UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





FORM 10-Q/A





Amendment No. 1





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





For the quarterly period ended November 30, 2010





 ̈
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934





For the transition period  __________ to __________





Commission File Number: 333-145910





SunSi Energies Inc.


(Exact name of registrant as specified in its charter)




Nevada

20-8584329(State or other jurisdiction of

incorporation

or organization)

(IRS Employer Identification No.)





45 Main Street, Suite 309


Brooklyn, New York


(Address of principal executive offices)





646-205-0291


(Issuer’s telephone number)




Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer 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.





 ̈ Large accelerated filer
 ̈ Accelerated filer ̈ Non-Accelerated filer
x 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





State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 27,731,000 common shares as of January 11, 2011.







EXPLANATORY NOTE





SunSi Energies Inc. (the “Company” or “SunSi”) is filing this Form 10-Q/A to amend Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and to add Exhibits 10.1 and 10.2 to Part II, Item 6. Exhibits, to its Quarterly Report on Form 10-Q for the quarter ended November 30, 2010 that was originally filed on January 14, 2011 (the “Original Quarterly Report”), in response to comments received from the Securities and Exchange Commission (the “SEC”) regarding the Original Quarterly Report as part of the SEC’s comment letter dated February 23, 2011. In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, currently dated certifications by the Company’s principal executive
officer and principal financial officer are being provided as exhibits to this Form 10-Q/A.





The Original Quarterly Report has been revised solely to reflect the changes above. This Form 10-Q/A speaks only as of the date the Original Quarterly Report was filed, and the Company has not undertaken herein to amend, supplement or update any information contained in the Original Quarterly Report to give effect to any subsequent events. Accordingly, this Form 10-Q/A should be read in conjunction with the Original Quarterly Report and the Company’s other reports filed with the SEC subsequent to the filing of the Original Quarterly Report, including any amendments to those filings.





PART I - FINANCIAL INFORMATION





Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations





Forward-Looking Statements





Certain statements in this quarterly report, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,”
“would,” “will be,” “will continue,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital,
interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.





Overview





SunSi Energies (“SunSi,” “the Company,” we” “us” our”) goal is to acquire and develop a portfolio of high quality trichlorosilane (“TCS”) distribution rights and producing facilities that are strategically located and possess a potential for future growth and expansion. TCS is the main feedstock of the solar energy industry, used in the production of silicon, which in turn is used in the production of solar PV energy producing panels.




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Acquisition of Baokai





On December 12, 2009, SunSi Hong Kong (“SunSi HK”) secured the exclusive distribution rights for Zibo Commerce and Trade Co. (“ZBC”) TCS production for the international market. ZBC is located in China and produces 25,000 metric tons of TCS annually.





On April 29th 2010, SunSi HK signed a definitive agreement to acquire 90% of Zibo Baokai Commerce and Trade Co. (“Zibo Baokai”), a company with the right to distribute ZBC’s TCS production in the China market.





On December 8, 2010, we completed acquisition of 90% of Zibo Baokai Trade Co., (“Baokai”) a company with the right to globally distribute, without restriction all of the TCS production of ZBC. This is same production facility that we had unsuccessfully attempted to purchase in 2009 and 2010 because we believed the terms of acquisition were not beneficial to Sunsi shareholders.





As a result of the consummation of the Baokai acquisition, we expect to begin generating revenues during our third fiscal quarter ending on February 28, 2011.





Definitive Agreement to Purchase Wendeng





On August 3rd 2010, SunSi HK signed a letter of intent with Wendeng He Xie Silicon Co. Ltd. (“Wendeng”) for the acquisition of 60% of Wendeng’s existing 20,000 metric ton (MT) TCS facility located in China. On November 30, 2010 we entered into a definitive agreement to purchase Wendeng. Under the terms of this agreement, we will acquire a 60% equity interest in Wendeng; and subsequent to consummation of the acquisition, we expect to increase Wendeng's capacity to a total of 60,000MT by the end of calendar 2011. We expect the cost of the Wendeng acquisition to be between $6.0 and $8.0 million. We are attempting to negotiate deferred payment terms with the seller of Wendeng that would enable us to pay a significant
portion of the acquisition consideration after closing, and to accept Sunsi common stock as part of the acquisition consideration. Additionally, we are working with potential investors to raise either equity or debt financing.  There can be no assurances that we will be able to secure the financing, or, negotiate favorable terms necessary to close the Wendeng transaction.  The existing shareholders of Wendeng will contribute to this planned expansion on a pro-rata basis to maintain their equity interest of 40%. Additionally, the current executive management team of Wendeng will provide its technical expertise for the construction, training and operation of the facility and its expansion. All of the management and employees are expected to remain employed by Wendeng. Wendeng's current customer base includes some of the largest polysilicon producers in China. Legal and financial due diligence, which has been underway since mid-September when SunSi entered into a
Letter of Intent to acquire Wendeng facility, is progressing well.





There can be no assurances that we can negotiate an acceptable purchase price on the facility; and can raise the sufficient capital necessary to purchase Wendeng.  Additionally, there can be no assurances that if the acquisition is successfully consummated, that we can raise the necessary funds to expand plant capacity.





We expect to complete the acquisition of Wendeng by February 28, 2011 however there can be no assurances.





Results of Operations for the three months and six months ended November 30, 2010 and 2009





Revenues.





We have not earned any revenues from the inception of our Company through the period ending November 30, 2010. As noted above under the section “Acquisition of Baokai”, in December 2010 we completed the acquisition of Baokai, and anticipate to begin earning revenues commencing in December 2010, however, there can be no assurances on the timing of commencing revenue or the amount of revenue that will be generated.




3


Operating Expenses.





We incurred operating expenses for the three months and six months ended November 30, 2010 of $231,713 and $390,109 respectively, compared to $ 277,881 and $440,220 for the same periods ended in 2009. Operating expenses for the six months ended November 30, 2010 included general and administrative expenses of $67,131, and professional fees expenses of $322,978. Operating expenses for the six months ended November 30, 2009 included general and administrative expenses of $6,482 and professional fees of $433,738. General and administrative expenses increased in 2010 over 2009 levels due to the addition of two employees, a business development director and the addition of a chief financial officer.   The decrease in professional fees from 2010 to 2009 is attributable to a decrease in acquisition related
expenses in 2010.





Loss





We incurred net losses for the six months ended November 30, 2010 and 2009 of $390,109 and $440,220 respectively. Our losses for all periods are attributable to operating expenses and our lack of revenue.





Liquidity and Capital Resources





The accompanying consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and satisfaction of liabilities and other commitments in the normal course of business.





As of November 30, 2010, we had cash of $467,881 and current liabilities of $189,412. We, therefore, had working capital of $278,469.





We expect the cost of the Wendeng acquisition to be between $6.0 and $8.0 million. We are attempting to negotiate deferred payment terms with the seller of Wendeng that would enable us to pay a significant portion of the acquisition consideration after closing, and to accept Sunsi common stock as part of the acquisition consideration. Additionally, we are working with potential investors to raise either equity or debt financing.  There can be no assurances that we will be able to secure the financing, or, negotiate favorable terms necessary to close the Wendeng transaction.





We have not recorded any revenues since inception and continue generating losses from operations. Since inception we have an accumulated deficit of $1,223,907. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. We believe that the Baokai acquisition combined with future fund raising activities will enable us to successfully address our going concern issue, however, there can be no assurances.





Critical Accounting Policies





Basis of Presentation





The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States and are expressed in U.S. Dollars. The Company’s fiscal year-end is May 31. The consolidated financial statements include the accounts of the Company and our wholly-owned subsidiary SunSi Energies Hong Kong Ltd., which had no activity through November 30, 2010 other than incorporation, legal and professional fees and start-up costs.





Use of Estimates





The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.





Financial Instruments





Cash is the only asset on our balance sheet. The carrying value of cash approximates its fair value.




4




Concentration of Credit Risk





Financial instruments that potentially subject us to credit risk consist principally of cash.  Cash is deposited with a high quality credit institution. On occasion, cash balances exceed the FDIC limit.





Income Taxes





Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. We adopted FASB ASC 740 as of our inception. Pursuant to FASB ASC 740 we are required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in the financial statements because we cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.





Basic and Diluted Net Income (Loss) Per Share





We compute net income (loss) per share in accordance with ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common stockholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti-dilutive. We have not issued any options or warrants since the inception of the Company.





Revenue Recognition





The Company is a development stage entity and has not recognized any revenues since inception. The Company expects to begin generating revenue from the sales of TCS during the three month period ending February 28, 2011. Revenue will be recognized when all of the following elements are satisfied (i) there are no uncertainties regarding customer acceptance;(ii) there is persuasive evidence that an agreement exists; (iii) delivery has occurred; (iv) legal title to the products has transferred to the customer; (v) the sales price is fixed or determinable; and (vi) collectability is reasonably assured.





Off Balance Sheet Arrangements





As of November 30, 2010, there were no off balance sheet arrangements.




PART II – OTHER INFORMATION





Item 6.      Exhibits





Exhibit

Number

Description of Exhibit10.1

Equity Transfer Agreement dated November 22, 2010 (1)10.2

Letter Agreement dated December 15, 2010 (2)31

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.




5




(1)
Incorporated by reference from Exhibit 10.1 of the Company’s current report on Form 8-K filed on March 10, 2011 with the SEC.


(2)
Incorporated by reference from Exhibit 10.2 of the Company’s current report on Form 8-K filed on March 10, 2011 with the SEC.





SIGNATURES





In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.




SUNSI ENERGIES INC.By:/s/ David NatanDavid NatanChief Executive OfficerMarch 23, 2011





In accordance with Section 13 or 15(d) of the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:





By:





/s/ Kebir Ratnani


Kebir Ratnani


Director


March 23, 2011





/s/ Richard St-Julien


Richard St-Julien


Secretary, Vice President and Director


March 23, 2011





/s/ David Natan


David Natan


Chief Executive Officer, Chief Financial and Accounting Officer, Director


March 23, 2011




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