UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q


(Mark
One)





x         QUARTERLY REPORT UNDER SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF1934





For the
quarterly period ended October 31, 2008





OR





o         TRANSITION REPORT UNDER SECTION 13 OR
15(d) OF THE EXCHANGE ACT




For the
transition period from ______________to _______________.





Commission
File Number 333-139774




SUNOVIA
ENERGY TECHNOLOG IES,
INC.


(Exact
name of small business issuer as specified in its charter)




Nevada
            98-0550703(State or other
      jurisdiction of incorporation or organization)
            (I.R.S. Employer
      Identification No.)




6408
Parkland Drive, Suite 104, Sarasota, Fl 34243


(Address
of principal executive offices)




941-751-6800


(Issuer’s
telephone number)




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





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


Yes  x   No
o





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




Large accelerated
      filer o
            Accelerated filer
      x
            Smaller reporting
      company oNon-accelerated
      filer o
      (Do not check if a 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 o   No x





The
number of shares of the Registrant’s Common Stock outstanding as of December 11,
2008 was 536,366,920.




Transitional
Small Business Disclosure Format (Check one): Yes  o   No
x


1


FORM
10-Q


INDEX





PagePART I: FINANCIAL
    INFORMATION
                                                  3ITEM 1. FINANCIAL
STATEMENTS
                                                  3REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                                                  4CONSOLIDATED
      BALANCE SHEETS
                                                  5CONSOLIDATED
      STATEMENTS OF OPERATIONS
                                                  6CONSOLIDATED
      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
                                                  7-8CONSOLIDATED
      STATEMENTS OF CASH FLOWS
                                                  9NOTES
      TO CONSOLIDATED FINANCIAL STATEMENTS
                                                  10-34ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR
      PLAN OF OPERATION
                                                  35ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
      ABOUT MARKET RISK
                                                  45ITEM 4. CONTROLS AND
    PROCEDURES
                                                  45ITEM 4T. CONTROLS AND
      PROCEDURES
                                                  45PART II. OTHER INFORMATION
                                                  45ITEM 1.  LEGAL
      PROCEEDINGS
                                                  45ITEM 1A. RISK FACTORS
                                                  46ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
      AND USE OF PROCEEDS
                                                  46ITEM 3 DEFAULTS UPON SENIOR
      SECURITIES
                                                  46ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
      SECURITY HOLDERS
                                                  46ITEM 5.  OTHER
      INFORMATION
                                                  47ITEM 6. EXHIBITS
                                                  47SIGNATURES
                                                  48





2







PART 1: FINANCIAL STATEMENTS


SUNOVIA
ENERGY TECHNOLOGIES, INC.


(FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)











REPORT
ON REVIEWS OF


CONSOLIDATED
FINANCIAL STATEMENTS


FOR
THE THREE MONTHS ENDED OCTOBER 31, 2008 AND 2007






3







December
11, 2008





To The
Board of Directors and Stockholders


Sunovia
Energy Technologies, Inc.


(Formerly
known as Acadia Resources, Inc.)


Sarasota
, Florida





REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM





We have
reviewed the accompanying consolidated balance sheet of Sunovia Energy
Technologies, Inc. (formerly known as Acadia Resources, Inc.), as of October 31,
2008 and the related consolidated statements of operations and cash flows for
the three months ended October 31, 2008 and 2007 and the statement of changes in
stockholders’ equity for the three months ended October 31,
2008.  These financial statements are the responsibility of the
Company’s management.





We
conducted our review in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting
matters.  It is substantially less in scope than an audit conducted in
accordance with standards of the Public Company Accounting Oversight Board
(United States), the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.  Accordingly, we
do not express such an opinion.





Based on
our review, we are not aware of any material modifications that should be made
to the accompanying interim financial statements for them to be in conformity
with accounting principles generally accepted in the United States of
America.





We have
previously audited, in accordance with auditing standards of the Public Company
Accounting Oversight Board (United States), the balance sheet of Sunovia Energy
Technologies, Inc. (see note A), as of July 31, 2008 and the related statements
of operations, stockholders’ equity, and cash flows for the period from
inception (November 9, 2005) through July 31, 2008, and in our report dated
October 31, 2008, we expressed an unqualified opinion on those financial
statements.  In our opinion, the information set forth in the
accompanying balance sheet as of July 31, 2008, is fairly stated, in all
material respects, in relation to the balance sheet from which it has been
derived.





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  As discussed in Note A to the
financial statements, the Company has experienced losses of $2,912,017 and
$2,379,377 for the three months ended October 31, 2008 and 2007, respectively.
These conditions raise substantial doubt about its ability to continue as a
going concern. Management’s plans regarding those matters also are described in
Note A. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.









Certified
Public Accountants


Sarasota,
Florida







4





SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 CONSOLIDATED
BALANCE SHEETS
   October
      31,
                              
                              
                              July
      31,2008
                              
                              
                              2008(Unaudited)ASSETSCurrent
      assets:Cash
      and cash equivalents
                              
                              $
                              3,828,562
                              
                              
                              $
                              5,982,779Accounts
      receivable
                              
                              
                              291,897
                              
                              
                              
                              40,299Other
      receivables
                              
                              
                              16,500
                              
                              
                              
                              -Prepaid
      expenses
                              
                              
                              46,120
                              
                              
                              
                              28,801Inventory
                              
                              
                              300,618
                              
                              
                              
                              351,265TOTAL
      CURRENT ASSETS
                              
                              
                              4,483,697
                              
                              
                              
                              6,403,144Furniture
      and equipment, net
                              
                              
                              206,021
                              
                              
                              
                              210,615Investment
      in EPIR Technologies, Inc.
                              
                              
                              3,780,385
                              
                              
                              
                              3,780,385Other
      assets
                              
                              
                              87,792
                              
                              
                              
                              53,988TOTAL
      ASSETS
                              
                              $
                              8,557,895
                              
                              
                              $
                              10,448,132LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilities:Accounts
      payable
                              
                              $
                              144,743
                              
                              
                              $
                              364,801Accrued
      expenses
                              
                              
                              177,600
                              
                              
                              
                              177,600Noncash
      compensation payable
                              
                              
                              386,306
                              
                              
                              
                              1,503,374Common
      stock redemption
                              
                              
                              650,000
                              
                              
                              
                              650,000TOTAL
      CURRENT LIABILITIES
                              
                              
                              1,358,649
                              
                              
                              
                              2,695,775STOCKHOLDERS'
      EQUITYCommon
      stock, $.001 par value; 1,500,000,000 sharesauthorized:
      531,672,707 and 524,543,964 at October 31, 2008 and July 31, 2008,
      respectively, issued and outstanding
                              
                              
                              531,673
                              
                              
                              
                              524,544Additional
      paid-in capital
                              
                              
                              50,372,544
                              
                              
                              
                              48,020,767Retained
      deficit
                              
                              
                              (43,704,971
                              )
                              
                              
                              (40,792,954
                              )TOTAL
      STOCKHOLDERS' EQUITY
                              
                              
                              7,199,246
                              
                              
                              
                              7,752,357TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                              
                              $
                              8,557,895
                              
                              
                              $
                              10,448,132


See
report of independent registered public accounting firm
 and notes
to consolidated financial statements.
 5


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 CONSOLIDATED
STATEMENTS OF OPERATIONS
 For
      the Three
                                  
                                  
                                  For
      the ThreeMonths
      Ended
                                  
                                  
                                  Months
      EndedOctober 31, 2008
                                  
                                  
                                  October 31, 2007(Unaudited)
                                  
                                  
                                  (Unaudited)Net
      sales
                                  
                                  $
                                  310,823
                                  
                                  
                                  $
                                  -Cost
      of sales
                                  
                                  
                                  315,703
                                  
                                  
                                  
                                  -Gross
      margin
                                  
                                  
                                  (4,880
                                  )
                                  
                                  
                                  -Expenses:Selling,
      general and administrative
                                  
                                  
                                  1,198,436
                                  
                                  
                                  
                                  812,318Research
      and development
                                  
                                  
                                  1,731,254
                                  
                                  
                                  
                                  1,599,403Total
      expenses
                                  
                                  
                                  2,929,690
                                  
                                  
                                  
                                  2,411,721Operating
      loss
                                  
                                  
                                  (2,934,570
                                  )
                                  
                                  
                                  (2,411,721
                                  )Other
      income:Interest
                                  
                                  
                                  22,553
                                  
                                  
                                  
                                  32,344Total
      other income
                                  
                                  
                                  22,553
                                  
                                  
                                  
                                  32,344Loss
      before income tax benefit
                                  
                                  
                                  (2,912,017
                                  )
                                  
                                  
                                  (2,379,377
                                  )Income
      tax benefit
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Net
      loss
                                  
                                  $
                                  (2,912,017
                                  )
                                  
                                  $
                                  (2,379,377
                                  )Loss
      per share:Basic
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )Diluted
                                  
                                  $
                                  (0.01
                                  )
                                  
                                  $
                                  (0.01
                                  )Weighted
      average number of commonshares
      outstanding:Basic
                                  
                                  
                                  527,541,587
                                  
                                  
                                  
                                  269,299,905Diluted
                                  
                                  
                                  527,541,587
                                  
                                  
                                  
                                  269,299,905


See
report of independent registered public accounting firm
 and notes
to consolidated financial statements.
 6


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN  AS ACADIA RESOURCES, INC.)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
 AdditionalCommon Stock
                                                        
                                                        
                                                        Paid-in
                                                        
                                                        
                                                        AccumulatedShares
                                                        
                                                        
                                                        Amount
                                                        
                                                        
                                                        Capital
                                                        
                                                        
                                                        Deficit
                                                        
                                                        
                                                        TotalBalance,
      August 1, 2007
                                                        
                                                        
                                                        264,913,506
                                                        
                                                        
                                                        $
                                                        13,241
                                                        
                                                        
                                                        $
                                                        8,786,946
                                                        
                                                        
                                                        $
                                                        (5,955,993
                                                        )
                                                        
                                                        $
                                                        2,844,194Common
      stock redemption($0.10
      per share)
                                                        
                                                        
                                                        (37,523,114
                                                        )
                                                        
                                                        
                                                        (1,875
                                                        )
                                                        
                                                        
                                                        (3,750,436
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        (3,752,311
                                                        )Stock
      issued for servicesand
      compensation
                                                          ($0.10
      per share)
                                                        
                                                        
                                                        18,197,500
                                                        
                                                        
                                                        
                                                        11,974
                                                        
                                                        
                                                        
                                                        1,807,776
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        1,819,750Reverse
      stock split, 1 for 4 sharesand
      change in par value of stock
                                                        
                                                        
                                                        (175,455,294
                                                        )
                                                        
                                                        
                                                        46,793
                                                        
                                                        
                                                        
                                                        (46,793
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Shares
      exchanged forAcadia
      Resources, Inc.
                                                        
                                                        
                                                        7,350,000
                                                        
                                                        
                                                        
                                                        7,350
                                                        
                                                        
                                                        
                                                        (7,350
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Stock
      split, 4.5 for 1 share
                                                        
                                                        
                                                        230,422,843
                                                        
                                                        
                                                        
                                                        230,423
                                                        
                                                        
                                                        
                                                        (230,423
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -Shares
      issued in private placement($0.10
      per share)less
      syndication costs)
                                                        
                                                        
                                                        110,625,510
                                                        
                                                        
                                                        
                                                        110,626
                                                        
                                                        
                                                        
                                                        10,946,664
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        11,057,290Stock
      issued for servicesand
      compensation($0.73
      per share)
                                                        
                                                        
                                                        5,256,226
                                                        
                                                        
                                                        
                                                        5,256
                                                        
                                                        
                                                        
                                                        3,831,789
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        3,837,045Shares
      issued for equity investmentin
      EPIR Technologies, Inc.
                                                        
                                                        
                                                        37,803,852
                                                        
                                                        
                                                        
                                                        37,804
                                                        
                                                        
                                                        
                                                        3,742,581
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        3,780,385Reissuance
      of previously
                                                          redeemed
      stock
                                                        
                                                        
                                                        28,948,075
                                                        
                                                        
                                                        
                                                        28,948
                                                        
                                                        
                                                        
                                                        2,865,859
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        2,894,807Stock
      options granted for services
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        9,663,284
                                                        
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        9,663,284Stock
      options exercised
                                                        
                                                        
                                                        24,922,360
                                                        
                                                        
                                                        
                                                        24,922
                                                        
                                                        
                                                        
                                                        (24,922
                                                        )
                                                        
                                                        
                                                        -
                                                        
                                                        
                                                        
                                                        -
  
 See
report of independent registered public accounting firm
 and notes
to consolidated financial statements.
 7
 SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN  AS ACADIA RESOURCES, INC.)
 CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (CONTINUED)
  AdditionalCommon Stock
                                                          
                                                          
                                                          Paid-in
                                                          
                                                          
                                                          AccumulatedShares
                                                          
                                                          
                                                          Amount
                                                          
                                                          
                                                          Capital
                                                          
                                                          
                                                          Deficit
                                                          
                                                          
                                                          TotalStock
      issued for servicesand
      compensation($1.15
      per share)
                                                          
                                                          
                                                          9,082,500
                                                          
                                                          
                                                          
                                                          9,082
                                                          
                                                          
                                                          
                                                          10,435,792
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          10,444,874Net
      loss
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (34,836,961
                                                          )
                                                          
                                                          
                                                          (34,836,961
                                                          )Balance,
      July 31, 2008
                                                          
                                                          
                                                          524,543,964
                                                          
                                                          
                                                          
                                                          524,544
                                                          
                                                          
                                                          
                                                          48,020,767
                                                          
                                                          
                                                          
                                                          (40,792,954
                                                          )
                                                          
                                                          
                                                          7,752,357Shares
      issued in private placement($0.10
      per share)less
      syndication costs)
                                                          
                                                          
                                                          6,764,530
                                                          
                                                          
                                                          
                                                          6,765
                                                          
                                                          
                                                          
                                                          669,689
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          676,454Stock
      options granted for services
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,295,592
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          1,295,592Stock
      issued for services andcompensation
                                                          
                                                          
                                                          364,213
                                                          
                                                          
                                                          
                                                          364
                                                          
                                                          
                                                          
                                                          386,496
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          386,860Net
      loss
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          -
                                                          
                                                          
                                                          
                                                          (2,912,017
                                                          )
                                                          
                                                          
                                                          (2,912,017
                                                          )Balance,
      October 31, 2008
                                                          
                                                          
                                                          531,672,707
                                                          
                                                          
                                                          $
                                                          531,673
                                                          
                                                          
                                                          $
                                                          50,372,544
                                                          
                                                          
                                                          $
                                                          (43,704,971
                                                          )
                                                          
                                                          $
                                                          7,199,246
  See
report of independent registered public accounting firm
 and notes
to consolidated financial statements.
 8
 SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 CONSOLIDATED
STATEMENTS OF CASH FLOWS
 
 For
      the Three
                              
                              
                              For
      the ThreeMonths
      Ended
                              
                              
                              Months
      EndedOctober 31, 2008
                              
                              
                              October 31, 2007(Unaudited)
                              
                              
                              (Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                              
                              $
                              (2,912,017
                              )
                              
                              $
                              (2,379,377
                              )Adjustments
      to reconcile net loss tonet
      cash used by operating activitiesDepreciation
                              
                              
                              16,079
                              
                              
                              
                              10,481Stock
      issued and stock options issued for services
                                and
      compensation
                              
                              
                              1,682,452
                              
                              
                              
                              655,000Changes
      in operating assets and liabilities:Accounts
      receivable
                              
                              
                              (251,598
                              )
                              
                              
                              -Prepaid
      expenses
                              
                              
                              (17,319
                              )
                              
                              
                              3,735Inventory
                              
                              
                              50,647
                              
                              
                              
                              (59,043
                              )Other
      receivables
                              
                              
                              (16,500
                              )
                              
                              
                              -Other
      assets
                              
                              
                              (33,804
                              )
                              
                              
                              -Accounts
      payable
                              
                              
                              (220,058
                              )
                              
                              
                              41,262Accrued
      expenses
                              
                              
                              -
                              
                              
                              
                              (21,412
                              )Noncash
      compensation payable
                              
                              
                              (1,117,068
                              )
                              
                              
                              233,000NET
      CASH USED BY OPERATING ACTIVITIES
                              
                              
                              (2,819,186
                              )
                              
                              
                              (1,516,354
                              )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of furniture and equipment
                              
                              
                              (11,485
                              )
                              
                              
                              (50,942
                              )NET
      CASH USED BY INVESTING ACTIVITIES
                              
                              
                              (11,485
                              )
                              
                              
                              (50,942
                              )CASH
      FLOWS FROM FINANCING ACTIVITIESEquity
      contributed by private placement
                              
                              
                              676,454
                              
                              
                              
                              -Common
      stock redemption
                              
                              
                              -
                              
                              
                              
                              (165,000
                              )NET
      CASH PROVIDED (USED) BY FINANCING ACTIVITIES
                              
                              
                              676,454
                              
                              
                              
                              (165,000
                              )NET
      DECREASE IN CASH AND CASH EQUIVALENTS
                              
                              
                              (2,154,217
                              )
                              
                              
                              (1,732,296
                              )CASH
      AND CASH EQUIVALENTS, BEGINNING OF PERIOD
                              
                              
                              5,982,779
                              
                              
                              
                              3,457,729CASH
      AND CASH EQUIVALENTS, END OF PERIOD
                              
                              $
                              3,828,562
                              
                              
                              $
                              1,725,433Cash
      paid for:Interest
                              
                              $
                              -
                              
                              
                              $
                              -Income
      taxes
                              
                              $
                              -
                              
                              
                              $
                              -NONCASH
      OPERATING AND FINANCING ACTIVITIES:Stock
      and stock options issued for services and
                                compensation
                              
                              $
                              1,682,452
                              
                              
                              $
                              655,000


See
report of independent registered public accounting firm
 and notes
to consolidated financial statements.
 9


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


FOR THE
THREE MONTHS ENDED OCTOBER 31, 2008 AND 2007








NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Organization, Nature, and
Continuance of Operations





Sunovia
Energy Technologies, Inc. (“the Company”) is incorporated in
Nevada.  The Company is developing, designing, and integrating
photovoltaic solar cells into products for incident management, energy efficient
advertising, and low-cost durable solar modules for easy installation and
incremental upgrading of capacity.  The Company is also developing and
selling environmentally responsible, energy efficient lighting products that are
based on the latest and most efficient light emitting diode (LED)
technologies.





On
November 27, 2007, Acadia Resources, Inc. (“Acadia”), Sunovia Solar, Inc., a
wholly owned subsidiary of Acadia (“Sunovia Solar”) and Sun Energy Solar, Inc.
entered into an Agreement and Plan of Merger which closed on November 28,
2007.  Pursuant to the terms of the Merger agreement, Sun Energy Solar
merged with and into Sunovia Solar, which became a wholly-owned subsidiary of
Acadia (the “Merger”). The transaction was accounted for as a purchase. On
December 17, 2007, Acadia changed its name to Sunovia Energy Technologies,
Inc.





In March,
2008, the Company launched a new subsidiary, EvoLucia, which is the solid state
lighting division of the Company. EvoLucia creates, patents, and markets
proprietary LED lighting fixtures through strategic partnerships and energy
solution providers.





Sun
Energy Solar was incorporated under the laws of the State of Delaware on
November 9, 2005.  Sun Energy Solar, Inc. was organized for the
purpose of developing solar related products and technologies.  The
Company was originally named Sologic, Inc.  On April 25, 2006, the
Company completed its name change from Sologic, Inc. to Sun Energy Solar,
Inc.





On
December 21, 2005, the Company acquired the patent rights (patent applied for)
to No. 60/617,263 Titled Substrate with Light Display, applied for on September
2, 2005, from Sparx, Inc., a Florida corporation 100% owned by the Company’s
Chief Executive Officer.  Sparx, Inc. had acquired the patent rights
from company officers who were the original inventors.  As
compensation under this agreement, the Company has granted Sparx, Inc., a
royalty of 4.9% of gross revenues (see Note B).





The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.  For the three months ended October
31, 2008 and 2007 the Company has experienced losses of $2,912,017 and
$2,379,377.  To date the Company has funded operations through the
issuance of common stock and common stock options.  Management’s plan
is to continue raising funds through future equity or debt financings as needed
until it achieves profitable operations.  The ability of the Company
to continue its operations as a going concern is dependent on continuing to
raise sufficient new capital to fund its business and development activities and
to fund ongoing losses, if needed, and ultimately on generating profitable
operations.





10


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Basis of
Consolidation





The
consolidated financial statements include the accounts of the Company and its
subsidiaries.  All significant intercompany balances and transactions
have been eliminated.





Accounting
Method





The
Company recognizes income and expenses on the accrual basis of
accounting.  The accompanying financial statements have been prepared
on the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States.





Use of
Estimates





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





Concentrations





Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash and cash equivalents.  The Company maintains cash
and cash equivalents in deposit accounts with one financial institution located
in the United States.  Deposit accounts exceed federally insured
limits.  Management does not believe the Company is exposed to
significant risks on such accounts.  Generally, these deposits may be
redeemed upon demand and, therefore, bear minimal interest rate
risk.  At October 31, 2008, the Company had an uninsured cash balance
of approximately $3,451,000.





Royalty
Agreements





The
Company has entered into an agreement that requires the payment of royalties to
Sparx, Inc. (See Note B), a company owned by the Chief Executive Officer and
largest stockholder.  The Company expenses royalties as product costs
during the period in which the related revenues are recorded.





Cash and Cash
Equivalents





For
purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.





Accounts
Receivable





Accounts
receivable are stated at the amount management expects to collect from
outstanding balances. Management provides for probable uncollectible amounts
through a charge to bad debt expense and a credit to an allowance for
uncollectible accounts based on its assessment of the current status of
individual accounts. Balances that are still outstanding after


11


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Management
has used reasonable collection efforts are written off through a charge to the
allowance for uncollectible accounts and a credit to accounts receivable.
Management deems all accounts receivable at October 31, 2008 collectible;
accordingly, no allowance for doubtful accounts is
required.  Management has not charged interest on accounts receivable
as of October 31, 2008.  At October 31, 2008, approximately 88% of
accounts receivable are due from two customers that have a common
ownership.





Furniture and Equipment,
Net





Furniture
and equipment are recorded at cost.  Maintenance, repairs and other
renewals are charged to expense when incurred.  Major additions are
capitalized, while minor additions, which do not extend the useful life of an
asset, are charged to operations when incurred.  When property and
equipment are sold or otherwise disposed of, the related cost and accumulated
depreciation is removed from the accounts, and any gain or loss is included in
operations.  Depreciation is calculated using the straight-line
method, in amounts sufficient to relate the cost of depreciable assets to
operations over their estimated useful lives, which range from three to seven
years.  Leasehold improvements are amortized using the straight-line
method over the lives of the respective leases or the service lives of the
improvements, whichever is shorter.





Accounting for Long-Lived
Assets





In
accordance with the provisions of Statement of Financial Accounting Standards
(SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived
Assets”, the Company’s policy is to evaluate whether there has been a permanent
impairment in the value of long-lived assets, certain intangibles and
goodwill.  In evaluating for possible impairment, the Company uses an
estimate of undiscounted cash flows.  Factors considered in the
valuation include current operating results, trends and anticipated undiscounted
future cash flows.  The Company has not recorded any impairment losses
since inception.





Intangible
Assets





In
accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, intangible
assets with an indefinite useful life are not amortized. Intangible assets with
a finite useful life are amortized using the straight-line method over the
estimated useful life.  All intangible assets are tested for
impairment annually during the fourth quarter of the fiscal year.  The
Company had no intangible assets as of October 31, 2008 and 2007.





Research and
Development





In
accordance with SFAS No. 2, “Accounting for Research and Development Costs”,
Research and Development ("R&D") expenses are charged to expense when
incurred.  R&D is performed internally, and the Company does not
perform R&D for other entities.  The Company has consulting
arrangements which are typically based upon a fee paid monthly or
quarterly.  Samples are purchased that are used in testing, and are
expensed when purchased.  R&D costs also include salaries and
related personnel expenses, direct materials, laboratory supplies, equipment
expenses and administrative expenses that are allocated to R&D based upon
personnel costs.


12


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Revenue
Recognition





In
accordance with SEC Staff Accounting Bulletin 101, “Revenue Recognition”, as
amended by Staff Accounting Bulletin 104, the Company recognizes revenue when
the following conditions have been met: there is persuasive evidence an
arrangement exists which includes a fixed price, there is reasonable assurance
of collection, the services or products have been provided and delivered to the
customer, no additional performance is required, and title and risk of loss has
passed to the customer.





Products
may be placed on consignment to a limited number of
resellers.  Revenue for these consignment transactions will also be
recognized as noted above.





Shipping and Handling
Costs





Amounts
charged to customers for shipping and handling of the Company’s products is
recorded as product revenue.  The related costs are recorded as cost
of sales.





Advertising





Advertising
costs, including direct response advertising costs, are charged to operations as
incurred. Advertising costs charged to expense for the years ended October 31,
2008 and 2007 totaled $8,077 and $1,000, respectively.





Stock Based
Compensation





For the
period from inception (November 9, 2005) through July 31, 2006, the Company had
adopted SFAS No. 123, “Accounting for Stock Based Compensation”.  SFAS
No. 123 allowed the Company to adopt a fair value basis of accounting for stock
options and other equity instruments or to continue to apply the existing
accounting required by Accounting Principles Board (APB) Opinion No. 25,
“Accounting for Stock Issued to Employees”.  The Company has also
adopted the disclosure provisions of SFAS No. 148, “Accounting for Stock Based
Compensation - Transition and Disclosure”.  This pronouncement
requires prominent disclosures in both annual and interim financial statements
about the method of accounting for stock based employee compensation and the
effect of the method used on reporting results.  Effective
August 1, 2006, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 123 (revised 2004), “Share-Based
Payment” (“SFAS 123R”) requiring that compensation cost relating to share-based
payment transactions be recognized in the financial statements.  The
cost is measured at the grant date, based on the calculated fair value of the
award, and is recognized as an expense over the employee’s requisite service
period (generally the vesting period of the equity award).  The
Company adopted SFAS 123R using the modified prospective method and,
accordingly, did not restate prior periods to reflect the fair value method of
recognizing compensation cost.  Under the modified prospective
approach, SFAS 123R applies to new awards and to awards that were outstanding on
August 1, 2006 that are subsequently modified, repurchased or
cancelled.


13


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Legal Costs Related to Loss
Contingencies





The
Company accrues legal costs expected to be incurred in connection with loss
contingencies as they occur.  As of October 31, 2008 and 2007, there
were no loss contingencies expected.





Income Taxes
(Benefits)





The
Company utilizes the guidance provided by SFAS No. 109, “Accounting for Income
Taxes”.  Deferred tax assets and liabilities are determined based on
the difference between the financial statement and tax basis of assets and
liabilities as measured by the enacted tax rates that are expected to be in
effect when these differences reverse.  Valuation allowances are
provided if necessary to reduce deferred tax assets to the amount expected to be
realized.





The
Company has established a valuation allowance against the deferred tax asset due
to uncertainties in its ability to generate sufficient taxable income in future
periods to make realization of such  assets more likely than
not.  The Company has not recognized an income tax benefit for the
operating losses generated during the three months ended October 31, 2008 and
2007.





At
October 31, 2008, the Company had a net operating loss carryforward of
approximately $44,023,000 that may be offset against future taxable income
through 2026.  The amount of the income tax benefit for the three
months ended October 31, 2008 and 2007, before the valuation allowance was
applied, totaled approximately $1,212,000 and $892,000,
respectively.





Loss Per
Share





Loss per
share is computed using the basic and diluted calculations on the statement of
operations.  Basic loss per share is calculated by dividing net loss
available to common share stockholders by the weighted average number of shares
of common stock outstanding for the period.  Weighted average number
of shares has been adjusted for stock splits and reverse stock
splits.  Diluted loss per share is calculated by dividing net loss by
the weighted average number of shares of common stock outstanding for the
period, adjusted for the dilutive effect of common stock equivalents, using the
treasury stock method.  The total number of shares not included in the
calculation at October 31, 2008 and 2007 as the effect is antidilutive was
508,247,267 and 500,000,000.





Inventory





Inventory
consists of various electronic components used in the assembly of LED lights,
power film and batteries.  Inventory is stated at the lower cost or
market.  Cost is determined by the first-in, first-out (FIFO)
method.




14


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Comprehensive
Income





The
Company has adopted SFAS No. 130, “Reporting Comprehensive Income”. The
statement establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements.  The statement requires all items that are required to be
recognized under accounting standards as components of comprehensive income to
be disclosed in the financial statements.





Comprehensive
income is defined as the change in equity during a period from transactions and
other events from non-owner sources.  The Company has no components of
comprehensive income and, accordingly, net loss is equal to comprehensive loss
for the three months ended October 31, 2008 and 2007.





Transfer of Financial
Assets





In March
2006, the FASB issued SFAS 156 “Accounting for Servicing of Financial Assets.”
This Statement amends FASB Statement No. 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities,” with respect
to the accounting for separately recognized servicing assets and servicing
liabilities.  This statement was effective for the first fiscal year
that began after August 1, 2007.  Adoption of this statement has not
had any material effect on the Company’s financial position or results of
operations.





Fair Value of Financial
Instruments





The
Company’s financial instruments, including cash and cash equivalents, accounts
payable and accrued liabilities are carried at cost, which approximates their
fair value, due to the relatively short maturity of these
instruments.





Patent
Costs





The costs
of internally developing, maintaining, or restoring such intangibles that are
not specifically identifiable, have indeterminate lives, or are inherent in a
continuing business are charged to expense when incurred.  Costs
capitalized in association with patents totaled $47,008 at October 31,
2008.  Patent costs are included in other assets on the balance
sheet.





Reclassifications





Certain
amounts for the periods ended October 31, 2007 have been reclassified in the
comparative financial statements to be comparable to the presentation for the
periods ended October 31, 2008.  These reclassifications had no effect
on net loss as previously reported.




15


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE A -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)





Accounting Changes and Error
Corrections





In May
2005, the Financial Accounting Standards Board ("FASB") issued Statement No.
154, “Accounting Changes and Error Corrections”.  This Statement
replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3,
Reporting Accounting Changes in Interim Financial Statements, and changes the
requirements for the accounting for, and reporting of, a change in accounting
principle.  This Statement applies to all voluntary changes in
accounting principle.  It also applies to changes required by an
accounting pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions.  When a pronouncement includes
specific transition provisions, those provisions should be
followed.





SFAS 154
is effective for accounting changes and corrections of errors made in fiscal
years beginning after December 15, 2005.  Adoption of this Statement
did not have any material impact on the financial statements.





NOTE B -
ACQUISITION OF PATENT RIGHTS FROM SPARX, INC.





On
December 21, 2005, the Company acquired certain patent rights (see Note A) from
Sparx, Inc., a Florida corporation 100% owned by the Company’s Chief Executive
Officer and largest stockholder.  As compensation under this
agreement, the Company has granted Sparx, Inc., a royalty of 4.9% of gross
revenues. The Company has not paid or accrued any royalties to date per an
agreement with the Chief Executive Officer.





The
Company entered into a change of control severance agreement with the Chief
Executive Officer and largest stockholder on December 21, 2005.  If
any person, entity, or group acquires beneficial ownership of 20% or more of the
Company, the Chief Executive Officer is granted voting rights on a number of
common shares that would result in his having a voting majority of shares needed
for any stockholder meeting.





If there
is a change of control of the Company, as defined within the agreement, the
Chief Executive Officer will receive a cash payment equal to the value of his
annual bonus for the performance period that includes the date the change in
control occurred, disregarding any applicable vesting requirements; provided
that such amount will be equal to the product of the target award percentage
under the applicable annual incentive plan or program in effect immediately
prior to the change in control times the base pay, but prorated to base payment
only on the portion of the executive’s service that had elapsed during the
applicable performance period through the change in control.  Such
payments are to be made within five business days after the change in
control.





If the
Company fails to comply with any of the terms of the agreement, any related
legal expenses will be paid by the Company, without respect to whether the Chief
Executive Officer prevails.  Reimbursement for relocation expenses on
a basis consistent with the Company’s practices for senior executives, up to
$50,000, shall be provided to the executive, if the executive is relocated at
the request of the Company within five years of the termination
date.  For a period of twelve months following the termination date,
the Company shall provide the executive with benefits substantially similar to
those that the Chief Executive Officer was entitled to receive immediately prior
to the termination date.





16


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE C -
INCOME TAXES





The
Company's net deferred tax asset as of October 31, 2008 and 2007 is as
follows:


2008
                          
                          
                          2007Deferred
      tax assetNet
      operating loss carryforward
                          
                          $
                          16,511,000
                          
                          
                          $
                          3,134,000Valuation
      allowance
                          
                          
                          (16,511,000
                          )
                          
                          
                          (3,134,000
                          )Net
      deferred tax asset
                          
                          $
                          -
                          
                          
                          $
                          -




A
reconciliation of (provision) benefit for income taxes to income taxes at
statutory rate is as follows:




For
      the
                      
                      
                      For
      thePeriod
      from
                      
                      
                      Period
      fromInception
                      
                      
                      InceptionFor
      the Three
                      
                      
                      For
      the Three
                      
                      
                      (November
      9,
                      
                      
                      (November
      9,Months
      Ended
                      
                      
                      Months
      Ended
                      
                      
                      2005)
      through
                      
                      
                      2005)
      throughOctober 31, 2008
                      
                      
                      October 31, 2007
                      
                      
                      October 31, 2008
                      
                      
                      October 31, 2006Federal
      income (tax) benefitat
      statutory rate
                      
                      $
                      932,000
                      
                      
                      $
                      761,000
                      
                      
                      $
                      761,000
                      
                      
                      $
                      2,454,000State
      (taxes) benefit
                      
                      
                      160,000
                      
                      
                      
                      131,000
                      
                      
                      
                      131,000
                      
                      
                      
                      422,000Valuation
      allowance
                      
                      
                      (1,092,000
                      )
                      
                      
                      (892,000
                      )
                      
                      
                      (892,000
                      )
                      
                      
                      (2,876,000
                      )(Provision)
      benefit for income taxes
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -
                      
                      
                      $
                      -




NOTE D -
FURNITURE AND EQUIPMENT, NET





At
October 31, 2008 and July 31, 2008 furniture and equipment consisted of the
following:




October 31, 2008
                    
                    
                    July 31, 2008Computer
      equipment
                    
                    $
                    233,025
                    
                    
                    $
                    221,540Furniture
      and fixtures
                    
                    
                    29,350
                    
                    
                    
                    29,350Leasehold
      improvements
                    
                    
                    36,730
                    
                    
                    
                    36,730299,105
                    
                    
                    
                    287,620Less:
      accumulated depreciation
                    
                    
                    (93,084
                    )
                    
                    
                    (77,005
                    )Furniture
      and equipment
                    
                    $
                    206,021
                    
                    
                    $
                    210,615
  17
 SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE D -
FURNITURE AND EQUIPMENT, NET (CONTINUED)





Total
depreciation expense for the three months ended October 31, 2008 and 2007 was
$16,079 and $10,481, respectively.





NOTE E -
STOCKHOLDERS' EQUITY





Common
Stock





Effective
November 27, 2007 the Company declared a 1 for 4 reverse stock split of the
Company’s common stock.  The reverse stock split resulted in a
decrease of shares outstanding of 175,455,294 shares.  The par value
of the shares was changed on the same date to $.001 per share.





In
November 2007, the Company exchanged 7,350,000 shares of Acadia Resources, Inc.
common stock (See Notes A and Q) for the same number of shares in the
Company.





On
December 4, 2007, the Company declared a 4.5 for 1 forward stock split of the
Company’s common stock, effective to stockholders of record on December 11,
2007.  The stock split resulted in an additional 230,422,843 shares of
the Company’s common stock being issued.





As of
January 31, 2008, the Company redeemed 37,523,114 shares of Sun Energy Solar,
Inc. common stock at the issuance price of $.10.  Subsequent to
January 31, 2008, the Company issued 28,948,975 shares of Sunovia Energy
Technologies, Inc. common stock to shareholders who chose not to receive cash
for their shares.  Cash payments totaling $207,385 were made to
shareholders of Sun Energy Solar, Inc.  There are 6,500,000 shares of
Sunovia Energy Technologies, Inc. common stock still to be issued.





NOTE F -
RENTAL AND LEASE INFORMATION





Operating
Leases





The
Company leases office space/warehouse facilities in Sarasota, Florida under an
operating lease.  The lease term is for a period of three years and
commenced on October 1, 2006.  The base rent over the term is
approximately $134,000.  The company is responsible for all taxes,
insurance and utility expenses associated with the leased
property.  Rental expense for the three months ended October 31, 2008
and 2007 totaled $18,606 and $15,606, respectively.  Future minimum
rental payments for the remaining term are as follows:




2009
                    
                    $
                    44,5532010
                    
                    
                    11,220$
                    55,773


18




SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE G -
INVESTMENT IN EPIR TECHNOLOGIES, INC.





The
Company has entered into a research, development and supply agreement with EPIR
Technologies, Inc. (EPIR) for an exclusive marketing, supply and development
partnership for advanced solar photovoltaic (PV) and encapsulate technologies to
develop advanced light detection devices and II-VI materials.  The
II-VI materials are uniquely combined to form the semiconductors that are used
in solar PV technologies.  The partnership also provides for the
commercialization of advanced light detection technologies that form a
foundation for accelerating advanced PV development that is aimed at reducing
the overall cost of energy from a solar PV System.  The Company and
EPIR are developing a solar PV encapsulate that eliminates the need for glass
encapsulates that are prevalent in today’s market.





Consideration
for the agreement included exchanging 37,803,852 shares of the Company’s common
stock for 202,200 (10%) shares of EPIR common stock.





The
investment in EPIR is accounted for under the cost method of accounting because
the Company does not exercise significant influence over EPIR’s operations.
Under the cost method of accounting, investments are carried at cost and are
only adjusted for other-than-temporary declines in fair value and distributions
of earnings.





Payments
as shown in the following schedule through October 1, 2008 have been made by the
Company.


19


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE G -
INVESTMENT IN EPIR TECHNOLOGIES, INC. (CONTINUED)





The
agreement calls for the Company to make to EPIR the non-refundable payments set
forth below:




Payment Amount
                                          
                                          
                                          Payment to be received
by$
                                          1,700,000
                                          
                                          
                                          November
      30, 20071,000,000
                                          
                                          
                                          February
      1, 20081,000,000
                                          
                                          
                                          April
      1, 20081,000,000
                                          
                                          
                                          October
      1, 20081,000,000
                                          
                                          
                                          December
      1, 20081,000,000
                                          
                                          
                                          March
      1, 20091,000,000
                                          
                                          
                                          June
      1, 20091,000,000
                                          
                                          
                                          August
      1, 20091,000,000
                                          
                                          
                                          October
      1, 20091,000,000
                                          
                                          
                                          December
      1, 20091,000,000
                                          
                                          
                                          March
      1, 20101,000,000
                                          
                                          
                                          June
      1, 20101,000,000
                                          
                                          
                                          August
      1, 20101,000,000
                                          
                                          
                                          October
      1, 20101,000,000
                                          
                                          
                                          December
      1, 2010500,000
                                          
                                          
                                          April
      1, 2011500,000
                                          
                                          
                                          October
      1, 2011500,000
                                          
                                          
                                          April
      1, 2012500,000
                                          
                                          
                                          October
      1, 2012500,000
                                          
                                          
                                          April
      1, 2013500,000
                                          
                                          
                                          October
      1, 2013500,000
                                          
                                          
                                          April
      1, 2014500,000
                                          
                                          
                                          October
      1, 2014500,000
                                          
                                          
                                          April
      1, 2015500,000
                                          
                                          
                                          October
      1, 2015500,000
                                          
                                          
                                          April
      1, 2016500,000
                                          
                                          
                                          October
      1, 2016500,000
                                          
                                          
                                          April
      1, 2017500,000
                                          
                                          
                                          October
      1, 2017500,000
                                          
                                          
                                          March
      1, 2018500,000
                                          
                                          
                                          October
      1, 2018$
                                          23,700,000




20


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE G -
INVESTMENT IN EPIR TECHNOLOGIES, INC. (CONTINUED)





On June
30, 2008, The Company issued 8,990,000 shares, valued at $10,338,500 or $1.15
per share to employees of EPIR Technologies, Inc. for research. The Company’s
Chief Executive Officer and President have agreed to cancel 4,495,000 shares
each of their outstanding common stock to offset the dilution to the Company’s
common stock shares.





NOTE H –
SEGMENT INFORMATION





During
the year ended July 31, 2007, the Company was organized into operating segments
based on product groupings. Prior to this date, the Company did not have
lighting product. These operating segments have been aggregated into two
reportable business segments: Solar Substrate and Lighting Product. The
reportable segments were determined in accordance with the way that management
of the Company develops and executes the Company’s operations. The accounting
policies of the business segments are the same as the policies described in Note
A.





In
accordance with SFAS No. 131, for purposes of business segment performance
measurement, the Company does not allocate to the business segments items that
are of a nonoperating nature or corporate organizational and functional expenses
of a governance nature. Corporate expenses consist of corporate office expenses
including compensation, benefits, occupancy, depreciation, and other
administrative costs.





Assets of
the Solar Substrate segment consist of cash, capitalized patent costs, and
inventory. Assets of the Lighting Product segment consist of inventory. All
other assets including prepaid expenses, deposits, and fixed assets are
allocated to Corporate and Other.





Consolidated
      Operations by Business SegmentFor the three months ended October 31,
      2008Solar
                                                    Substrate
                                                  
                                                  
                                                  Lighting
                                                    Product
                                                  
                                                  
                                                  Corporate
                                                    and
      OtherNet
      sales
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  310,823
                                                  
                                                  
                                                  $
                                                  -Operating
      loss
                                                  
                                                  $
                                                  (1,508,333
                                                  )
                                                  
                                                  $
                                                  (1,240,718
                                                  )
                                                  
                                                  $
                                                  (185,519
                                                  )Interest
      income
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  22,553Depreciation
      and amortization
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  -
                                                  
                                                  
                                                  $
                                                  (16,079
                                                  )Assets
                                                  
                                                  $
                                                  3,780,385
                                                  
                                                  
                                                  $
                                                  843,786
                                                  
                                                  
                                                  $
                                                  3,933,724




21


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE H –
SEGMENT INFORMATION (CONTINUED)




For the three months ended October 31,
      2007Solar
                                    Substrate
                                  
                                  
                                  Lighting
                                    Product
                                  
                                  
                                  Corporate
                                    and
      OtherNet
      sales
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -Operating
      loss
                                  
                                  $
                                  (1,852,167
                                  )
                                  
                                  $
                                  (316,431
                                  )
                                  
                                  $
                                  (243,123
                                  )Interest
      income
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  32,344Depreciation
      and amortization
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (10,481
                                  )Assets
                                  
                                  $
                                  1,865,228
                                  
                                  
                                  $
                                  9,313
                                  
                                  
                                  $
                                  238,104


NOTE I -
RETIREMENT PLAN





Effective
January 1, 2007, the Company implemented a 401(k) plan, which allows all
eligible employees to contribute a percentage of their salary and receive a safe
harbor matching contribution from the Company which cannot exceed certain
maximum defined limitations.  The retirement expense for the three
months ended October 31, 2008 and 2007 was approximately $4,400 and $3,900,
respectively.





NOTE J -
COMMITMENTS AND CONTINGENCIES





In the
normal course of business, the Company is subject to litigation.  The
Company believes that any adverse outcome from potential litigation would not
have a material effect on its financial position or results of
operations.





NOTE K -
RELATED PARTY TRANSACTIONS





Transactions
with related parties during the three months ended October 31, 2008, include the
consulting agreements discussed in Note M and the stock options discussed in
Note O.





NOTE L -
RISKS AND UNCERTAINTIES





Operating
results may be affected by a number of factors.  The Company is
dependent upon a number of major inventory and intellectual property
suppliers.  Presently, the Company does not have formal arrangements
with any supplier, and shortages of key solar components exist in the
industry.  In the future, if the Company is unable to obtain
satisfactory supplier relationships, or a critical supplier had operational
problems, or ceased making material available, operations could be adversely
affected.


22


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


NOTE M -
EMPLOYMENTCONTRACTS AND CONSULTING
AGREEMENTS





The
Company has signed a series of contracts with stockholders, directors, and
consultants as listed below:





In June
2006, the Company entered into a one-year employment agreement with its Chief
Executive Officer.  Under the employment agreement, the Chief
Executive Officer received a base salary of two million shares of common stock
per year.  The employment agreement further provided up to two million
shares of common stock for each year of service beginning June,
2007.  In May 2008, the Company entered into a new contract with its
Chief Executive Officer that reduces compensation to employee benefits
only.





In June
2006, the Company entered into an employment agreement with its Co-founder and
current Business Development Representative.  Under the employment
agreement, the Co-founder and current Business Development Representative
received a base salary of two million shares of common stock per
year.  The employment agreement further provided up to two million
shares of common stock for each year of service beginning June,
2007.  In May, 2008, the Company entered into a new contract with its
Co-founder and Business Development Representative that reduces compensation to
employee benefits only.





In July
2006, the Company entered into a one-year employment agreement with the
President.  Under a revised employment agreement dated January 25,
2007, the Company granted the President two million three hundred fifty thousand
shares of common stock initially and five hundred thousand shares for each
quarter of service.  The employment agreement granted the President
cash remuneration of $150,000 per year and a one-time payment of $60,000. In May
2008, the Company entered into a new contract with its President that eliminated
all equity compensation but retained all other terms.





In May
2006, the Company entered into a one-year employment agreement with its current
Chief Financial Officer.  Under the employment agreement, the Company
granted the current Chief Financial Officer one million shares of common stock
for each year of service after his initial year of employment in addition to his
two million founding shares.  The employment agreement was
automatically renewable each year and was subject to conditional vesting based
on the completion of each year of service.  The employment agreement
grants the Chief Financial Officer an annual salary of $100,000 per year. In May
2008, the Company entered into a new contract with its Chief Financial Officer
with the same terms with an additional provision to receive 488,060 stock
options to purchase common stock at $0.62 per share (see Note O).





Effective
May 1, 2008, the Company entered into new employment agreements with its
employees. These agreements supersede all employment agreements between the
Company and the employees. Under the new agreements, 4,880,600 stock options
were granted to ten employees (see Note O).





23


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE M -
EMPLOYMENTCONTRACTS AND CONSULTING
AGREEMENTS (CONTINUED)





In May
2006, the Company entered into a consulting agreement with an individual who had
worked with the Company in its initial stage whereby the individual would
develop relationships with customers that the Company considers crucial to its
development and long term success. On March 17, 2008, the Company and the
individual entered into an amended and restated consulting agreement whereby the
individual would provide the Company with services related to the introduction
of the Company to nationally recognized entities for product distribution
opportunities, introduction to potential sales leads and acting as a liaison to
various corporations.  The term of the agreement began on May 22, 2006 and
is effective through May 2009. As compensation for providing such services, the
Company issued to the individual (i) an option to purchase an aggregate of
25,000,000 shares of common stock of the Company at an exercise price of $0.005
on a cashless basis for a term of seven years (see Note O) and (ii) an option to
purchase an aggregate of 5,000,000 shares of common stock of the Company at an
exercise price of $0.005 on a cashless basis for a term of seven years, which
shall be issued on January 1, 2009. In May 2008, these options were exercised on
a cashless basis.





In July
2007, the Company entered into a two-year agreement with a strategic business
advisor.  The business advisor will scrutinize Company products and
opportunities, and will make recommendations that he feels will be important to
realizing value and furthering efficiencies within the Company.  The
agreement was revised in October 28, 2008. Under the revised agreement, the
advisor received a fee of 1,000,000 shares of common stock.  In
October 2008, the Chief Executive Officer agreed to effectively cancel options
covering 3,000,000 shares of common stock (see Note O). The equivalent options
will be issued to the strategic business advisor under the revised agreement
with 1/3 vesting as of the effective date of the contract, 1/3 vesting on July
16, 2009, and the remainder on July 16, 2010.





In August
2007, the Company entered into a ten year agreement with an individual to serve
as a scientific advisor to the Company.  Under the agreement the
Company granted the principal 6,000,000 shares of common stock initially and
1,666,666 shares for each year of service commencing with the completion of the
second year of services and terminating at the completion of the tenth year of
services.





In August
2007, the Company entered into a six month consulting agreement with an
individual. The consultant will render engineering services in accordance with
generally accepted and currently recognized engineering practices, procedures,
and principles. In consideration for services rendered, the Company has accrued
a fee of 500,000 shares of common stock.





In
December, 2007, the Company entered into a one year consulting agreement with an
individual.  The consultant renders research, product development, and
strategic partnership development advice.  In consideration for
services rendered, the Company pays the consultant a fee equal to 125,000 shares
of common stock every three months.  In addition, the Company provided
an option to purchase up to 100,000 shares of the Company’s common stock at an
exercise price of $0.10 per share and an expiration date of December 31, 2009
(see Note O).


24


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE M -
EMPLOYMENTCONTRACTS AND CONSULTING
AGREEMENTS (CONTINUED)





In
February, 2008, an entity which the Company has agreed to finance, entered into
a research and development agreement with an educational institution in exchange
for certain patent rights. The educational institution will perform research and
development services and assign intellectual property created during the course
of those services to the entity, who in turn will assign such rights to the
Company.  During the three months ended October 31, 2008, the Company
paid $200,000 to the educational institution. The Company paid $625,000 to the
educational institution during the year ended July 31, 2008.  If an
agreement is made to extend the agreement to the second year, the Company will
pay an additional $2,000,000. If a decision is made to extend the agreement to
the third year, the Company will make a final payment of
$1,000,000.





In June,
2008, the Company entered into a one year strategic sales, marketing, sourcing,
consulting and representation agreement with a professional organization. The
organization will act as the Company’s non-exclusive sales
representative.  The Company will pay the organization a one-time
tooling costs fee of $50,000 if sales forecasts are achieved.  The
Company will also pay a 2% sales commission. The Company has also agreed to pay
the organization $100,000 per year payable monthly as well as 500,000 shares
annually of common stock paid quarterly beginning October 1, 2008 during the
term of the agreement.





In June,
2008, the Company entered into a three year consulting agreement with an
individual. The individual will provide advice and recommendations and introduce
the Company to nationally recognized entities. In consideration for services
rendered, the Company has issued the consultant a fee of 265,000 shares of
common stock.





In June,
2008, the Company entered into a three month consulting agreement with a
company. The consultant will provide advice to the Company in corporate
development and strategic planning. In consideration for services rendered, the
Company pays the consultant a fee equal to $2,500 and 15,000 shares of common
stock per month.





In June,
2008, the Company entered into an agreement with a company. The consultant will
serve as the Company’s principle engineering consultant for strategic product
development and marketing support efforts. In consideration for services
rendered, the Company will pay the consultant on an hourly basis. In addition,
the Company will also provide an option to purchase up to 3,000,000 shares of
the Company’s common stock at an exercise price of $0.10 per share. The options
vest according to a schedule over a period of three years.  500,000
options vested during the year ended July 31, 2008 (see Note O).





On June
30, 2008, The Company issued 8,990,000 shares, valued at $10,338,500 or $1.15
per share to employees of EPIR technologies inc. as compensation. The Company’s
Chief Executive Officer and Business Development Representative have agreed to
cancel 4,495,000 shares of their common stock each to offset the dilution to the
Company’s common stock (see Note G).





25




SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


NOTE M -
EMPLOYMENTCONTRACTS AND CONSULTING
AGREEMENTS (CONTINUED)





In
October 2008, the Company entered into a two year consulting agreement with an
organization. The organization will provide assistance with (i) expansion and
growth, (ii) brand building, (iii) public relations, marketing and business
development, (iv) strategic advice and assistance in Washington and key states,
and (v) assistance with the advisory board and other personnel matters. In
consideration for services rendered, the Company will pay the organization a
monthly retainer amount of $10,000. Upon closing of additional financing which
is expected to be during the first quarter of 2009, the monthly retainer will be
increased to $25,000. The Company issued the organization 100,000 shares of
common stock on the first day of each quarter beginning in the first quarter of
2009 and ending in the fourth quarter of 2010. The Company issued the
organization an option to purchase 200,000 shares of the Company’s common stock
with an expiration period of five years and an exercise price of 75% of the
market bid price as of the date of the grant.   In October 2008,
the Chief Executive Officer agreed to effectively cancel options covering
500,000 shares of common stock. The equivalent options were then issued to the
organization. The 700,000 options vested during the three months ended October
31, 2008. (see Note O)





In
October 2008, the Company entered into a one year consulting agreement with a
consulting company. The consulting company will (i) assist with the development
of advertising and marketing programs and materials, (ii) review and make any
necessary modifications to the Company press releases, collaterals,
presentations, and other sales, and marketing and promotional materials, (iii)
assist with key executive searches and offer executive qualification
evaluations,  (iv) consult biweekly with the President and/or CEO of
the Company, (v) attend select meetings with the President and/or CEO of the
Company, and (vi) assist with due diligence of potential acquisitions and
partnerships. In consideration for services rendered, the Company will pay the
consulting company a fee of $7,500 per month. The consulting company will also
receive two stock options consisting of 400,000 shares each of common stock of
the Company.





NOTE N -
STOCK COMPENSATION





The
Company has recorded expenses, paid or accrued in common stock or common stock
options, of $565,385 and $893,000 for the three months ended October 31, 2008
and 2007, respectively. For the three months ended October 31, 2008 consulting
expenses paid or accrued for payment in common stock or common stock options,
totaled $565,385.  For the three months ended October 31, 2007,
salary, consulting and research and development expenses paid or accrued for
payment in common stock, totaled $247,500, $45,500, and $600,000,
respectively.





26


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE O –
STOCK OPTION PLANS





The
Company granted stock options to its Chief Executive Officer under a stock
option agreement dated December 20, 2005.  The 2005 stock option
agreement provides for the granting of non-qualified and incentive stock options
to purchase up to 500,000,000 shares of common stock for a period not to exceed
15 years.  The options are vested.  Under the agreement, the
option exercise price equals $.10, which was the stock's market price on the
date of grant.  In December, 2007, the Chief Executive Officer then
transferred the options to Craca Properties, LLC, which he had become 100% owner
of. In October, 2008, the CEO agreed to cancel the equivalent of .7% of his
common stock options covering 3,500,000 shares. The equivalent options will then
be issued to two consultants of the Company (See Note M and Note R). 1,500,000
were vested in October 2008, 1,000,000 will vest on July 16, 2009, and the
remaining 1,000,000 will vest on July 16, 2010.





The
Company measured compensation for 500,000,000 common stock options under APB
Opinion No. 25. No compensation cost has been recognized as the purchase price
for the options was at or above the fair market value of the underlying stock at
the date of grant.





On
December 6, 2007, options for 100,000 shares were issued to a consultant to the
Company for services, exercisable at a price of $.10. The total consulting
expense related to these options totaled $20,080.





On March
17, 2008, options for 25,000,000 shares were issued to another consultant to the
Company for services, exercisable at a price of $.005. The total consulting
expense related to these options totaled $6,215,000. These options were
exercised on a cashless basis in May 2008.





The fair
value of the December 6, 2007 and the March 17, 2008 options is estimated on the
date of grant using the Black-Scholes option pricing model with the following
assumptions used: risk-free interest rates of 6%, expected volatility of 130%
and expected lives of 2-7 years.  No dividends were assumed in the
calculations.





In April
2008, the Company’s Board of Directors approved the 2008 Incentive Stock Plan
which authorizes, up to a maximum of 30,000,000 shares, the granting of awards
to key employees, directors, and consultants in the form of options to purchase
the Company’s common stock or restricted stock. The Company’s Board of Directors
determines the number of shares, the term, the frequency and date, the type, the
exercise periods, any performance criteria pursuant to which awards may be
granted and the restrictions and other terms and conditions of each grant of
restricted shares in accordance with the terms of the plan. The Company measures
compensation for these options under SFAS 123R.  The cost is measured
at the grant date, based on the calculated fair value of the award, and is
recognized as an expense over the employee’s requisite service period (generally
the vesting period of the equity award).





On May 1,
2008, options for 4,880,600 shares were issued to ten employees for services,
exercisable at a price of $.62. The options terminate five years from the date
of the option agreement.  The total salary expense related to these
options totaled $2,787,009 (see Note M).  There is no unrecognized
compensation cost related to unvested options at October 31, 2008.




27




SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE O –
STOCK OPTION PLANS (CONTINUED)





On June
6, 2008, options for 3,000,000 shares were granted to a consultant, exercisable
at a price of $.10.  The options vest over a period of three years,
with 500,000 options vesting during


the year
ended July 31, 2008.  The consulting expense related to these options
totaled $641,195.  Unrecognized consulting costs of $3,200,000 related
to unvested options will be recognized over the vesting period.





The fair
value of the May 1, 2008 and June 6, 2008 options are estimated on the date of
grant using the Black-Scholes option pricing model with the following
assumptions used: risk-free interest rates of 6%, expected volatility of 130%
and expected life of 3 years.  No dividends were assumed in the
calculations.





On
October 1, 2008, the Chief Executive Officer effectively cancelled 500,000 of
his 500,000,000 outstanding options. The equivalent options were then issued to
a consultant under an agreement dated October 1, 2008 (see Note M). The
consulting expense related to these options totaled $324,150. The Company also
granted an option for an additional 200,000 shares of common stock to the
consultant on October 1, 2008, exercisable at $.4875. The consulting expense
related to these options totaled $116,020.





On
October 10, 2008, options for 800,000 shares, exercisable at $.10, were granted
to a consultant. 400,000 options vest on January 1, 2009 with the remaining
vesting on March 31, 2009. 100,000 options vested during the three months ended
October 31, 2008. The consulting expense related to these options totaled
$55,422. The unrecognized compensation expense associated with these options is
$387,940.





On
October 28, 2008, the Chief Executive Officer agreed to effectively cancel
options covering 3,000,000 shares (see Note O). The equivalent options will be
issued to the strategic business advisor under the revised agreement. 1,000,000
shares vested retroactively as of the original date of the contract of July
2007. 1,000,000 shares will vest on July 16, 2009 with the remainder vesting on
July 16, 2010. The consulting expense related to these options totaled $800,000.
The unrecognized compensation cost associated with these options is
$1,600,000.





The fair
value of the October 1, 2008 options for 200,000 shares and the October 10, 2008
options for 100,000 shares are estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions used:
risk-free interest rates of 6%, expected volatility of 130% and expected life of
5 years.  No dividends were assumed in the calculations.





The fair
value of the October 1, 2008 and October 28, 2008 options for 500,000 and
1,000,000 shares are estimated on the date of grant using the Black-Scholes
option pricing model with the following assumptions used: risk-free interest
rates of 6%, expected volatility of 130% and expected life of 15
years.  No dividends were assumed in the
calculations.


28


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE O –
STOCK OPTION PLANS (CONTINUED)





A summary
of the Company’s stock option activity is as follows for the year ended July 31,
2008 and the three months ended October 31, 2008.




July
      31, 2008
                                                            
                                                            
                                                            October
      31, 2008Options
                                                            
                                                            
                                                            Weighted
      averageexercise price
                                                            
                                                            
                                                            Options
                                                            
                                                            
                                                            Weighted
      averageexercise priceOptions
      outstanding atbeginning
      of year
                                                            
                                                            
                                                            500,000,000
                                                            
                                                            
                                                            $
                                                            0.100
                                                            
                                                            
                                                            
                                                            507,980,600
                                                            
                                                            
                                                            $
                                                            0.100Options
      granted
                                                            
                                                            
                                                            32,980,600
                                                            
                                                            
                                                            
                                                            0.100
                                                            
                                                            
                                                            
                                                            4,500,000
                                                            
                                                            
                                                            
                                                            0.580Options
      cancelled
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            
                                                            (3,500,000
                                                            )
                                                            
                                                            
                                                            0.100Options
      exercised
                                                            
                                                            
                                                            (25,000,000
                                                            )
                                                            
                                                            
                                                            0.005507,980,600
                                                            
                                                            
                                                            $
                                                            0.105
                                                            
                                                            
                                                            
                                                            508,980,600
                                                            
                                                            
                                                            $
                                                            0.109


The
information with respect to stock options outstanding at October 31, 2008 is as
follows:




Options
      OutstandingWeighted
      averageNumber
                                                                
                                                                
                                                                Remaining
                                                                
                                                                
                                                                Weighted
      average
                                                                
                                                                
                                                                Aggregate
      IntrinsicOutstanding
                                                                
                                                                
                                                                Contractual
      Term
                                                                
                                                                
                                                                exercise
      price
                                                                
                                                                
                                                                Value500,900,000
                                                                
                                                                
                                                                
                                                                12.93
                                                                
                                                                
                                                                $
                                                                0.100
                                                                
                                                                
                                                                $
                                                                225,405,0003,000,000
                                                                
                                                                
                                                                
                                                                15.00
                                                                
                                                                
                                                                
                                                                0.800
                                                                
                                                                
                                                                
                                                                (750,000
                                                                )200,000
                                                                
                                                                
                                                                
                                                                5.00
                                                                
                                                                
                                                                
                                                                0.488
                                                                
                                                                
                                                                
                                                                12,5004,880,600
                                                                
                                                                
                                                                
                                                                3.00
                                                                
                                                                
                                                                
                                                                0.620
                                                                
                                                                
                                                                
                                                                (341,642
                                                                )508,980,600
                                                                
                                                                
                                                                
                                                                12.84
                                                                
                                                                
                                                                $
                                                                0.109
                                                                
                                                                
                                                                $
                                                                224,325,858


Aggregate
intrinsic value in the table above represents the total pre-tax intrinsic value
(difference between the Company’s closing stock price on October 31, 2008 and
the exercise price, multiplied by the number of in-the-money options) that would
have been received by the option holders had all the option holders exercised
their options on October 31, 2008.  This amount changes based on the
fair market value of the Company’s stock.


29


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE O –
STOCK OPTION PLANS (CONTINUED)





The
information with respect to stock options vested at October 31, 2008 is as
follows:





Options
      VestedWeighted
      averageNumber
                                                        
                                                        
                                                        Remaining
                                                        
                                                        
                                                        Weighted
      average
                                                        
                                                        
                                                        Aggregate
      IntrinsicOutstanding
                                                        
                                                        
                                                        Contractual
      Term
                                                        
                                                        
                                                        exercise
      price
                                                        
                                                        
                                                        Value497,700,000
                                                        
                                                        
                                                        
                                                        12.99
                                                        
                                                        
                                                        $
                                                        0.100
                                                        
                                                        
                                                        $
                                                        223,965,0001,000,000
                                                        
                                                        
                                                        
                                                        15.00
                                                        
                                                        
                                                        
                                                        0.800
                                                        
                                                        
                                                        
                                                        (250,000
                                                        )200,000
                                                        
                                                        
                                                        
                                                        5.00
                                                        
                                                        
                                                        
                                                        0.488
                                                        
                                                        
                                                        
                                                        12,5004,880,600
                                                        
                                                        
                                                        
                                                        3.00
                                                        
                                                        
                                                        
                                                        0.620
                                                        
                                                        
                                                        
                                                        (341,642
                                                        )503,780,600
                                                        
                                                        
                                                        
                                                        12.89
                                                        
                                                        
                                                        $
                                                        0.107
                                                        
                                                        
                                                        $
                                                        223,385,858


NOTE P -
RECENT ACCOUNTING PRONOUNCEMENTS





The
Financial Accounting Standards Board has issued SFAS No. 155 “Accounting for
Certain Hybrid Financial Instruments”, but it has not had any relationship to
the operations of the Company.  Therefore a description and its impact
on the Company’s operations and financial position has not been
disclosed.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”.  This standard establishes a standard definition for
fair value, establishes a framework under generally accepted accounting
principles for measuring fair value and expands disclosure requirements for fair
value measurements.  This standard is effective for financial
statements issued for fiscal years beginning after November 15,
2007.  Adoption of this statement is not expected to have any material
effect on the Company’s financial position or results of
operations.





In
September 2006, the FASB issued Financial Accounting Standard No. 158,
“Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans”, an amendment of FASB Statement Nos. 87, 88, 106, and 132(R), or FAS
158.  This Statement requires an employer that is a business entity
and sponsors one or more single-employer defined benefit plans to:





a.
            Recognize
      the funded status of a benefit plan—measured as the difference between
      plan assets at fair value (with limited exceptions) and the benefit
      obligation—in its statement of financial
  position;





30




SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS




NOTE P –
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)





b.
            Recognize,
      as a component of other comprehensive income, net of tax, the gains or
      losses and prior service costs or credits that arise during the period but
      are not recognized as components of net periodic benefit cost pursuant to
      FAS 87, Employers’ Accounting for Pensions, or FAS 106, Employers’
      Accounting for Postretirement Benefits Other Than
  Pensions;





c.
            Measure
      defined benefit plan assets and obligations as of the date of the
      employer’s fiscal year-end statement of financial position (with limited
      exceptions); and





d.
            Disclose
      in the notes to financial statements additional information about certain
      effects on net periodic benefit cost for the next fiscal year that arise
      from delayed recognition of the gains or losses, prior service costs or
      credits, and transition assets or
obligations.





An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006.  This statement has not had a significant effect on
the Company’s financial statements.





In
February 2007, the FASB issued Financial Accounting Standard No. 159 “The Fair
Value Option for Financial Assets and Financial Liabilities”—Including an
amendment of FASB Statement No. 115 or FAS 159.  This Statement
permits entities to choose to measure many financial instruments and certain
other items at fair value.  Most of the provisions of this Statement
apply only to entities that elect the fair value option.  The
Statement is effective as of the beginning of an entity’s first fiscal year that
begins after November 15, 2007.  Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, “Fair
Value Measurements”.  The Company has not yet determined what effect,
if any, adoption of this Statement will have on the Company’s financial position
or results of operations.





In
September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108),
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements”.  SAB 108 provides
guidance on the consideration of the effects of prior year unadjusted errors in
quantifying current year misstatements for the purpose of a materiality
assessment.  Adoption of this statement has not had any material
effect on the Company’s financial position or results of
operations.





In June
2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes”, an interpretation of SFAS No. 109. FIN 48
prescribes a comprehensive model for how companies should recognize, measure,
present and disclose uncertain tax positions taken or expected to be taken on a
tax return. Under FIN 48, the Company shall initially recognize tax positions in
the financial statements when it is more likely than not the position will be
sustained upon examination by the tax authorities. The Company shall initially
and subsequently measure such tax positions as the largest amount of tax benefit
that is greater than 50% likely of being realized upon ultimate settlement with
the tax authority assuming full




31




SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE P –
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)





knowledge
of the position and all relevant facts. FIN 48 also revises disclosure
requirements to include an annual tabular roll-forward of unrecognized tax
benefits.  Adoption of this statement has not had any material effect
on the Company’s financial position or results of operations.





In
December 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51”, which
changes the accounting and reporting for minority interests. Minority interests
will be re-characterized as non-controlling interests and will be reported as a
component of equity separate from the parent’s equity, and purchases or sales of
equity interests that do not result in a change in control will be accounted for
as equity transactions. In addition, net income attributable to the
non-controlling interest will be included in consolidated net income on the face
of the income statement and, upon a loss of control, the interest sold, as well
as any interest retained, will be recorded at fair value with any gain or loss
recognized in earnings. The Company has not yet determined what effect, if any,
adoption of this Statement will have on the Company’s financial position or
results of operations.





In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 161, “Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133”, which requires additional
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. The Company has not yet determined what
effect, if any, adoption of this Statement will have on the Company’s financial
position or results of operations.





In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles” (“SFAS 162”).  SFAS 162 is intended to improve
financial reporting by identifying a consistent framework, or hierarchy, for
selecting accounting principles to be used in the preparation of financial
statements of nongovernmental entities that are presented in conformity with
accounting principles generally accepted in the United States of America
(GAAP).  SFAS 162 directs the GAAP hierarchy to the entity, not the
independent auditors, as the entity is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.  SFAS 162 is effective 60 days following the Securities and
Exchange Commission’s approval of the Public Company Accounting Oversight Board
amendments to remove the GAAP hierarchy from the auditing
standards.  The Company does not expect SFAS 162 to have a material
impact on its consolidated financial statements.





NOTE Q –
REVERSE MERGER





On
November 27, 2007, Acadia Resources, Inc. (“Acadia”), Sunovia Solar, Inc., a
wholly-owned subsidiary of Acadia (“Sunovia Solar”), and the Company, entered
into an Agreement and Plan of Merger (the “Merger Agreement”), which closed on
November 28, 2007. Pursuant to the terms of the Merger Agreement, Sun Energy
Solar merged with and into Sunovia Solar, which became a wholly-owned subsidiary
of Acadia. The transaction was accounted for as a purchase.





In
consideration for the merger, Acadia issued an aggregate of 58,485,098 shares of
common stock to the stockholders of the Company at the closing of the
merger.  On December 17, 2007, Acadia changed its name to Sunovia
Energy Technologies, Inc.




32


SUNOVIA
ENERGY TECHNOLOGIES, INC.
 (FORMERLY
KNOWN AS ACADIA RESOURCES, INC.)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS





NOTE Q –
REVERSE MERGER (CONTINUED)





On
November 26, 2007, the record holder of 61.24% of the issued and outstanding
common stock of Acadia, entered into a certain Stock Purchase Agreement (the
“Stock Purchase Agreement”) with the Company’s Chief Executive Officer (CEO),
pursuant to which the record holder agreed to sell to the CEO 4,500,000 shares
(the “Shares”) of Acadia’s common stock for a purchase price in the aggregate
amount of $650,000.  The sale represents a change in control in Acadia
and the shares acquired represent 61.24% of the issued and outstanding capital
stock of Acadia calculated on a fully-diluted basis prior to the
merger.





NOTE R –
SUBSEQUENT EVENTS





In
November, 2008, a consulting agreement originally executed in October, 2008, was
amended. The amended agreement increased the monthly consulting fee from $7,500
to $15,000. The amended agreement also increased the amount of stock options
that the consultant will receive. The consultant will receive two options each
consisting of 1,900,000 shares of common stock of the Company.





On
December 2, 2008, the Company entered into a non-binding letter of intent with
the government of the Dominican Republic through the CNE National Energy
Commission, for the development of a 20 megawatt plant utilizing its high
concentration photovoltaic technology.





The
commencement of the development of the 20 megawatt plant is subject to the
completion of customary due diligence; approval of Sunovia’s directors; final
approval by the government of the Dominican Republic; receipt by Sunovia of all
necessary regulatory and third party consents and approvals; execution by
Sunovia and the government of the Dominican Republic of definitive documentation
relating to the development of the plant; and such other conditions as are
customary for transactions of this type.  As a result of the foregoing
closing conditions there is no guarantee that the Company will successfully
finalize and enter into a definitive agreement governing the development of the
20 megawatt plant or, if such agreement is executed, that Sunovia will
successfully develop such 20 megawatt plant resulting in the generation of
revenue on a profitable basis.




33








Introductory
Note





Caution
Concerning Forward-Looking Statements





This
Report and our other communications and statements may contain “forward-looking
statements,” within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 including statements about
our beliefs, plans, objectives, goals, expectations, estimates, projections and
intentions. These statements are subject to significant risks and uncertainties
and are subject to change based on various factors, many of which are beyond our
control. The words “may,” “could,” “should,” “would,” “believe,” “anticipate,”
“estimate,” “expect,” “intend,” “plan,” “target,” “goal,” and similar
expressions are intended to identify forward-looking statements, including when
used in the negative. All forward-looking statements, by their nature, are
subject to risks and uncertainties. Our actual future results may differ
materially from those set forth in our forward-looking statements.
Forward-looking statements include, but are not limited to, statements
about:






            our
      expectations regarding our expenses and revenue;
            our
      anticipated cash needs and our estimates regarding our capital
      requirements and our needs for additional
  financing;






            plans
      for future products, for enhancements of existing products and for
      development of new technologies;
            our
      anticipated growth strategies;






            existing
      and new customer relationships;
            our
      technology strengths;






            our
      intellectual property, third-party intellectual property and claims
      related to infringement thereof;
            anticipated
      trends and challenges in our business and the markets in which we
      operate; and






            sources
      of new revenue, if any.








Although
we believe that the expectations reflected in these forward-looking statements
are reasonable, we can give no assurance that the expectations reflected in
these forward-looking statements will prove to be correct.. Although we believe
that the expectations reflected in these forward-looking statements are
reasonable and achievable, these statements involve risks and uncertainties and
no assurance can be given that actual results will be consistent with these
forward-looking statements. Current shareholders and prospective investors are
cautioned that any forward-looking statements are not guarantees of future
performance. Such forward-looking statements by their nature involve substantial
risks and uncertainties, certain of which are beyond our control, and actual
results for future periods could differ materially from those discussed in this
report, depending on a variety of important factors, among which are our ability
to implement our business strategy, our ability to compete with major
established companies, the acceptance of our products in our target markets, the
outcome of litigation, our ability to attract and retain qualified personnel,
our ability to obtain financing, our ability to continue as a going concern, and
other risks described from time to time in our filings with the Securities and
Exchange Commission. Forward-looking statements contained in this report speak
only as of the date of this report. Future events and actual results could
differ materially from the forward-looking statements. You should read this
report completely and with the understanding that actual future results may be
materially different from what management expects. We will not update
forward-looking statements even though its situation may change in the future.


34





ITEM 2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION




The
following discussion and analysis summarizes the significant factors affecting:
(i) our results of operations for the three months ended October 31, 2008; and
(ii) financial liquidity and capital resources.  This discussion and
analysis should be read in conjunction with our financial statements and notes
included in this Form 10-Q.




MANAGEMENT’S DISCUSSION AND ANALYSIS





To
familiarize themselves with our operations, readers are encouraged to review our
securities filings on the SEC’s Edgar database, including the 10-K filed for the
year ending July 31, 2008. This quarterly report provides an update of that
information. Since we filed that report, we have accomplished the
following:





·
            We
      have began shipping products under the purchase orders discussed in the
      form 10-Q. These initial operations have been substantial enough that we
      are no longer considered a development stage enterprise under generally
      accepted accounting principles.





·
            We
      have obtained a distribution contract with a well-known Fortune 500
      Company for our emergency lighting product, ImpulseTM, which is a patented,
      simple to install a LED
      switchplate that detects when the power goes out, to activate an
      emergency battery-powered LED
light.





·
            We
      have obtained several research contracts for our infrared products
      division during the calendar year
2009.





·
            We
      have begun production on our new streetlights for the City of Fairview
      Texas, which we believe will open a significant market to the Company, and
      have furthered our work on Cobrahead streetlights and our LED parking
      garage light to the extent we are nearing final decisions on pricing and
      being able to take orders from
customers.





·
            We
      have executed a letter of agreement with the Department of Energy of the
      government of the Dominican Republic to construct a 20 megawatt solar
      concentrator photovoltaic facility in Santo Domingo, Dominican Republic,
      subject to various terms and conditions.  A comprehensive formal
      agreement is currently being created that sets forth the obligations,
      terms and conditions specific to any and all aspects of the solar
      concentrator photovoltaic facility.  The company expects to sign the
      formal agreement during the 1st
      quarter of 2009, but until said formal agreement is executed by the
      Company and the Department of Energy of the Dominican Republic, the
      Company cannot guarantee any aspects of the
  transaction.





We
continue to face challenges, particularly as follows:





·
            Our
      profit margins on initial lights are not where we believe they will
      ultimately be. As with any new product offering, we find that the initial
      orders have delays and issues requiring further attention. Also, our
      business has rapidly changing prices due to technology changes that effect
      pricing decisions.





·
            Like
      all companies, we face challenges related to economic issues worldwide.
      These affect quantities bought, upfront prices customers are willing to
      pay, and general attitudes regarding risk, as well as ability to raise
      capital, which is still crucial to implementation of our overall business
      plan.  While many of our lights are upgrades of existing lights
      on the market, where customers can more clearly evaluate long-term
      benefits when making decisions regarding purchases, completely new
      products such as Impulse have even greater
  risks.





·
            Our
      infrared research products are associated with the military, and with the
      change in administration, military spending and underlying needs may be
      revised, and contract profit margins are not as high with this type of
      work due to contract provisions as we had hoped for. In time we look to
      develop more profitable product lines arising from this work in addition
      to the solar applications of infrared, but this is currently in the
      planning stage.





·
            Our
      streetlight project in Fairview Texas has us doing additional work beyond
      our expertise; typically we provide “light engines”, which are an
      important component of the streetlight, but usually our customers package
      the light engines with the poles and installation and sell to the end
      user. In this case we perform the entire procedure. While there are
      benefits to our knowledge base by doing this type of work, this is a
      deviation from our current plan that may or may not have consequences,
      such as effect on our existing customers that would increase if we
      proceeded to do this type of work more and more in the
    future.




35




·
            While
      we believe we will be able to accomplish all the requirements of the
      Dominican Republic Solar facility, it is a large scale facility that will
      require significant resources to
complete.





·
            We
      are reviewing to determine whether or not we should continue our research
      being performed by the Quantum Physics Department of Dongkuk university on
      our behalf that involves the use of zinc oxide as a material for Light
      Emitting Diodes (LEDs), and cannot currently assess what the findings will
      be in that area.





·
            Initial
      product offerings often create negative cash flow due to the timing of
      collections and payments due, this combined with development costs and the
      fact that the upfront costs of purchases are much higher until order
      quantities begin to build up.





Our
lighting customers at this point tend to be original equipment manufacturers and
system integration providers who demand reliable LED lighting solutions. Since
the inception of the LED Lighting Division, EvoLucia, the emphasis for our
engineers has been to design the LED System rather than parts of the system that
do not necessarily perform optimally as a whole.  As we emerge from
the development stage, we are aligning ourselves with partners in the solid
state lighting division who can be instrumental in the development of
significant sales channels for the products we will be releasing in 2009. In the
near future, we hope to develop more of our own sales and marketing group, but
at this stage of the lighting division, it is most cost effective to use already
established sales channels to promote our solid state lighting
products.





In
addition, we have sought out LED Lighting products that we can private label and
sell to our customers.  These products are LED Bulbs, LED Track
Lighting and an LED Utility Light. We are in the process of completing an
application through the federal GSA program to become a vendor in the government
system.    While we have started with a few basic products,
as we add products to our line, we believe the sales should increase
proportionately and a new revenue stream should be developed for the
company.





Several
presentations have made to utility companies as we have partnered strategically
with contractors and other lighting companies to win renewable energy contracts
through local municipalities.  While these sales are long-term
projects, they can yield significant revenue at some point.  As we
become more skilled in making presentations to this type of customer, the
likelihood that we will be successful in our response to such requests for
proposals increases dramatically.





History





On
November 27, 2007, Acadia Resources, Inc., now known as Sunovia Energy
Technologies, Inc. (the “Company”), Sunovia Solar, Inc., a wholly-owned
subsidiary of the Company (“Sunovia Solar”), Sun Energy Solar, Inc. (“Sun
Energy”), and Carl L. Smith, III, Richard Craig Hall and Rick St. George,
(collectively the “Sun Energy Majority Shareholders”), entered into an Agreement
and Plan of Merger (the “Merger Agreement”), which closed on November 28,
2007.  Pursuant to the terms of the Merger Agreement, Sun Energy
merged with and into Sunovia Solar, which became a wholly-owned subsidiary of
the Company (the “Merger”).  In consideration for the merger, the
Company issued an aggregate of 263,182,941 shares of common stock to the Sun
Energy Majority Shareholders and the other shareholders of Sun Energy at the
closing of the merger.  As a result of the Merger, we ceased being a
shell company as that term is defined in Rule 12b-2 and, through our
newly-acquired subsidiary Sunovia Solar, entered into the business of
engineering, developing, marketing and distributing solar powered substrate
technology. The information presented hereon is entirely from Sun Energy Solar,
Inc., which is the accounting successor in the merger.




36





Sun
Energy was incorporated on November 9, 2005 under the laws of the State of
Delaware for the purpose of commercializing solar products. Sun Energy was
originally named Sologic, Inc. On April 25, 2006, the name was changed to Sun
Energy Solar, Inc. On December 21, 2005, Sun Energy acquired the patent nights
(patent applied for) to No. 60/6 17,263 Titled Substrate “with Light
Display”  applied for on September 2, 2005 (provisional was applied in
September 2004), from Sparx, Inc., a Florida corporation,  100% owned
by Carl L. Smith III, its Chief Executive Officer.





As a
result of the Merger, the Company ceased to be a shell company and became a
holding company for Sunovia.    Pursuant to the terms of the
Merger Agreement, Sun Energy merged with and into Sunovia Solar, which became a
wholly-owned subsidiary of the Company (the “Merger”). Because Sun Energy’s
operations are the only significant operations of the Company, this discussion
and analysis focuses on the business results of Sun Energy.








Having
only recently emerged from the development stage, we have had a limited
operating history that can serve as the basis to evaluate our business. There
are many factors that could have a material adverse effect on our business and
operating results once operations begin. You should read the following
information in conjunction with our financial statements and related notes
contained elsewhere in this report. You should consider the risks and
difficulties frequently encountered by early-stage companies, in new and rapidly
evolving markets, such as the solar market. Our limited operating history
provides only a limited historical basis to assess the impact that critical
accounting policies may have on our business and our financial
performance.




Because
we have only recently begun substantial operations but have incurred costs in
the areas above, for the quarter ending October 31, 2008, the Company has had a
net loss as measured by generally accepted accounting principles of
$(2,912,017).





Many of
the costs we have incurred in both the quarter ending October 31, 2008 and 2007
were initial costs such as upfront inducements through stock to secure services
we believe we will need, market studies, core design work and other similar
costs.








Results of Operations





The
 following  table  sets  forth  the  percentage
 relationship  to total revenues of principal  items
 contained in the  statement of operations of the consolidated
 financial  statements included  herewith  for the quarters
ending October 31, 2008 and October 31, 2007.  It should be noted that
percentages discussed throughout this analysis are stated on an approximate
basis.





2008
                      
                      
                      2007Amount
                      
                      
                      AmountSales
                      
                      $
                      310,823Cost
      of Sales
                      
                      $
                      315,703Gross
      Profit
                      
                      $
                      (4,880
                      )Selling,
      General & Administrative Expenses
                      
                      $
                      1,198,436
                      
                      
                      $
                      812,318Research
      and Development Expenses
                      
                      $
                      1,731,254
                      
                      
                      $
                      1,599,403Total
      Operating Costs and Expenses
                      
                      $
                      2,929,690
                      
                      
                      $
                      2,411,721Operating
      Loss
                      
                      $
                      (2,934,570
                      )
                      
                      $
                      (2,411,721
                      )Interest
      Income
                      
                      $
                      22,553
                      
                      
                      $
                      32,344Net
      Loss
                      
                      $
                      (2,912,017
                      )
                      
                      $
                      (2,379,377
                      )





37


Revenues
and Cost of Sales





For the
quarter ending October 31, 2008, we sold approximately 5,163 lights at an
average price of $60.20 with an average cost of
$54.76.  However, an additional 612 lights were sent to
customers and testing agencies for promotional and evaluation
 purposes. As a result, our gross profit was negative in the amount
of   $4,880, although we believe gross profit will improve over
time.





Our two
largest customers, Beacon Products, LLC and Precision-Lighting, Inc. (who are
owned by the same parent company) represented 35% and 59% of our sales,
respectively. We did not have any sales in the quarter ending October 31,
2007.





Expenses





Selling, General and Administrative
Expenses


Our
activities to date have centered in these areas:





·
            Product
      Development,


·
            Research,
      Sales and Marketing, and


·
            General
      and Administrative.





For the
quarter ended October 31, 2008, our selling, general and administrative
(“SG&A”) expenses increased. For the Quarter period ending October 31, 2008,
SG&A expenses increased $386,118 to $1,198,436 when compared to $812,318 for
the quarter ended October 31, 2007.  This increase was primarily the
result of non-cash share-based compensation of $565,384 , for the quarter ended
October 31, 2008 and compared to $55,000 for the quarter ended October
31,  2007, respectively, related to the hiring of management,
marketing and other personnel that were necessary to initiate the company’s
product development and operations and the result of higher personnel and
personnel-related expenses, associated with the increase in management and
administrative headcount that was necessary to initiate the company’s product
development and operations.







The
components of this category for the quarters ended October 31 in each of the
respective years are discussed  in the table and notes
below:


Increase(Decrease)%2008
                                                                      
                                                                      
                                                                      2007Selling,
      general and administrative
                                                                      
                                                                      
                                                                      1,198,436
                                                                      
                                                                      
                                                                      
                                                                      812,318
                                                                      
                                                                      
                                                                      
                                                                      48
                                                                      %Product
      Development – Solar
                                                                      
                                                                      
                                                                      -0-
                                                                      
                                                                      
                                                                      
                                                                      116,025
                                                                      
                                                                      
                                                                      
                                                                      n/aProduct
      Development - Lighting
                                                                      
                                                                      
                                                                      266,070
                                                                      
                                                                      
                                                                      
                                                                      147,724
                                                                      
                                                                      
                                                                      
                                                                      80
                                                                      %Legal
      (1)
                                                                      
                                                                      
                                                                      82,844
                                                                      
                                                                      
                                                                      
                                                                      64,034
                                                                      
                                                                      
                                                                      
                                                                      29
                                                                      %Salaries,
      not including benefits & taxes (2)
                                                                      
                                                                      
                                                                      50,052
                                                                      
                                                                      
                                                                      
                                                                      203,703
                                                                      
                                                                      
                                                                      
                                                                      -75
                                                                      %Noncash
      Salaries and Consulting (3)
                                                                      
                                                                      
                                                                      -0-
                                                                      
                                                                      
                                                                      
                                                                      293,000
                                                                      
                                                                      
                                                                      
                                                                      n/aSales
      & Marketing
                                                                      
                                                                      
                                                                      284,395
                                                                      
                                                                      
                                                                      
                                                                      -0-
                                                                      
                                                                      
                                                                      
                                                                      n/aHeadcount:Employees
                                                                      
                                                                      
                                                                      13
                                                                      
                                                                      
                                                                      
                                                                      10
                                                                      
                                                                      
                                                                      
                                                                      30
                                                                      %Consultant
                                                                      
                                                                      
                                                                      14
                                                                      
                                                                      
                                                                      
                                                                      17
                                                                      
                                                                      
                                                                      
                                                                      -18
                                                                      %




38




Product
Development




Product
development consists of engineering, design, purchasing of components and
assembly of prototypes and testing. We were able to successfully develop the
following for the quarter ending October 31, 2008:




a.)
            Completion
      of design and testing for a street and walkway LED lighting project in
      Fairview, Texas. This product family can be used for other street and
      walkway lighting applications




b.)
            Final
      preparations for the release of Impulse emergency light to the
      public




c.)
            Substantial
      completion of designs for LED Cobra head street
  lighting




d.)
            Substantial
      completion of designs for LED parking garage
  lighting




For the
quarter ending October 31, 2007 we completed design on our original prototype
and canopy light family.




Marketing





The
completion of new products has necessitated marketing expenses. For the quarter
ending October 31, 2008, we spent $338,891 on marketing, which for the quarter
ending October 31, 2007 had been nominal. The biggest component of which was the
payment of equity compensation of $290,071, which went to consultants to develop
a professional marketing plan, represent the company’s products and to assist in
arrangements with large-scale partners. The nature of the equity compensation
payment was upfront compensation. Payment in the form of equity compensation,
when made by startups, does encourage further service to create value in the
stock.




General
and Administrative




As in all
companies, general and administrative expenses are the supporting services
needed to maximize the efforts of the other departments in performing their
duties. For the quarter ending October 31, 2007, we spent $ 243,123, and in the
quarter ending October 31, 2008, we spent $185,519.  Additional detail
regarding these costs is provided below:




(1)
              Legal
      - The Company expensed for the three months ended October 31, 2008, as
      compared to $64,039 which
      represents the bulk of what we have expended since inception, represented
      expenses from a numberof
      filings that were the result of our research activities over a several
      month period. We expect this amountto increase as a result of engineering
      and research effort.(2)
              Salaries
      and Benefits - We have employment contracts in place for approximately
      $50,052 per quarter(plus benefits and taxes), for accounting and
      administrative personnel. most of which were put into place inJune and
      July, 2006. See “Employment Agreements”.(3)
              Non
      Cash Salaries and Consulting -  We have reduced our exposure in
      this area as many of the contracts in the prior year
      were    short in duration and vary from project to
      project, and the new contracts are specifically associated with sales and
      marketing entirely.





39





Research
and Development Expenses




The
Company has entered into research contracts with EPIR Technologies, Inc. and
Dongguk University which most of our research will be predominately
outsourced for the next couple of years. We expense our research and development
costs as incurred. Research and Development expenses were $1,731,254 for the
quarter ending October 31, 2008. We expense our research and development costs
as incurred. Research and Development included $1,500,000 expended with EPIR and
$200,000 expended with Dongguk University.





Other
Income and Expenses




Interest
income for the quarter reduced in spite of  the accumulation of cash
from private placements during the quarter ending October 31, 2008 due to a
reduction interest rates we were able to obtain from savings as part of the
general economic slowdown in effect during the quarter.





Off-Balance
Sheet Arrangements





We do not
currently have any 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 that are material to our
stockholders.





Our
arrangement with EPIR may require working capital in the future over and above
our research commitment, but at this time we cannot predict what effect that
will be.




Our
company has not entered into any transaction, agreement or other contractual
arrangement with an entity unconsolidated with us under which we
have




o
                an obligation under a guarantee contract, although we do
      have obligations under certain sales arrangementsincluding purchase
      obligations to vendorso
                a
      retained or contingent interest in assets transferred to the
      unconsolidated entity or similar arrangement thatserves as credit,
      liquidity or market risk support to such entity for such
  assets,o
                any obligation, including a contingent obligation, under
      a contract that would be accounted for as a derivativeinstrument,
    oro
                any
      obligation, including a contingent obligation, arising out of a variable
      interest in an unconsolidated entitythat is held by us and material to us
      where such entity provides financing, liquidity, market risk or credit
      risksupport to, or engages in leasing, hedging or research  and
      development services with us.





In
December 2005, we acquired all of the patent rights owned by Sparx, Inc. from
Carl Smith; our Chief Executive officer owns all of the capital stock of Sparx.
In connection with the acquisition of the patent rights, we issued 500,000,000
stock options to Mr. Smith and have agreed to pay a royalty of 4.9% of
revenues to Sparx, Inc., a Company owned by Mr. Smith. Mr. Smith has waived
royalties for this quarter as part of attempts to conserve the Company’s
resources.





In
February, 2008, the Company informally agreed to finance an entity that entered
into a research and development agreement with an educational institution in
consideration of the assignment of certain patent rights held by the educational
institution to the Company. The educational institution will perform research
and development services and assign intellectual property created during the
course of those services to the entity, who in turn assigned such rights to the
Company. The Company has agreed to pay on behalf of the entity, $2,000,000 to
the educational institution in the first year. If an agreement is made to extend
the agreement to the second year, the Company will pay an additional $2,000,000.
If a decision is made to extend the agreement to the third year, the Company
will make a final payment of $1,000,000. In August, 2008, the entity, Novakor,
Inc., transferred all patent rights under this agreement to Sunovia,
Inc.





40




Plan
of Operation




By the
end of the year ending July 31, 2009, we expect, but can provide no guarantee,
that we will be generating sales, developing new products and new product
families, which will require a different infrastructure featuring increased
activity in more significant sales and marketing, increasing efforts to convert
research activities into product development activities, and greater focus on
product development in development of new products within product families as
opposed to searching for new product lines.




For
      the Three month Period Ending October 312008
                        
                        
                        2007Cash
      flows used in Operations
                        
                        $
                        2,819,186
                        
                        
                        $
                        1,516,354Capital
      Expenditures
                        
                        $
                        11,485
                        
                        
                        $
                        50,942Equity
      Raised
                        
                        $
                        676,458
                        
                        
                        
                        -Cash
      at end of period
                        
                        $
                        3,828,562
                        
                        
                        $
                        1,725,433




We
currently lease an operating facility at 6408 Parkland Drive, Sarasota, Florida
34243. This facility is under a three year and one month term through
October 31, 2009. The lease requires monthly rent of approximately
$3,738.90 plus annual increases of 3% that go into effect on November 1 of
each subsequent year. The building consists of approximately 5,316 square feet
of laboratory, warehouse and office space. The facilities are in good condition
and are adequate for small scale commercialization of our products. However, we
do not believe our facility would be adequate to handle more than 25
employees.




Our
staffing remains the same with 13 employees and 14 consultants; however, we are
at the point where we are beginning to seek other professionals in the lighting
industry to join our company.  A sales and marketing manager who can build
a sales force may be the next strategic hire.  As the sales volume
increases, we will also be adding some administrative staff to assist with
customer service duties, purchasing, billing and overall accounting.  We
will continue to work with the consultant model whenever possible in order to
minimize the office space that is needed and the cost for ancillary benefits for
full-time employees of the company.





Cash
Flows and Working Capital





To date,
we have financed our operations primarily through equity contributions by our
shareholders. As of December 11, 2008, we had $3,615,210 in cash and cash
equivalents. We had receivables of $291,897 and inventory of $300,618 and our
current liabilities were $1,358,649 as of October 31, 2008, although almost 70%
of the liabilities are convertible into common stock. At present levels we incur
overhead of $300,000 per month in cash before our research
commitments.





Since we
outsource our manufacturing, we are not a capital intensive
operation.





We raised $676,454for the quarter ending October 31,
2008but did not raise
capitalfor the quarter
ending October 31, 2007.. On or before November 3, 2007, the Company
redeemed and retired 37,523,114 of outstanding shares of common stock for
$1,650,000 and the agreement to reissue 34,473,114 shares in the future. The
purchase price was $.10 per share. We have reissued 27,973,114 of the redeemed
shares to date.





Cash
Requirements





Over the
next twelve months, we presently anticipate spending approximately $3.6 million
on operations, $3.2 million on research and development and $100,000 on capital
equipment. To date, we have unfulfilled purchase orders from customers totaling
$4.3 million. In turn, we have open purchase orders to suppliers for $2.7
million to fulfill the orders we have received (we expect to issue additional
orders for additional parts and labor that are estimated to $600,000). Payment
from customers and to vendors is typically on a 90-day basis, however there is a
production time lag of usually 30 days. To finance these operations and to take
advantage of these opportunities the Company will need to raise capital and/or
incur debt. There is no assurance that such capital can be raised or if such
capital can be raised on terms that are not highly dilutive to our current
shareholders. If we are not successful in raising capital we will have to limit
our plans accordingly, and we may not be able to take full advantage of
opportunities we believe exist.  Further, there is no assurance that
we be successful in collecting amounts owed in connection with these purchase
orders.




41





Going
Concern





With our
present cash and cash equivalents management expects to be able to continue some
of our operations for at least the next twelve months. However, we have suffered
losses from operations. The continuation of our company is dependent upon our
company attaining and maintaining profitable operations and raising additional
capital as needed. In this regard we have raised additional capital through the
equity offerings noted above. We may, however, require additional cash due to
changing business conditions or other future developments, including any
investments or acquisitions we may decide to pursue. If our existing cash is
insufficient to meet our requirements, we may seek to sell additional equity
securities, debt securities or borrow from lending institutions. We cannot
assure you that financing will be available in the amounts we need or on terms
acceptable to us, if at all. The issuance of additional equity securities,
including convertible debt securities, by us could result in a significant
dilution in the equity interests of our current stockholders. The incurrence of
debt would divert cash for working capital and capital expenditures to service
debt obligations and could result in operating and financial covenants that
restrict our operations and our ability to pay dividends to our shareholders. If
we are unable to obtain additional equity or debt financing as required, our
business operations and prospects may suffer. In such event, we will be forced
to scale down or perhaps even cease our operations.





We have
undertaken steps as part of a plan to improve operations with the goal of
sustaining our operations for the next twelve months and beyond. These steps
include





·
            raising
      additional capital and/or obtaining
financing;


·
            increasing
      our revenues and gross profits and


·
            controlling
      overhead and expenses.





There can
be no assurance that we will successfully accomplish these steps and it is
uncertain we will achieve a profitable level of operations and/or obtain
additional financing. There can be no assurance that any additional financings
will be available to us on satisfactory terms and conditions, if at all. In the
event we are unable to continue as a going concern, we may elect or be required
to seek protection from our creditors by filing a voluntary petition in
bankruptcy or may be subject to an involuntary petition in bankruptcy. To date,
management has not considered this alternative, nor does management view it as a
likely occurrence.





These
consolidated financial statements do not give effect to any adjustments which
would be necessary should the Company be unable to continue as a going concern
and therefore be required to realize its assets and discharge its liabilities in
other than the normal course of business and at amounts different from those
reflected in the accompanying consolidated financial statements.





Quantitative
and Qualitative Disclosures about Market Risk





We have
no material exposure to interest rate changes.  We are subject to
changes in the price of energy, which are out of our control.





Effect
of Changes in Prices





Changes
in prices during the past few years have been a significant factor in the solar
and lighting industries. Although the price of solar and lighting has been
declining gradually over recent years and part of a decreasing overall trend,
the cost of commodities used including silicon has created challenges for our
industry. Ultimately, success in research towards finding more cost effective
materials is the Company’s strategy for maximizing profit within these
constraints.





Critical
Accounting Policies and Estimates





“Management's
Discussion and Analysis of Financial Condition and Results of Operations”
discusses our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. On an on-going basis,
management evaluates our estimates and judgments, including those related to
revenue recognition, , financing operations, and contingencies and
litigation.




42





We utilize certain accounting policies
and procedures to manage changes that occur in our business environment that may
affect accounting estimates made in preparation of our financial statements.
These estimates relate primarily to our allowance for doubtful accounts
receivable and the recognition and measurement of potential impairment on
long-lived and intangible assets. Our strategy for managing doubtful accounts
includes stringent, centralized credit policies and collection procedures for
all customer accounts. We utilize a credit risk rating system in order to
measure the quality of individual credit transactions. We strive to identify
potential problem receivables early, take appropriate collection actions, and
maintain adequate reserve levels. Management reviews its long-lived and
intangible assets for impairment whenever changes in circumstances or other
events indicate potential impairment. Management has determined that the
allowance for doubtful accounts and impairment losses are adequate at October
31, 2008.





Recent
Accounting Pronouncements





In
December 2005, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—
an Amendment of APB Opinion No. 29,” or SFAS 153. SFAS 153 amends Accounting
Principles Board Opinion No. 29, “Accounting for Nonmonetary Transactions”
to eliminate the exception for nonmonetary exchanges of similar productive
assets and replaced it with a general exception for exchanges of nonmonetary
assets that do not have commercial substance. SFAS 153 is effective for
nonmonetary assets exchanges occurring in fiscal periods beginning after June
15, 2005. The adoption of SFAS 153 has not had a material effect on the
Company’s financial position or results of operations.





The
Financial Accounting Standards Board has issued SFAS No. 155 “Accounting for
Certain Hybrid Financial Instruments”, but it has not had any relationship to
the operations of the Company.  Therefore a description and its impact
on the Company’s operations and financial position has not been
disclosed.





In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”.  This standard establishes a standard definition for
fair value, establishes a framework under generally accepted accounting
principles for measuring fair value and expands disclosure requirements for fair
value measurements.  This standard is effective for financial
statements issued for fiscal years beginning after November 15,
2007.  Adoption of this statement has not had a material effect on the
Company’s financial position or results of operations.





In
September 2006, the FASB issued Financial Accounting Standard No. 158,
“Employers’ Accounting for Defined Benefit Pension and Other Postretirement
Plans”, an amendment of FASB Statement Nos. 87, 88, 106, and 132(R), or FAS
158.  This Statement requires an employer that is a business entity
and sponsors one or more single-employer defined benefit plans to:





a.
            Recognize
      the funded status of a benefit plan—measured as the difference between
      plan assets at fair value (with limited exceptions) and the benefit
      obligation—in its statement of financial
  position;





b.
            Recognize,
      as a component of other comprehensive income, net of tax, the gains or
      losses and prior service costs or credits that arise during the period but
      are not recognized as components of net periodic benefit cost pursuant to
      FAS 87, Employers’ Accounting for Pensions, or FAS 106, Employers’
      Accounting for Postretirement Benefits Other Than
  Pensions;





c.
              Measure
      defined benefit plan assets and obligations as of the date of the
      employer’s fiscal year-end statement of financial position (with limited
      exceptions); ande.
              Disclose
      in the notes to financial statements additional information about certain
      effects on net periodic benefit cost for the next fiscal year that arise
      from delayed recognition of the gains or losses, prior service costs or
      credits, and transition assets or
obligations.




An
employer with publicly traded equity securities is required to initially
recognize the funded status of a defined benefit postretirement plan and to
provide the required disclosures as of the end of the fiscal year ending after
December 15, 2006.  This statement has not had a significant effect on
the Company’s financial statements.




43





In
February 2007, the FASB issued Financial Accounting Standard No. 159 “The Fair
Value Option for Financial Assets and Financial Liabilities”—Including an
amendment of FASB Statement No. 115 or FAS 159.  This Statement
permits entities to choose to measure many financial instruments and certain
other items at fair value.  Most of the provisions of this Statement
apply only to entities that elect the fair value option.  The
Statement is effective as of the beginning of an entity’s first fiscal year that
begins after November 15, 2007.  Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provisions of FASB Statement No. 157, “Fair
Value Measurements”.  Adoption of this Statement has not had
a material effect on the Company’s financial position or results of
operations.





In
September 2006, the SEC issued Staff Accounting Bulletin No. 108 (SAB 108),
“Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements”.  SAB 108 provides
guidance on the consideration of the effects of prior year unadjusted errors in
quantifying current year misstatements for the purpose of a materiality
assessment.  Adoption of this statement has not had any material
effect on the Company’s financial position or results of
operations.





In June
2006, the FASB issued Interpretation No. 48 (“FIN 48”), “Accounting for
Uncertainty in Income Taxes”, an interpretation of SFAS No. 109. FIN 48
prescribes a comprehensive model for how companies should recognize, measure,
present and disclose uncertain tax positions taken or expected to be taken on a
tax return. Under FIN 48, the Company shall initially recognize tax positions in
the financial statements when it is more likely than not the position will be
sustained upon examination by the tax authorities. The Company shall initially
and subsequently measure such tax positions as the largest amount of tax benefit
that is greater than 50% likely of being realized upon ultimate settlement with
the tax authority assuming full knowledge of the position and all relevant
facts. FIN 48 also revises disclosure requirements to include an annual tabular
roll-forward of unrecognized tax benefits.  Adoption of this statement
has not had any material effect on the Company’s financial position or results
of operations.





In
December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in
Consolidated Financial Statements, an amendment of ARB No. 51, which
changes the accounting and reporting for minority interests. Minority interests
will be re-characterized as non-controlling interests and will be reported as a
component of equity separate from the parent’s equity, and purchases or sales of
equity interests that do not result in a change in control will be accounted for
as equity transactions. In addition, net income attributable to the
non-controlling interest will be included in consolidated net income on the face
of the income statement and, upon a loss of control, the interest sold, as well
as any interest retained, will be recorded at fair value with any gain or loss
recognized in earnings. The Company has not yet determined what effect, if any,
adoption of this Statement will have on the Company’s financial position or
results of operations.





In March
2008, the FASB issued Statement of Financial Accounting Standards (“SFAS”)
No. 161, Disclosures about Derivative Instruments and Hedging Activities,
an amendment of FASB Statement No. 133, which requires additional
disclosures about (a) how and why an entity uses derivative instruments, (b) how
derivative instruments and related hedged items are accounted for under
Statement 133 and its related interpretations, and (c) how derivative
instruments and related hedged items affect an entity’s financial position,
financial performance, and cash flows. The Company has not yet determined what
effect, if any, adoption of this Statement will have on the Company’s financial
position or results of operations.





In July
2008, the FASB ratified the consensus in EITF Issue No. 07-1, “Accounting
for Collaborative Arrangements” (EITF 07-1). EITF 07-1 defines
collaborative arrangements and requires collaborators to present the result of
activities for which they act as the principal on a gross basis and report any
payments received from (made to) the other collaborators based on other
applicable authoritative accounting literature, and in the absence of other
applicable authoritative literature, on a reasonable, rational and consistent
accounting policy is to be elected. EITF 07-1 also provides for disclosures
regarding the nature and purpose of the arrangement, the entity’s rights and
obligations, the accounting policy for the arrangement and the income statement
classification and amounts arising from the agreement. EITF 07-1 will be
effective for fiscal years beginning after July 15, 2008, and will be
applied as a change in accounting principle retrospectively for all
collaborative arrangements existing as of the effective date. The Company has
not yet evaluated the potential impact of adopting EITF 07-1 on our
financial position, results of operations or cash flows.





Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the AICPA, and the SEC did not, or are not believed by
management to, have a material impact on the Company’s present or future
consolidated financial statements, including SFAS 162, “The Hierarchy of
Generally Accepted Accounting Principles”.




44





ITEM 3.
QUA NTITATIVE AND QUALITIATIVE DISCLOSURES ABOUT MARKET
RISK




We have
no material exposure to interest rate changes or credit risk.  We are
subject to changes in the price of energy, which are out of our
control.




ITEM 4.
CONTROLS AND PROCEDURES.





Not
applicable.





ITEM4T. CONTROLS
AND PROCEDURES





As of the
end of the period covered by this report, our Chief Executive Officer and our
Chief Financial Officer (the “Officers”) conducted an evaluation of the
effectiveness of our disclosure controls and procedures (as defined in Rule
13a-15(e) and Rule 15d-15(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")). Based upon this evaluation, the Officers concluded that
our disclosure controls and procedures are not effective to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act are recorded, processed, summarized and reported, within
the time periods specified in the Securities and Exchange Commission's rules and
forms and our disclosure controls and procedures are also not effective for the
purpose of ensuring that material information required to be in this report is
made known to management and others, as appropriate, to allow timely decisions
regarding required disclosures.  The ineffectiveness of our disclosure
controls and procedures is the result of certain deficiencies in internal
controls constituted material weaknesses as discussed below. The material
weaknesses identified did not result in the restatement of any previously
reported financial statements or any other related financial disclosure, nor
does management believe that it had any effect on the accuracy of the Company's
financial statements for the current reporting period. We lack segregation
of duties in the period-end financial reporting process.  The Company has
historically had limited accounting and minimal operating revenue and, as such,
all accounting and financial reporting operations have been and are currently
performed by one individual.  The party that performs the accounting and
financial reporting operations is the only individual with any significant
knowledge of generally accepted accounting principles.  The person is also
in charge of the general ledger (including the preparation of routine and
non-routine journal entries and journal entries involving accounting estimates),
the preparation of accounting reconciliations, the selection of accounting
principles, and the preparation of interim and annual financial statements
(including report combinations, consolidation entries and footnote disclosures)
in accordance with generally accepted accounting principles.  In addition,
the lack of additional staff with significant knowledge of generally accepted
accounting principles has resulted in ineffective oversight and
monitoring.





In
addition, no change in our internal control over financial reporting occurred
during the fiscal quarter ended October 31, 2008 that has materially affected,
or is reasonably likely to materially affect, our internal control over
financial reporting.




PART II:
OTHER INFORMATION
  ITEM 1. LEGAL PROCEEDINGS
 
 LEGAL
PROCEEDINGS.
 
 From time
to time, we may become involved in various lawsuits and legal proceedings, which
arise in the ordinary course of business. However, litigation is subject to
inherent uncertainties, and an adverse result in these or other matters may
arise from time to time that may harm our business. We are currently not aware
of any such legal proceedings or claims that we believe will have, individually
or in the aggregate, a material adverse affect on our business, financial
condition or operating results.
  45
  None of our directors, officers or
affiliates are involved in a proceeding adverse to our business or have a
material interest adverse to our business.
 
 ITEM 1A. RISK
FACTORS
 
 There
have been no material changes to the Company’s Risk Factors since our 10-k filed
July 31, 2008 other than the update presented in “ Management’s Discussion and
Analysis and Plan of Operation”.
 
 ITEM 2 - UNREGISTERED SALES
OF EQUITY SECURITIES AND USE OF PROCEEDS
 
 During
October 2008, we issued 6,764,530 shares in a private offering at $.10 per share
for an aggregate amount of $676,454.
 
 On
October 1, 2008, we issued 187,500 shares of stock at $.65 per share for
services.  We also issued 176,713 shares valued at $1.50 per share in
settlement of obligations due as of July 31, 2008.
 
 On
October 1,_2008, we issued 500,000 stock options with an exercise price of $.10
for services, and 200,000 stock options with an exercise price of
$.4875.
 
 On
October 10, 2008 we issued 500,000 stock options with an exercise price of $.10
for services rendered.
 
 In
November and December 2008, we issued 4,694,213 shares of common of common stock
in a private offering at $.10 per share, for an aggregate amount of
$469,421.
 
 All of
the above offerings and sales were deemed to be exempt under rule 506 of
Regulation D and Section 4(2) of the Securities Act of 1933, as amended. No
advertising or general solicitation was employed in offering the securities. The
offerings and sales were made to a limited number of persons, all of whom were
accredited investors, business associates of the Company or executive officers
of the Company, and transfer was restricted by the Company in accordance with
the requirements of the Securities Act of 1933. In addition to representations
by the above-referenced persons, we have made independent determinations that
all of the above-referenced persons were accredited or sophisticated investors,
and that they were capable of analyzing the merits and risks of their
investment, and that they understood the speculative nature of their investment.
Furthermore, all of the above-referenced persons were provided with access to
our Securities and Exchange Commission filings.
 
 ITEM
3.DEFAULTS
UPON SENIOR SECURITIES
 
 None
 
 ITEM 4 - SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS
 
 None
   46
   ITEM
5.OTHER
INFORMATION
 
 None.
 
 ITEM 6. EXHIBITS
 
 
 Exhibit
      No.
                  
                  Description
      of Exhibit3.1
                  
                  Certificate
      of Change (2)3.2
                  
                  Agreement
      and Plan of Merger between Acadia Resources, Inc.  and Sunovia
      Solar, Inc. (3)3.3
                  
                  Certificate
      of Merger between Sun Energy Solar, Inc. and Sunovia Solar, Inc.
      (3)3.4
                  
                  Certificate
      of Merger between Acadia Resources, Inc. And Sunovia Energy Technologies,
      Inc. (3)3.5
                  
                  Articles
      of Incorporation (6)3.6
                  
                  Bylaws
      (6)4.1
                  
                  Form
      of Subscription Agreement (5)10.1
                  
                  Royalty
      Agreement between Sun Energy Solar, assigned to the Registrant and Sparx,
      Inc., dated December 20, 2005 (3)10.2
                  
                  Stock
      Option Agreement between Sun Energy Solar, assigned to the Registrant and
      Carl Smith, dated December 20, 2005 (3)10.3
                  
                  Change
      of Control Severance Agreement between Sun Energy Solar, assigned to the
      Registrant and Carl Smith, dated December 21, 2005 (3)10.4
                  
                  Modification
      to Stock Option Agreement between Sun Energy Solar, assigned to the
      Registrant and Carl Smith relating to Charitable Pledge by Executive,
      dated June 29, 2006 (3)10.5
                  
                  Employment
      Contract between Sun Energy Solar, Inc. (now known as Sunovia Solar, Inc.)
      and Bob Fugerer, dated July 10, 2006, and addendum (3)10.6
                  
                  Executive
      Employment Contract between Sun Energy Solar, Inc. (now known as Sunovia
      Solar, Inc.) and Matthew Veal, dated May 29, 2006 and addendum
      (3)10.7
                  
                  Consulting
      Agreement between Sun Energy Solar, Inc. (to be assigned to Sunovia Energy
      Technologies, Inc.) and Ken Juster dated July 16, 2007
  (3)10.8
                  
                  Consulting
      Agreement between Sun Energy Solar, Inc. (now known as Sunovia Solar,
      Inc.) and Don Sipes dated July 18, 2007 (3)10.9
                  
                  Consulting
      Agreement between Sun Energy Solar, Inc. (now known as Sunovia Solar,
      Inc.) and Don Sipes dated July 18, 2007 (3)10.10
                  
                  Agreement
      between Sun Energy Solar, Inc. (now known as Sunovia Solar, Inc.) and EPIR
      Technologies dated November 1, 2007 (3)10.11
                  
                  Addendum
      to employment contract between the Company and Bob Fugerer, dated January
      25, 2007 (4)10.12
                  
                  Amended
      and Restated  Research, Development and Supply Agreement, dated
      January 24, 2008, between EPIR Technologies, Inc. Sunovia Energy
      Technologies, Inc, dated January 24, 2008 (1)10.13
                  
                  Stock
      Purchase Agreement between EPIR Technologies, Inc. and Sunovia Energy
      Technologies, Inc., dated January 24, 2008 (1)10.14
                  
                  Amended
      and Restated Consulting Agreement between Sunovia Energy Technologies,
      Inc. and Fernando Cuza dated March 17, 2008 (4)10.15
                  
                  Consulting
      Agreement between the Company and Pacific Coast Capital Advisors,
      Inc.dated
      June 10, 2008 (4)10.16
                  
                  Employment
      Agreement between the Company  and Robert Fugerer, dated May 1,
      2008 (4)10.17
                  
                  Employment
      Agreement between the Company  and Carl Smith, dated May 1, 2008
      (4)10.18
                  
                  Employment
      Agreement between the Company  and Matthew Veal, dated May 1,
      2008 (4)10.19
                  
                  Sunovia
      Energy Technologies, Inc. 2008 Incentive Stock Plan date May 1, 2008
      (4)10.20
                  
                  Employment
      Agreement between the Company  and Donna Webb, dated May 1,
      200810.21
                  
                  Consulting
      Agreement between the Company and Rick Kauffman, dated June 6,
      200810.22
                  
                  Purchase
      Agreement between the Company and Precision Lighting dated May 16,
      200810.23
                  
                  Purchase
      Agreement between the Company and Beacon Products dated May 16,
      200810.24
                  
                  Consulting
      Agreement between the Company and The Abraham Group, dated October 1,
      200810.25
                  
                  Assignment
      Agreement Between the Company and Novakor dated August 31,
      200810.26
                  
                  Amendment
      to Consulting Agreement between the Company and Kenneth I. Juster dated
      October 28, 200810.27
                  
                  Consulting
      Agreement between the Company and Akaoni Management dated October 10,
      200810.28
                  
                  Consulting
      Agreement between the Company and Bay Hill Partners, LLC, dated November
      4, 200810.29
                  
                  Distribution
      agreement between the Company and Spectrum Brands, Inc. effective November
      18,200831.1
                  
                  Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to
      Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section
      135032.1
                  
                  Certification
      of Chief Executive Officer and Chief Financial Officer Pursuant to
      Securities Exchange Act Rule 13a-14(b) and 18 U.S.C. Section
      1350
 (1)
Incorporated by reference to the Form 8-K filed with the Securities and Exchange
Commission on January 30, 2008.
 (2)
Incorporated by reference to the Form 8-K filed with the Securities and Exchange
Commission on December 14, 2007.
 (3)
Incorporated by reference to the Form 10QSB filed with the Securities Exchange
Commission on December 21, 2007
 (4)
Incorporated by reference to the Form 10QSB filed with the Securities Exchange
Commission on March 17, 2008
 (5)
Incorporated by reference to the Form 8K Current Report filed with the
Securities and Exchange Commission on January 16, 2008.
 (6)
Incorporated by reference to the Form SB-2 Registration Statement filed with the
Securities and Exchange Commission on January 1, 2007
 Incorporated
by reference to the Form 10-K Annual Report filed with the
Securities and Exchange Commission on November 14, 2008.
  47
 
  SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 SUNOVIA
ENERGY TECHNOLOGIES, INC.
  Signature
              Title
              Date/s/
      Carl L. Smith, III
                
                Carl
      L. Smith, III
              Chief
      Executive Officer and Chairman of Board of Directors
              December
      15, 2008/s/
      Matthew Veal
                
                Matthew
      Veal
              Secretary,
      Chief Financial Officer, Treasurer, and Principal Accounting
      Officer
              December
      15, 2008
         48