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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31,
2010

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

For the transition period from ________ to ________

COMMISSION FILE NUMBER000-52686

QUANTUM SOLAR POWER CORP.(Exact name of registrant as specified in its charter)

|NEVADA                                                               | 27-1616811                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|3900 Paseo del Sol, Suite A311                                       |                                     
|Santa Fe, NM                                                         | 87507                               
|(Address of principal executive offices)                             | (Zip Code)                          

(505)-216-5021(Registrant's telephone number,
including area code)

N/A(Former name, former address and
former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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. **[X] Yes**[   ] No

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    [   ] No

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

|Large accelerated filer [   ] |                                                     | Accelerated
      filer                 
      [X]
|----------------------------- | --------------------------------------------------- | --------------------------------------------------
|Non-accelerated filer   [   ] | (Do not
      check if a smaller reporting company) | Smaller reporting company [   ]                   

Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act): [   ]
Yes[X]No

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
February 3, 2011, the Issuer had 146,726,192 shares of common stock, issued and
outstanding.

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PART I - FINANCIAL INFORMATION

ITEM
1.              
FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the six month period ended December 31,
2010 are not necessarily indicative of the results that can be expected for the
year ending June 30, 2011.

As used in this Quarterly Report, the terms "we, "us, "our,
and Quantum mean Quantum Solar Power Corp., unless otherwise indicated. All
dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise
stated.

2

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QUANTUM SOLAR POWER CORP. AND SUBSIDIARY
  (A
  Development Stage Company) 
  CONSOLIDATED BALANCE SHEETS 
  (Expressed in United States Dollars)

|                                                                                                                                                                                                                                              |   | December 31, |   |   |               |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------- | -
|                                                                                                                                                                                                                                              |   | 2010         |   |   | June 30, 2010 |  
|ASSETS                                                                                                                                                                                                                                        |   |              |   |   |               |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Current                                                                                                                                                                                                                                       |   |              |   |   |               |  
|Cash                                                                                                                                                                                                                                          | $ | 1,936,853    |   | $ | 70,230        |  
|Receivables                                                                                                                                                                                                                                   |   | -            |   |   | 4,638         |  
|Security Deposits                                                                                                                                                                                                                             |   | 1,677        |   |   | 11,376        |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Total Current Assets                                                                                                                                                                                                                          |   | 1,938,530    |   |   | 86,244        |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Equipment(Note 3)                                                                                                                                                                                                                             |   | 2,224        |   |   | 2,780         |  
|Patents(Note 4)                                                                                                                                                                                                                               |   | 1,534,818    |   |   | 1,573,189     |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Total Assets                                                                                                                                                                                                                                  | $ | 3,475,572    |   | $ | 1,662,213     |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                          |   |              |   |   |               |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Current                                                                                                                                                                                                                                       |   |              |   |   |               |  
|Accounts payable and accrued liabilities                                                                                                                                                                                                      | $ | 239,277      |   | $ | 382,456       |  
|Subscriptions
      received in advance                                                                                                                                                                                                       |   | 10,000       |   |   | 76,500        |  
|Line of credit (Note 5)                                                                                                                                                                                                                       |   | 0            |   |   | 18,713        |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Total Liabilities                                                                                                                                                                                                                             | $ | 249,277      |   | $ | 477,669       |  
|                                                                                                                                                                                                                                              |   |              |   |   |               |  
|Stockholders' equity                                                                                                                                                                                                                          |   |              |   |   |               |  
|Preferred
      stock, $0.001 par value 10,000,000 shares
      authorized 
                            no
      shares outstanding                                                                                                           |   |              |   |   |               |  
|Common
      stock, $0.001 par value 400,000,000 shares
      authorized 
                            and
      146,726,192 (2010 - 142,130,000) shares
      outstanding 
                            as
      of December 31, 2010 (Note 6) |   | 146,726      |   |   | 142,130       |  
|Commitment to
      issue shares (Note 6)                                                                                                                                                                                                     |   |              |   |   |               |  
|Additional Paid in capital (Note 6)                                                                                                                                                                                                           |   | 322,956      |   |   | 112,632       |  
|Accumulated
      deficit during development stage                                                                                                                                                                                            |   | 6,894,127    |   |   | 2,577,498     |  
|                                                                                                                                                                                                                                              |   | (4,137,514   | ) |   | (1,647,716    | )
|Total
      Stockholders' Equity                                                                                                                                                                                                              |   |              |   |   |               |  
|                                                                                                                                                                                                                                              |   | 3,226,295    |   |   | 1,184,544     |  
|Total Liabilities and Stockholders' Equity                                                                                                                                                                                                    |   |              |   |   |               |  
|                                                                                                                                                                                                                                              | $ | 3,475,572    |   | $ | 1,662,213     |  

The accompanying notes are an integral part of these
  consolidated financial statements.

---

QUANTUM SOLAR POWER CORP. AND SUBSIDIARY
  (A
  Development Stage Company) 
  CONSOLIDATED STATEMENTS OF OPERATIONS 
  (Expressed in United States Dollars)

|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  | For the Period |  
|---------------------------------------------------- |  | ------------ | - |  | ------------ | - |  | ----------- | - |  | ------------ | - |  | -------------- | -
|                                                     |  |              |   |  |              |   |  | For the 6   |   |  |              |   |  | From April 14, |  
|                                                     |  | For the 3    |   |  | For the 3    |   |  | Months      |   |  | For the 6    |   |  | 2004           |  
|                                                     |  | Months Ended |   |  | Months Ended |   |  | Ended       |   |  | Months Ended |   |  | (Inception) to |  
|                                                     |  | December 31, |   |  | December 31, |   |  | December    |   |  | December 31, |   |  | December 31,   |  
|                                                     |  | 2010         |   |  | 2009         |   |  | 31, 2010    |   |  | 2009         |   |  | 2010           |  
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|OPERATING EXPENSES                                   |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|Amortization of equipment                            |  | 278          |   |  |              |   |  | 556         |   |  |              |   |  | 1,112          |  
|Amortization
      of patents                        |  | 19,185       |   |  |              |   |  | 38,371      |   |  |              |   |  | 76,741         |  
|General and administrative                           |  | 168,958      |   |  | 12,283       |   |  | 351,958     |   |  | 15,328       |   |  | 649,183        |  
|Professional
      fees                              |  | 148,775      |   |  |              |   |  | 221,211     |   |  |              |   |  | 571,329        |  
|Research and development                             |  | 868,924      |   |  |              |   |  | 1,270,924   |   |  |              |   |  | 1,966,662      |  
|Stock-based
      compensation (Note 6)              |  | 79,855       |   |  |              |   |  | 234,778     |   |  |              |   |  | 394,487        |  
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|                                                     |  | (1,285,975   | ) |  | (12,283      | ) |  | (2,117,798  | ) |  | (15,328      | ) |  | (3,659,514     | )
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|OTHER ITEM                                           |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|Impairment of intangible
      assets                |  |              |   |  |              |   |  |             |   |  |              |   |  | (106,000       | )
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|Loss and comprehensive loss for the period           |  | (1,285,975   | ) |  | (12,283      | ) |  | (2,117,798  | ) |  | (15,328      | ) |  | (3,765,514     | )
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|Basic and diluted loss per common share              |  | (0.01        | ) |  | (0.00        | ) |  | (0.01       | ) |  | (0.00        | ) |  |                |  
|                                                     |  |              |   |  |              |   |  |             |   |  |              |   |  |                |  
|Weighted average number of common shares outstanding |  | 145,190,610  |   |  | 141,800,000  |   |  | 143,750,673 |   |  | 141,666,848  |   |  |                |  

The accompanying notes are an integral part of these
  consolidated financial statements.

---

QUANTUM SOLAR POWER CORP. AND SUBSIDIARY
  (A
  Development Stage Company) 
  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 
  (Expressed in United States Dollars)

|                                                                      |  | Common
      Stock |   |  |         |   |  |            |   |  |            |   |  |             |  
|--------------------------------------------------------------------- |  | ------------------ | - |  | ------- | - |  | ---------- | - |  | ---------- | - |  | ----------- | -
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  | Accumulated |  
|                                                                      |  |                    |   |  |         |   |  | Additional |   |  | Commitment |   |  | Deficit     |  
|                                                                      |  |                    |   |  |         |   |  | Paid in    |   |  | to Issue   |   |  | During the  |  
|                                                                      |  | Shares             |   |  | Amount  |   |  | Capital    |   |  | Shares     |   |  | Dev. Stage  |  
|Balance, April 14, 2004 (Inception)                                   |  | 0                  |   |  | 0       |   |  | 0          |   |  | 0          |   |  | 0           |  
|Common shares issued at par                                           |  | 117,200,000        |   |  | 15      |   |  | 92,485     |   |  | 0          |   |  | 0           |  
|Net
      loss                                                        |  |                    |   |  |         |   |  |            |   |  |            |   |  | (9,557      | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2004                                                |  | 117,200,000        |   |  | 15      |   |  | 92,485     |   |  | 0          |   |  | (9,557      | )
|Net loss                                                              |  |                    |   |  |         |   |  |            |   |  |            |   |  | (40,111     | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2005                                                |  | 117,200,000        |   |  | 15      |   |  | 92,485     |   |  | 0          |   |  | (49,668     | )
|Net
      loss                                                        |  |                    |   |  |         |   |  |            |   |  |            |   |  | (26,654     | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2006                                                |  | 117,200,000        |   |  | 15      |   |  | 92,485     |   |  | 0          |   |  | (76,322     | )
|Net loss                                                              |  |                    |   |  |         |   |  |            |   |  |            |   |  | (15,652     | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2007                                                |  | 117,200,000        |   |  | 15      |   |  | 92,485     |   |  | 0          |   |  | (91,974     | )
|Common
      shares issued at $2.00 
                
      per share |  | 100,000            |   |  | 100     |   |  | 199,900    |   |  |            |   |  |             |  
|Net loss                                                              |  |                    |   |  |         |   |  |            |   |  |            |   |  | (166,032    | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2008                                                |  | 117,300,000        |   |  | 115     |   |  | 292,385    |   |  | 0          |   |  | (258,006    | )
|Net
      loss                                                        |  |                    |   |  |         |   |  |            |   |  |            |   |  | (28,747     | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2009                                                |  | 117,300,000        |   |  | 115     |   |  | 292,385    |   |  | 0          |   |  | (286,753    | )
|Private placement                                                     |  | 280,000            |   |  | 280     |   |  | 559,720    |   |  |            |   |  |             |  
|Share
      issuance costs                                            |  |                    |   |  |         |   |  | (4,140     | ) |  |            |   |  |             |  
|Stock-based compensation                                              |  |                    |   |  |         |   |  | 159,709    |   |  |            |   |  |             |  
|Commitment
      to issue shares                                      |  |                    |   |  |         |   |  |            |   |  | 112,632    |   |  |             |  
|Acquisition of patents                                                |  | 71,500,000         |   |  | 71,500  |   |  | 1,540,059  |   |  |            |   |  |             |  
|Shares
      issued for services                                      |  | 50,000             |   |  | 50      |   |  | 99,950     |   |  |            |   |  |             |  
|Par value reclassification                                            |  |                    |   |  | 117,185 |   |  | (117,185   | ) |  |            |   |  |             |  
|Return
      to treasury                                              |  | (47,000,000        | ) |  | (47,000 | ) |  | 47,000     |   |  |            |   |  |             |  
|Net loss                                                              |  |                    |   |  |         |   |  |            |   |  |            |   |  | (1,360,963  | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, June 30, 2010                                                |  | 142,130,000        |   |  | 142,130 |   |  | 2,577,498  |   |  | 112,632    |   |  | (1,647,716  | )
|Dividend
      - warrants                                             |  |                    |   |  |         |   |  | 372,000    |   |  |            |   |  | (372,000    | )
|Private placement                                                     |  | 4,039,560          |   |  | 4,039   |   |  | 4,035,521  |   |  |            |   |  |             |  
|Return
      to nonqualified investors                                |  | (8,000             | ) |  | (8      | ) |  | (15,992    | ) |  |            |   |  |             |  
|Exercise of warrants                                                  |  | 372,000            |   |  | 372     |   |  | 3,348      |   |  |            |   |  |             |  
|Share
      issuance costs                                            |  |                    |   |  |         |   |  | (505,465   | ) |  |            |   |  |             |  
|Stock-based compensation                                              |  |                    |   |  |         |   |  | 234,778    |   |  |            |   |  |             |  
|Shares
      issued for services                                      |  | 192,632            |   |  | 193     |   |  | 192,439    |   |  | (112,632   | ) |  |             |  
|Commitment to issue
      shares                                      |  |                    |   |  |         |   |  |            |   |  | 322,956    |   |  |             |  
|Net
      loss                                                        |  |                    |   |  |         |   |  |            |   |  |            |   |  | (2,117,798  | )
|                                                                      |  |                    |   |  |         |   |  |            |   |  |            |   |  |             |  
|Balance, December 31, 2010                                            |  | 146,726,192        |   |  | 146,726 |   |  | 6,894,127  |   |  | 322,956    |   |  | (4,137,514  | )

The accompanying notes are an integral part of these
  consolidated financial statements.

---

QUANTUM SOLAR POWER CORP. AND SUBSIDIARY
  (A
  Development Stage Company) 
  CONSOLIDATED STATEMENTS OF CASH FLOWS 
  (Expressed in United States Dollars)

|                                                                  |  |              |   |  | For the 6 |   |  |              |   |  | For the Period |  
|----------------------------------------------------------------- |  | ------------ | - |  | --------- | - |  | ------------ | - |  | -------------- | -
|                                                                  |  | For the 6    |   |  | Months    |   |  | For the 6    |   |  | April 14, 2004 |  
|                                                                  |  | Months Ended |   |  | Ended     |   |  | Months Ended |   |  | (Inception) to |  
|                                                                  |  | December 31, |   |  | December  |   |  | December 31, |   |  | December 31,   |  
|                                                                  |  | 2010         |   |  | 31, 2009  |   |  | 2008         |   |  | 2010           |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|CASH FLOWS FROM OPERATING ACTIVITIES                              |  |              |   |  |           |   |  |              |   | 
|Loss
      for the year                                           |  | (2,117,798   | ) |  | (15,328   | ) |  | (13,480      | ) |  | (3,765,514     | )
|Items not affecting
      cash:                                   |  |              |   |  |           |   |  |              |   |  |                |  
|Amortization
      of equipment                                   |  | 556          |   |  |           |   |  |              |   |  | 1,112          |  
|Amortization of intangible
      assets                           |  | 38,371       |   |  |           |   |  |              |   |  | 76,741         |  
|Impairment
      of intangible assets                             |  |              |   |  |           |   |  |              |   |  | 106,000        |  
|Stock-based compensation                                          |  | 234,778      |   |  |           |   |  |              |   |  | 394,487        |  
|Shares
      for management services                              |  |              |   |  |           |   |  |              |   |  | 100,000        |  
|Shares for consulting
      and management bonuses                |  | 160,000      |   |  |           |   |  |              |   |  | 272,632        |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Changes in non-cash
      working capital items:                  |  |              |   |  |           |   |  |              |   |  |                |  
|Changes
      in receivables                                      |  | 4,638        |   |  |           |   |  |              |   |  |                |  
|Changes in prepaid
      expenses                                 |  | 9,699        |   |  |           |   |  |              |   |  | (1,677         | )
|Changes
      in accounts payable and accrued liabilities         |  | (143,179     | ) |  | 1,607     |   |  | (6,000       | ) |  | 248,277        |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Net cash used in operating activities                             |  | (1,812,935   | ) |  | (13,721   | ) |  | (19,480      | ) |  | (2,567,942     | )
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|CASH FLOWS FROM INVESTING ACTIVITIES                              |  |              |   |  |           |   |  |              |   | 
|Equipment                                                         |  |              |   |  |           |   |  |              |   |  | (3,336         | )
|Purchase
      of technology rights                               |  |              |   |  |           |   |  |              |   |  | (15,000        | )
|Purchase of intangible
      assets                               |  |              |   |  |           |   |  |              |   |  | (100,000       | )
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Net cash used in investing
      activities                       |  | 0            |   |  | 0         |   |  | 0            |   |  | (118,336       | )
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|CASH FLOWS FROM FINANCING ACTIVITIES                              |  |              |   |  |           |   |  |              |   | 
|Proceeds
      from line of credit and loans payable              |  |              |   |  | 500       |   |  |              |   |  | 43,713         |  
|Proceeds from issuance
      of common stock                      |  | 3,963,060    |   |  |           |   |  |              |   |  | 4,815,560      |  
|Proceeds
      from exercise of warrants                          |  | 3,720        |   |  |           |   |  |              |   |  | 3,720          |  
|Share issuance costs                                              |  | (262,509     | ) |  |           |   |  |              |   |  | (266,649       | )
|Refunds
      to nonqualified investors                           |  | (16,000      | ) |  |           |   |  |              |   |  | (16,000        | )
|Subscriptions received
      in advance                           |  | 10,000       |   |  |           |   |  |              |   |  | 86,500         |  
|Cash
      used to pay line of credit and loans payable           |  | (18,713      | ) |  |           |   |  |              |   |  | (43,713        | )
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Net
      cash provided by financing activities                   |  | 3,679,558    |   |  | 500       |   |  |              |   |  | 4,623,131      |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Change in cash during the period                                  |  | 1,866,623    |   |  | (13,221   | ) |  | (19,480      | ) |  | 1,936,853      |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Cash and Cash Equivalents, beginning of
      period              |  | 70,230       |   |  | 13,247    |   |  | 41,994       |   |  | 0              |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Cash and Cash Equivalents, end of period                          |  | 1,936,853    |   |  | 26        |   |  | 22,514       |   |  | 1,936,853      |  
|                                                                  |  |              |   |  |           |   |  |              |   |  |                |  
|Supplemental disclosures with
      respect to cash flows(Note 7) |  |              |   |  |           |   |  |              |   | 

The accompanying notes are an integral part of these
  consolidated financial statements.

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|1. | NATURE AND CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Quantum Solar Power Corp. (the Company) was
      incorporated in Nevada on April 14, 2004. The Company is a development
      stage company engaged in the business of developing and commercializing
      next generation solar power technology under the name Next Generation
      Device abbreviated NGD. Quantums NGD is a patent pending, functioning,
      laboratory model that demonstrates its utility in solar power conversion.
      On June 16, 2008 stockholders by way of Proxy Statement confirmed and
      ratified the change of the companys name from QV, Quantum Ventures, Inc.
      to Quantum Solar Power Corp.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The Company operates in one reportable segment being the
      research and development of solar power technology in Canada and the
      United States of America. Revenues will be substantially derived from
      royalty based licensing arrangements in this reporting segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | These consolidated financial statements have been
      prepared consistent with accounting policies generally accepted in the
      United States (U.S. GAAP) assuming the Company will continue as a going
      concern. Currently, the Company has no sales and has incurred a net loss
      of $2,117,798 for the six months ending December 31, 2010 and an
      accumulated loss of $3,765,514 for the period from April 14, 2004
      (inception) to December 31, 2010. The future of the Company is dependent
      upon its ability to obtain financing and upon future profitable operations
      from development and commercialization of an NGD. Management has plans to
      seek additional capital through private placements and public offerings of
      its common stock. These factors raise substantial doubt that the Company
      will be able to continue as a going concern.                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Management's plans for the continuation of the Company as
      a going concern include financing the Company's operations through
      issuance of its common stock. If the Company is unable to complete its
      financing requirements or achieve revenue as projected, it will then
      modify its expenditures and plan of operations to coincide with the actual
      financing completed and actual operating revenues. There are no
      assurances, however, with respect to the future success of these
      plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The accompanying financial statements do not include any
      adjustments to the recorded assets or liabilities that might be necessary
      should the Company fail in any or the above objectives and is unable to
      operate for the coming year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | Basis of Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | The accompanying unaudited financial statements have been
      prepared by the Company in conformity with U.S. GAAP applicable to interim
      financial information. Accordingly, certain information and footnote
      disclosures normally included in financial statements prepared in
      accordance with generally accepted accounting principles have been
      condensed, or omitted. In the opinion of management, the unaudited interim
      financial statements include all adjustments necessary for the fair
      presentation of the results of the interim periods presented. All
      adjustments are of a normal recurring, nature, except as otherwise noted
      below. These financial statements should be read in conjunction with the
      Companys audited consolidated financial statements
      and notes thereto for the year ended June 30, 2010, included in the Company's Annual Report on Form 10-K, filed September 13, 2010, with the Securities Exchange Commission. The results of operations for the interim periods are
      not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|2. | SIGNIFICANT ACCOUNTING POLICIES(cont'd... )                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Basis of Presentation(cont'd... )                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Certain comparative figures have been reclassified to conform with the current period's presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In January 2010, the FASB issued ASU 2010-06 which is intended to improve disclosures about fair value measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels, the
      reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies
      that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and
      significant unobservable inputs (Level 3). The Company has applied the new disclosure requirements as of January 1, 2010, except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be
      effective for interim and annual periods beginning after December 15, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company's financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In April 2010, the FASB issued ASU 2010-13, Compensation  -  Stock Compensation (Topic 718), amending ASC 718. ASU 2010-13 clarifies that a share-based payment award with an exercise price denominated in the currency of a
      market in which the entity's equity securities trade should not be classified as a liability if it otherwise qualifies as equity. ASU 2010-13 also improves GAAP by improving consistency in financial reporting by eliminating diversity in
      practice. ASU 2010-13 is effective for interim and annual reporting periods beginning after December 15, 2010 (January 1, 2011 for the Company). The Company is currently evaluating the impact of ASU 2010-09, but does not expect its adoption to have
      a material impact on the Company's financial reporting and disclosures.                                                                                                                                                                                                                                                                                                                                                                                                         

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|3. | EQUIPMENT
|-- | ---------

| |                    |   | 6 months       |  |   |              |  |   |                  |  |   |       | 
| | ------------------ | - | -------------- |  | - | ------------ |  | - | ---------------- |  | - | ----- | 
| |                    |   | ended          |  |   | Year ended   | 
| |                    |   | December       |  |   | June 30,     | 
| |                    |   | 31,
      2010 |  |   | 2010         | 
| |                    |   |                |  |   |              |  |   |                  |  |   |       | 
| |                    |   |                |  |   | Accumulated  |  |   | Net              |  |   |       | 
| |                    |   | Cost           |  |   | Amortization |  |   | Book
      Value |  |   | Cost  | 
| |                    |   |                |  |   |              |  |   |                  |  |   |       | 
| |                    |   |                |  |   |              |  |   |                  |  |   |       | 
| | Computer equipment | $ | 3,336          |  | $ | 1,112        |  | $ | 2,224            |  | $ | 3,336 | 

|4. | TECHNOLOGY PURCHASE AGREEMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On April 15, 2008, QV, Quantum Ventures, Inc. entered
      into a License agreement ( The Agreement) with Canadian Integrated
      Optics International Ltd. of Douglas, Isle of Man (CIOI), to manufacture
      and market CIOIs patent pending solar technology based on a new approach
      for the generation of solar power. On May 7, 2008 the Agreement was
      subsequently amended and executed by CIOI and on May 16, 2008 the
      agreement was executed by QV, Quantum Ventures, Inc. closing of this
      agreement and is subject to certain terms and conditions. The purchase
      price paid in cash for the License was $100,000. These costs were later
      written-off and charged to operations in fiscal 2008.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In December 2009 the Company executed an agreement with
      CIOI to purchase technology and associated patents related to the
      development of certain solar technology in an exchange for 71,500,000
      common stock of the Company valued at $1,611,559. The patents have an
      estimated useful life of 21 years since acquisition. The Company has
      recorded $76,741 in amortization through the quarter ended December 31,
      2010.                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|5. | LINE OF CREDIT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 20, 2010, the Company entered into an
      unsecured, non-interest bearing revolving line of credit with CIOI of up
      to $250,000 in available financing. The Company had withdrawn $43,713 and
      repaid the balance in full. As at December 31, 2010 the line of credit has
      a zero balance.                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|6. | STOCKHOLDERS EQUITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On May 7, 2004 the Company issued 8,650,000 of its common
      shares for cash of $86,500.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On June 30, 2004, the Company issued 6,000,000 of its
      common shares for cash of $6,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | On February 25, 2008, the Board of Directors of the
      registrant passed unanimously a resolution authorizing a forward split of
      the authorized and issued and outstanding common shares on
      an eight to one (8  -  1) basis bringing the total common shares issued and outstanding to 117,200,000 and authorized common shares to 400,000,000.                                                                                                                                                                                                                                                                                                                                                                                       

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|6. | STOCKHOLDERS' EQUITY(cont'd... )                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company has completed a private placement on April 15, 2008 to issue 100,000 common shares at a price of $2.00 per share. The net proceeds received were $200,000. No commissions were paid and no registration rights
      have been granted.                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | On December 16, 2009, the Company entered into an agreement with CIOI as amended, wherein the Company agreed to purchase all of their solar cell technology in consideration of 71,500,000 restricted shares of common stock. As part
      the transaction, the Company's President returned and cancelled 47,000,000 shares of the Company's common stock.                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In April 2010, 50,000 shares valued at $100,000 were issued as compensation for a performance bonus to a director of the Company.                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In April 2010 the Company completed a private placement to issue 280,000 shares at a share price of $2.00 per share. The net proceeds received were $560,000.                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | During the quarter ended September 30, 2010, 274,060 shares were issued through a private placement at a stock price of $1.00 per share; net proceeds were $274,060 of which $76,500 was received during the year ended
      June 30, 2010. On September 27, 2010, the Board granted 372,000 warrants to those shareholders who had purchased shares at $2.00 per share to allow them to purchase a matching number of shares at $0.01 in order to make them whole as a result
      of the change in the share sale price.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | During the quarter ended December 31, 2010, 3,765,500 shares were issued through two private placements and a total of $262,509 in share issue costs were paid. In addition, 372,000 shares were issued when the warrants
      described above were exercised. Net proceeds were $3,768,720, all of which were received by December 31. 2010. Also, $16,000 was returned to several investors who previously paid for 8,000 shares and were found not to be qualified.                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In October 2010, 30,000 shares were issued for consulting services and 50,000 for a management performance bonus relating to services provided during the previous quarter.                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Commitment to issue shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | According to the terms of a contract entered into during the year ended June 30, 2010, the Company agreed to issue 50,000 shares per quarter to management and 10,000 shares per month to a consultant. Accordingly, the Company has a
      commitment to issue 80,000 common shares at a value of $80,000.                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | The Company entered into an agreement with various fund raisers to compensate them for their activities on the behalf of the Company by issuing common shares. Accordingly, the Company has recorded a commitment to issue 242,956
      shares at a value of $242,956.                                                                                                                                                                                                                                                     

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|6. | STOCKHOLDERS EQUITY(contd)                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                      
|   | Stock options                                                                                                                        
|   |                                                                                                                                      
|   | The Company does not have a formal stock option plan in
      place. Stock option grants are determined on as individual
      basis.
|   |                                                                                                                                      
|   | Stock options are summarized as
      follows:                                                                                       

| |                                                                        |  |                 |  |   | Stock    | 
| | ---------------------------------------------------------------------- |  | --------------- |  | - | -------- | 
| |                                                                        |  |                 |  |   | Options  | 
| |                                                                        |  |                 |  |   | Weighted | 
| |                                                                        |  |                 |  |   | Average  | 
| |                                                                        |  | Number          |  |   | Exercise | 
| |                                                                        |  | of
      Shares |  |   | Price    | 
| |                                                                        |  |                 |  |   |          | 
| | Balance outstanding, April 14, 2004
      (inception) to June 30, 2009 |  | -               |  |   | -        | 
| |                                                                        |  |                 |  |   |          | 
| | Granted                                                                |  | 500,000         |  | $ | 0.50     | 
| |                                                                        |  |                 |  |   |          | 
| | Balance outstanding, June 30, 2010                                     |  | 500,000         |  |   | 0.50     | 
| |                                                                        |  |                 |  |   |          | 
| | Granted                                                                |  | 100,000         |  |   | 0.50     | 
| |                                                                        |  |                 |  |   |          | 
| | Balance outstanding, December 31, 2010                                 |  | 600,000         |  | $ | 0.50     | 
| |                                                                        |  |                 |  |   |          | 
| | Exercisable, December 31, 2010                                         |  | 266,667         |  | $ | 0.50     | 

The following table summarizes
  information about the stock options outstanding at December 31, 2010:

| |         |  |           |  |   |          |  |  |  |  |  |                   | 
| | ------- |  | --------- |  | - | -------- |  |  |  |  |  | ----------------- | 
| |         |  | Number    |  |   | Exercise |  |  |  |  |  |                   | 
| |         |  | of Shares |  |   | Price    |  |  |  |  |  | Expiry
      Date | 
| |         |  |           |  |   |          |  |  |  |  |  |                   | 
| |         |  |           |  |   |          |  |  |  |  |  |                   | 
| | Options |  | 500,000   |  | $ | 0.50     |  |  |  |  |  | January 1, 2013   | 
| |         |  | 50,000    |  | $ | 0.50     |  |  |  |  |  | July 9, 2011      | 
| |         |  | 50,000    |  | $ | 0.50     |  |  |  |  |  | July 15, 2011     | 

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|6. | STOCKHOLDERS EQUITY(contd)                                                                                                                                                                                                                                                                                                                                                                            
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company used the Black-Scholes option pricing model
      to determine the fair value of options granted. During fiscal 2010, the
      Company granted 500,000 (2009  Nil; 2008  Nil) options with a weighted
      average fair value of $1.91 (2009  $Nil; 2008 - $Nil) per option to a
      director of the Company, which is being recognized over the vesting
      periods of the options.
|   |                                                                                                                                                                                                                                                                                                                                                                                                          
|   | During the period ended December 31, 2010, 100,000
      options with a weighted average fair value of $0.75 were granted to two
      former board members, exercisable at any time after the date of the
      agreement. Total stock-based compensation paid in the 6 month period ended
      December 31, 2010 was $234,778 (2009 -$Nil). This amount represents the
      value of vested options. 
|   |                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The fair value of stock options has been estimated with
      the following assumptions:                                                                                                                                                                                                                                                                                                                 

| | Period ended September 30      |  | 2010             |  |  | 2009 |  |  | 2008 | 
| | ------------------------------ |  | ---------------- |  |  | ---- |  |  | ---- | 
| |                                |  |                  |  |  |      |  |  |      | 
| |                                |  |                  |  |  |      |  |  |      | 
| | Dividend yield                 |  | 0.00%            |  |  | -    |  |  | -    | 
| | Expected volatility            |  | 229%             |  |  | -    |  |  | -    | 
| | Risk free interest rate        |  | 1.93%            |  |  | -    |  |  | -    | 
| | Expected life of
      options |  | 1.83
      years |  |  | -    |  |  | -    | 

|   | Common share purchase warrants
      outstanding                                                                                                                                                                                                                                                                                                  
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                   
|   | During the 6 month period ended December 31, 2010 the
      Company granted 372,000 common share purchase warrants for an exercise
      price of $0.01 expiring October 25, 2010. The warrant issue is treated as
      a dividend and has a fair value of $372,000. During the period ended
      December 31, 2010 the warrants were exercised.
|   |                                                                                                                                                                                                                                                                                                                                                   
|7. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOWS                                                                                                                                                                                                                                                                                          

| |                            |   |          |  |   |          |  |   |          |  |   | For the        | 
| | -------------------------- | - | -------- |  | - | -------- |  | - | -------- |  | - | -------------- | 
| |                            |   | 6 months |  |   | 6 months |  |   | 6 months |  |   | period from    | 
| |                            |   | ended    |  |   | ended    |  |   | ended    |  |   | April 14,      | 
| |                            |   | December |  |   | December |  |   | December |  |   | 2004           | 
| |                            |   | 31, 2010 |  |   | 31, 2009 |  |   | 31, 2008 |  |   | (inception) to | 
| |                            |   |          |  |   |          |  |   |          |  |   | December       | 
| |                            |   |          |  |   |          |  |   |          |  |   | 31,
      2010 | 
| |                            |   |          |  |   |          |  |   |          |  |   |                | 
| | Cash paid for interest     | $ | -        |  | $ | -        |  | $ | -        |  | $ | -              | 
| |                            |   |          |  |   |          |  |   |          |  |   |                | 
| | Cash paid for income taxes | $ | -        |  | $ | -        |  | $ | -        |  | $ | -              | 

---

|QUANTUM SOLAR POWER CORP. AND SUBSIDIARY      
|----------------------------------------------
|(A Development Stage Company)                 
|NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
|(Expressed in United States dollars)          
|DECEMBER 31, 2010                             
|                                              

|7. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS(contd)                                                
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|   | Significant non-cash transactions for the 6 month period
      ended December 31, 2010 include the Company:
|   |                                                                                                            
|   | a)                                                                                                         
|   | b)                                                                                                         
|   | c)                                                                                                         

|8. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                     
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                
|   | During the 6 months ended December 31, 2010 the Company
      paid or accrued $868,924 in research and development costs with CIOI, a
      former significant shareholder, of which $212,814 is included in accrued
      liabilities as at December 31, 2010.
|   |                                                                                                                                                                                                                                                                
|9. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                
|   | Subsequent to December 31, 2010, the Company:                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                
|   | a)                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                
|   | b)                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                
|   | c)                                                                                                                                                                                                                                                             

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ITEM
2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
  STATEMENTS

Certain statements contained in this Quarterly Report
constitute "forward-looking statements". These statements, identified by words
such as plan, "anticipate," "believe," "estimate," "should," "expect" and
similar expressions, include our expectations and objectives regarding our
future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events
and are subject to risks, uncertainties and other factors that may cause our
actual results, performance or achievements, or industry results, to be
materially different from those described in the forward-looking statements.
Such risks and uncertainties include those set forth under this caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" and elsewhere in this Quarterly Report. We intend to discuss in our
Quarterly and Annual Reports any events and circumstances that occurred during
the period to which such document relates that are reasonably likely to cause
actual events or circumstances to differ materially from those disclosed in this
Quarterly Report. We advise you to carefully review the reports and documents we
file from time to time with the United States Securities and Exchange Commission
(the SEC).

OVERVIEW

We were incorporated on April 14, 2004 under the laws of the
State of Nevada. Our principal executive offices are located at 3900 Paseo del
Sol, Suite A311, Santa Fe, New Mexico, USA.

We are currently in the business of developing and marketing
our NGD Technology for the production of solar energy without the need for
expensive silicon based absorber components or other rare earth elements. The
NGD Technology which is covered by three provisional U.S. patents differs from
conventional solar technology as it does not require expensive silicon based
absorber components or rare earth elements. Our researchers at Simon Fraser
University in British Columbia, Canada have developed and built a proof of
concept prototype of a next generation device utilizing the NGD Technology (see
Technology Acquisition and NGDTM Technology below).

We are a development stage company. We have not earned any
revenue to date nor have we engaged in any licensing agreements to date. We do
not anticipate earning revenue until we have completed the development and
testing of our NGD Technology. We are presently in the development stage of our
business and we can provide no assurance that we will be able to complete
commercial development or successfully sell or license products incorporating
our solar power generation devices, once development and testing is complete. We
have limited operations. We conduct all of our research and development on a
contractual basis with Simon Fraser University. We have relied on the sale of
our securities and loans or capital infusions from our officers and directors to
fund our operations to date.

RECENT CORPORATE DEVELOPMENTS

Since the filing of our Quarterly Report for the fiscal quarter
ended September 30, 2010 with the SEC, we experienced the following significant
corporate developments:

|(1) | On January 28, 2011, we entered into an investor
      relations consulting agreement (the Agreement), dated for reference
      January 15, 2011, with Teatyn Enterprises Inc. (Teatyn). Under the terms
      of the Agreement, Teatyn has agreed to provide us with investor relations
      services. In consideration of Teatyns investor relations services, we
      agreed to pay to Teatyn:
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (a)                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                          
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                          

3

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| | (ii) | CDN $4,250 for the period from January 1, 2012 to January
      14, 2012.
| | ---- | -------------------------------------------------------------------------

|    | Under the terms of the Agreement, we also agreed to issue
      to Teatyn 600,000 warrants (the Warrants) for aggregate proceeds of CDN
      $6,000 (which have been issued). Each warrant will be exercisable to
      purchase one share of our common stock at a price of USD $1.90 per share.
      The Warrants vest and become exercisable as follows: 25,000 vested
      immediately upon issuance; an additional 50,000 will vest on the first day
      of each month from February 1, 2011 to December 31, 2011; and 25,000 will
      vest on January 1, 2012. The Warrants were issued pursuant to the
      provisions of Regulation S of the Securities Act of 1933 (the Act) as
      Teatyn represented that it was not a "U.S. Person" as defined under
      Regulation S and that it was not acquiring the shares for the account or
      benefit of a U.S. Person. The term of the Agreement is for a period of one
      year effective as of January 15, 2011.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(2) | Pursuant to the terms of a takeover bid, under Canadian
      Securities Laws, Canadian Integrated Optics (IOM) Ltd. (CIO), our
      largest shareholder, has transferred over 99% of its 71,500,000 shares of
      our common stock to 47 different shareholders. As a result of the
      transaction, CIO no longer holds a significant amount of our common
      shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(3) | On November 24, 2010, we issued 63,000 shares at a price
      of $1.00 per share for cash proceeds of $63,000. The issuances were
      completed pursuant to the provisions of Rule 506 of Regulation D of the
      Act. Each subscriber represented that they were an accredited investor as
      defined under Regulation D. This share issuance represents the sole
      tranche under the $5,000,000 U.S. private placement offering approved by
      the Company's board of directors on May 28, 2010. Following completion of
      this tranche, our Board of Directors approved the closing and termination
      of the U.S. private placement offering.                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(4) | On November 24, 2010, we completed our final tranche of
      our $5,000,000 foreign private placement offering (the Foreign Private
      Placement) by issuing a 1,972,500 shares of common stock pursuant to the
      provisions of Regulation S of the Act to persons who represented that they
      were not "U.S. Persons" as defined under Regulation S and that they were
      not acquiring the shares for the account or benefit of a U.S. Person.
      Following the completion of the final tranche, we have issued a total of
      3,986,560 shares of common stock for gross proceeds of $3,986,560 under
      the Foreign Private Placement. Following completion of this tranche, our
      Board of Directors approved the closing and termination of the Foreign
      Private Placement.                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|(5) | On November 24, 2010, we issued an aggregate of 372,000
      common shares on the exercise of warrants which were issued for no
      consideration to shareholders who had purchased shares on a private
      placement basis at a price of $2.00 per share. Each warrant entitled the
      holder to purchase a common share our common stock at $0.01 per share.
      This enabled previous investors who exercised the warrants to have an
      average price per share substantially the same as those purchasing shares
      under our $1.00 per share Foreign Private Placement. The shares were
      issued pursuant to the provisions of Regulation S of the Act to persons
      who represented that they were not "U.S. Persons" as defined under
      Regulation S and that they were not acquiring the shares for the account
      or benefit of a U.S. Person.                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Proceeds from the above offerings will be used to for the
      development and marketing of our NGDTMTechnology and for
      general corporate purposes over the next twelve
months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

TECHNOLOGY ACQUISITION

We acquired the NGDTM Technology on December 16,
2009 by an agreement (the Technology Acquisition Agreement) with Canadian
Integrated Optics (IOM) Limited, (CIO). In consideration of the NGD
Technology, we issued 71,500,000 shares of our common stock to CIO (of which CIO
transferred over 99% pursuant to the terms of a takeover bid, under Canadian
Securities Laws) and Desmond Ross, our former director and executive officer,
returned 47,000,000 shares to the treasury. Under the Technology Acquisition
Agreement, we also agreed to pay CIO, or such other parties designated by CIO,
for ongoing development and research costs under CIOs existing research
agreement (the CIO Research Agreement) with Simon Fraser University (SFU).
The initial term of the CIO Research Agreement was until July 30, 2010.

4

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Subsequent to entering into the Technology Acquisition
Agreement, CIO entered into an amendment agreement to the CIO Research
Agreement, whereby SFU agreed to extend the term until December 31, 2010 and in
consideration of which we paid $310,076 CDN. On December 23, 2010, CIO entered
into another amendment agreement dated January 1, 2011, whereby SFU agreed to
further extend the term until July 31, 2011 and in consideration of which we
will pay $476,482 CDN plus expenses, during the term.

As at December 31, 2010 we have paid $1,738,489 CDN under the
CIO Research Agreement.

NGD TECHNOLOGY

Our NGD Technology is a patent pending, technology and proof
of concept prototype for producing solar power without the necessity of
utilizing expensive silicon based absorber components or other rare earth
elements.

Solar cells based on the NGD Technology can reach a regime of
cost and efficiency not obtainable with conventional solar cells. As a result,
we believe our NGD Technology has the potential to enable the manufacture of
solar cells at significantly less cost per Watt than current producers.

Thin Film solar cell technologies have proven inexpensive to
manufacture but are at present only capable of efficiencies in the 10% power
conversion efficient (PCE) range. Crystalline silicon solar cells are in the
15% to 20% PCE range but are very expensive to manufacture due to the cost of
silicon processing. The reason for both these shortfalls is directly linked with
the semiconductors used in the fabrication process.

All currently available solar cell technologies rely on a
photovoltaic effect in which an incoming solar photon knocks loose a negative
charge, leaving behind a positive charge, in a semiconducting material such as
silicon. The positive and negative charges are then collected through separate
conducting layers to be delivered as current to a load. Defects within the
semiconductor layer can affect the power conversion efficiency by reducing the
voltage and the current delivered to the load. Elimination of these defects can
only occur through expensive purification and processing.

The NGD Technologys principle of operation avoids the
detrimental effects of defects within the semiconductor absorber layers by
disposing of it altogether, and thus has the potential to simultaneously satisfy
the requirements of high power conversion efficiencies and low costs. In
addition, by eliminating expensive and exotic materials and manufacturing in a
continuous rather than batch or wafer based process, we believe module costs can
be reduced well below $1 per Watt-peak (Wp), the nominal price
of a solarmodule widely recognized as the standard of solar commercial
enablement.

The market for solar energy has been limited by the costs of
panels and by their low efficiencies. Quantum expects that with its low cost,
high efficiency NGD that the economics of solar power will prove to be superior
to alternatives and that new and unforeseen markets will open for solar devices.

The solar panel business has been in a high growth phase over
the past years however it is not sustainable since the growth has been
fundamentally based on the availability of tax incentives, subsidies and other
inducements. The economics of unsubsidized solar power are not attractive except
in certain niche applications where choices are limited and the high costs can
be justified.

An average crystalline silicon cell solar module has an
efficiency of 15%, an average thin film cell solar module has an efficiency of
6%. Thin film manufacturing costs potentially are lower, though. Crystalline
silicon cell technology forms about 90% of solar cell demand. The balance comes
from thin film technologies. Approximately 45% of the cost of a silicon cell
solar module is driven by the cost of the silicon wafer, a further 35% is driven
by the materials required to assemble the solar module.

Thin film manufacturer First Solar is reported in some
publications to have approximately $6 billion in contracts between 2010 and
2013. If First Solar were to have the opportunity to accept contracts worth $1
trillion and had the manufacturing capability to fulfill these contracts they
would still be inhibited and negatively governed by material availability.
According to the U.S. Geological Survey, there is enough tellurium available in
global reserves to meet only 0.02 Terawatts (TRW) of energy provision using
existing thin film technology. The same applies to San Jose, California-based
Nanosolars Indium supply. Both companies current material choices (according to
the Andrea Feltrin, Alex Freundlich Report, Photovoltaics and Nanostructures
Laboratories, Center for Advanced Materials and Physics
Department, University of Houston, Texas) limits these companies forever to
sub-Gigawatt energy production (maximum 0.02 TRW per year).

5

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Current Thin Film companies are coming close to competing
commercially with coal but the materials they use such as tellurium and indium
are very rare and capable of meeting only 0.13% of the worldwide energy demand
even if they accessed the entire worldwide reserves of these materials.

PLAN OF OPERATION

The following discussion and analysis summarizes our plan of
operation for the next twelve months, our results of operations for the six
month period ended December 31, 2010 and changes in our financial condition from
June 30, 2010. This discussion should be read in conjunction with the
Managements Discussion and Analysis of Financial Condition and Results of
Operation included in our Annual Report on Form 10-K for the year ended June 30,
2010 filed with the SEC on September 13, 2010.

If we can obtain sufficient financing we intend to continue the
final development of our NGD Technology, and identify and engage original
equipment manufacturers (OEMs) interested in licensing our technology. We
anticipate that the licensing agreements will be between us and OEMs with the
expertise and facilities required to mass manufacture solar cells based on our
NGD technology and that the OEMs will distribute the solar cells worldwide
using their existing sales and marketing channels and at their expense. The cost
of manufacture will be solely the responsibility of the OEMs. We expect to
receive revenue on royalties based on the number of cells produced by the OEMs.
This business model should allow us to maximize capital resources available at
startup and through our OEM licensees positively address the demand for high
efficiency solar cell devices. This business model should enable us to increase
revenues and create brand recognition without the time, capital and risk
associated with manufacturing plant construction.

There is no assurance that we will be able to obtain sufficient
financing to proceed with our plan of operation.

RESULTS OF OPERATIONS

|Three and Six      |   | Three Months
      Ended |   |   | Percentage |   |  | Six Months
      Ended |  |   | Percentage |  
|------------------ | - | ------------------------ | - | - | ---------- | - |  | ---------------------- |  | - | ---------- | -
|Months Summary     |   | December 31              |   |   | Increase / |   |  | December 31            |  |   | Increase / |  
|                   |   | 2010                     |   |   | 2009       |   |  | (Decrease)             |  |   | 2010       |  
|Revenue            | $ | -                        |   | $ | -          |   |  | n/a                    |  | $ | -          |  
|Operating Expenses |   | (1,285,975               | ) |   | (12,283    | ) |  | 10369.5%               |  |   | (2,117,798 | )
|Net Loss           | $ | (1,285,975               | ) | $ | (12,283    | ) |  | 10369.5%               |  | $ | (2,117,798 | )

For the period from inception on April 14, 2004 to December 31,
2010, we have not earned any operating revenue. We had an accumulated net loss
of $3,765,514 since inception. We incurred total operating expenses of
$3,659,514 since inception.

We have not earned any revenues since inception. We do not
anticipate earning revenues until such time as we complete further development
of, and enter into licensing agreements for our NGD Cell Technology. We are
presently in the development stage of our business and we can provide no
assurance that we will be able to generate revenues from sales of our product or
that the revenues generated will exceed the operating costs of our business.

6

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Operating Expenses

We have incurred operating expenses in the amount of $1,285,975
for the fiscal quarter ended December 31, 2010. Operating expenses for this
period included the following expenses:

|                           |   | Three Months Ended December 31,
      2010 |  |   | Three Months Ended December 31,
      2009 |  |  | Percentage Increase / (Decrease) |  |   | Six Months Ended December 31, 2010 |  |   | Six Months Ended December 31, 2009 |  |  | Percentage Increase / (Decrease) | 
|-------------------------- | - | ------------------------------------------ |  | - | ------------------------------------------ |  |  | -------------------------------- |  | - | ---------------------------------- |  | - | ---------------------------------- |  |  | -------------------------------- | 
|Amortization of equipment  | $ | 278                                        |  | $ | -                                          |  |  | 100%                             |  | $ | 556                                |  | $ | -                                  |  |  | 100%                             | 
|Amortization of patents    |   | 19,185                                     |  |   | -                                          |  |  | 100%                             |  |   | 38,371                             |  |   | -                                  |  |  | 100%                             | 
|General and administrative |   | 168,958                                    |  |   | 12,283                                     |  |  | 1275.5%                          |  |   | 351,958                            |  |   | 15,328                             |  |  | 2196.2%                          | 
|Professional fees          |   | 148,775                                    |  |   | -                                          |  |  | 100%                             |  |   | 221,211                            |  |   | -                                  |  |  | 100%                             | 
|Research and Development   |   | 868,924                                    |  |   | -                                          |  |  | 100%                             |  |   | 1,270,924                          |  |   | -                                  |  |  | 100%                             | 
|Stock Based Compensation   |   | 79,855                                     |  |   | -                                          |  |  | 100%                             |  |   | 234,778                            |  |   | -                                  |  |  | 100%                             | 
|Total Operating Expenses   | $ | 1,285,975                                  |  | $ | 12,283                                     |  |  | 10369.5%                         |  | $ | 2,117,798                          |  | $ | 15,328                             |  |  | 13716.5%                         | 

Our operating expenses for the three and six months ended
December 31, 2010 have increased as a result of increased operations in the
development of our NGDTMTechnology. This has resulted in increased
research and development activities and general and administrative expenses. All
expenses increased from fiscal 2009 to 2010. Professional fees related to the
acquisition of the NGDTMTechnology and meeting our ongoing reporting
requirements with the SEC.

We anticipate our operating expenses will increase as we
undertake our plan of operation. The increase will be attributable to our
development, of our NGD solar cell technology. We also anticipate our ongoing
operating expenses will also increase as a result of our ongoing reporting
requirements under the Exchange Act.

Net Loss

We incurred a loss in the amount of $3,765,514 for the period
from inception to December 31, 2010. Our loss was attributable to the costs of
operating expenses which primarily consisted of research and development costs,
general and administrative expenses and professional fees paid in connection
with acquiring our assets, preparing and filing our Current, Quarterly and
Annual Reports.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital

|                                  |   |                            |   |   |                        |   |  | Percentage          | 
|--------------------------------- | - | -------------------------- | - | - | ---------------------- | - |  | ------------------- | 
|                                  |   | At
      December 31, 2010 |   |   | At
      June 30, 2010 |   |  | Increase / Decrease | 
|Current Assets                    | $ | 1,938,530                  |   | $ | 86,244                 |   |  | 2147.7%             | 
|Current Liabilities               |   | (249,277                   | ) |   | (477,669               | ) |  | (47.8)%             | 
|Working Capital Surplus (Deficit) | $ | 1,689,253                  |   | $ | (391,425               | ) |  | (531.6)%            | 

7

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|Cash Flows                                    |   |                   |   |   |                   |  
|--------------------------------------------- | - | ----------------- | - | - | ----------------- | -
|                                              |   | Six Months Ended  |   |   | Six Months Ended  |  
|                                              |   | December 31, 2010 |   |   | December 31, 2009 |  
|Cash Used in Operating
      Activities       | $ | (1,812,935        | ) | $ | (13,721           | )
|Cash Provided by Investing Activities         |   | -                 |   |   | -                 |  
|Cash Provided by Financing
      Activities   |   | 3,679,558         |   |   | 500               |  
|Net Increase (Decrease) in Cash During Period | $ | 1,866,623         |   | $ | (13,221           | )

As at December 31, 2010, we had cash of $1,936,853 and a
working capital surplus of $1,689,253.

The change in our working capital at December 31, 2010 from our
year ended June 30, 2010 is primarily a result of the increases in proceeds from
the sale of common stock and from decreases in accounts payable and accrued
liabilities and our revolving line of credit with CIO. The increase in our cash
used during the period ended on December 31, 2010 from the comparable periods of
the preceding fiscal years are due to subscriptions received under our foreign
private placement offering.

Future Financings

As of December 31, 2010, we had cash on hand of $1,936,853.
Since our inception, we have used our common stock to raise money for our
operations and for our acquisition. We have not attained profitable operations
and are dependent upon obtaining financing to pursue our plan of operation. For
these reasons, our auditors stated in their report to our audited financial
statements for the year ended June 30, 2010, that there is substantial doubt
that we will be able to continue as a going concern.

U.S. and Foreign Private Placement Offerings

U.S. Private Placement

Our Board of Directors approved a private placement offering of
up to 5,000,000 shares of our common stock at a price of $1.00 per share (the
U.S. Private Placement). This offering was made to United States persons who
were accredited investors as defined in Regulation D of the Securities Act.

On November 24, 2010, we issued 63,000 shares at a price of
$1.00 per share for cash proceeds of $63,000. This share issuance represents the
sole tranche under of the $5,000,000 U.S. Private Placement approved by the
Company's board of directors on May 28, 2010. Following completion of this
tranche, our Board of Directors approved the closing and termination of the U.S.
Private Placement.

Foreign Private Placement

Our Board of Directors also approved a private placement
offering of up to 5,000,000 shares of our common stock at a price of $1.00 per
share (the Foreign Private Placement). This offering was only available to
persons who are not U.S. Persons as defined under Regulation S of the
Securities Act.

On November 24, 2010, we completed our final tranche of our
$5,000,000 foreign private placement offering (the Foreign Private Placement)
We have issued a total of 3,986,560 shares of common stock for gross proceeds of
$3,986,560 under the Foreign Private Placement. Following completion of this
tranche, our Board of Directors approved the closing and termination of the
Foreign Private Placement.

Proceeds from the above offerings will be used to market and
develop the Companys NGDTM Technology over the next twelve
months.

We have no revenues to date from our inception. We anticipate
continuing to rely on equity sales of our common stock in order to continue to
fund our business operations. Issuances of additional shares will result in
dilution to our existing stockholders. We believe that we have obtained
sufficient financing to cover our anticipated expenses over the next twelve
months. However, there is no assurance that we will achieve any of additional
sales of our equity securities or arrange for debt or other financing for to
fund our planned business activities.

8

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Significant Trends, Uncertainties and Challenges

We believe that the significant trends, uncertainties and
challenges that directly or indirectly affect our financial performance and
results of operations include:

- Our ability to achieve module efficiencies and other performance targets
  through our partners, and to obtain necessary or desired certifications for
  our photovoltaic modules based on our technology, in a timely manner;
- Our ability to license the technology to effective manufacturers and/or
  distributers;
- Our ability to achieve projected operational performance and cost metrics;
- Our ability to consummate strategic relationships with key partners,
  including original equipment manufacturer (OEM) customers, system integrators,
  value added resellers and distributors who deal directly with manufacturers
  and end-users.
- Changes in the supply and demand for photovoltaic modules as well as
  fluctuations in selling prices for photovoltaic modules worldwide;
- Our ability to raise additional capital on terms favorable to us;
- Our future strategic partners expansion of their manufacturing facilities,
  operations and personnel; and
- Our ability and the ability of our distributors, suppliers and customers to
  manage operations and orders during financial crisis and financial downturn.

Contractual Obligations

|Contractual Obligations      | Payments Due By Period
|---------------------------- | ----------------------
|Total                        | Less than 1 Year      
|CIO Research Agreement       | $476,482 CDN          
|Investor Relations Agreement | $97,750 CDN           

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in Note 2 to
our audited financial statements included in our Annual Report for the year
ended June 30, 2010.

9

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ITEM
3.              
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Foreign Currency Exchange Risk

The Company is actively engaged in research and development
activities internationally and is exposed to foreign currency risk. We currently
conduct significant research and development operations on a contractual basis
at Simon Fraser University in British Columbia, Canada.

We do not hold any derivative instruments and do not engage in
any hedging activities. Because most of our purchases and sales will made in
Canadian dollars, any exchange rate change affecting the value of the in
Canadian dollar relative to the U.S. dollar could have an effect on our
financial results as reported in U.S. dollars. If the Canadian dollar were to
depreciate against the U.S. dollar, amounts reported in U.S. dollars would be
correspondingly reduced. If the in Canadian dollar were to appreciate against
the U.S. dollar, amounts reported in U.S. dollars would be correspondingly
increased.

Although our reporting currency is the U.S. dollar, we may
conduct business and incur costs in the local currencies of other countries in
which we may operate, make sales and buy materials. As a result, we are subject
to currency translation risk. Further, changes in exchange rates between foreign
currencies and the U.S. dollar could affect our future net sales and cost of
sales and could result in exchange losses.

We cannot accurately predict future exchange rates or the
overall impact of future exchange rate fluctuations on our business, results of
operations and financial condition.

Interest Rate Risk

Our exposure to market risks for changes in interest rates
relates primarily to our cash equivalents. This can also have an effect on the
ability of manufacturers and consumers to obtain sufficient financing to
license, manufacture, distribute or purchase a device using our technology.

Commodity and Component Risk

Failure to receive timely delivery of production tools by our
future licensees equipment suppliers could delay manufacturing capacity and
materially and adversely affect our results of operations and financial
condition in future periods. The failure of any suppliers to perform could
disrupt our future licensees supply chain and impair our operations.

If delivery of production tools or raw materials are not made
on schedule or at all, then our licensees might be unable to carry out our
commercialization and manufacturing plans, produce photovoltaic modules in the
volumes and at the times that we expect or generate sufficient revenue from
operations, and our business, results of operations and financial condition
could be materially and adversely affected.

Credit Risk

We currently do not hold financial instruments that subject us
to credit risk. Our receivables are all in the form of security deposits and
travel advances to employees and so expose us to minimal risk.

ITEM
4.              
CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of December 31, 2010 (the Evaluation Date). This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed in our Annual Report on Form 10-K for the fiscal year ended
June 30, 2010.

10

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Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in this report, we believe that our financial statements contained in
our Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2010
fairly present our financial condition, results of operations and cash flows in
all material respects.

Changes in internal control over financial reporting

There were no changes in our internal control over financial
reporting that occurred during the fiscal quarter months ended December 31, 2010
that have materially affected, or that are reasonably likely to materially
affect, our internal control over financial reporting.

Limitations on the effectiveness of controls and procedures

Our management, including our Chief Executive Officer and the
Chief Financial Officer, do not expect that the our controls and procedures will
prevent all potential errors or fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

11

---

PART II - OTHER INFORMATION

ITEM
1.              
LEGAL PROCEEDINGS.

None.

ITEM
1A.            RISK
FACTORS.

If photovoltaic technology is not suitable for widespread
adoption, or if sufficient demand for solar modules does not develop or takes
longer to develop than we anticipate, we may never earn revenues or become
profitable.

The solar energy market is at a relatively early stage of
development and the extent to which solar modules will be widely adopted is
uncertain. If photovoltaic technology proves unsuitable for widespread adoption
or if demand for solar modules fails to develop sufficiently, we may be unable
to grow our business or generate sufficient net sales to sustain profitability.
In addition, demand for solar modules in our targeted may not develop or may
develop to a lesser extent than we anticipate. Many factors may affect the
viability of widespread adoption of photovoltaic technology and demand for solar
modules, including the following:

|1. | cost-effectiveness of the electricity generated by
      photovoltaic power systems compared to conventional energy sources and
      products, including conventional energy sources, such as natural gas, and
      other non-solar renewable energy sources, such as wind;
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                              
|2. | availability and substance of government subsidies,
      incentives and renewable portfolio standards to support the development of
      the solar energy industry;                                                                                                        
|   |                                                                                                                                                                                                                                                                              
|3. | performance and reliability of photovoltaic systems
      compared to conventional and other non-solar renewable energy sources and
      products;                                                                                                                          
|   |                                                                                                                                                                                                                                                                              
|4. | success of other renewable energy generation
      technologies, such as hydroelectric, tidal, wind, geothermal, solar
      thermal, concentrated photovoltaic, and biomass;                                                                                                
|   |                                                                                                                                                                                                                                                                              
|5. | fluctuations in economic and market conditions that
      affect the price of, and demand for, conventional and non-solar renewable
      energy sources, such as increases or decreases in the price of oil,
      natural gas and other fossil fuels; and                  
|   |                                                                                                                                                                                                                                                                              
|6. | fluctuations in capital expenditures by end-users of
      solar modules, which tend to decrease when the economy slows and interest
      rates increase.                                                                                                                   

An increase in interest rates or lending rates or tightening
of the supply of capital in the global financial markets (including a reduction
in total tax equity availability) could make it difficult for end-users to
finance the cost of a photovoltaic system and could reduce the demand for
solar modules utilizing our NGD Technology and/or lead to a reduction in the
average selling price for photovoltaic modules.

Many of potential solar technology customers will depend on
debt financing to fund the initial capital expenditure required to develop,
build and purchase a photovoltaic system. As a result, an increase in interest
rates or lending rates could make it difficult for our potential customers to
secure the financing necessary to develop, build, purchase or install a
photovoltaic system on favorable terms, or at all, and thus lower demand for our
solar modules which could limit our growth or reduce our net sales. Due to the
overall economic outlook, our end-users may change their decision or change the
timing of their decision to develop, build, purchase or install a photovoltaic
system. In addition, we believe that a significant percentage of our end-users
install photovoltaic systems as an investment, funding the initial capital
expenditure through a combination of equity and debt. An increase in interest
rates and/or lending rates could lower an investors return on investment in a
photovoltaic system, increase equity return requirements or make alternative
investments more attractive relative to photovoltaic systems, and, in each case,
could cause these end-users to seek alternative investments. A reduction in the
supply of project debt financing or tax equity investments could reduce the
number of solar projects that receive financing and thus lower demand for solar
modules.

Existing regulations and policies and changes to these
regulations and policies may present technical, regulatory and economic barriers
to the purchase and use of photovoltaic products, which may significantly reduce
demand for our solar modules.

12

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The market for electricity generation products is heavily
influenced by foreign, federal, state and local government regulations and
policies concerning the electric utility industry, as well as policies
promulgated by electric utilities. These regulations and policies often relate
to electricity pricing and technical interconnection of customer-owned
electricity generation. In the United States and in a number of other countries,
these regulations and policies have been modified in the past and may be
modified again in the future. These regulations and policies could deter
end-user purchases of photovoltaic products and investment in the research and
development of photovoltaic technology. For example, without a mandated
regulatory exception for photovoltaic systems, utility customers are often
charged interconnection or standby fees for putting distributed power generation
on the electric utility grid. If these interconnection standby fees were
applicable to photovoltaic systems, it is likely that they would increase the
cost to our end-users of using photovoltaic systems which could make them less
desirable, thereby harming our business, prospects, results of operations and
financial condition. In addition, electricity generated by photovoltaic systems
mostly competes with expensive peak hour electricity, rather than the less
expensive average price of electricity. Modifications to the peak hour pricing
policies of utilities, such as to a flat rate for all times of the day, would
require photovoltaic systems to achieve lower prices in order to compete with
the price of electricity from other sources.

We anticipate that solar modules utilizing our technology and
their installation will be subject to oversight and regulation in accordance
with national and local ordinances relating to building codes, safety,
environmental protection, utility interconnection and metering and related
matters. It is difficult to track the requirements of individual states and
design equipment to comply with the varying standards. Any new government
regulations or utility policies pertaining to our solar modules may result in
significant additional expenses to us, our resellers and their customers and, as
a result, could cause a significant reduction in demand for our solar modules.

We face intense competition from manufacturers of
crystalline silicon solar modules, thin film solar modules and solar thermal and
concentrated photovoltaic systems; if global supply exceeds global demand, it
could lead to a reduction in the average selling price for photovoltaic modules.

The solar energy and renewable energy industries are both
highly competitive and continually evolving as participants strive to
distinguish themselves within their markets and compete with the larger electric
power industry. Within the global photovoltaic industry, we face competition
from crystalline silicon solar module manufacturers, other thin film solar
module manufacturers and companies developing solar thermal and concentrated
photovoltaic technologies.

Even if demand for solar modules continues to grow, the rapid
expansion plans of many solar cell and module manufacturers could create periods
where supply exceeds demand.

During any such period, our competitors could decide to reduce
their sales price in response to competition, even below their manufacturing
cost, in order to generate sales. As a result our partners may be unable to sell
solar modules based on our technology at attractive prices, or for a profit,
during any period of excess supply of solar modules, which would reduce our net
sales and adversely affect our results of operations. Also, we may decide to
lower our average selling price to certain customers in certain markets in
response to competition.

Our failure to further refine our technology and develop and
introduce improved photovoltaic products could render solar modules based on our
technology uncompetitive or obsolete and reduce our net sales and market share.

We will need to invest significant financial resources in
research and development to continue to improve our module conversion efficiency
and to otherwise keep pace with technological advances in the solar energy
industry. However, research and development activities are inherently uncertain
and we could encounter practical difficulties in commercializing our research
results. We seek to continuously improve our products and processes, and the
resulting changes carry potential risks in the form of delays, additional costs
or other unintended contingencies. In addition, our significant expenditures on
research and development may not produce corresponding benefits. In addition,
other companies could potentially develop a highly reliable renewable energy
system that mitigates the intermittent power production drawback of many
renewable energy systems, or offers other value-added improvements from the
perspective of utilities and other system owners, in which case such companies could compete with us even
if the levelized cost of electricity associated with such new system is higher
than that of our systems. Our solar modules may be rendered obsolete by the
technological advances of our competitors, which could reduce our net sales and
market share.

13

---

Our failure to protect our intellectual property rights may
undermine our competitive position and litigation to protect our intellectual
property rights or defend against third-party allegations of infringement may be
costly.

Protection of our proprietary processes, methods and other
technology is critical to our business. Failure to protect and monitor the use
of our existing intellectual property rights could result in the loss of
valuable technologies. We rely primarily on patents, trademarks, trade secrets,
copyrights and contractual restrictions to protect our intellectual property.
Our existing provisional patents and future patents could be challenged,
invalidated, circumvented or rendered unenforceable. Our pending patent
applications may not result in issued patents, or if patents are issued to us,
such patents may not be sufficient to provide meaningful protection against
competitors or against competitive technologies.

We also rely upon unpatented proprietary manufacturing
expertise, continuing technological innovation and other trade secrets to
develop and maintain our competitive position. While we generally enter into
confidentiality agreements with our associates and third parties to protect our
intellectual property, such confidentiality agreements are limited in duration
and could be breached and may not provide meaningful protection for our trade
secrets or proprietary manufacturing expertise. Adequate remedies may not be
available in the event of unauthorized use or disclosure of our trade secrets
and manufacturing expertise. In addition, others may obtain knowledge of our
trade secrets through independent development or legal means. The failure of our
patents or confidentiality agreements to protect our processes, equipment,
technology, trade secrets and proprietary manufacturing expertise, methods and
compounds could have a material adverse effect on our business. In addition,
effective patent, trademark, copyright and trade secret protection may be
unavailable or limited in some foreign countries, especially any developing
countries into which we may expand our operations. In some countries we have not
applied for patent, trademark or copyright protection.

Third parties may infringe or misappropriate our proprietary
technologies or other intellectual property rights, which could have a material
adverse effect on our business, financial condition and operating results.
Policing unauthorized use of proprietary technology can be difficult and
expensive. Also, litigation may be necessary to enforce our intellectual
property rights, protect our trade secrets or determine the validity and scope
of the proprietary rights of others. We cannot assure you that the outcome of
such potential litigation will be in our favor. Such litigation may be costly
and may divert management attention and other resources away from our business.
An adverse determination in any such litigation may impair our intellectual
property rights and may harm our business, prospects and reputation. In
addition, we have no insurance coverage against litigation costs and would have
to bear all costs arising from such litigation to the extent we are unable to
recover them from other parties.

We have yet to attain profitable operations and we will need
additional financing to fund continued development of solar energy products.

We have incurred a net loss of $3,765,514 for the period from
inception to December 31, 2010, and have earned no revenues to date. We expect
to spend additional capital in order produce and market solar energy products
which we are licensed to do, and establish our infrastructure and organization
to support anticipated operations. We cannot be certain whether we will ever
earn a significant amount of revenues or profit, or, if we do, that we will be
able to continue earning such revenues or profit. Also, any economic weakness
may limit our ability to continue development and ultimately market our products
and services. Any of these factors could cause our stock price to decline and
result in investors losing a portion or all of their investment. These factors
raise substantial doubt that we will be able to continue as a going concern. We
have cash in the amount of $1,936,853 as at December 31, 2010.

We believe that we have obtained sufficient financing to fund
our anticipated expenditures for the next twelve months. However, business
activities beyond the next twelve months will require additional funding in the
event that our cash on hand is insufficient for any additional work proposed. We
currently do not have sufficient arrangements for future financing and we may
not be able to obtain financing when required.

14

---

Our financial statements included with this Quarterly Report
have been prepared assuming that we will continue as a going concern. If we are
not able to earn revenues, then we may not be able to continue as a going
concern and our financial condition and business prospects will be adversely
affected. These factors raise substantial doubt that we will be able to continue
as a going concern and adversely affect our ability to obtain additional
financing.

Our short operating history makes our business difficult to
evaluate, accordingly, we have a limited operating history upon which to base an
evaluation of our business and prospects.

Our business is in the early stage of development and we have
not generated any revenues or profit to date. We commenced our operations in
April, 2004. Because of our limited operating history, investors may not have
adequate information on which they can base an evaluation of our business and
prospects. To date, we have done the following:

|1. | Completed organizational activities;                
|-- | ----------------------------------------------------
|2. | Developed a business plan;                          
|3. | Obtained interim funding;                           
|4. | Engaged consultants for professional services;
  and
|5. | Acquired NGD Technology.                           

In order to establish ourselves as a technology supplier, we
are dependent upon continued funding and the successful development of the NGD
Technology and products. Failure to obtain funding for continued development and
marketing would result in us having difficulty establishing licensing agreements
for our technology or achieving profitability. Investors should be aware of the
increased risks, uncertainties, difficulties and expenses we face as a
development stage company and our business may fail and investors may lose their
entire investment.

We have a limited operating history upon which to base an
evaluation of our business and prospects. Our business and prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in their early stage of development, particularly
companies in new and rapidly evolving markets such as renewable energy. These
risks include the initial completion of a developed product, the demand for the
companys product, the companys ability to adapt to rapid technological change,
the level of product and price competition, the companys success in setting up
and expanding distribution channels and whether the company can develop and
market new products and control costs.

To address these risks, we must successfully implement our
business plan and marketing strategies. We may not successfully implement all or
any of our business strategies or successfully address the risks and
uncertainties that we encounter. We have no history of earning revenues and
there is no assurance that we will be able to generate revenues from sales or
that the revenues generated will exceed the operating costs of our business.

Operating results are difficult to predict, with the result
that we may not achieve profitability and our business may fail.

Our future financial results are uncertain due to a number of
factors, many of which are outside our control. These factors include:

|1. | Our ability to successfully license our technology to
      OEMs and the ability of licensees to attract customers;
|-- | --------------------------------------------------------------------------------------------------------------------
|2. | Our ability to generate revenue through the licensing of
      the NGD Technology;                                 
|3. | The amount and timing of costs relating to expansion of
      our operations;                                       
|4. | The announcement or introduction of competing
      distributors and products of competitors; and                   
|5. | General economic conditions and economic conditions
      specific to the solar power generation.                   

We believe that we can compete favorably on these factors.
However, we will have no control over how successful our competitors are in
addressing these factors. These factors could negatively impact on our financial
results, with the result that we may not achieve profitability and our business
may fail.

15

---

We will require additional financing and may not be able to
continue operations if additional financing is not obtained.

As of December 31, 2010, we had cash in the amount of
$1,936,853. Under the Foreign Private Placement we have obtained sufficient
financing to fund our anticipated business activities over the next 12 months.
Our total expenditures over the next twelve months are anticipated to be
approximately $2,000,000, the majority of which is due to the development and
marketing of our products and general, legal, accounting and administrative
expenses associated with our reporting obligations under the Exchange Act.
Depending on the success of our initial marketing efforts, we estimate that we
will require further funding to implement an advertising campaign to establish
and enhance awareness of our products.

The accompanying financial statements have been prepared
assuming that we will continue as a going concern. As discussed in Note 1 of our
June 30, 2010 year end audited financial statements, we are in the development
stage of operations, have had losses from operations since inception, and have
insufficient working capital available to meet ongoing financial obligations
over the next fiscal year. After the fiscal year end, we will require additional
financing for any operational expenses and to pursue our plan of operation. We
will require additional capital and financing in order to continue otherwise our
business will fail. We have no agreements for additional financing and there can
be no assurance that additional funding will be available to us on acceptable
terms in order to enable us to complete our plan of operation.

We will depend on recruiting and retaining qualified
personnel and the inability to do so would seriously harm our business.

Our success is dependent in part on the services of certain key
management personnel, including Daryl J. Ehrmantraut, our Chief Executive
Officer and President, Graham R. Hughes, our Chief Financial Officer, Secretary
and Treasurer, and Dr. Andras Pattantyus-Abraham, our Chief Technology Officer.
We have an employment agreement with Mr. Ehrmantraut. We do not have employment
agreements with Mr. Hughes or Dr. Pattantyus-Abraham. We do not have any
employment agreements with any third parties providing services to us. The
experience of these individuals is an important factor contributing to our
success and growth and the loss of one or more of these individuals could have a
material adverse effect on our company. Our future success also depends on our
attracting, retaining and motivating highly skilled personnel and we may be
unable to retain our key personnel or attract, assimilate or retain other highly
qualified personnel in the future.

We may also experience difficulty in hiring and retaining
highly skilled consultants with appropriate qualifications. We are materially
dependent on our financial consultant. If we are unable to retain the services
of this consultant, or if we are unable to attract a qualified employee or
financial consultant, we may be unable to prepare financial statements, which
could cause our business to fail. Even if we invest significant resources to
recruit, train and retain qualified personnel, we may not be successful in our
efforts.

We may become liable for defects or patent disputes that
arise and this could negatively affect our business.

We may become liable for any defects that exist in the NGD
Technology, or any patent disputes. If we are deemed to be liable for any
defects or licensing issues, this will have a material adverse impact on our
financial condition and results of operation.

Because we are significantly smaller and less established we
may lack the financial resources necessary to compete effectively and sustain
profitability.

Our future success depends on our ability to compete
effectively with other distributors of other solar technology. Many of these
competitors are more established, offer more products, services and features,
have a greater number of clients, locations, and employees, and also have
significantly greater financial, technical, marketing, public relations, name
recognition, and other resources than we have. While our objective is to
continue to develop our technology, if we do not compete effectively with
current and future competitors, we may not generate enough revenue to be
profitable. Any of these factors could cause our stock price to decline and
result in investors losing a portion or all of their investment. Increased
competition may result in increased operating costs and the inability to
generate revenues, any one of which could materially adversely affect our
business, results of operations and financial condition. Many of our current and
potential competitors have significantly greater financial,
marketing, customer support, technical and other resources than us. As a result,
such competitors may be able to attract potential customers away from us, and
they may be able to devote greater resources to the development and promotion of
their products than we can.

16

---

We do not intend to pay dividends in the near future.

We have not declared any dividends and we do not plan to
declare any dividends in the foreseeable future. Our board of directors
determines whether to pay dividends on our issued and outstanding shares. The
declaration of dividends will depend upon our future earnings, our capital
requirements, our financial condition and other relevant factors. The Nevada
Revised Statutes, however, do prohibit us from declaring dividends where, after
giving effect to the distribution of the dividend:

|1. | We would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|2. | Our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed to satisfy the rights of
      stockholders who have preferential rights superior to those receiving the
      distribution.

Our board does not intend to declare any dividends on our
shares for the foreseeable future.

Our business is exposed to foreign currency fluctuations
causing negative changes in exchange rates to result in greater costs.

A portion of our expenses and capital spending will be
transacted in Canadian dollars. We do not have a foreign currency hedging
program in place. Due to the unpredictable behavior of foreign currency exchange
rate fluctuations we cannot assure that this will not have a material adverse
impact on our financial condition and results of operation.

Because our stock is a penny stock, stockholders will be
more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation
system.

Because our securities constitute "penny stocks" within the
meaning of the rules, the rules apply to us and to our securities. The rules may
further affect the ability of owners of shares to sell our securities in any
market that might develop for them. As long as the quotation price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule
15g-9 under the Exchange Act. The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock, to deliver a standardized risk
disclosure document prepared by the SEC, that:

|1. | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                          
|2. | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation to such duties or other requirements of
      securities laws;
|   |                                                                                                                                                                                                                                          
|3. | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
|   |                                                                                                                                                                                                                                          
|4. | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
|   |                                                                                                                                                                                                                                          
|5. | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             

17

---

|6. | contains such other information and is in such form,
      including language, type, size and format, as the SEC shall require by
      rule or regulation.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------

The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In
addition, the penny stock rules require that, prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements may have the effect of reducing the trading
activity in the secondary market for our stock.

ITEM
2.              
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Subsequent to the closing of our Foreign Private Placement, we issued an aggregate of 35,000 shares of our common stock at a price of $1.00 per share to subscribers who had submitted subscription agreements prior to the closing but were not issued shares.  The shares were issued pursuant to the provisions of Regulation S of the Act to persons who represented that they were not "U.S. Persons" as defined under Regulation S and that they were not acquiring the shares for the account or benefit of a U.S. Person.

ITEM
3.              
DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM
5.              
OTHER INFORMATION.

None.

18

---

ITEM
6.              
EXHIBITS.

The following exhibits are either provided with this Quarterly
Report or are incorporated herein by reference.

|Exhibit |                                                                                                                                                                                
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                                        
|        |                                                                                                                                                                                
|3.1     | Articles of Incorporation.(1)                                                                                                                                                  
|        |                                                                                                                                                                                
|3.2     | Certificate of
        Change Pursuant to NRS 78.209 increasing the issued and authorized capital
        of common stock to 350,000,000 shares, par value $0.001 per share.(3)
|        |                                                                                                                                                                                
|3.3     | Certificate of
        Change Pursuant to NRS 78.209 increasing the issued and authorized capital
        of common stock to 400,000,000 shares, par value $0.001 per share.(3)
|        |                                                                                                                                                                                
|3.4     | Certificate of
        Amendment to Articles of Incorporation.(3)                                                                                                              
|        |                                                                                                                                                                                
|3.5     | Certificate of
        Amendment to Articles of Incorporation.(3)                                                                                                              
|        |                                                                                                                                                                                
|3.6     | Bylaws, as amended.(1)                                                                                                                                                         
|        |                                                                                                                                                                                
|10.1    | Technology Acquisition
        Agreement between Quantum and Canadian Integrated Optics (IOM) Ltd. dated
        December 16, 2009.(3)                                         
|        |                                                                                                                                                                                
|10.2    | CEO Employment
        Agreement between Quantum and Daryl J. Ehrmantraut dated January 1, 2010.(4)                                                                            
|        |                                                                                                                                                                                
|10.3    | Investor relations
        Consulting Services Contract between Quantum and Green Street Capital
        Partners, LLC dated January 6, 2010. (2)                              
|        |                                                                                                                                                                                
|10.4    | Office Space
        Lease Agreement between Quantum and Santa Fe Business Incubator, Inc.
        dated January 19, 2010. (2)                                                 
|        |                                                                                                                                                                                
|10.5    | Revolving Line
        of Credit Agreement between Quantum and Canadian Integrated Optics (IOM)
        Ltd. dated February 20, 2010.(3)                                       
|        |                                                                                                                                                                                
|10.6    | Consulting Agreement
        between Quantum and Caisey Harlingten dated April 19, 2010. (4)                                                                                   
|        |                                                                                                                                                                                
|10.7    | Office Space
        Lease Agreement between Quantum and Santa Fe Business Incubator, Inc.
        dated July 27, 2010. (4)                                                    
|        |                                                                                                                                                                                
|10.8    | Office Space
        Lease Agreement between Quantum and Guinness Business Center Ltd. dated
        June 21, 2010 and Addendum dated August 17, 2010. (4)                     
|        |                                                                                                                                                                                
|10.9    | Finders
        Fee Agreement between Quantum and 1536476 Alberta Ltd. dated for reference
        August 30, 2010. (4)                                                       
|        |                                                                                                                                                                                
|10.10   | Investor Relations
        Consulting Agreement between Quantum and Teatyn Enterprises Inc. dated
        for reference January 15, 2011.(5)                                   
|        |                                                                                                                                                                                
|14.1    | Code of Ethics.(3)                                                                                                                                                             
|        |                                                                                                                                                                                
|31.1    | Certification
        of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                        
|        |                                                                                                                                                                                
|31.2    | Certification
        of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                                        
|        |                                                                                                                                                                                
|32.1    | Certification
        of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.         
|        |                                                                                                                                                                                
|32.2    | Certification
        of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.         
|        |                                                                                                                                                                                
|99.1    | Audit Committee
        Charter.(3)                                                                                                                                            

|(1) | Previously filed as an exhibit to our Registration
      Statement on Form S-1 originally filed with the SEC on September 21,
      2004.                      
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Previously filed as an exhibit to our Quarterly Report on
      Form 10-Q for the period ended December 31, 2009 filed with the SEC on
      February 17, 2010.
|(3) | Previously filed as an exhibit to our Quarterly Report of
      Form 10-Q for the period ended March 31, 2010 filed with the SEC on May
      17, 2010.        
|(4) | Previously filed as an exhibit to our Annual Report on
      Form 10-K for the year ended June 30, 2010 filed with the SEC on September
      13, 2010.        
|(5) | Previously filed as an exhibit to our Current Report on
      Form 8-K filed with the SEC on February 3, 2011.                                                 

19

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SIGNATURES

Pursuant to the requirements 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.

|       |                  |  |     | QUANTUM SOLAR POWER CORP.                             
|------ | ---------------- |  | --- | ------------------------------------------------------
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|Dated: | February 9, 2011 |  | By: | /s/ Daryl J. Ehrmantraut                              
|       |                  |  |     | DARYL J. EHRMANTRAUT                                  
|       |                  |  |     | Chief Executive Officer and
      President           
|       |                  |  |     | (Principal Executive Officer)                         
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|       |                  |  |     |                                                       
|Dated: | February 9, 2011 |  | By: | /s/ Graham R. Hughes                                  
|       |                  |  |     | GRAHAM R. HUGHES                                      
|       |                  |  |     | Chief Financial Officer,
      Secretary and Treasurer
|       |                  |  |     | (Principal Accounting Officer)                        

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