- Quarterly Report (10-Q)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2012

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

For the transition period from ________to ________

COMMISSION FILE NUMBER 000-52686

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

NEVADA	27-1616811
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

300 - 1055 West Hastings Street
Vancouver, British Columbia, Canada	V6E 2E9
(Address of principal executive offices)	(Zip Code)

(604) 681-7311
(Registrant's telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ x ] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[ ] Yes [ x ] No

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
As of November 15, 2012, the Issuer had 155,574,742 shares of common stock, issued and outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three month period ended September 30, 2012 are not necessarily indicative of the results that can be expected for the year ending June 30, 2013.

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(Expressed in United States Dollars)

		September 30,			June 30,
		2012			2012
ASSETS

Current
Cash	$	15,057		$	29,432
Receivables		10,805			6,852
Prepaid expenses		1,601			650

Total Current Assets		27,463			36,934

Equipment (Note 3)		2,993			3,573

Total Assets	$	30,456		$	40,507

LIABILITIES AND STOCKHOLDERS' DEFICIENCY

Current
Accounts payable and accrued liabilities	$	1,295,416		$	1,218,361
Loans payable (Note 5)		12,830			12,910
Convertible loan (Note 6)		482,800			336,586

Total Liabilities		1,791,046			1,567,857

Stockholders' deficiency
Preferred stock, $0.001 par value 10,000,000 shares authorized - no shares issued and outstanding
Common stock, $0.001 par value 400,000,000 shares authorized and 154,429,742 shares outstanding as of September 30, 2012 (June 30, 2012 – 150,179,742) (Note 7)		154,429			150,179
Subscriptions received in advance (Note 7)		20,914			195,000
Commitment to issue shares (Note 7)		-			18,700
Additional paid in capital (Note 7)		12,685,036			12,235,841
Accumulated deficit during development stage		(14,620,969	)		(14,127,070	)

Total Stockholders' Deficiency		(1,760,590	)		(1,527,350	)

Total Liabilities and Stockholders' Deficiency	$	30,456		$	40,507

Nature and continuance of operations (Note 1)

Subsequent events (Note 10)

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Unaudited

(Expressed in United States Dollars)

								For the
								period from
		For the three			For the three			April 14, 2004
		months ended			months ended			(Inception) to
		September 30,			September 30,			September 30,
		2012			2011			2012

OPERATING EXPENSES
Amortization of equipment (Note 3)	$	580		$	429		$	3,963
Amortization of patents		-			19,185			1,611,559
General and administrative		95,047			219,724			1,735,522
Interest and accretion of convertible loan (Note 6)		148,517			-			488,159
Professional fees		123,199			164,736			1,694,056
Research and development		16,421			426,171			5,732,112
Stock-based compensation (Note 7)		110,135			748,633			2,877,598

		(493,899	)		(1,578,878	)		(14,142,969	)

OTHER ITEM
Impairment of intangible assets		-			-			(106,000	)

Loss and comprehensive loss for the period	$	(493,899	)	$	(1,578,878	)	$	(14,248,969	)

Basic and diluted loss per common share	$	(0.00	)	$	(0.01	)
Weighted average number of common shares outstanding		152,859,090			146,927,692

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

Unaudited

(Expressed in United States Dollars)

																	Total
							Additional			Commitment		Subscriptions		Accumulated			Stockholders'
							Paid in			to Issue		Received in		Deficit During			Equity
	Shares			Amount			Capital			Shares		Advance		the Dev. Stage			(Deficiency)
Balance, April 14, 2004 (Inception)	-		$	-		$	-		$	-	$	-	$	-		$	-
Common shares issued at par	117,200,000			15			92,485			-		-		-			92,500
Loss	-			-			-			-		-		(9,557	)		(9,557	)
Balance, June 30, 2004	117,200,000			15			92,485			-		-		(9,557	)		82,943
Loss	-			-			-			-		-		(40,111	)		(40,111	)
Balance, June 30, 2005	117,200,000			15			92,485			-		-		(49,668	)		42,832
Loss	-			-			-			-		-		(26,654	)		(26,654	)
Balance, June 30, 2006	117,200,000			15			92,485			-		-		(76,322	)		16,178
Loss	-			-			-			-		-		(15,652	)		(15,652	)
Balance, June 30, 2007	117,200,000			15			92,485			-		-		(91,974	)		526
Common shares issued at $2.00 per share	100,000			100			199,900			-		-		-			200,000
Loss	-			-			-			-		-		(166,032	)		(166,032	)
Balance, June 30, 2008	117,300,000			115			292,385			-		-		(258,006	)		34,494
Loss	-			-			-			-		-		(28,747	)		(28,747	)
Balance, June 30, 2009	117,300,000			115			292,385			-		-		(286,753	)		5,747
Private placement	280,000			280			559,720			-		-		-			560,000
Share issuance costs	-			-			(4,140	)		-		-		-			(4,140	)
Stock-based compensation	-			-			159,709			-		-		-			159,709
Commitment to issue shares	-			-			-			112,632		-		-			112,632
Acquisition of patents	71,500,000			71,500			1,540,059			-		-		-			1,611,559
Shares issued for services	50,000			50			99,950			-		-		-			100,000
Par value reclassification	-			117,185			(117,185	)		-		-		-			-
Return to treasury	(47,000,000	)		(47,000	)		47,000			-		-		-			-
Loss	-			-			-			-		-		(1,360,963	)		(1,360,963	)
Balance, June 30, 2010	142,130,000		$	142,130		$	2,577,498		$	112,632	$	-	$	(1,647,716	)	$	1,184,544

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

Unaudited

(Expressed in United States Dollars)

															Accumulated			Total
							Additional			Commitment			Subscriptions		Deficit During			Stockholders'
							Paid in			to Issue			Received in		the			Equity
	Shares			Amount			Capital			Shares			Advance		Dev. Stage			(Deficiency)
Balance, June 30, 2010	142,130,000		$	142,130		$	2,577,498		$	112,632		$	-	$	(1,647,716	)	$	1,184,544
Dividend-warrants	-			-			372,000			-			-		(372,000	)		-
Private placement	4,049,560			4,049			4,045,511			-			-		-			4,049,560
Return to nonqualified investors	(8,000	)		(8	)		(15,992	)		-			-		-			(16,000	)
Exercise of warrants	372,000			372			3,348			-			-		-			3,720
Shares issued as finder’s fees	161,500			161			161,339			-			-		-			161,500
Share issuance costs	-			-			(390,237	)		-			-		-			(390,237	)
Stock-based compensation	-			-			1,246,115			-			-		-			1,246,115
Shares issued for services	222,632			223			222,409			(112,632	)		-		-			110,000
Commitment to issue shares	-			-			-			60,000			-		-			60,000
Loss	-			-			-			-			-		(4,728,538	)		(4,728,538	)
Balance, June 30, 2011	146,927,692			146,927			8,221,991			60,000			-		(6,748,254	)		1,680,664
Private placements	2,662,050			2,662			2,128,948			-			-		-			2,131,610
Shares issued for services	590,000			590			203,110			(60,000	)		-		-			143,700
Share issuance costs	-			-			(21,805	)		-			-		-			(21,805	)
Stock-based compensation	-			-			1,361,639			-			-		-			1,361,639
Subscriptions received in advance	-			-			-			-			195,000		-			195,000
Commitment to issue shares	-			-			-			18,700			-		-			18,700
Beneficial conversion feature attributed to convertible loan	-			-			341,958			-			-		-			341,958
Loss	-			-			-			-			-		(7,378,816	)		(7,378,816	)
Balance, June 30, 2012	150,179,742		$	150,179		$	12,235,841		$	18,700		$	195,000	$	(14,127,070	)	$	(1,527,350	)

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

Unaudited

(Expressed in United States Dollars)

														Accumulated			Total
					Additional			Commitment			Subscriptions			Deficit During			Stockholders'
					Paid in			to Issue			Received in			the			Equity
	Shares		Amount		Capital			Shares			Advance			Dev. Stage			(Deficiency)

Balance, June 30, 2012	150,179,742	$	150,179	$	12,235,841		$	18,700		$	195,000		$	(14,127,070	)	$	(1,527,350	)
Private placement	3,900,000		3,900		191,100			-			(195,000	)		-			-
Shares issued for services	60,000		60		18,640			(18,700	)		-			-			-
Share issued as finder’s fees	290,000		290		14,210			-			-			-			14,500
Share issuance costs	-		-		(15,055	)		-			-			-			(15,055	)
Stock-based compensation	-		-		110,135			-			-			-			110,135
Subscriptions received in advance	-		-		-			-			20,914			-			20,914
Beneficial conversion feature attributed to convertible loan	-		-		130,165			-			-			-			130,165
Loss	-		-		-			-			-			(493,899	)		(493,899	)

Balance, September 30, 2012	154,429,742	$	154,429	$	12,685,036		$	-		$	20,914		$	(14,620,969	)	$	(1,760,590	)

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(Expressed in United States Dollars)

								For the Period
		For the three			For the three			April 14, 2004
		months ended			months ended			(Inception) to
		September 30,			September 30,			September 30,
		2012			2011			2012

CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period	$	(493,899	)	$	(1,578,878	)	$	(14,248,969	)
Items not affecting cash:
Amortization of equipment		580			429			3,963
Amortization of patents		-			19,185			1,611,559
Impairment of intangible assets		-			-			106,000
Stock-based compensation		110,135			748,633			2,877,598
Shares for management services		-			-			100,000
Shares for consulting and management bonuses		-			28,700			445,032
Interest and accretion on convertible loan		148,517			-			488,159
Unrealized foreign exchange loss on loans payable		8,169			-			8,475
Changes in non-cash working capital items:
Increase in receivables		(3,953	)		-			(10,805	)
Increase in prepaid expenses		(951	)		(30,619	)		(1,601	)
Increase (decrease) in accounts payable and accrued liabilities		66,503			(34,339	)		1,290,502

Net cash used in operating activities		(164,899	)		(846,889	)		(7,330,087	)

CASH FLOWS FROM INVESTING ACTIVITIES
Equipment		-			(3,620	)		(6,956	)
Purchase of technology rights		-			(426,834	)		(15,000	)
Purchase of intangible assets		-			-			(100,000	)

Net cash used in investing activities		-			(430,454	)		(121,956	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit and loans payable		130,165			-			528,746
Proceeds from issuance of common stock		-			-			7,228,670
Proceeds from exercise of warrants		-			-			3,720
Share issuance costs		(555	)		-			(255,237	)
Refunds to nonqualified investors		-			-			(16,000	)
Subscriptions received in advance		20,914			1,814,000			20,914
Cash used to pay line of credit and loans payable		-			-			(43,713	)

Net cash provided by financing activities		150,524			1,814,000			7,467,100

Change in cash during the period		(14,375	)		536,657			15,057
Cash, beginning of period		29,432			343,289			-

Cash, end of period	$	15,057		$	879,946		$	15,057

Supplemental disclosures with respect to cash flows (Note 8)

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

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

1.	NATURE AND CONTINUANCE OF OPERATIONS

Quantum Solar Power Corp. (the “Company”) was incorporated in Nevada on April 14, 2004. The Company is a development stage company engaged in the business of developing and commercializing next generation solar power technology under the name Next Generation Device™ abbreviated NGD™. Quantum’s NGD™ is a patent pending, functioning, laboratory model that demonstrates its utility in solar power conversion.

The Company operates in one reportable segment being the research and development of solar power technology in Canada and the United States of America. Revenues will be substantially derived from royalty based licensing arrangements in this reporting segment.

Going concern

These condensed consolidated financial statements have been prepared consistent with accounting policies generally accepted in the United States (“U.S. GAAP”) assuming the Company will continue as a going concern. Currently, the Company has no sales and has incurred a loss of $493,899 for the three months ended September 30, 2012 and an accumulated loss of $14,248,969 for the period from April 14, 2004 (inception) to September 30, 2012. The Company has also experienced the following:

Suspension of research agreement

On May 23, 2012, Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), a company that conducts research and development activities on behalf of the Company, entered into an amendment agreement (the “Amended Research Agreement”) to the research agreement (the “CIO-BC Research Agreement”) with Simon Fraser University (“SFU”). The Amended Research Agreement was dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CAD$452,749 in respect of previous research activities conducted on the Company’s behalf. To secure payment under the Amended Research Agreement, the Company has agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, certain research equipment (Note 3). During the period ended September 30, 2012, the Company paid CAD$75,199 towards the outstanding amount leaving a balance of CAD$377,550.

The Company has not had enough cash to make payments to CIO-BC for ongoing research and development costs. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the CIO-BC Research Agreement has been suspended by SFU. SFU has made a demand for payment on the outstanding balances. There are no assurances that a new agreement with SFU will be reached, or that SFU will allow the Company to continue to use their facilities to conduct the Company’s research and development activities. The Company will require financing to repay the debt owed on the Promissory Note and conduct further research and development activities. There is no assurance that the Company will be able to secure financing on acceptable terms or at all.

Default on convertible loan agreement

On April 23, 2012, the Company secured an aggregate of CAD$475,000 in debt financing from Foundation Freehold Ltd. (“Foundation”) (Note 6). The Loan became in default due to failure to pay interest that was due on September 30, 2012. During the three months ended September 30, 2012 the Company received a notice of default and is in discussions with Foundation to settle the indebtedness of which there is no assurance.

These conditions indicate the existence of a material uncertainty that casts a substantial doubt about the Company’s ability to continue as a going concern. The future of the Company is dependent upon its ability to obtain financing, resume research activities and protect its proprietary process upon future profitable operations from development and commercialization of an NGD™.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

1.	NATURE AND CONTINUANCE OF OPERATIONS (cont’d)

	Going concern (cont’d)

	Management is in the process of obtaining additional financing, which may involve debt or equity offerings, and negotiating an agreement to continue conducting research. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed. There are no assurances, however, with respect to the future success of these plans.

	The accompanying condensed consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company fail in any of the above objectives and is unable to operate for the coming year.

2.	SIGNIFICANT ACCOUNTING POLICIES

	Basis of presentation and consolidation

	The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and are expressed in U.S. dollars. The interim condensed consolidated financial statements have been prepared under the guidelines of Accounting and Reporting by Development Stage Enterprises. A development stage enterprise is one in which planned principal operations have not commenced, or if its operations have commenced, there have been no significant revenues therefrom. As of September 30, 2012, the Company had not commenced its planned principal operations.

	These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended June 30, 2012, included in the Company’s Annual Report on Form 10-K, filed October 15, 2012, with the Securities Exchange Commission. For a full description of the Company’s significant accounting policies, refer to the footnotes to the audited financial statements for the Company for its fiscal year ended June 30, 2012 included in the Company’s Annual Report in Form 10-K for that year.

	These interim condensed consolidated financial statements include the accounts of the Company, and its wholly- owned subsidiary, 0935493 BC Ltd. (incorporated in British Columbia, Canada on April 10, 2012). All significant inter-company balances and transactions have been eliminated upon consolidation.

	Use of estimates

	The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant accounts that require estimates relate to the valuation of deferred tax assets, stock-based compensation, the estimated useful life of equipment, and the valuation of shares issued for technology, bonuses and services.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

	Fair value of financial instruments

	Financial assets

	All financial assets are initially recorded at fair value and designated upon inception into one of the following four categories: held to maturity, available for sale, loans and receivables or at fair value through profit or loss (“FVTPL”).

	Financial assets classified as FVTPL are measured at fair value with unrealized gains and losses recognized through profit and loss. The Company’s cash is classified as FVTPL. Financial assets classified as loans and receivables and held to maturity assets are measured at amortized cost. The Company’s receivables are classified as loans and receivables. Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in other comprehensive income and loss except for losses in value that are considered other than temporary which are recognized in earnings. At September 30, 2012, the Company has not classified any financial assets as available for sale.

	Transaction costs associated with FVTPL financial assets are expensed as incurred, while transaction costs associated with all other financial assets are included in the initial carrying amount of the asset.

	Financial liabilities

	All financial liabilities are initially recorded at fair value and designated upon inception as FVTPL or other financial liabilities. Financial liabilities classified as FVTPL include financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Derivatives, including separated embedded derivatives are also classified as held for trading and recognized at fair value with changes in fair value recognized in earnings unless they are designated as effective hedging instruments. Fair value changes on financial liabilities classified as FVTPL are recognized in earnings. The Company has classified the embedded derivative component of the loan payable as FVTPL.

	Financial liabilities classified as other financial liabilities are initially recognized at fair value less directly attributable transaction costs. After initial recognition, other financial liabilities are subsequently measured at amortized cost using the effective interest rate method. The effective interest rate method is a method of calculating the amortized cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that discounts estimated future cash payments through the expected life of the financial liability, or, where appropriate, a shorter period. The Company’s accounts payable and accrued liabilities and loans payable are classified as other financial liabilities.

	The Company measures the fair value of financial assets and liabilities based on the guidance of Fair Value Measurements which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Effective July 1, 2008, the Company adopted the policy for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis. The adoption of the provisions of this accounting policy did not materially impact the Company’s financial position and results of operations.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Fair value of financial instruments (cont’d)

Financial liabilities (cont’d)

The policy defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The policy also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy describes three levels of inputs that may be used to measure fair value:

Level 1 – quoted prices in active markets for identical assets and liabilities

Level 2 – quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 – inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

Fair values

The fair value of receivables, accounts payable and accrued liabilities and loans payable approximate their financial statement carrying amounts due to the short-term maturities of these instruments.

The Company’s cash was measured using Level 1 inputs.

Foreign currency risk

The Company operates in Canada, which gives rise to the risk that cash flows may be adversely impacted by exchange rate fluctuations. The Company has not entered into any forward exchange contracts or other derivative instrument to hedge against foreign exchange risk.

Credit risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. Management believes that the credit risk concentration with respect to financial instruments included in cash is remote. Receivables comprise mainly harmonized sales tax from the Canadian government.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

2.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

	Recent accounting pronouncements and changes in accounting policies

	Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.

	In September 2011, the FASB issued ASU No. 2011-08, “Intangibles—Goodwill and Other (Topic 350): Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 is intended to simplify how entities, both public and nonpublic, test goodwill for impairment. ASU 2011-08 permits an entity to first assess qualitative factors to determine whether it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Although early adoption is permitted, the Company adopted ASU 2011-08 as of July 1, 2012. Based on the Company’s evaluation of this ASU, the adoption of ASU 2011-08 did not have a material impact on the Company’s consolidated financial statements.

	In December 2011, the FASB issued ASU No. 2011-11, “Balance Sheet (Topic 210)—Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). The update requires entities to disclose information about offsetting and related arrangements of financial instruments and derivative instruments. ASU 2011-11 is effective for the Company in the first quarter of its fiscal year ending June 30, 2014 (“fiscal 2014”). The Company currently believes there will be no significant impact on its consolidated financial statements.

	In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. ASU 2011-12 defers only those changes in Update No. 2011-05 that relate to the presentation of the reclassification adjustments. Under the amendments in Update No. 2011-05, entities are required to present reclassification adjustments and the effect of those reclassification adjustments on the face of the financial statements where net income is presented, by component of net income, and on the face of the financial statements where other comprehensive income is presented, by component of other comprehensive income. In addition, the amendments in Update No. 2011-05 require that reclassification adjustments be presented in interim financial periods. This standard is effective for annual reporting periods beginning after December 15, 2011. The Company adopted ASU 2011-05 as of July 1, 2012. Based on the Company’s evaluation of this ASU, the adoption of ASU 2011-05 did not have a material impact on the Company’s consolidated financial statements.

	In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite- Lived Intangible Assets for Impairment” (“ASU 2012-02”). The Update simplifies the guidance for testing the decline in the realizable value (impairment) of indefinite-lived intangible assets other than goodwill. Examples of intangible assets subject to the guidance include indefinite-lived trademarks, licenses, and distribution rights. The standard applies to all public, private, and not-for-profit organizations. The amendments allow an organization the option to first assess qualitative factors to determine whether it is necessary to perform the quantitative impairment test. An organization electing to perform a qualitative assessment is no longer required to calculate the fair value of an indefinite-lived intangible asset unless the organization determines, based on a qualitative assessment, that it is “more likely than not” that the asset is impaired. Under former guidance ( FASB Accounting Standards Codification ®, Subtopic 350-30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill), an organization was required to test an indefinite-lived intangible asset for impairment on at least an annual basis by comparing the fair value of the asset with its carrying amount. If the carrying amount of an indefinite-lived intangible asset exceeded its fair value, an impairment loss was recognized in an amount equal to the difference. The amendments in this Update are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

3.	EQUIPMENT


		Three months ended						Year ended
		September 30, 2012						June 30, 2012

				Accumulated		Net				Accumulated		Net
		Cost		Amortization		Book Value		Cost		Amortization		Book Value

Computer equipment	$	6,956	$	3,963	$	2,993	$	6,956	$	3,383	$	3,573

	During the year ended June 30, 2012, the Company purchased $955,383 of scientific equipment which the Company expensed to research and development due to its specialized nature. Certain items of equipment are pledged as collateral on the convertible loan payable and the research agreement with SFU (Note 1).

4.	TECHNOLOGY PURCHASE AGREEMENT

	On April 15, 2008, the Company entered into a License agreement (“The Agreement”) with CIOI, to manufacture and market CIOI’s patent pending solar technology based on a new approach for the generation of solar power. On May 7, 2008 the Agreement was subsequently amended and executed by CIOI and on May 16, 2008 the agreement was executed by the Company and is subject to certain terms and conditions. The purchase price paid in cash for the License was $100,000. These costs were later written-off and charged to operations in fiscal 2008.

	In December 2009, the Company executed an agreement with CIOI to purchase technology and associated provisional patents related to the development of certain solar technology in exchange for 71,500,000 common stock of the Company valued at $1,611,559. The intellectual property is covered by two provisional U.S. patents and one Patent Cooperation Treaty Application. Due to the suspension of the research agreement and other issues raised in Note 1, the Company has recorded an impairment and charged the balance of $1,496,448 to operations during the year ended June 30, 2012.

5.	LOAN PAYABLE

	In January 2012, the Company entered into a loan agreement in the amount of EUR 9,980 (US$12,830). The loan is non-interest bearing, unsecured and has no specific terms of repayment.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

6.	CONVERTIBLE LOAN

In May 2012, the Company entered into a loan agreement for the principal amount of CAD$475,000 (the “Loan”). The Loan was advanced to the Company, subject to certain conditions, according to the following schedule:

	(i)	CAD$175,000 on April 25, 2012;
	(ii)	CAD$18,000 on May 23, 2012;
	(iii)	CAD$150,000 on June 25, 2012;
	(iv)	CAD$132,000 on July 23, 2012.

	The loan accrues interest at 9% per annum from the date of the first advance and matures on April 23, 2015. The loan is secured by certain assets.

	At any time lender may elect to receive shares in exchange for any portion of the principal or interest outstanding on the Loan on the basis of one share for each USD $0.02 of indebtedness converted. In the event of a default, the lender may elect to receive shares on the basis of one share for each USD $0.01 of indebtedness converted (Note 1).

	On comparison of the conversion price to the fair value of the Company’s common stock at issuance, the Company recorded a beneficial conversion feature of $472,123 (CAD$475,000), representing the entire proceeds received. This amount was recorded as a discount to the convertible notes with an offset to additional paid-in capital. The discount will be amortized over the term of the convertible notes and recorded as interest expense. The convertible debt will be accreted over its term to its principal amount at maturity. During the period ended September 30, 2012, the Company record interest expense of $148,517 (2011 - $nil) as a result of amortizing the discount due to the event of default noted below.

	As at September 30, 2012, a principal balance of $482,800 (CAD$475,000) is outstanding. Included in accounts payable and accrued liabilities is accrued interest of $13,913. During the period ended September 30, 2012, the Company defaulted on the interest payment which was due on September 30, 2012. The Company received a notice of default and has recorded the full principal balance as a current liability as at September 30, 2012.

7.	STOCKHOLDERS’ EQUITY (DEFICIENCY)

	On May 7, 2004, the Company issued 69,200,000 of its common shares for cash of $86,500.

	On June 30, 2004, the Company issued 48,000,000 of its common shares for cash of $6,000.

	The Company completed a private placement on April 15, 2008 to issue 100,000 common shares at a price of $2.00 per share. The net proceeds received were $200,000. No commissions were paid and no registration rights have been granted.

	On December 16, 2009, the Company entered into an agreement with CIOI as amended, wherein the Company agreed to purchase all of their solar cell technology in consideration of 71,500,000 restricted shares of common stock. As part of the transaction, the Company’s President returned and cancelled 47,000,000 shares of the Company’s common stock.

	In April 2010, 50,000 shares valued at $100,000 were issued as compensation for a performance bonus to a director of the Company.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

7.	STOCKHOLDERS’ EQUITY (DEFICIENCY) (cont’d)

In April 2010, the Company completed a private placement to issue 280,000 shares at a price of $2.00 per share. The net proceeds received were $560,000.

During the year ended June 30, 2011, 10,000 shares were issued through a private placement at $1 per share for proceeds of $10,000. A total of 161,500 shares valued at $161,500 were issued as finders’ fees.

During the year ended June 30, 2011, 274,060 shares were issued through a private placement at a stock price of $1.00 per share; net proceeds were $274,060 of which $76,500 was received during the year ended June 30, 2010. The Board granted 372,000 warrants to those shareholders who had purchased shares at $2.00 per share to allow them to purchase a matching number of shares at $0.01 in order to make them whole as a result of the change in the share sale price.

During the year ended June 30, 2011, 62,632 shares were issued for consulting services and 50,000 for a management performance bonus relating to services performed.

During the year ended June 30, 2011, a further 3,765,500 shares were issued through two private placements and a total of $228,737 in share issue costs were paid. In addition, 372,000 shares were issued when the warrants described above were exercised. Net proceeds were $3,769,220, all of which were received during the year. A refund of $16,000 was paid to several investors who previously paid for 8,000 shares and were found not to be qualified.

During the year ended June 30, 2011, 60,000 shares valued at $60,000 for consulting services and 50,000 shares valued at $50,000 for a management performance bonus relating to services provided were issued.

During the year ended June 30, 2012, 1,974,000 shares were issued through a private placement at a stock price of $1.00 per share for net proceeds of $1,974,000. A further 400,000 units were issued through a private placement at a stock price of $0.25 per share for net proceeds of $90,000. Each unit consists of one common share and one share purchase warrant with an exercise price of $0.30 expiring February 2, 2013. The Company paid finders’ fees of $10,000 in cash.

During the year ended June 30, 2012, 90,000 shares valued at $88,700 were issued in accordance to the terms of a consulting contract entered into during fiscal 2010, of which $60,000 was previously recorded as commitment to issue shares at June 30, 2011.

During the year ended June 30, 2012, 250,000 shares valued at $87,500 and 250,000 shares valued at $27,500 were issued for consulting services based on a consulting agreement entered on December 1, 2011.

During the year ended June 30, 2012, 288,050 units were issued through a private placement at a stock price of $0.20 per unit for net proceeds of $57,610. Each unit consists of one share and one share purchase warrant. Each warrant entitles the subscribers to purchase an additional common share at an exercise price of $0.25 per share, expiring on March 25, 2013.

During the year ended June 30, 2012, the Company paid $6,723 in share issue costs in connection with the private placements.

During the period ended September 30, 2012, the Company issued 3,900,000 units at an effective price of $0.05 per unit in satisfaction of $195,000 subscriptions received during the year ended June 30, 2012. Each unit consisted of one share and one share purchase warrant. Each warrant entitles the subscribers to purchase an additional common share at an exercise price of $0.25 per share, expiring on November 3, 2012 (subsequently expired unexercised). A total of 290,000 common shares valued at $14,500 were issued as finders’ fees.

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

7.	STOCKHOLDERS’ EQUITY (DEFICIENCY) (cont’d)

	During the period ended September 30, 2012, 60,000 shares valued $18,700 were issued in accordance to the terms of a consulting contract entered into during fiscal 2010.

	During the period ended September 30, 2012, the Company paid $555 in share issue costs in connection with the private placement.

	Subscriptions received in advance

	During the period ended September 30, 2012, the Board of Directors of the Company approved an offering of up to 10,000,000 units at a price of $0.02 per unit of which $20,914 was received.

	Stock options and warrants

	On February 28, 2011, the Company implemented a formal stock option plan under which it is authorized to grant options to directors, officers, employees and eligible consultants of the Company enabling them to acquire up to 14,650,000 shares of the Company. Under the plan, the exercise price of each option equals the market price of the Company’s stock, less applicable discount, as calculated on the date of grant. The options can be granted for a maximum term of 5 years. Vesting provisions are set at the discretion of the Company. The Plan has not been approved by the Company’s stockholders.

	Stock options and warrants are summarized as follows:


	Warrants					Stock Options
				Weighted					Weighted
				Average		Number of			Average
	Number of			Exercise		Stock			Exercise
	Warrants			Price		Options			Price
Balance outstanding at June 30, 2011	50,000		$	1.90		1,800,000		$	1.22
Expired/cancelled	(50,000	)		(1.90	)	(2,466,668	)		(1.14	)
Granted	688,050			0.28		7,866,668			0.37
Balance outstanding at June 30, 2012	688,050		$	0.28		7,200,000		$	0.22
Granted	3,900,000			0.25		-			-
Balance outstanding at September 30, 2012	4,588,050		$	0.25		7,200,000		$	0.22
Exercisable at September 30, 2012	4,588,050		$	0.25		5,912,526		$	0.22

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

7.	STOCKHOLDERS’ EQUITY (DEFICIENCY) (cont’d)

	The following table summarizes information about stock options and warrants outstanding at September 30, 2012:


	Number outstanding		Exercise Price	Expiry Date
Options	500,000	$	0.50	January 1, 2013
	250,000	$	0.165	March 1, 2014
	5,950,000	$	0.20	April 12, 2015
	500,000	$	0.20	March 6, 2016

Warrants	3,900,000	$	0.25	November 3, 2012*
	400,000	$	0.30	February 2, 2013
	288,050	$	0.25	March 25, 2013

*Expired unexercised subsequent to September 30, 2012.

Stock-based compensation

During the three months ended September 30, 2012, the Company granted nil options (2011 – 1,666,668) to employees and consultants of the Company, with a weighted average fair value of $nil (2011 - $0.86) per option, which are being recognized over the vesting periods of the options.

Total stock-based compensation for the three months ended September 30, 2012 was $110,135 (2011 - $748,633).

The Company used the Black-Scholes option pricing model to determine the fair value of options granted.

The fair value of stock options has been estimated with the following assumptions:


	2012	2011

Dividend yield	-	0.00%
Expected volatility	-	171.49%
Risk free interest rate	-	1.32%
Expected life of options	-	3.00 years

QUANTUM SOLAR POWER CORP.

(A Development Stage Company)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in United States Dollars)

Unaudited

SEPTEMBER 30, 2012

8.	SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS


						For the period
		For the		For the		from April 14,
		period ended		period ended		2004 (inception) to
		September 30,		September 30,		September 30,
		2012		2011		2012

Cash paid for interest	$	-	$	-	$	-

Cash paid for income taxes	$	-	$	-	$	-

Significant non-cash transactions for the period ended September 30, 2012 included:

	a)	issuing 60,000 common shares at a value of $18,700 from commitment to issue shares to common stock and additional paid in capital.

	b)	issuing 290,000 common shares at a value of $14,500 as finder’s fees.

Significant non-cash transactions for the year ended September 30, 2011:

included in scientific equipment is $528,549 which relates to accounts payable and accrued liabilities.

9.	RELATED PARTY TRANSACTIONS

	During the period ended September 30, 2012, the Company:

	a)	paid or accrued $30,214 (2011 - $nil) for consulting fees to a director and officer of the Company, of which $55,714 (2011 - $nil) is included in accounts payable and accrued liabilities as at September 30, 2012;

	b)	paid or accrued $nil (2011 - $33,438) for management fees to a former director and officer of the Company, of which $41,208 is included in accounts payable and accrued liabilities as at September 30, 2012;

	c)	paid or accrued $nil (2011 - $384,769) in research and development costs and $nil (2011 - $940,343) in scientific equipment with CIOI, a former significant shareholder, of which $383,747 (June 30, 2012 – $441,663) is included in accounts payable and accrued liabilities as at September 30, 2012.

	These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

10.	SUBSEQUENT EVENTS

	Subsequent to September 30, 2012, the Company:

	a)	entered into an amendment to the convertible loan agreement, pursuant to which the lender advanced an additional CAD$25,000 in consideration for which the conversion price of the loan was reduced to one common share of the Company for each USD$0.008 of indebtedness converted.

	a)	approved an offering of up to 10,000,000 shares at a price of $0.02 per share of which 1,145,000 shares were issued for proceeds of $22,914.

ITEM 2.

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

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

OVERVIEW

We were incorporated on April 14, 2004 under the laws of the State of Nevada. Our principal executive offices are located at Suite 300, 1055 West Hastings Street, Vancouver, BC, Canada V6E 2E9.

We are currently engaged in research, development and marketing of next generation solar power generation devices utilizing our patent pending technology (the “Next Generation Device™ or NGD™ Technology”) for photovoltaic devices that do not use silicon or other, rare earth elements. Once we have completed development, we expect to derive substantially all revenues from royalty based licensing arrangements.

The NGD™ Technology, which is covered by two provisional U.S. patents and one Patent Cooperation Treaty Application, differs from conventional solar technology as it does not require expensive silicon based absorber components or rare earth elements. We have developed and built a proof of concept prototype of a next generation device utilizing the NGD™ Technology (see “Technology Acquisition” and “NGD ^TM Technology” below).

We are a development stage company. We have not earned any revenue to date nor have we engaged in any licensing agreements to date. We do not anticipate earning revenue until we have completed the development and testing of our NGD™ Technology. We are presently in the development stage of our business and we can provide no assurance that we will be able to complete commercial development or successfully sell or license products incorporating our solar power generation devices, once development and testing is complete. We have limited operations. Our research activities are currently suspended until we can pay outstanding creditors and fund continued research activities of which there is no assurance.

TECHNOLOGY ACQUISITION

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

Subsequent to entering into the Technology Acquisition Agreement, CIO-BC entered into an amendment agreement to the CIO-BC Research Agreement, whereby SFU agreed to extend the term until December 31, 2010. On December 23, 2010, CIO-BC entered into another amendment agreement dated January 1, 2011, whereby SFU agreed to further extend the term until July 31, 2011. On July 28, 2011, CIO-BC entered into another amendment agreement dated July 2, 2011, whereby SFU agreed to further extend the term until December 31, 2011. CIO-BC entered into another amendment agreement dated January 2, 2012, whereby SFU agreed to further extend the term until June 29, 2012 and in consideration of which we will pay $594,401 CDN plus expenses, during the term. During our fiscal year ended June 30, 2012, we entered into another amendment to the research agreement (the “Amended Research Agreement”) dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CDN $452,749 in respect of previous research activities conducted on our behalf. The Promissory Note bears interest at a rate of 9% per annum. We, along with our wholly owned subsidiary 0935493 B.C. Ltd, guaranteed the Promissory Note with three of our PVD 75 Deposition Tools.

We have had insufficient funds to make our payments to CIO-BC for ongoing research and development activities conducted at SFU. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the Amended Research Agreement has been suspended by SFU. We are currently evaluating our research options going forward. We have focused our activities on arranging financing to pay outstanding liabilities and fund continued research and development activities. There is no assurance that we will be able to secure sufficient financing on acceptable terms or at all.

NGD™ TECHNOLOGY

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

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

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

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

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

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

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

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

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

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

PLAN OF OPERATION

The following discussion and analysis summarizes our plan of operation for the next twelve months, our results of operations for the three month period ended September 30, 2012 and changes in our financial condition from June 30, 2012. This discussion should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operation included in our Annual Report on Form 10-K for the year ended June 30, 2012 filed with the SEC on October 15, 2012.

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

Our research activities are currently suspended. We will need to acquire additional financing to pay outstanding liabilities and to fund additional research and development activities. There is no assurance that we will be able to obtain sufficient financing to proceed with our plan of operation.

RESULTS OF OPERATIONS

For the period from inception on April 14, 2004 to September 30, 2012, we have not earned any operating revenue. We had an accumulated net loss of $14,248,969 since inception and have incurred total operating expenses of $14,142,969 since inception.

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

Operating Expenses

Our operating expenses for the three months ended September 30, 2012 and 2011 consisted of the following:

		Three Months		Three Months
		Ended		Ended	Percentage
		September 30,		September 30,	Increase /
		2012		2011	(Decrease)
Amortization of equipment	$	580	$	429	35.2%
Amortization of patents		-		19,185	(100.0 )%
General and administrative		95,047		219,724	(56.7 )%
Interest and accretion of convertible loan		148,517		-	100.0%
Professional fees		123,199		164,736	(25.2 )%
Research and Development		16,421		426,171	(96.1 )%
Stock Based Compensation		110,135		748,633	(85.3 )%
Total Operating Expenses	$	493,899	$	1,578,878	(68.7 )%

Our operating expenses decreased from $1,578,878, during the three months ended September 30, 2011, to $493,899, during the three months ended September 30, 2012. With the exception of a slight increase in amortization of equipment and the recording of interest and accretion of convertible loan, all of our operating expenses decreased. This decrease is a result of the suspension of the CIO Research Agreement and decreased operations in the development of our NGD ^TM Technology.

General and administrative expenses primarily relate to fees paid to our: (i) officers, directors, consultants and employees; and (ii) amounts incurred in connection with investor relations activities.

Interest and accretion of convertible loan relates to our Loan from Foundation Freehold Ltd.

Professional fees relate to legal and accounting fees in connection with meeting our ongoing reporting obligations under the Exchange Act.

Research and development expenses primarily relate to amounts paid under the CIO Research Agreement as other consulting expenses incurred in connection with the development of our NGD™ Technology.

Stock based compensation relates to recorded expenses for stock options granted to our directors, officers and consultants.

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

Net Loss

We incurred a loss in the amount of $14,248,969 for the period from inception to September 30, 2012. Our loss was attributable to the costs of operating expenses which primarily consisted of interest and accretion of convertible loan, research and development costs, general and administrative expenses, stock based compensation and professional fees paid in connection with preparing and filing our Current, Quarterly and Annual Reports.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital
		At September 30,					Percentage
		2012			At June 30, 2012		Increase / Decrease
Current Assets	$	27,463		$	36,934		(25.6 )%
Current Liabilities		(1,791,046	)		(1,567,857	)	14.2%
Working Capital Deficit	$	(1,763,583	)	$	(1,530,923	)	15.2%

Cash Flows
		Three Months Ended			Three Months Ended
		September 30, 2012			September 30, 2011
Cash Used in Operating Activities	$	(164,899	)	$	(846,889	)
Cash Used in by Investing Activities		-			(430,454	)
Cash Provided by Financing Activities		150,524			1,814,000
Net Increase (Decrease) in Cash During Period	$	(14,375	)	$	536,657

As at September 30, 2012, we had cash of $15,057 and a working capital deficit of $1,763,583, compared to cash of $29,432 and a working capital deficit of $1,530,923 as at June 30, 2012.

The increase in our working capital deficit at September 30, 2012 from our year ended June 30, 2012 is primarily a result of decreases in cash and increases in accounts payable and accrued liabilities and accruals from the convertible loan from Foundation Freehold Ltd.

Subsequent to the three months ended September 30, 2012, we issued 1,145,000 shares of our common stock at a price of $0.02 per share pursuant to Regulation S of the United States Securities Act, as amended (the “Securities Act”).

Future Financings

Since our inception, we have used proceeds from the sales of our common stock to raise money for our operations and for our technology acquisition. We have not attained profitable operations and are dependent upon obtaining financing to pursue our plan of operation. For these reasons, our auditors stated in their report to our audited financial statements for the year ended June 30, 2012, that there is substantial doubt that we will be able to continue as a going concern.

On August 17, 2012, our Board of Directors approved an offering (the “Foreign Units Offering”) of up to 10,000,000 shares (the “Shares”) at a price of $0.02 US per Share pursuant to Regulation S of the Securities Act. To date we have sold 1,145,000 shares under this offering.

We have no revenues to date from our inception. We anticipate continuing to rely on loans or equity sales of our common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. We do not believe that we have obtained sufficient financing to cover our anticipated expenses over the next four months. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for to fund our planned business activities.

OFF-BALANCE SHEET ARRANGEMENTS

To secure payment under the Amended Research Agreement, We, along with 0935493 B.C. Ltd., our wholly owned subsidiary, have agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, three of our PVD 75 Deposition tools.

We entered into this arrangement with SFU in order to ensure that research and development activities could continue. In the event that CIO defaults on the Promissory Note, SFU will be able to collect from us. Our research activities with SFU have been suspended due to non-payment. SFU has made a demand for payment of the Promissory Note and we are in default. We may lose three of our PVD 75 Deposition tools if we cannot settle the outstanding indebtedness.

CRITICAL ACCOUNTING POLICIES

Our significant accounting policies are disclosed in Note 2 to our audited financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2012 filed with the SEC on October 15, 2012.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2012 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2012 (the “2012 Annual Report”).

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in the 2012 Annual Report, we believe that our financial statements contained in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended September 30, 2012 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

None.

ITEM 1A.

RISK FACTORS.

Amended Research Agreement is currently suspended we are not be able to continue our research and development activities on our NGD ^TM Technology at SFU.

We have not had enough cash to make our payments to CIO-BC for ongoing research and development costs. As a result, CIO-BC has fallen behind with its payments under the Amended Research Agreement and the CIO-BC Research Agreement has been suspended by SFU. There are no assurances that a new agreement with SFU will be reached, that SFU will allow us to continue to use their facilities to conduct our research and development activities. We will require financing to repay the debt owed on the Promissory Note and conduct further research and development activities. There is no assurance that we will be able to secure financing on acceptable terms or at all.

CIO-BC has defaulted on the Promissory Note that we have guaranteed and we have defaulted on the interest payments on the Loan from Foundation. As a result, we may lose all four of our PVD 75 Deposition tools and our Nova NanoSEM 430 Ultra-high resolution FESEM microscope.

SFU has made a demand on the outstanding balance of the Promissory Note and Foundation has made a demand on the interest payable on the Loan. The Loan is currently in default because of our failure to pay interest that was due on September 30, 2012. We do not have sufficient finances to pay the outstanding interest on the Loan and the outstanding balance due on the Promissory Note. As a result, we may lose all four of our PVD 75 Deposition tools and our Nova NanoSEM 430 Ultra-high resolution FESEM microscope. If we lose all of our equipment, our business may fail. There is no assurance that we will be able to negotiate an alternative arrangement with Foundation or SFU or that we will obtain sufficient financing to settle our outstanding debts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We have incurred a net loss of $14,248,969 for the period from inception to September 30, 2012, and have earned no revenues to date. We expect to spend additional capital in order produce and market solar energy products which we are licensed to do, and establish our infrastructure and organization to support anticipated operations. We cannot be certain whether we will ever earn a significant amount of revenues or profit, or, if we do, that we will be able to continue earning such revenues or profit. Also, any economic weakness may limit our ability to continue development and ultimately market our products and services. Any of these factors could cause our stock price to decline and result in investors losing a portion or all of their investment. These factors raise substantial doubt that we will be able to continue as a going concern. We have cash in the amount of $15,057 as at September 30, 2012.

We do not have sufficient financing to cover our anticipated expenditures over the next three months. We currently do not have sufficient arrangements for future financing and we may not be able to obtain financing on acceptable terms or at all.

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

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

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

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

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

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

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

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

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

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

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

We have not obtained sufficient financing to fund our anticipated business activities over the next twelve months. Our total expenditures over the next twelve months are anticipated to be approximately $1,700,000 the majority of which is due to the development and marketing of our products and general, legal, accounting and administrative expenses associated with our reporting obligations under the Exchange Act. Depending on the success of our initial marketing efforts, we estimate that we will require further funding to implement an advertising campaign to establish and enhance awareness of our products.

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

If we fail to re-negotiate our secured debt obligations to our secured creditors, we could lose our assets and be forced to discontinue our business.

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

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

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

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

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

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

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

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

	1.	We would not be able to pay our debts as they become due in the usual course of business; or

	2.	Our total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.

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

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

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

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

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

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

1.	contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

2.	contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

3.	contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

4.	contains a toll-free telephone number for inquiries on disciplinary actions;

5.	defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

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

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

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On October 22, 2012, we sold 1,145,000 shares of our common stock at a price of $0.02 per share pursuant to Regulation S promulgated under the United States Securities Act, as Amended (the “Securities Act”). Each subscriber and fundraiser represented that they were not a “U.S. Person” as that term is defined under Regulation S of the Securities Act and was not acquiring the shares for the account or benefit of any U.S. Person.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

On April 23, 2012, we secured an aggregate of $475,000 CDN in debt financing (the “Loan”) from Foundation Freehold Ltd. (“Foundation”). At any time, Foundation may elect to receive shares of our common stock in exchange for any portion of the principal or interest outstanding on the Loan on the basis of one share for each CDN $0.02 of indebtedness converted. In the event of a default, Foundation may elect to receive shares on the basis of one share for each CDN $0.01 of indebtedness converted (the “Reduced Conversion Rate”). On October 12, 2012, we entered into an amendment agreement (the “Amended Loan Agreement”) with Foundation. Under the terms of the Amended Loan Agreement, Foundation advanced us an additional $25,000 CDN and we reduced the Reduced Conversion Rate by 20% from $0.01 CDN to $0.008 CDN. As at the date of this filing we are indebted to Foundation in the amount of $500,000 CDN. As at the date of this filing, we are in default of our interest payment of $13,913 which was due on September 30, 2012.

On May 23, 2012, Canadian Integrated Optics (BC) Ltd. (“CIO-BC”), a company that conducts research and development activities on the NGDTM Technology on our behalf, entered into its sixth amendment agreement (the “Amended Research Agreement”) to the research agreement (the “CIO-BC Research Agreement”) with Simon Fraser University (“SFU”). The Amended Research Agreement was dated effective April 15, 2012. Under the terms of the Agreement, CIO-BC issued SFU a promissory note (the “Promissory Note”) in the amount of CDN $452,749 in respect of previous research activities conducted on our behalf. The Promissory Note bears interest at a rate of 9% per annum. To secure payment under the Amended Research Agreement, We, along with 0935493 B.C. Ltd., our wholly owned subsidiary, have agreed to provide a secured guarantee to SFU of the Promissory Note, charging, in favor of SFU, three of our PVD 75 Deposition tools. We are currently in default of our obligation to pay the indebtedness under the Promissory Note and have proposed that SFU take the three PVD 75 Deposition tools in settlement of the indebtedness. As of the date of this filing we are indebted to SFU in the amount of $377,550 CDN, all of which is in default.

ITEM4.

MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5.

OTHER INFORMATION.

None.

ITEM 6.

EXHIBITS.

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

Exhibit
Number	Description of Exhibits
3.1	Articles of Incorporation. ⁽¹⁾
3.2	Certificate of Change Pursuant to NRS 78.209 increasing the issued and authorized capital of common stock to 350,000,000 shares, par value $0.001 per share. ⁽³⁾
3.3	Certificate of Change Pursuant to NRS 78.209 increasing the issued and authorized capital of common stock to 400,000,000 shares, par value $0.001 per share. ⁽³⁾
3.4	Certificate of Amendment to Articles of Incorporation. ⁽³⁾
3.5	Certificate of Amendment to Articles of Incorporation. ⁽³⁾
3.6	Bylaws, as amended. ⁽¹⁾
10.1	Technology Acquisition Agreement between Quantum and Canadian Integrated Optics (IOM) Ltd. dated December 16, 2009. ⁽³⁾
10.2	CEO Employment Agreement between Quantum and Daryl J. Ehrmantraut dated January 1, 2010. ⁽⁴⁾
10.3	Investor relations Consulting Services Contract between Quantum and Green Street Capital Partners, LLC dated January 6, 2010. ⁽²⁾
10.4	Office Space Lease Agreement between Quantum and Santa Fe Business Incubator, Inc. dated January 19, 2010. ⁽²⁾
10.5	Revolving Line of Credit Agreement between Quantum and Canadian Integrated Optics (IOM) Ltd. dated February 20, 2010. ⁽³⁾
10.6	Consulting Agreement between Quantum and Caisey Harlingten dated April 19, 2010. ⁽⁴⁾
10.7	Office Space Lease Agreement between Quantum and Santa Fe Business Incubator, Inc. dated July 27, 2010. ⁽⁴⁾
10.8	Office Space Lease Agreement between Quantum and Guinness Business Center Ltd. dated June 21, 2010 and Addendum dated August 17, 2010. ⁽⁴⁾
10.9	Finder’s Fee Agreement between Quantum and 1536476 Alberta Ltd. dated for reference August 30, 2010. ⁽⁴⁾
10.10	Investor Relations Consulting Agreement between Quantum and Teatyn Enterprises Inc. dated for reference January 15, 2011. ⁽⁵⁾
10.11	2011 Stock Incentive Plan. ⁽⁶⁾
10.12	Task Order Agreement between Quantum and SgurrEnergy Ltd. dated April 28, 2011. ⁽⁷⁾
10.13	Investor Relations Consulting Agreement between Quantum and John Thornton dated for reference March 1, 2011 ⁽⁸⁾
10.14	Public Relations Agreement dated June 21, 2011 between the Company and Vorticom Inc. ⁽⁹⁾
10.15	Consulting Agreement dated July 18, 2011 between the Company and Advantag Aktiengesellschaft. ⁽¹⁰⁾
10.16	English translation of the Consulting Agreement dated July 18, 2011 between the Company and Advantag Aktiengesellschaft. ⁽¹⁰⁾
10.17	Consulting Agreement dated for reference July 8, 2011 between the Company and Quorum Capital Corporation. ⁽¹¹⁾
10.18	Executive Services Agreement dated for reference August 8, 2011 between the Company, Team Solar BV and Steven Pleging. ⁽¹²⁾
10.19	Employment Agreement dated effective September 1, 2011 between the Company and Stella Guo. ⁽³⁾
10.20	Release Agreement dated October 5, 2011 between the Company and Quorum Capital Corporation. ⁽¹⁴⁾
10.21	Investor Relations Consulting Agreement dated December 1, 2011 between the Company and Pristine Capital Corp. ⁽¹⁵⁾
10.22	Consulting Agreement dated December 1, 2011 between the Company and Mirador Consulting LLC. ⁽¹⁵⁾
10.23	Loan Agreement dated April 23, 2012 between the Corporation and Foundation Freehold Ltd. ⁽¹⁶⁾
10.24	Amendment No. 1 to Loan Agreement dated May 22, 2012 between the Corporation and Foundation Freehold Ltd. ⁽¹⁶⁾

Exhibit
Number	Description of Exhibits
10.25	Guarantee dated April 23, 2012 between 0935493 B.C. Ltd. and Foundation Freehold Ltd. ⁽¹⁶⁾
10.26	Security Agreement dated April 23, 2012 between 0935493 B.C. Ltd. and Foundation Freehold Ltd. ⁽¹⁶⁾
10.27	Guarantee dated May 8, 2012 between the Corporation and Simon Fraser University. ⁽¹⁶⁾
10.28	Guarantee dated May 8, 2012 between the 0935493 B.C. Ltd. and Simon Fraser University. ⁽¹⁶⁾
10.29	Security Agreement dated May 8, 2012 between 0935493 B.C. Ltd and Simon Fraser University. ⁽¹⁶⁾
10.30	Consulting Agreement dated for reference March 9, 2012 between the Corporation and Edward H. Sargent. ⁽¹⁶⁾
10.31	Amendment No. 2 to Loan Agreement dated October 12, 2012 between the Corporation and Foundation Freehold Ltd. ⁽¹⁷⁾
14.1	Code of Ethics. ⁽³⁾
21.1	List of Subsidiaries.
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1	Audit Committee Charter. ⁽³⁾
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF	XBRL Taxonomy Extension Definition Linkbase.
101.LAB	XBRL Taxonomy Extension Label Linkbase.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase.

(1)	Previously filed as an exhibit to our Registration Statement on Form S-1 originally filed with the SEC on September 21, 2004.
(2)	Previously filed as an exhibit to our Quarterly Report on Form 10-Q for the period ended December 31, 2009 filed with the SEC on February 17, 2010.
(3)	Previously filed as an exhibit to our Quarterly Report of Form 10-Q for the period ended March 31, 2010 filed with the SEC on May 17, 2010.
(4)	Previously filed as an exhibit to our Annual Report on Form 10-K for the year ended June 30, 2010 filed with the SEC on September 13, 2010.
(5)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on February 3, 2011.
(6)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on March 4, 2011.
(7)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 3, 2011.
(8)	Previously filed as an exhibit to our Quarterly Report of Form 10-Q for the period ended March 31, 2011 filed with the SEC on May 10, 2010.
(9)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 27, 2011.
(10)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 20, 2011.
(11)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 11, 2011.
(12)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 1, 2011.
(13)	Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on September 13, 2011.
(14)	Previously filed as an exhibit to our Quarterly Report on Form 10-Q filed with the SEC on November 8, 2011.
(15)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 7, 2011.
(16)	Previously filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 30, 2012.
(17)	Previously filed as an exhibit to our Annual Report on Form 10-K filed with the SEC on October 15, 2012.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		QUANTUM SOLAR POWER CORP.


Dated: November 16, 2012		/s/ Andras Pattantyus-Abraham
		ANDRAS PATTANTYUS-ABRAHAM
		Chief Executive Officer, President and Chief
		Technology Officer
		(Principal Executive Officer)


Dated: November 16, 2012	By:	/s/ Graham R. Hughes
		GRAHAM R. HUGHES
		Chief Financial Officer, Secretary and Treasurer
		(Principal Accounting Officer)