, the shares were valued at
par.  The assets and liabilities of the Company prior to the change in
control continued to be reflected at historical cost which approximated fair
value.




During
the period from March 1 through August 31, 2009, the Company raised $159,409
(net of $11,384 in offering costs) through the sale of common stock
subscriptions.  Six hundred, seventy-nine thousand, three hundred and
eleven (679,311) restricted shares of common stock were sold to investors at a
price range of $0.08 - $0.30 per share.




On April
25, 2009, the board of directors approved the issuance of  4,000,000
warrants to a consulting group in exchange for consulting services provided to
the Company during the development stage.  These warrants were fully
vested upon issuance, have an exercise price of $0.30, and have a three-year
term which expires April 24, 2012.   The market value at grant
date was $0.06 per share.  Using the Black Scholes  options
pricing model, we estimated the fair market value of these options to be
$89,117, which was booked to compensation expense – consultants during the
quarter.




On August
17, 2009, as a result of the change in senior management, Mr. Siebenga
transferred 13,500,000 shares restricted common stock to the other three
directors, and then returned 7,500,000 to the Company treasury.  This
was done to lower the outstanding and compensate the other directors more
equitably based on their contributions and new position (in the case of Mr.
Odeen).  Based on SEC requirements, the total 21,000,000 shares were
considered to have been returned to the Company treasury; then partially
redistributed to the other directors. Since
this was simply a reallocation of distributed shares among the New Directors,
management viewed this transaction as part of the original recapitalization and
accounted for it in the same manner. This transaction also reduced
the total issued and outstanding by 7,500,000 shares.




On August
17, 2009, the Company issued 4,050,000 fully vested restricted shares common
stock to three consultants for services rendered, valued at approximately $0.076
per share, or a total of $307,800, which was booked to compensation expense –
consultants during the quarter.




20




CRITICAL
ACCOUNTING POLICIES AND ESTIMATES




Use
of Estimates




Our
discussion and analysis of our financial condition and results of operations are
based on our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. By their nature, these estimates and judgments are subject to
an inherent degree of uncertainty.




We review
our estimates on an on-going basis, including those related to sales allowances,
the allowance for doubtful accounts, inventories and related reserves,
long-lived assets, income taxes, litigation and stock-based compensation. We
base our estimates on our historical experience, knowledge of current conditions
and our beliefs of what could occur in the future considering available
information. Actual results may differ from these estimates, and material
effects on our operating results and financial position may result.




We
believe the following critical accounting policies involve our more significant
judgments and estimates used in the preparation of our financial
statements.




Project
Development




Project
development costs are either expensed or capitalized. The costs of materials and
equipment that will be acquired or constructed for project development
activities, and that have alternative future uses, both in project development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives. To date, project development costs include
the general and administrative expenses related to securing fiber agreements,
technology, and our future production facilities.  During the twelve
months ended August 31, 2009, we expensed all such development-stage
costs.




Accounting
for Employee and Director Stock-Based Compensation




The
Company accounts for stock options issued to employees and directors under SFAS
No. 123(R), “Share-Based Payment”. Under SFAS 123(R), share-based compensation
cost to employees is measured at the grant date, based on the estimated fair
value of the award, and is recognized as expense over the employee's requisite
vesting period.  We consider our assumptions to be an important aspect
of properly recording compensation.  No compensation, once recorded,
is reversed.




Accounting
for Non-Employee Stock-Based Compensation




We
measure compensation expense for its non-employee stock-based compensation under
the Financial Accounting Standards Board (FASB) Emerging Issues Task Force
(EITF) Issue No. 96-18, “Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”. The fair value of the option issued or
expected to be issued is used to measure the transaction, as this is more
reliable than the fair value of the services received. The fair value is
measured at the value of our common stock on the date that the commitment for
performance by the counterparty has been reached or the counterparty’s
performance is complete. In the case of the issuance of stock options, we
determine the fair value using the Black-Scholes option pricing model. The fair
value of the equity instrument is charged directly to stock-based compensation
expense and credited to additional paid-in capital.  We consider our
assumptions to be an important aspect of properly recording
compensation.  No compensation, once recorded, is
reversed.




Revenue
Recognition – Traditional Electricity Supply and Demand




Although
no revenues have been recognized by our continuing operations, we expect to
recognize revenues in the future from wholesale electricity sales and
electricity transmission and distribution delivery services.  At that
point, we will recognize the revenues upon delivery of the energy to the
customer and include unbilled as well as billed amounts.




OFF-BALANCE
SHEET ARRANGEMENTS




Since
inception, we have not engaged in any off-balance sheet financing
activities.




21




KEY
INVESTMENT CONSIDERATIONS


●
              Contracts
      for long term supply of Torrified biomass allow Sea 2 Sky to provide
      market security and standards to various markets. Markets in Europe seek
      supply security, which we can provide. With the advent of global warming
      awareness the Company can also access carbon credits and has the ability
      to market and present new biomass products into the US market to assist
      Americans in obtaining energy
    independence.●
              Our
      management team brings technical and operational experience to create
      financial strength and enables us to deliver an environmentally-sound
      Torrefied biomass solution in a cost effective and secure
      manner.


GOVERNANCE




Our Board
of Directors reviews all aspects of our governance policies and practices,
including our Corporate Code of Conduct and Code of Ethics for Senior
Management, at least annually in light of best practices and makes whatever
changes are necessary to further our longstanding commitment to the highest
standards of corporate governance. The Codes are available in the Corporate
Governance section of our Web site.




Our Web
site is located at www.sea2skyenergy.com.
Detailed information about our company can be found on our Web
site.  In addition, we make our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to such
reports available, free of charge, through the Investor Relations page of our
Web site, as soon as reasonably practicable after they are filed with or
furnished to the SEC. The information on our Web site, however, is not
incorporated by reference in, and does not form part of, this Annual Report on
Form 10-K.  Except as otherwise specified, any reference to a year
indicates our fiscal year ended August 31st of
the year referenced.




ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK




As a
"smaller reporting company" as defined by Item 10 of Regulation S-K, the Company
is not required to provide information required by this Item. However, we do not
hold any derivative instruments and do not engage in any hedging
activities.





22
 
  SEA
2 SKY CORPORATION
 (A
Development Stage Company)
  
 ITEM
8.FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
  TABLE
OF CONTENTS
 
 PAGE
                F-2
                REPORTS
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMSPAGE
                F-4
                BALANCE
      SHEETS AS OF AUGUST 31, 2009 AND 2008.PAGE
                F-5
                STATEMENTS
      OF OPERATIONS FOR THE YEARS ENDED AUGUST 31, 2009 AND 2008 AND FOR THE
      PERIOD FROM MARCH 1, 2009 (INCEPTION) TO AUGUST 31,
  2009.PAGE
                F-6
                STATEMENTS
      OF CHANGES IN STOCKHOLDERS’ EQUITY/ (DEFICIENCY) FOR THE PERIOD FROM MARCH
      1, 2009 (INCEPTION) TO AUGUST 31, 2009, AND FOR THE YEARS ENDED AUGUST 31,
      2008 AND 2009.PAGE
                F-7
                STATEMENTS
      OF CASH FLOWS FOR THE YEARS ENDED AUGUST 31, 2009 AND 2008, AND FOR THE
      PERIOD FROM MARCH 1, 2009 (INCEPTION) TO AUGUST 31,
  2009.PAGES
                F-8
      - F-14
                NOTES
      TO FINANCIAL STATEMENTS
 
 F-1
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
   REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   The Board
of Directors and Stockholders
 Sea 2 Sky
Corporation
  We have
audited the accompanying balance sheet of Sea 2 Sky Corporation (the “Company”)
as of August 31, 2009, and the related statement of operations, stockholders’
deficit, and cash flows for the year then ended, and for the period from March
1, 2009 (“Inception”) to August 31, 2009.  These consolidated
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
  We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Sea 2 Sky Corporation as of August
31, 2009, and the results of its operations and its cash flows for the year then
ended, and the period from Inception to August 31, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
     dbbmckennonNewport
      Beach, CaliforniaDecember
      8, 2009
 
 
 F-2
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
   Board of
Directors
 Sea 2 Sky
Corporation
 
 We have
audited the accompanying balance sheet of Sea 2 Sky Corporation, as of August
31, 2008, and the related statements of operations, stockholders' equity, and
cash flows for the year then ended.  These financial statements are
the responsibility of the Company's management.  Our responsibility is
to express an opinion on these financial statements based on our
audit.
 
 We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America).  Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  The Company is not required to have, nor were we
engaged to perform an audit of its internal control over financial
reporting.  Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.  We believe our audit provides a
reasonable basis for our opinion.
 
 In our
opinion,  the financial  statements  referred to
above present fairly, in all material  respects,  the
financial  position of Sea 2 Sky  Corporation as of August
31, 2008,  and the results of its  operations and its cash
flows for the year then ended,  in conformity
with  accounting  principles  generally accepted
in the United States of America.
 
 The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As described in Note 3 of the
financial statements, the Company is a development stage company, has incurred
losses and used cash in operating activities since inception, and has a
significant working capital deficit.  These factors raise substantial
doubt about the Company’s ability to continue as a going concern. Management's
plans with respect to these matters are also discussed in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
 
 
  
 SCHUMACHER
& ASSOCIATES, INC.
 Denver,
Colorado  80211
 
 November
3, 2008
          F-3
 
 PART
I – FINANCIAL INFORMATION
 Item
1.    Financial Statements
  SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
 BALANCE SHEETS
  August
      31, 2009
                  
                  
                  August
      31, 2008Assets:Current
      assets:Cash
      and cash equivalents
                  
                  $
                  12,687
                  
                  
                  $
                  36,465Prepaids
                  
                  
                  58
                  
                  
                  
                  417Total
      current assets
                  
                  
                  12,745
                  
                  
                  
                  36,882Property
      and equipment, net of accumulated depreciationof
      $194 and $2,515, respectively
                  
                  
                  805
                  
                  
                  
                  7,294Total
      assets
                  
                  $
                  13,550
                  
                  
                  $
                  44,176Liabilities
      and Shareholders’ Equity (Deficit):Current
      liabilities:Accounts
      payable
                  
                  $
                  22,844
                  
                  
                  $
                  2,000Accrued
      payroll and payroll taxes (Note 4)
                  
                  
                  51,783
                  
                  
                  
                  -Accrued
      liabilities – related party (Note 4)
                  
                  
                  39,333
                  
                  
                  
                  -Other
      accrued liabilities (Note 4)
                  
                  
                  168,008
                  
                  
                  
                  6,500Total
      liabilities
                  
                  
                  281,968
                  
                  
                  
                  8,500Shareholders’
      equity (deficit) (Notes 5 and 6):Common
      Stock, $0.001 par value:225,000,000
      shares authorized – 80,629,311 and 131,400,000 sharesissued
      and outstanding shares at August 31, 2009 and August 31, 2008,
      respectively
                  
                  
                  80,629
                  
                  
                  
                  131,400Additional
      paid-in capital
                  
                  
                  607,157
                  
                  
                  
                  -Accumulated
      other comprehensive income
                  
                  
                  2,499
                  
                  
                  
                  5,587Deficit
      accumulated during the development-stage, net of adjustment (Note
      5)
                  
                  
                  (958,703
                  )
                  
                  
                  (101,311
                  )Total
      shareholders’ equity (deficit)
                  
                  
                  (268,418
                  )
                  
                  
                  35,676Total
      liabilities and shareholders' equity (deficit)
                  
                  $
                  13,550
                  
                  
                  $
                  44,176
  The
accompanying notes are an integral part of these statements.
 F-4
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
 STATEMENTS
OF OPERATIONS
  For
      the Year
                  ended
                  August
      31,
                
                
                For
      the Year
                  ended
                  August
      31,
                
                
                From
                  March 1,2009
                  (Inception)throughAugust
    31,2009
                
                
                2008
                
                
                2009(see Note
      1)Revenues:
                
                $
                -
                
                
                $
                -
                
                
                $
                -Operating
      expenses:Selling
                
                
                -
                
                
                
                -
                
                
                
                -General
      and administrative, including stock-based compensation of $396,977, $0 and
      $396,977 for the years ended August 31, 2009, 2008, and the period from
      March 1, 2009 to August 31, 2009, respectively. (Notes 5 and
      6)
                
                
                857,212
                
                
                
                33,953
                
                
                
                820,679Total
      operating expenses
                
                
                857,212
                
                
                
                33,953
                
                
                
                820,679Operating
      loss
                
                
                (857,212
                )
                
                
                (33,953
                )
                
                
                (820,679
                )Other
      income and (expense):Interest
      Income
                
                
                -
                
                
                
                -Loss
      from continuing operations
                
                
                (857,212
                )
                
                
                (33,953
                )
                
                
                (820,679
                )Loss
      from discontinued  operations
                
                
                (180
                )
                
                
                (18,061
                )Net
      loss
                
                $
                (857,392
                )
                
                $
                (52,014
                )
                
                $
                (820,679
                )Basic
      and diluted loss per common share
                
                $
                *
                
                
                
                *Weighted
      average common shares outstanding, basic and diluted
                
                
                106,610,176
                
                
                
                131,400,000
 
 *Less than $(0.01) per
share.
 Discontinued
operations loss per share is less than $(0.01) and therefore not
presented
  The
accompanying notes are an integral part of these statements.
 F-5
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
 STATEMENTS
OF STOCKHOLDERS’ DEFICIT
 
 
 Common
      StockShares
                
                
                Par
                
                
                Additional
                  paid-in
                  capital
                
                
                Accumulated
      Deficit
                
                
                Accumulated
      comprehensive income (loss)
                
                
                TotalBalance,
      August 31, 2007
                
                
                131,400,000
                
                
                $
                131,400
                
                
                $
                -
                
                
                $
                (49,297
                )
                
                $
                2,976
                
                
                $
                85,079Foreign
      currency translationadjustment
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                2,611
                
                
                
                2,611Net
      loss for the year endedAugust
      31, 2008
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                (52,014
                )
                
                
                
                
                
                
                (52,014
                )Balance,
      August 31, 2008
                
                
                131,400,000
                
                
                $
                131,400
                
                
                $
                -
                
                
                $
                (101,311
                )
                
                $
                5,587
                
                
                $
                35,676Foreign
      currency translation adj
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (2,744
                )
                
                
                (2,744
                )February
      24, 2009 -Shares returned to treasury
                
                
                (48,000,000
                )
                
                
                (48,000
                )
                
                
                48,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Inception
      (March 1, 2009, see Note
      1):Stock
      based compensation - Consultants
                
                
                -
                
                
                
                -
                
                
                
                89,177
                
                
                
                -
                
                
                
                -
                
                
                
                89,177Sale
      of Stock for cash at $0.30 per share
                
                
                454,311
                
                
                
                454
                
                
                
                135,839
                
                
                
                -
                
                
                
                -
                
                
                
                136,293Foreign
      currency translation adjustment
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (344
                )
                
                
                (344
                )Sale
      of Stock for cash at $0.30 per share
                
                
                75,000
                
                
                
                75
                
                
                
                22,425
                
                
                
                -
                
                
                
                -
                
                
                
                22,500August
      17, 2009 -Shares returned to treasury
                
                
                (21,000,000
                )
                
                
                (21,000
                )
                
                
                21,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Stock issued
      to Directors/Officers
                
                
                13,500,000
                
                
                
                13,500
                
                
                
                (13,500
                )
                
                
                -
                
                
                
                -
                
                
                
                -Stock
      based compensation – Consultants at $0.076 per share
                
                
                4,050,000
                
                
                
                4,050
                
                
                
                303,750
                
                
                
                -
                
                
                
                -
                
                
                
                307,800Sale
      of Stock  for cash at $0.08 per share
                
                
                150,000
                
                
                
                150
                
                
                
                11,850
                
                
                
                -
                
                
                
                -
                
                
                
                12,000Offering
      costs related to capital raise
                
                
                -
                
                
                
                
                
                
                
                (11,384
                )
                
                
                -
                
                
                
                -
                
                
                
                (11,384
                )Net
      loss for year ended August 31, 2009
                
                
                -
                
                
                
                
                
                
                
                
                
                
                
                (857,392
                )
                
                
                
                
                
                
                (857,392
                )Balance,
      August 31, 2009
                
                
                80,629,311
                
                
                $
                80,629
                
                
                
                607,157
                
                
                $
                (958,703
                )
                
                $
                2,
      499
                
                
                $
                (268,418
                )
 
 
  The
accompanying notes are an integral part of these statements.
 F-6
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
 STATEMENTS
OF CASHFLOWS
  For
      the Year
                    ended
                    August
      31, 2009
                
                
                For
      the Year
                    ended
                    August
      31,2008
                
                
                FromMarch 1, 2009(Inception)
                  through August
      31,2009(see Note 1)Cash flows from operating
      activities:Net
      loss
                
                $
                (857,392
                )
                
                $
                (52,014
                )
                
                $
                (820,679
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Amortization
      and depreciation
                
                
                7,486
                
                
                
                2,515
                
                
                
                3,357Stock-based
      compensation expense
                
                
                396,977
                
                
                
                -
                
                
                
                396,977Changes
      in operating assets and liabilities:(Increase)
      in prepaid expenses
                
                
                359
                
                
                
                (417
                )
                
                
                2,454(Decrease)
      Increase in accounts payable & accrued liabilities
                
                
                273,469
                
                
                
                1,721
                
                
                
                264,217Net cash used in operating
      activities
                
                
                (179,101
                )
                
                
                (48,195
                )
                
                
                (153,674
                )Cash flows from investing
      activities:Acquisition
      of property and equipment
                
                
                (998
                )
                
                
                (9,809
                )
                
                
                -Net cash used in investing
      activities
                
                
                (998
                )
                
                
                (9,809
                )
                
                
                -Cash flows from financing
      activities:Proceeds
      from sale of  common stock
                
                
                170,733
                
                
                
                -
                
                
                
                170,733Offering
      costs
                
                
                (11,384
                )
                
                
                -
                
                
                
                (11,384)Net cash provided by financing
      activities
                
                
                159,349
                
                
                
                -
                
                
                
                159,349Effect
      of exchange rate changes on cash
                
                
                (3,028)
                
                
                
                2,611
                
                
                
                (2,492)Net
      increase (decrease) in cash and cash equivalents
                
                
                (23,778)
                
                
                
                (55,393)
                
                
                
                3,183Cash
      and cash equivalents, beginning of period
                
                
                36,465
                
                
                
                91,858
                
                
                
                9,504Cash
      and cash equivalents, end of period
                
                $
                12,687
                
                
                $
                36,465
                
                
                $
                12,687
  Supplemental
      disclosures of cash flow information:Cash
      paid during the period for:Interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Income
      taxes
                
                $
                -
                
                
                $
                -
                
                
                $
                -
 
 The
accompanying notes are an integral part of these statements.
 F-7
 
 SEA
2 SKY CORPORATION
 (A
Development Stage Company)
 
 NOTES
TO THE FINANCIAL STATEMENTS
 (Unaudited)
 
  NOTE
1 - ORGANIZATION AND BUSINESS
  Sea 2 Sky
Corporation (“Sea 2 Sky” or the “Company”) is a development-stage Renewable
Bio-Energy Company headquartered in a HUB Zone in Ferndale, Washington. The
Company’s primary focus is to deliver alternative energy solutions globally to
Fortune 1000 companies, Government agencies and Countries around the globe. Sea
2 Sky intends to manufacture Torrified biomass and related products for
industrial use in North America and Western Europe as a fuel and energy
alternative. The Company is committed to securing the largest concentration of
biomass material in the world and is backed by “Special Category Minority
Business” which enables it to compete effectively in a growing market. Sea 2 Sky
plans to obtain and apply this torrefaction technology to increase the
energy output in biomass products and to provide a coal-like product with
significant environmental advantages. Torrefaction is a scientifically proven
method for improving the properties of biomass as a fuel.The end result of
Torrified biomass is the formation of solid products that retain approximately
70% of their initial weight and 90% of the original energy content and can be
co-fired in existing coal factories in pulverized coal boilers.
 
 Sea 2 Sky
Corporation (the “Company” or “Sea 2 Sky”) was incorporated in the state of
Nevada, on November 16, 2005.  The Company's fiscal year end is August
31st.  The Company was initially established to provide travel related
services to tourists in Canada and other countries.  Due to an
economic downturn, the Company abandoned its travel-related services during the
first half of fiscal year 2009.  As a result, results from operations
related to the travel business have been reclassified from current operations to
that of discontinued operations for proper financial presentation. The
total net loss from these discontinued operations since November 16, 2005, is
$19,304.
 
 Effective
March 1, 2009 (“Inception”), the Company has transitioned from its initial
business focus to that of a world-wide renewable energy provider, and is
entering an emerging opportunity in the alternative fuel, biomass sector of the
forest industry. See Note 5 for discussion of change in control of the
Company.  The Company is currently seeking acquisition rights to biomass
supplies around the world so that it may begin the manufacturing and global
distribution of environmentally-friendly alternative fuel
sources.  Note that whereas in prior Form 10-Q and 10-K filings, the
term “Inception” represented the Company’s incorporation date of November 16,
2005; “Inception” as referred to in this and future Form 10-Q and Form10-K
filings will represent the date in which the Company changed its business focus
to that of an alternative energy provider (March 1, 2009).
  NOTE
2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
  This
summary of significant accounting policies is presented to assist in
understanding the Company’s financial statements. The financial statements
and notes are representations of the Company's management who is responsible for
their integrity and objectivity. These accounting policies conform to
generally accepted accounting principles in the United States of America and
have been consistently applied in the preparation of the financial statements.
The financial statements are stated in United States of America
dollars.
  Basis
of Presentation
  The
accompanying financial statements have been prepared by the Company pursuant to
the rules and regulations of the United States Securities and Exchange
Commission.  Certain information and disclosures normally included in
the annual financial statements prepared in accordance with the accounting
principles generally accepted in the Unites States of America have been
condensed or omitted pursuant to such rules and regulations.  In the
opinion of management, all adjustments and disclosures necessary for a fair
presentation of these financial statements have been included.  Such
adjustments consist of normal recurring adjustments.
  Use
of Estimates
  The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. These estimates are based on management's best
knowledge of current events and actions the Company may undertake in the future.
Actual results may ultimately differ from those estimates. These estimates are
reviewed on an ongoing basis and as adjustments become necessary, they are
reported in earnings in the period in which they become known.
  F-8
  Cash
and Cash Equivalents
  Cash and
cash equivalents include cash on hand, cash in banks and cash equivalents, which
are highly liquid investment instruments with original maturities of less than
90 days.
  Development-Stage
Company
  On or
around March 1, 2009, the Company abandoned its previous travel agency business
and entered into the development stage with its intended new business, which
currently has no revenues.  Management expects to sustain losses from
operations until such time it can generate sufficient revenues to meet its
anticipated cost structure.  The Company is considered a
development-stage company in accordance with the Statement of Financial
Accounting Standards No. 7 “Accounting and Reporting by Development-Stage
Enterprises”.  A development-stage enterprise is one in which planned
principal operations have not commenced or if its operations have commenced,
there has been no significant revenues there from.
  Discontinued
Operations
  When
specific operations of a business are sold, abandoned, or otherwise disposed of,
the business must account for these related revenues and expenses (including any
gains or losses on related assets disposed of) as gain (loss) from discontinued
operations.  Continuing operations must be reported separately in the
income statement from discontinued operations, and any gain or loss from the
disposal of a segment be reported along with the operating results of the
discontinued segment.
  Project
Development
  Project
development costs are either expensed or capitalized. The costs of materials and
equipment that will be acquired or constructed for project development
activities, and that have alternative future uses, both in project development,
marketing or sales, will be classified as property and equipment and depreciated
over their estimated useful lives. To date, project development costs include
the general and administrative expenses related to securing fiber agreements,
technology, and our future production facilities.  During the year
ended August 31, 2009, we expensed all such development-stage
costs.
  Risks
and Uncertainties
  The
Company's operations are subject to new innovations in product design and
function. Significant technical changes can have an adverse effect on product
lives. Design and development of new products are important elements to achieve
and maintain profitability in the Company's industry segment. The Company may be
subject to federal, state and local environmental laws and regulations. The
Company does not anticipate expenditures to comply with such laws and does not
believe that regulations will have a material impact on the Company's financial
position, results of operations, or liquidity.
  Fair
Value of Financial Instruments
  The fair
value of financial instruments approximated their carrying values at August 31,
2009 and 2008. The financial instruments consist of cash, accounts payable,
and accrued liabilities.
  Concentrations
  Financial
instruments  that   potentially   subject  the  company  to
concentrations  of
credit  risk  consist  principally  of
cash and cash equivalents. At August 31,  2008,  the
Company had $19,875 US Funds in deposit in a
business  bank  account,  and
US  equivalent of $16,590 in Canadian  funds in a
business  bank  account  which are not insured by
agencies of the U.S. Government.  At August 31, 2009, the Company had
cash totaling $12,687 US in deposit in a US bank, insured by the
FDIC.
  Stock
Splits
  In the
case of a stock split, all shares of stock are retroactively restated for all
periods presented.  During December 2008, the Company affected a 30-1
forward stock split; all share information presented within these financial
statements has been adjusted to reflect this stock split.
  F-9
  Stock-Based
Payments
  The
Company accounts for stock options issued to employees and directors under SFAS
No. 123(R), “Share-Based Payment”. Under SFAS 123(R), share-based compensation
cost to employees is measured at the grant date, based on the estimated fair
value of the award, and is recognized as expense over the employee's requisite
vesting period.  No stock options are currently
outstanding.
 
 The
Company measures compensation expense for its non-employee stock-based
compensation under the Financial Accounting Standards Board (FASB) Emerging
Issues Task Force (EITF) Issue No.96-18“Accounting for Equity Instruments
that are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”. The fair value of the option issued or
committed to be issued is used to measure the transaction, as this is more
reliable than the fair value of the services received. The fair value is
measured at the value of the Company’s common stock on the date that the
commitment for performance by the counterparty has been reached or the
counterparty’s performance is complete. The fair value of the equity instrument
is charged directly to stock-based compensation expense and credited to
additional paid-in capital.
  Comprehensive
Income (Loss)
  The
Company has adopted SFAS No. 130, "Reporting Comprehensive
Income".  SFAS 130 requires that the components and total amounts of
comprehensive income be displayed in the financial
statements.  Comprehensive income includes net income and all changes
in equity during a period that arises from non-owner sources, such as foreign
currency items and unrealized gains and losses on certain investments in equity
securities.
  Loss
per Share
  The
Company accounts for loss per share pursuant to SFAS No. 128, "Earnings per
Share," which requires disclosure on the financial statements of "basic" and
"diluted" earnings (loss) per share. Basic earnings (loss) per share is computed
by dividing net income (loss) by the weighted average number of common shares
outstanding for the year. Diluted earnings (loss) per share is computed by
dividing net income (loss) by the weighted average number of common shares
outstanding plus potentially dilutive securities outstanding for each
year.  At August 31, 2009, the Company’s dilutive securities
outstanding consisted of warrants to purchase shares of common stock, all of
which exercise prices were above the average closing price of the Company’s
common stock and thus excluded under the treasury method. At August 31, 2008,
the Company had no dilutive securities outstanding.
  Website
Development Costs
  Website development costs representing capitalized costs of
design, configuration, coding, installation and testing of the
Company's website is capitalized until initial implementation. Upon
implementation, the asset is amortized to expense over its estimated useful life
of three years using the straight-line method.  In February 2009, the
original website had no remaining useful life and was expensed.  A new
website was developed in February 2009.  Accumulated amortization at August
31, 2009 was $194.  Ongoing website post-implementation costs of operation,
including training and application maintenance, will be charged to expense as
incurred.
  Income
Taxes
  The
Company has adopted the Statement of Financial Accounting Standards No. 109 -
"Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the use of the asset
and liability method of accounting of income taxes. Under the asset and method
of SFAS 109, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences  between the
financial  statements carrying amounts of existing assets
and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
  Deferred
Offering Costs
  The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed.  At the time of the
completion of the offering, the costs are charged against the capital
raised.  Should the offering be terminated, deferred offering costs
are charged to operations during the period in which the offering is
terminated.
  Recent
Accounting Pronouncements
  On
July 1, 2009, FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles”, also known as FASB Accounting Standards Codification (“ASC”)
105, “Generally Accepted Accounting Principles” (“ASC 105”) (the Codification”).
ASC 105 establishes the exclusive authoritative reference for U.S. GAAP for use
in financial statements, except for SEC rules and interpretive releases, which
are also authoritative GAAP for SEC registrants. The Codification will supersede
all existing non-SEC accounting and reporting standards. Management is currently
working on its transition to incorporate this codification within its financial
statements and notes in preparation for adoption for our first fiscal quarter of
2010 ending November 30, 2009.
  F-10
  The FASB
issued SFAS 165 “Subsequent Events” (SFAS 165),incorporating guidance
on subsequent events into authoritative accounting literature and clarifying the
time following the balance sheet date which management reviewed for events and
transactions that may require disclosure in the financial
statements.  We adopted this standard effective second quarter of
2009.  The standard increased our disclosure by requiring disclosure
of the date through which subsequent events have been reviewed.  The
standard did not change our procedures for reviewing subsequent
events.  SFAS 165 is included in the “Subsequent Events” accounting
guidance.  Our subsequent events review was performed through November
25, 2009.
  In April
2009, the FASB issued Staff Position No. FAS 157-4, Determining Fair Value When Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly ("FSP 157-4").
FSP 157-4 provides guidance on how to determine the fair value of assets
and liabilities when the volume and level of activity for the asset/liability
has significantly decreased. FSP 157-4 also provides guidance on
identifying circumstances that indicate a transaction is not orderly. In
addition, FSP 157-4 requires disclosure in interim and annual periods of
the inputs and valuation techniques used to measure fair value and a discussion
of changes in valuation techniques. FSP 157-4 was effective for the Company
on July 1, 2009. The adoption of FSP 157-4 did not have a material
impact on its results of operations and financial position.  Also see Note
5 for discussion of our valuation of our common stock and warrants issued for
services rendered and to be rendered.
 In
December 2007, the FASB issued ASC 805-10-65-1 (formerly SFAS No. 141 (revised
2007), "Business Combinations" ("SFAS 141R") which replaces SFAS No. 141,
"Business Combination"). ASC 805-10-65-1 establishes the principles and
requirements for how an acquirer: (1) recognizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed, and any
noncontrolling interest in the acquiree; (2) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (3) discloses the business combination. This Statement applies to all
transactions in which an entity obtains control of one or more businesses,
including transactions that occur without the transfer of any type of
consideration. ASC 805-10-65-1 will be effective on a prospective basis for all
business combinations on or after January 1, 2009, with the exception of the
accounting for valuation allowances on deferred taxes and acquired tax
contingencies.  See Note 5.
 In
July 2006, the FASB issued Interpretation No. (“FIN”) 48, “Accounting
for Uncertainty in Income Taxes”. This Interpretation sets forth a recognition
threshold and valuation method to recognize and measure an income tax position
taken, or expected to be taken, in a tax return. The evaluation is based on a
two-step approach. The first step requires an entity to evaluate whether the tax
position would “more likely than not,” based upon its technical merits, be
sustained upon examination by the appropriate taxing authority. The second step
requires the tax position to be measured at the largest amount of tax benefit
that is greater than 50 percent likely of being realized upon ultimate
settlement. In addition, previously recognized benefits from tax positions that
no longer meet the new criteria would no longer be recognized. The application
of this Interpretation will be considered a change in accounting principle with
the cumulative effect of the change recorded to the opening balance of retained
earnings in the period of adoption. Adoption of this new standard did not have a
material impact on our financial position, results of operations or cash
flows.
 
 In April
2008, the FASB issued Emerging Issues Task Force (“EITF”) 07-05, "Determining whether an Instrument
(or Embedded Feature) Is Indexed to an Entity’s Own Stock". EITF 07-5
applies to any freestanding financial instruments or embedded features that have
the characteristics of a derivative, as defined by SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” and to any
freestanding financial instruments that are potentially settled in an entity’s
own common stock. EITF 07-05 is effective for financial statements issued for
fiscal years beginning after December 15, 2008.  The Company is
currently evaluating the impact of EITF 07-5, but does not expect the adoption
of this pronouncement will have a material impact on its financial position,
results of operations or cash flows.
  International
Financial Reporting Standards
  In
November 2008, the Securities and Exchange Commission (“SEC”) issued for comment
a proposed roadmap regarding potential use of financial statements prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board. Under the proposed roadmap, the
Company would be required to prepare financial statements in accordance with
IFRS in fiscal year 2014, including comparative information also prepared under
IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential
impact of IFRS on its financial statements and will continue to follow the
proposed roadmap for future developments.
 
 F-11
  Our Web
site is located at www.sea2skyenergy.com.  Detailed
information about our company can be found on our Web site.  In
addition, we make our Annual Reports on Form 10-K, Quarterly Reports on Form
10-Q, Current Reports on Form 8-K and all amendments to such reports available,
free of charge, through our Web site, as soon as reasonably practicable after
they are filed with or furnished to the SEC.  These and other SEC
filings are available through the Investor Relations page of our Web
site.  The information on our Web site, however, is not incorporated
by reference in, and does not form part of, this Annual Report on Form
10-K.  Except as otherwise specified, any reference to a year
indicates our fiscal year ended August 31 of the year
referenced.
  NOTE
3 - GOING CONCERN
  The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern.  The
Company has an accumulated deficit at August 31, 2009 of $958,703 and limited
available capital. The Company has incurred net losses from Inception of
$820,679.  Net cash used in operating activities from Inception were
$153,674. These matters raise substantial doubt about the Company’s ability
to continue as a going concern.  In view of these
matters,  realization  of  certain  of
the  assets in the  accompanying balance  sheet
is  dependent  upon
the  Company's  ability  to meet its
financing  requirements,  raise additional
capital,  and the success of its  future
operations. There is no assurance that future capital raising plans will be
successful in obtaining sufficient funds to assure the eventual profitability of
the Company.  Management believes that actions planned and presently
being taken to revise the Company's operating and financial requirements provide
the opportunity for the Company to continue as a going concern. The financial
statements do not include any adjustments that might result from these
uncertainties.
  NOTE
4 - ACCRUED LIABILITIES
  Accrued
liabilities by major classification are as follows:
 
 August 31,
                  2009
                
                
                August
      31,
                  2008Accrued
      payroll
                
                $
                49,743
                
                
                $
                -Accrued
      payroll taxes
                
                
                2,040
                
                
                
                -Accrued
      liabilities – related parties
                
                
                39,333
                
                
                
                -Other
      accrued expenses
                
                
                168,008
                
                
                
                6,500Total
      accrued liabilities
                
                $
                259,124
                
                
                $
                6,500
 
 Accrued
salaries and related payroll taxes represent those wages and taxes accrued for
the CEO and CFO.  The related party liabilities represent fees payable
to three of our directors.  Other Accrued expenses includes accrued
fees and commissions due an external consulting group which assists in the
raising of operating capital, and miscellaneous business taxes.
  NOTE
5 - COMMON STOCK
  The
Company's authorized common stock consists of 225 million shares with a par
value of $0.001 per share.
  On
December 30, 2008, our Board of Directors authorized a 30-for-1 forward stock
split of our $0.001 par value common stock.  This share dividend
became effective February 17, 2009. As a result of the forward stock split,
127,020,000 additional shares were issued.  Capital and additional
paid-in capital have been adjusted accordingly.   When adjusting
retroactively at August 31, 2008, there was a $24,187 shortage of additional
paid-in-capital; thus an adjustment to retained earnings will be booked to the
opening balance at November 16, 2005.  The financial statements
contained herein reflect the appropriate values for capital stock and
accumulated deficit. All references in the accompanying financial statements to
the number of common shares and per share amounts have been retroactively
restated to reflect the forward stock split.
  On
February 10, 2009, our Articles of Incorporation were amended to change the
aggregate number of shares which we have authority to issue 225 million shares
of common stock, par value $0.001 per share.
  On
February 10, 2009, our Board of Directors authorized the cancellation of 48
million post forward-split common shares.  These restricted shares
were owned by Mr. Dennis Cox and were cancelled for no consideration at his
request. This became effective February 24, 2009.
  On
February 23, 2009, three new directors were appointed (David Siebenga, Erik
Odeen and Ira Steiner).  On February 26, 2009, Irene Getty and Dennis
Cox resigned from the board of directors.  Prior to resigning, they
suggested allocating 40 million shares of their restricted stock for private
sale to five new directors (the “New Directors”) pending
the Board’s approval.  On March 6, 2009, our board of directors
ratified an action made by the prior directors to sell 40 million of their
restricted shares to the New Directors in a private transaction.  This
was done on condition that the New Directors would accept positions on the Board
in order to develop a working business plan for the Company.  The
restricted shares are non-transferable without being unanimously approved by the
Board.  Under
guidelines provided by SFAS No. 141R, “Business Combinations”, the New Directors, who received
48% of the then issued and outstanding stock, were considered to be the largest
minority voting interest owner (group of organized owners) without the existence
of any single majority owner (or organized group of owners).  These New
Directors controlled the Board and the Company’s operations.
 F-12
  The New
Directors brought a business plan reflecting a viable business in the renewable
alternative energy industry, which meets a large and timely demand.  These
directors possess the industry knowledge and relative experience necessary to
accomplish their plan.  Each of the directors has unique skills and
strategic relationships which are directly in line with the objectives of this
plan. As a
result of these factors, a change of control was recognized, which triggered
recapitalization accounting.  Since there were no assets or outstanding
liabilities contributed at the time of the change of control, the shares were
valued at par.  The assets and liabilities of the Company and the date of
the change in control continued to be reported at historical costs which
represented fair value.
  During
April and May 2009, subscription agreements were sold to seven accredited
investors totaling 454,311 shares of common stock for $0.30, each, raising
$136,233 (net of bank wire fees).
  During
June 2009, subscription agreements were sold to three (3) additional investors
totaling 75,000 shares for $22,500.
  On August
17,2009,
as a result of the former President/CEO’s resignation, David Siebenga
transferred 13,500,000 restricted shares common stock to the other three
directors (see more detail at Item 7 – MD&A section),
and returned 7,500,000 shares to the Company treasury.  Since
this was simply a reallocation of distributed shares among the New Directors,
management viewed this transaction as part of the original recapitalization and
accounted for it in the same manner.
  On August
17, 2009, the Board of Directors approved the distribution of 4,050,000 shares
to three external consultants for financial consulting, investor relation
services, and information technology services and consulting.  These
shares were issued as compensation for services performed at a value of $307,800
which was recorded as compensation expense.
  At August
28, 2009, our CFO and new CEO, Erik Odeen, purchased 75,000 restricted shares
common stock for $0.08 per share, totaling $6,000 cash which was deposited for
operating capital.  See additional detail above under Item 10 Beneficial
Ownership.
  At August
28, 2009, a subscription agreement was sold to an investor for 75,000 shares for
$6,000 cash.
  NOTE
6 - COMMON STOCK WARRANTS
  On April
25, 2009, the board of directors approved the issuance of four (4) million
warrants to a consulting group in exchange for consulting services provided to
the Company during the development stage.  These warrants were fully
vested upon issuance, have an exercise price of $0.30, and have a three-year
term which expires April 24, 2012.
  The
common stock purchase warrants were not issued with the intent of effectively
hedging any future cash flow, fair value of any asset, liability or any net
investment in a foreign operation. The warrants do not qualify for hedge
accounting. These common stock purchase warrants do not trade in an active
securities market, and as such, we estimated the fair value of these warrants to
be $89,177, using the Black-Scholes option pricing model using the following
assumptions:
  April
      25, 2009Annual
      dividend yield
                
                
                -Expected
      life (years)
                
                
                3Risk-free
      interest rate
                
                
                1.32
                %Expected
      volatility
                
                
                110
                %
 
 Since
there has not been any significant trading of this stock, we determined the
expected volatility based on price fluctuations for development-stage companies
in similar alternative energy industries, based on a three- year observation,
the expected life of the warrants.
  Expected
volatility is based primarily on historical volatility. Historical volatility
was computed using weekly pricing observations for recent periods that
correspond to the last 36 months. We believe this method produces an estimate
that is representative of our expectations of future volatility over the
expected term of these warrants. We currently have no reason to believe future
volatility over the expected remaining life of these warrants is likely to
differ materially from historical volatility. The expected life is based on the
remaining term of the warrants. The risk-free interest rate is based on
three-year U.S. Treasury securities.
  NOTE
7 - COMMITMENTS AND CONTINGENCIES
  Professional Services
Agreement
  The
Company has formalized an agreement with a consulting firm for services related
to debt and equity capital raising and business development
activities.  Under this agreement, consulting fees payable will accrue
at the rate of $25,000 per month for a term of three years, effective March 1,
2009.  Consulting fees for the quarter ended August 31, 2009 totaling
$75,000 have been approved by management and accrued for.  Total
accrued consulting fees earned by this firm as of August 31, 2009, are $150,000.
In addition, commissions will be paid on debt or equity funding (i.e., private
offerings) generated by the consulting firm, at a rate of ten percent
(10%). At the time of the completion of the offering, the costs are charged
against the capital raised.  Commissions earned during the quarter for
raising capital totaling $11,384 were approved by management and offset against
proceeds upon receipt of funds.    In August 2009, the Board
of Directors approved an addendum to this agreement which provided for the
issuance of two million, five-hundred thousand (2,500,000) restricted shares of
common stock to the consulting firm. (See Note 5 – Common
Stock)
 F-13
 NOTE
8 - INCOME TAXES
  Prior to
March 1, 2009, our executive offices and operations were located in British
Columbia.  As such, we filed the appropriate foreign income tax
returns for prior years.  For year ending August 31, 2009, we will be
filing a foreign tax return, U.S. Federal tax return and U.S. State tax return.
We have identified our U.S. Federal tax returns as our “major” tax
jurisdiction.  The Company has had losses to date, and therefore has
paid no income taxes.
  Deferred
income taxes arise from temporary timing differences in the recognition of
income and expenses for financial reporting and tax purposes.  The
Company's deferred tax assets consist entirely of the benefit from net operating
loss (NOL) carry-forwards.  Effective March 1, 2009, prior net
operating loss carry forwards are no longer available to the Company, due to the
Company’s abandonment of the related travel services business.  Any
future net operating losses, based on operations of the renewable energy
business, will be considered for NOL carry-forward.
 
 The
amount of benefits the Company may receive from the operating loss carry
forwards for income tax purposes is further dependent, in part, upon the tax
laws in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined.
 
 The
Company's deferred tax assets consist primarily of net operating loss carry
forwards since March 1, 2009 (the date of change in business focus to the
renewable energy industry).  For federal tax purposes this carry
forward expires in twenty years, beginning in 2029. A full valuation allowance
has been placed on 100% of the Company's deferred tax assets as it cannot be
determined if the assets will be ultimately used.
 
 The
Company’s deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
  Period
      Ending
                Estimated
      NOL
                  Carry-forward
                NOL
      Expires
                Tax
      Benefit
                  from
      NOL
                Valuation
                  Allowance
                Elimination
      of Allowance
                Net
      TaxBenefitAugust
      31, 2008
                77,124
                2009
                19,281
                
                (19,281)
                -August
      31, 2009 (for continuing operations)
                451,452
                2029
                153,494
                (153,494)
                -
                -
 
 Income
taxes at the statutory rate are reconciled to the Company’s actual income taxes
as follows:
  Income tax benefit
      at statutory rate resulting from net operating loss carry
      forward
                
                
                (34
                %)Deferred income tax
      valuation allowance
                
                
                34
                %Actual tax
      rate
                
                
                0
                %
 
 NOTE
9 - SUBSEQUENT EVENTS
  During
September, 2009, the Company issued 50,000 shares to an outside consultant for
information technology services performed under a contract with a one year term,
expiring September 2010.  As a result, the Company recorded an entry
to reflect $3,500 in stock compensation expense, based on the stock’s fair
market value on date of grant.
  During
September 2009, subscription agreements were sold to four (4) investors to
purchase 712,500 shares for $57,000 cash.
  On
October 30, 2009, the Lake Babine Nation (LBN) Band Council issued a Resolution
to fully support the Company in its efforts to build a biomass pellet plant in
the Burns Lake area of British Columbia, Canada.  LBN has agreed to
negotiate sufficient biomass and land from the Interim Treaty Arrangement (ITA)
Crown Land necessary to complete the project. This event was filed in Current
Report on Form 8-K dated November 5, 2009.
  On
November 30, 2009, the Company’s Board of Directors re-appointed David Siebenga
as Chief Executive Officer of the Company.  Erik Odeen, the Company’s
Chief Financial Officer, had been appointed the additional position of Chief
Executive Officer during August 2009 when Mr. Siebenga requested to resign for
personal reasons.  Mr. Odeen relinquished his position as Chief
Executive Officer on November 30, 2009; however, still remains the Company’s
Chief Financial Officer, as well as Secretary and Treasurer on the Board of
Directors.  This subsequent position change has been reflected
throughout this Form 10-K only where it is applicable based on the date
associated with the reference.
  Our
subsequent events review was performed through December 3, 2009.
  F-14
  ITEM
9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  None.
  ITEM
9A. CONTROLS AND PROCEDURES
  Management’s
Evaluation of Disclosure Controls and Procedures
  The
management of Sea 2 Sky, with the participation of our principal executive and
financial officer, has evaluated the effectiveness of our disclosure controls
and procedures in ensuring that the information required to be disclosed in our
filings under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms, including ensuring that
such information is accumulated and communicated to FedEx management as
appropriate to allow timely decisions regarding required disclosure. Based on
such evaluation, our principal executive and financial officers have concluded
that such disclosure controls and procedures were effective as of
August 31, 2009 (the end of the period covered by this Annual Report on
Form 10-K).
  ITEM 9T. CONTROLS AND
PROCEDURES
  Management’s
Annual Report on Internal Control Over Financial Reporting
  The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting. The internal control process
has been designed, under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of the
Company’s financial statements for external reporting purposes in accordance
with accounting principles generally accepted in the United States of
America.
  Management
conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting as of August 31, 2008, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information
and communication, and (v) monitoring, based on the framework inInternal Control –
Integrated Framework,  issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”).  As of August 31,
2009, management has determined that the Company’s internal control over
financial reporting as of August 31, 2009 was effective based on the size of the
Company, the minimal transactions, and the financial and internal controls
expertise of the CFO.  As the Company grows, steps will be taken to
ensure that additional financial experts are sequestered to provide secondary
review of all financials and related disclosures filed with the
SEC.
  Our
internal control over financial reporting includes policies and procedures that
pertain to the maintenance of records that accurately and fairly reflect, in
reasonable detail, transactions and dispositions of assets; and provide
reasonable assurances that: (1) transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles
generally accepted in the United States; (2) receipts and expenditures are being
made only in accordance with authorizations of management and the directors of
the Company; and (3) unauthorized acquisitions, use, or disposition of the
Company’s assets that could have a material effect on the Company’s financial
statements are prevented or timely detected.
  All
internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparations and presentations. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
 
 Changes
in Internal Control Over Financial Reporting
  During
our fiscal quarter ended August 31, 2009, there were no significant changes
in our internal controls over financial reporting, as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act, or in other factors that could
significantly affect these controls subsequent to the evaluation date. We have
not identified any significant deficiencies or material weaknesses in our
internal controls, and therefore there were no corrective actions
taken.
  ITEM  9B.
OTHER INFORMATION
  On May
22, 2009, the Company dismissed Schumacher & Associates, Inc. the
independent accountants previously engaged as the principal accountants to audit
our financial statements. The decision to change accountants was approved by our
Board of Directors included in our filing of Form 8-K on June 1,
2009.
  Also
effective on May 22, 2009, we engaged dbbmckennon, Certified Public
Accountants, as our independent certified public accountants.  The
decision to change accountants was approved by our Board of
Directors.
  These
events have been previously disclosed in the prior Form 10-Q and on Form 8-K
filed with the SEC on June 1, 2009.
  23
 PART III
  ITEM 10.DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  As a
result of the Company’s change in business focus (effective March 1, 2009), the
Compay’s prior Chief Executive Officer, Irene Getty, and the prior Chief
Financial Officer, Dennis Cox, resigned from their positions on February 26,
2009.  Concurrently, David Siebenga and Erik Odeen were appointed to
these positions.
 
 Our
executive officer and directors and their respective ages as of November 25,
2009 are as follows:
 
 NAME
                AGE
                POSITIONHenry
      V. James
                72
                Chairman
      of the BoardErik
      Odeen
                43
                Former
      Chief Executive Officer, Chief Financial Officer, Secretary,
      TreasurerDouglas
      Robertson
                57
                Chief
      Operations Officer, DirectorDavid
      J. Siebenga
                49
                Chief
      Executive Officer, Director
 
 Set forth
below is a brief description of the background and business experience of our
executive officers and directors.  Our Directors serve until the next
annual meeting of the Company’s shareholders.
 
 Henry
V. James
  Henry
James was appointed Chairman of the Board for the Company on December 31,
2008.  Mr. James is a senior tribal member of the Lummi Nation, USA.
Having served in the US military until discharged in 1957, Henry, a disabled
veteran, operates James Trading Company and associated companies which target
government procurement via their SDVOB, in a HUB and Free Trade Zone
status.
  A
successful businessman, builder and developer, Henry owns or controls numerous
properties and businesses under development. He also operates a successful
international trading company utilizing his special access designations for US
government contracting. Seeing a
need to produce environmentally-wise energy, Henry’s success as a native
entrepreneur has forged connections with indigenous communities in Canada, the
US and abroad to provide a wise new direction in energy supply and access to
Biomass Pellets. Sea 2 Sky has the opportunity to secure and develop these long
term energy contracts through Henry’s involvement.
 
 Erik
Odeen, CPA, CFE
  Erik
Odeen was asked to join the Board of Directors on February 23,
2009.  Subsequently, on February 26, 2009, he was appointed Chief
Financial Officer of the Company.  Mr. Odeen, CPA, CFE, is a seasoned
executive with over 20 years experience in corporate management, financial
leadership, manufacturing & distribution operations, and public
accounting. For the past six years, he managed a consulting practice
which provides financial management and strategic-planning advisory
services to both public and privately-held company clients. More recently,
Erik’s focus has been corporate restructuring and reorganization, SEC reporting
and resolving complex accounting issues, and Sarbanes-Oxley
compliance.
  Erik’s
public company experience ranges from start-up and development stage to Fortune
100 companies, including turn-around and M&A engagements. During his 13 year
career with International Paper, Erik was instrumental in the planning and
implementation of financial and operating systems, and served in senior-level
management positions with a division of XPEDX, IP’s $6 billion distribution arm.
Erik is an active member of the American Institute of Certified Public
Accountants (AICPA), the Washington Society of CPAs (WSCPA), the
California Society of CPAs (CalCPA), and Association of Certified Fraud
Examiners (ACFE).
 
 Doug
Robertson, PMP
  Doug
Robertson joined the Company’s Board of Directors on December 31,
2008.  On February 23rd,
2009, he accepted the position of Chief Operating Officer for the
Company.  A designated Project Management Professional (PMP), Doug has
extensive experience in resource procurement and harvesting, international log
imports and exports, and financing and construction of foreign wood product
manufacturing facilities.  Doug, a published author of forest resource
issues in British Columbia, has consulted to an American Tribal Economic
Development Department.
  Doug’s
work experience with American Indians and Canadian First Nations forest
practices provides Sea 2 Sky an advantage in helping First Nations and
Indigenous peoples wisely deploy their biomass fiber inventories to a world
searching for environmentally-responsible alternative sources of
energy.
  24
 David
J. Siebenga
  David
Siebenga joined the Board of Directors on February 23, 2009, and then was
subsequently appointed the Company’s Chief Executive Officer on February 26,
2009.  Mr. Siebenga, a lawyer admitted to the British Columbia Law
Society, operates a legal and business consulting practice in British Columbia.
His business background history includes operating as CFO of an International
Trading Corporation, an environmental industrial products corporation, a
manufacturing facility, and a financial development officer for an international
land developer. David currently provides international consulting to firms in
the immigration and trading industries which seek access to international
markets for their goods.
  David
joined Sea 2 Sky to work through the international aspects of distribution,
contracting, sales and marketing of its biomass products.
 
 Significant
Employees
  The
Company has no significant employees other than the executive employees and
directors described above.
 
 Audit
Committee and Audit Committee Financial Expert Disclosure
  The
Company does not currently have an audit committee; audit committee functions
are performed by our board of directors. None of our directors are deemed
independent; two of the four directors also hold positions as our officers. Our
audit committee is responsible for: (1) selection and oversight of our
independent accountant; (2) establishing procedures for the receipt, retention
and treatment of complaints regarding accounting, internal controls, and
auditing matters; (3) establishing procedures for the confidential, anonymous
submission by our employees of concerns regarding accounting and auditing
matters; (4) engaging outside advisors; and, (5) funding for the outside
auditory and any outside advisors engagement by the audit
committee.
  The
Company’s CFO, Erik Odeen, CPA, CFE, is the financial expert serving on the
Board of Directors.
 
 Code
of Conduct and Code of Ethics for Senior Management
  The
Company has implemented a Code of Conduct and A Code of Ethics for Senior
Management, which are both located on our website www.sea2skyenergy.com.   The
Company's management intends to promote honest and ethical conduct, full and
fair disclosure in our reports to the SEC, and compliance with applicable
governmental laws and regulations. We believe our codes are reasonably designed
to deter wrongdoing and promote honest and ethical conduct; provide full, fair,
accurate, timely and understandable disclosure in public reports; comply with
applicable laws; ensure prompt internal reporting of code violations; and
provide accountability for adherence to the codes.
  Section
16(a) Beneficial Ownership Reporting Compliance
  Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each
person who is the beneficial owner of more than 10% of the common stock of a
company that files reports pursuant to Section 12 of the Exchange Act of 1934,
are required to report the ownership of such common stock, options, and stock
appreciation rights (other than certain cash only rights) and any changes in
that ownership with the Securities and Exchange
Commission.
  ITEM
11.  EXECUTIVE COMPENSATION
  The
Company’s Board of Directors also serves as the Compensation
Committee.  The Compensation Committee believes that base salaries for
our senior executive officers are appropriate for executives serving a public
company of our size in our industry.
  Employment
Agreements
  We do not
have any employment agreements in place with any of our officers and
directors.
  25
  SUMMARY
COMPENSATION TABLE
  The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid (or accrued) by us
during the years ended August 31, 2009 and 2008, in all capacities for the
accounts of our executives, including the Chief Executive Officer
(CEO).  None of the current employees were employed by the Company
during the prior year, ended August 31, 2008.
 
 Name
      and Principal Position
                
                Fiscal
      Year
                
                Salary
      Earned or Paid
                  
                  ($)
                Bonus
                  
                  ($)
                
                Stock
                  Awards
                  
                  ($)
                
                Option
                  Awards
                  
                  ($)
                
                Non-Equity
      Incentive Plan Compensation
                  
                  ($)
                
                Non-Qualified
      Deferred Compensation Earnings
                  
                  ($)
                
                All
      Other Compensation*
                  
                  ($)
                
                
                Totals
                  
                  ($)Irene
      Getty,
                  prior
      Chief Executive Officer, President
                
                2008
                
                $
                -
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                -Dennis
      Cox,
                  Chief
      Financial Officer, Secretary, Treasurer
                
                2008
                
                $
                -
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                $
                -Erik
      Odeen,
                  Chief
      Executive Officer, Chief Financial Officer, Secretary,
      Treasurer
                
                2009
                
                $
                46,667
                
                
                -
                
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                $
                46,667Doug
      Robertson,
                  Chief
      Operating Officer, Director
                
                2009
                
                $
                34,417
                
                
                -
                
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                $
                34,417David
      Siebenga, Director, Former Chief Executive Officer
                
                2009
                
                $
                60,000
                
                
                -
                
                
                
                
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                
                
                $
                60,000
  Compensation
of Directors
  The
following table sets forth certain information concerning compensation paid to
the Company’s directors during the year ended August 31, 2009:
 
 Name
                Fees
      earned or
                  paid
      in cash
                  ($)
                Stock
      awards
                  ($)
                Option
      awards
                  ($)
                Non-equity
                  incentive
      plan compensation
                  ($)
                Non-qualified
                  deferred
                  compensation
      earnings
                  ($)
                All
      other compensation*
                  ($)
                Total
                  ($)Henry
      James
                $
      34,417
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-
                $
      34,417Erik
      Odeen
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-
                $
      -0-Doug
      Robertson
                $
      -0-
                $
      -0-
                $-0-
                $
      -0-
                $-0-
                $
      -0-
                $
      -0-David
      Siebenga
                $
      -0-
                $
      -0-
                $-0-
                $
      -0-
                $-0-
                $
      -0-
                $
      -0-
  Directors
are permitted to receive fixed fees and other compensation for their services as
directors. The Board of Directors has the authority to fix the compensation of
directors.
  Term
of Office
  Our
directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors and hold
office until removed by the Board.
  Retirement
Plans
  There are
no annuity, pension, or retirement benefits proposed to be paid to officers,
directors, or employees of the Corporation in the event of retirement at normal
retirement date pursuant to any presently existing plan provided or contributed
to by the Corporation.
  26
  ITEM 12. 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
  The
following table provides the names and addresses of each person known to us to
own more than 5% of our outstanding shares of common stock as of August 31, 2009
and by the officers and directors, individually and as a group. Except as
otherwise indicated, all shares are owned directly.
  Name
                  of
      Beneficial Owner
                Position
                Amount
      and Nature
                  of
      Beneficial Owner
                Percent
                  Of
      Common StockErik
      Odeen
                Chief
      Executive Officer, Chief Financial Officer, Secretary,
      Treasurer
                8,075,000
                10.04%Henry
      V. James
                Chairman
      of the Board of Directors
                8,000,000
                9.95%Douglas
      Robertson
                Chief
      Operations Officer, Director
                8,000,000
                9.95%David
      J. Siebenga
                Director
      (Former President and Chief Executive Officer)
                8,000,000
                9.95%Total
      Officers and Directors (__ individuals)
                32,075,000  (1)
                  The percent is based on 80,629,311shares of our common stock issued
      and outstanding as of August 31, 2009.
 
 (2)
                  All
      addresses for the above are:  2287 Slater Road, Ferndale, WA 
      98248
  ITEM
13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTION, AND DIRECTOR
INDEPENDENCE
  On August
28, 2009, 75,000 restricted shares of common stock were sold to our CFO and
recently appointed CEO, Erik Odeen, for cash proceeds of $6,000. The shares were
sold pursuant to the exemption from registration contained in Section 4(2) of
the Act. No commission was paid to anyone in connection with the sale of shares
to Mr. Odeen.
  Sea 2 Sky
is headquartered in Ferndale Washington, on an Indian
reservation.  The Company has a sub-lease agreement with our Chairman
for $1 per year, renewable annually.
 
 On August
17, 2009, David Siebenga resigned his position of President and CEO, however,
retained his position on the Board.  The Board unanimously elected
Erik Odeen, CFO, to be CEO of the Company – in addition to his current
role.  Mr. Siebenga relinquished 21,000,000 shares of previously
issued restricted common stock back to the Company
treasury.  Subsequently, 13,500,000 shares were redistributed as
follows:
  Redistributed
      sharesErik Odeen, CEO/CFO,
      Secretary, Treasurer
                
                7,500,000Henry James,
      Chairman
                
                3,000,000Doug Robertson,
      COO
                
                3,000,000David Siebenga,
      Director
                
                (21,000,000)
 
 ITEM
14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
  During
the period from November 16, 2005 through May 22, 2009, the Company utilized
Schumacher & Associates, Inc. as their independent audit firm. On May 22,
2009, the Company dismissed Schumacher & Associates, Inc. and engaged
dbbmckennon, Certified
Public Accountants, as our independent certified public accountants. The
decision to change accountants was approved by our Board of Directors included
in our filing of Form 8-K on June 1, 2009.
  27
  The
aggregate fees billed for the most recently completed fiscal year ended August
31, 2008 and for fiscal year ended August 31, 2009 for professional services
rendered by the principal accountant for the audit of our annual financial
statements and review of the financial statements included in our quarterly
reports on Form 10-QSB and services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for these
fiscal periods were as follows:
  Years EndedAugust
      31, 2009
                
                
                August 31, 2008Audit
      Related Fees
                
                $
                15,750
                
                
                $
                8,050Tax
      Fees
                
                
                3,000
                
                
                
                -All
      Other Fees
                
                
                -
                
                
                
                -Total
                
                $
                18,750
                
                
                $
                8,050
  Fees
incurred for the prior year ended August 31, 2008, were paid to our predecessor
CPA firm – Schumacher & Associates, Inc.  During the current year,
$9,250 in audit related fees were accrued for and paid to Schumacher &
Associates, Inc.  The remaining $9,500 in fees incurred during the
current year were accrued for and paid to our current CPA firm – dbbmckennon for audit and tax
services.  Our board of directors pre-approves all services provided
by our independent auditors. All of the above services and fees were reviewed
and approved by the board of directors either before or after the respective
services were rendered.
  Our board
of directors has considered the nature and amount of fees billed by our
independent auditors and believes that the provision of services for activities
unrelated to the audit is compatible with maintaining our independent auditors’
independence.
  PART
IV
  ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
  The
following exhibits are included with this filing:
 
 Exhibit
      No.:
                
                Description:31.1
                
                Section
      302 Certification by Principal Executive Officer and Principal Financial
      and Accounting Officer  (1)32.1
                
                Section
      906 Certification by Principal Executive Officer and Principal Financial
      and Accounting
Officer  (1)
 (1) Filed
herewith
 
 
 28
 
 SIGNATURES
  Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
  Sea
      2 Sky CorporationDate:
      December 8, 2009
                  By:
                  /s/ David
      J. SiebengaDavid
      J. SiebengaChief Executive
      Officer
  By:
                  /s/ Erik
      OdeenErik
      OdeenChief
      Financial Officer
  Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
  Signature
                
                Title
                
                Date/s/
      David
      J. SiebengaDavid
      J. Siebenga
                
                Chief
      Executive Officer, Principal Executive Officer, Director
                
                December
      8, 2009/s/
      J.
      Erik OdeenJ.
      Erik Odeen
                
                Chief
      Financial Officer,  Principal Financial
      Officer,  Principal Accounting Officer, Treasurer and
      Secretary
                
                December
      8, 2009/s/ Henry
      V. JamesHenry
      V. James
                
                Chairman
      of the Board of Directors
                
                December
      8, 2009/s/
      Douglas
      RobertsonDouglas
      Robertson
                
                Chief
      Operations Officer, Director
                
                December
      8, 2009
 
  29