10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

þAnnual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2008.

o 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: 001-14791

SOLAR ENERGY LIMITED

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization) 76-0418364 (I.R.S. Employer Identification No.)

73200 El Paseo, Suite 2H, Palm Desert, California, 92260

(Address of principal executive offices) (Zip Code)

(760) 773-1111

(Issuer’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act: none

Securities registered under Section 12(g) of the Exchange Act: common stock (title of class), $0.0001 par value.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933: Yes o No þ.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act: Yes o No þ

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

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company as defined by Rule 12b-2 of the Exchange Act: smaller reporting company þ

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

The aggregate market value of the registrant's common stock, $0.0001 par value, held by non-affiliates (14,048,355 shares) was approximately $913,143 based on the average closing bid and asked prices ($0.065) for the common stock on April 14, 2009.

At April 14, 2009 the number of shares outstanding of the registrant's common stock, $0.0001 par value (the only class of voting stock), was 18,423,309.

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TABLE OF CONTENTS

		Page
PART I.
	Item       1.        Business		3
	Item       1A.      Risk Factors		7
	Item       1B.      Unresolved Staff Comments		10
	Item       2.        Properties		10
	Item       3.        Legal Proceedings		10
	Item       4.        Submission of Matters to a Vote of Security Holders		11
PART II.
	Item       5.        Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities		11
	Item       6.        Selected Financial Data		12
	Item       7.        Management's Discussion and Analysis of Financial Condition and Results of Operations		13
	Item       7A.     Quantitative and Qualitative Disclosures about Market Risk		19
	Item       8.        Financial Statements and Supplementary Data		19
	Item       9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		20
	Item       9A.     Controls and Procedures (Item 9A (T))		20
	Item       9B.     Other Information		22
PART III.
	Item     10.      Directors, Executive Officers and Corporate Governance		22
	Item     11.      Executive Compensation		24
	Item     12.      Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		26
	Item     13.      Certain Relationships and Related Transactions, and Director Independence		26
	Item     14.      Principal Accountant Fees and Services		27
PART IV.
	Item     15.      Exhibits and Financial Statement Schedules		28
	Signatures		29

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PART I

ITEM 1.     BUSINESS

As used herein the terms “Company,” “it,” “its,” “we,” “our,” and “us” refer to Solar Energy Limited, our predecessors, and our subsidiaries, unless context indicates otherwise.

Corporate History

The Company was incorporated under the laws of the State of Delaware as Taurus Enterprises, Inc., on January 5, 1994, and re-incorporated in Nevada on August 20, 1996, as Salvage World, Inc. On December 17, 1997, the Company effected a Plan of Reorganization and Merger of Salvage World, Inc., into Solar Energy Limited, a private Delaware Corporation, the effect of which merger changed our name and moved our place of incorporation from Nevada to Delaware. The reorganization also involved the acquisition of Hydro-Air Technologies, Inc., initially as a wholly-owned subsidiary.

Since reorganization the Company has focused on the development of cost-effective solutions for global issues related to water, energy and pollution.
 

The primary thrust of that focus was initially in connection with the development of renewable energy sources such as solar energy and water. The Company believed that with the right technologies renewable energy could prospectively compete with traditional energy sources. Nevertheless, the Company was unable to realize any commercial application of such technologies. In 2005 the Company redirected its focus to tackle carbon sequestration with a process designed to generate plankton blooms in the oceans as a means to resist global warming and the application of “cold fusion” technologies as a potential source of unlimited energy.
 
On February 22, 2008 the Company entered into an agreement with Russ George, the proponent of the carbon sequestration process and the “cold fusion” technologies, to separate itself and its subsidiaries from his management, pursuant to which Mr. George agreed to cancel 3.5 million shares in exchange for the non-exclusive use of the know-how associated with both “iron-fertilization” and “cold fusion”.

The Company is currently without operations.

Planktos

The Company acquired Planktos, Inc. in August of 2005 from Mr. George intent on improving the world’s marine and terrestrial environments by acting on commercial opportunities related to carbon sequestration projects. Planktos operated as a wholly subsidiary of the Company until August of 2007 at which time it was sold to Planktos Corp. for a controlling equity interest in that entity.

Planktos Corp.’s efforts to finance and conduct an “iron-fertilization” prove out program while at the same time attempting to fund a reforestation project in Hungary were not successful. A combination of poor market conditions, condemnation from certain environmental groups and local opposition to ocean research caused Planktos to suspend operations in December of 2007.
 

On November 12, 2008 the Company sold its entire interest in Planktos Corp. to Maidon Services Limited in exchange for cash consideration of $200,000 of which $125,000 has been paid with the remainder due in December of 2009. The agreement provides that the remainder due can be converted, at the Company’s option, into shares of Planktos Corp. at $0.25 per share.

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D-2 Fusion
 

The Company acquired D-2 Fusion, Inc. from Mr. George in August of 2005 in order to fund research and development into solid-state fusion technology. Designs for entry level heat and energy applications for homes and industry were the focus of that effort.

D-2 Fusion’s attempts to develop an energy program built around “cold fusion” met with limited successes that could not be replicated. Several attempts to realize funding commitments for the D-2 Fusion research and development effort proved unsuccessful. Consequently, D2-Fusion was forced to suspend operations prior to year end December 31, 2008.

Our principal place of business is located at 73200 El Paseo, Suite 2H, Palm Desert, California, 92260, and our telephone number is (760) 773-1111. Our registered statutory office is located at The Company Corporation, 2711 Centerville Road, Wilmington, Delaware, 19808.

The Company’s shares are quoted on the Over the Counter Bulletin Board under the symbol “SLRE”.

The Company

The Company’s plan of operation for the coming year is to actively pursue development stage assets and emerging businesses with which to merge or acquire. We intend to function as a business incubator for assets and businesses that focus on (i) cost-effective renewable energy sources that do not threaten the environment, and (ii) practical solutions to mitigate the effects of traditional energy sources’ unintended consequences concerning global climate change. We will fund the process of driving emerging technologies towards commercial applications through debt or equity offerings tied to our common stock.

Selection of a Business
 
Management has adopted a conservative policy of seeking opportunities that it considers to be of exceptional quality. Therefore, we may have to wait some time before consummating a suitable transaction. Management recognizes that the higher the standards it imposes, the greater may be its competitive disadvantage when vying with other acquiring interests or entities.
 
The Company does not intend to restrict its consideration to any particular business or industry segment, though management intends to continue its focus on opportunities related to renewable energy sources and combating climate change. Due to our lack of financial resources, the scope and number of suitable business ventures is limited. We are therefore most likely to participate in a single business venture. Accordingly, the Company will not be able to diversify and will be limited to one merger or acquisition. The lack of diversification will prevent us from offsetting losses from one business opportunity against profits from another.

The decision to participate in a specific business opportunity will be made upon management’s analysis of the quality of the opportunity’s management and personnel, the anticipated acceptability of products or marketing concepts, the merit of technological changes and numerous other factors which are difficult, if not impossible, to analyze through the application of any objective criteria. Further, it is anticipated that the historical operations of a specific venture may not necessarily be indicative of the potential for the future because of the necessity to substantially shift a marketing approach, expand operations, change product emphasis, change or substantially augment management, or make other changes. The Company will be partially dependent upon the management of any given business opportunity to identify such problems and to implement, or be primarily responsible for the implementation of required changes. 

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Since we may participate in a business opportunity with a newly organized business or with a business which is entering a new phase of growth, it should be emphasized that the Company may incur risk due to the failure of the target’s management to have proven its abilities or effectiveness, or the failure to establish a market for the target’s products or services, or the failure to realize profits.
 
The Company will not acquire or merge with any company for which audited financial statements cannot be obtained. Management anticipates that any opportunity in which we participate will present certain risks. Many of these risks cannot be adequately identified prior to selection of a specific opportunity. Our shareholders must therefore depend on the ability of management to identify and evaluate such risks. Further, in the case of some of the opportunities available to us, it may be anticipated that some of such opportunities are yet to develop as going concerns or that some of such opportunities are in the development stage in that same have not generated significant revenues from principal business activities prior to our participation.

Acquisition of Business
 
Implementation of a structure for any particular business acquisition may involve a merger, consolidation, reorganization, joint venture, franchise or licensing agreement with another corporation or entity. The Company may also purchase stock or assets of an existing business. On the completion of a transaction, it is possible that present management and shareholders of the Company would not remain in control of the Company. Further, our sole officer and director may, as part of the terms of any transaction, resign, to be replaced by new officers and directors without a vote of our shareholders.
 
We anticipate that any securities issued in any such reorganization would be issued in reliance on exemptions from registration under applicable federal and state securities laws. However, in certain circumstances, as a negotiated element of any transaction, the Company may agree to register securities either at the time a transaction is consummated, under certain conditions, or at a specified time thereafter. The issuance of substantial additional securities and their potential sale into any trading market may have a depressive effect on such market.
 
While the actual terms of a transaction to which the Company may be a party cannot be predicted, it may be expected that the parties to a business transaction will find it desirable to avoid the creation of a taxable event and thereby structure the acquisition in a so called “tax-free” reorganization under Section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”). In order to obtain tax-free treatment under the Code, it may be necessary for the owners of the acquired business to own 80% or more of the voting stock of the surviving entity. In such event, our shareholders would retain less than 20% of the issued and outstanding shares of the surviving entity, which could result in significant dilution in the equity of such shareholders.

Our due diligence process will require that management meet personally with the personnel involved in any given transaction, visit and inspect material facilities, obtain independent analysis or verification of the information provided, check references for management and key persons, and take other reasonable investigative measures, to the extent of our limited financial resources and management expertise.

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The manner in which we participate in an opportunity will depend on the nature of the opportunity, the respective needs and desires of the Company and other parties, the management of the opportunity, and the our relative negotiating strengths. Negotiations that involve mergers or acquisitions will focus on the percentage of the Company that the target company shareholders would acquire in exchange for their shareholdings in the target company. Depending upon, among other things, the target company’s assets and liabilities, our shareholders will in all likelihood hold a lesser percentage ownership interest in the Company following any merger or acquisition. The percentage ownership may be subject to significant reduction in the event the Company acquires a target company with substantial assets. Any merger or acquisition effected by the Company can be expected to have a significant dilutive effect on the percentage of shares held by our current shareholders.
 

Operation of Business after Acquisition
 
The Company’s operation following its merger or acquisition of a business will be dependent on the nature of the business and the interest acquired. We are unable to determine at this time whether the Company will be in control of the business or whether present management will be in control of the Company following the acquisition. We may expect that any future business will present various challenges that cannot be predicted at the present time.
 

Competition

We will be involved in intense competition with other business entities to obtain a suitable business opportunity many of which competitors will have a considerable edge over us by virtue of their stronger financial resources and prior experience in business.

Marketability

As we currently are not involved in selling products or services, there can be no assurance that we will be successful in marketing any such products or services or whether a market will develop.

Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements and Labor Contracts

We currently have no patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts.

Governmental and Environmental Regulation
 

The Company cannot anticipate the government regulations, if any, to which it may be subject until it has acquired an interest in a business. The use of assets to conduct a business that the Company may acquire could subject it to environmental, public health and safety, land use, trade, or other governmental regulations and state or local taxation. Our selection of a business in which to acquire an interest will include an effort to ascertain, to the extent of the limited resources of the Company, the effects of any government regulation on the prospective business of the Company. However, in certain circumstances, such as the acquisition of an interest in a new or start-up business activity, it may not be possible to predict with any degree of accuracy the impact of government regulation.

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Research and Development

During the years ended December 31, 2008 and 2007, the Company spent $0 and $186,511, respectively, on research and development activities. We cannot anticipate the amount of spending on research and development in the future; such level will depend upon on success in raising additional financing and our progress with ongoing development projects in relation to the nature of future businesses that we may incubate.

Employees

The Company is a development stage company and currently has no employees. Michael James Gobuty, our sole officer and director, manages the Company. We look to Mr. Gobuty for his entrepreneurial skills and talents. Management uses consultants, attorneys and accountants as necessary and does not plan to engage any full-time employees in the near future.

Reports to Security Holders

The Company’s annual report contains audited financial statements. We are not required to deliver an annual report to security holders and will not automatically deliver a copy of the annual report to our security holders unless a request is made for such delivery. We file all of our required reports and other information with the Securities and Exchange Commission (the “Commission”). The public may read and copy any materials that are filed by the Company with the Commission at the Commission’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Commission at 1-800-SEC-0330. The statements and forms filed by us with the Commission have also been filed electronically and are available for viewing or copy on the Commission maintained Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission. The Internet address for this site can be found at http://www.sec.gov.

ITEM 1A.     RISK FACTORS

The Company’s securities and future operations are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our future operations, business, financial condition and/or operating results as well as the trading price and/or the value of our securities.

Risks Related to the Company’s Business

The Company’s ability to continue as a going concern is in question

Our independent public accounting firm has issued a report on our consolidated financial statements for the years ended December 31, 2008 and 2007 that states that the consolidated financial statements were prepared assuming we will continue as a going concern and further states that our significant operating losses and negative working capital raise substantial doubt about our ability to continue as a going concern.

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We have a history of significant operating losses and such losses may continue in the future

Since our inception in 1994, our operations have resulted in a continuation of losses and an accumulated deficit which reached $14,978,690 at December 31, 2008. The Company has never realized revenue from operations. We will continue to incur operating losses as we maintain our search for a suitable business opportunity and satisfy our ongoing disclosure requirements with the Securities and Exchange Commission (“Commission”). Such continuing losses could result in a decrease in share value.

The Company’s limited financial resources cast severe doubt on our ability to acquire a profitable business opportunity.

The Company’s future operation is dependent upon the acquisition of a profitable business opportunity. However, the prospect of such an acquisition is doubtful due to the Company’s limited financial resources. Since we have no current business opportunity, the Company is not in a position to improve this financial condition through debt or equity offerings. Therefore, this limitation may act as a deterrent in future negotiations with prospective acquisition candidates. Should we be unable to acquire a profitable business opportunity the Company will, in all likelihood, be forced to cease operations.

Our limited financial resources cast severe doubt on our ability to pursue our business plan of incubating new business opportunities.

The Company’s future operation is dependent upon its ability to realize sufficient financing to incubate business opportunities through merger or acquisition. We cannot be certain that financing for our intended purpose will be forthcoming. Our inability to finance new business opportunities will prevent us from developing our business plan and may act as a deterrent in any future negotiations with merger or acquisition candidates. Should the Company be unable to realize financing and develop what might become a profitable business opportunity, it will, in all likelihood, be forced to cease operations.

Risks Related to the Company’s Stock

The Company will need to raise additional capital to fund operations which could adversely affect our shareholders

The Company will need to raise additional capital. However, we have no commitment from any source of financing to provide us with this necessary additional capital. Should we secure a commitment to provide us with capital such commitment may obligate us to issue additional shares of the Company’s common stock or warrants or other rights to acquire common stock which will result in dilution to existing shareholders. Nonetheless, if we are unable to obtain additional capital, then we will need to restrict or even cease operations, which action would adversely affect our shareholders.

The market for our stock is limited and our stock price may be volatile.

The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day.

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We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.
 
We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has substantially increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly. Further, expenses related to our compliance may increase in the future, as legislation affecting smaller reporting companies comes into effect that may negatively impact our financial performance to the point of having a material adverse effect on our results of operations and financial condition.

Our internal controls over financial reporting are not be considered effective, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.
 
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. Since we have been unable to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.

If the market price of our common stock declines as the selling security holders sell their stock, selling security holders or others may be encouraged to engage in short selling, depressing the market price.

The significant downward pressure on the price of the common stock as the selling security holders sell material amounts of common stock could encourage short sales by the selling security holders or others. Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold it short. Significant short selling of a company’s stock creates an incentive for market participants to reduce the value of that company’s common stock. If a significant market for short selling our common stock develops, the market price of our common stock could be significantly depressed.

The Company’s shareholders may face significant restrictions on their stock.

The Company’s stock differs from many stocks in that it is a “penny stock.” The Commission has adopted a number of rules to regulate “penny stocks” including, but not limited to, those rules from the Securities Act as follows:

3a51-1     which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;

15g-1     which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;

15g-2      which details that brokers must disclose risks of penny stock on Schedule 15G;

15g-3      which details that broker/dealers must disclose quotes and other information relating to the penny stock market;

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15g-4      which explains that compensation of broker/dealers must be disclosed;

15g-5      which explains that compensation of persons associated in connection with penny stock sales must be disclosed;

15g-6      which outlines that broker/dealers must send out monthly account statements; and

15g-9     which defines sales practice requirements.

Since the Company’s securities constitute a “penny stock” within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:

 

·      control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;

·      manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;

·      “boiler room” practices involving high pressure sales tactics and unrealistic price projections by inexperienced sales persons;

·      excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and

·      the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.

ITEM 1B.     UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.     PROPERTIES

The Company’s maintains an office located at 73200 El Paseo, Suite 2H, Palm Desert, California, 92260, for which the Company pays no rent. The Company does not believe that it will need to maintain any additional office space at any time in the foreseeable future in order to carry out the plan of operation described herein.

ITEM 3.     LEGAL PROCEEDINGS
 

Legal proceedings were initiated by Mary Ruth Ladd against the Company, Planktos Corp. and certain individuals affiliated to the Company on October 3, 2007 in the Superior Court of the State of California, County of San Francisco in connection with allegations of discrimination and retaliation against a whistle blower, wrongful termination, fraud, breach of contract, wrongful business acts and intentionally causing injury in the workplace. The claim seeks $58,280 in lost wages in addition to certain employee benefits and punitive damages. The Company has retained counsel to respond to these allegations and denies any liability for these alleged causes of action.

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

No matter was submitted to a vote of the security holders, through the solicitation of proxies or otherwise, during the fourth quarter ended December 31, 2008.

PART II

ITEM 5.     MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's common stock is quoted on the Over the Counter Bulletin Board, a service maintained by the National Association of Securities Dealers, Inc. under the symbol “SLRE”. Trading in the common stock in the over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions. Further, these prices reflect inter-dealer prices without retail mark-up, mark-down, or commission, and may not necessarily reflect actual transactions. The following table sets forth for the periods indicated the high and low bid prices for the common stock as reported each quarterly period within the last two fiscal years.

Year	Quarter Ending	High	Low
2008	December 31	$0.11	$0.04
	September 30	$0.20	$0.05
	June 30	$0.22	$0.08
	March 31	$0.23	$0.09
2007	December 31	$0.37	$0.11
	September 30	$0.56	$0.33
	June 30	$0.59	$0.43
	March 31	$0.64	$0.38

Capital Stock

The following is a summary of the material terms of the Company’s capital stock. This summary is subject to and qualified by our articles of incorporation and bylaws.

Common Stock

As of April 14, 2009 there were 437 shareholders of record holding a total of 18,423,309 shares of fully paid and non-assessable common stock of the 50,000,000 shares of common stock, par value $0.0001, authorized. The board of directors believes that the number of beneficial owners is substantially greater than the number of record holders because a portion of our outstanding common stock is held in broker “street names” for the benefit of individual investors. The holders of the common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of the common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock.

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Preferred Stock

The Company has no authorized shares of preferred stock

Warrants

As of April 14, 2009 the Company had 1,250,000 outstanding warrants to purchase shares of our common stock.

Stock Options

As of April 14, 2009 the Company had 500,000 outstanding stock options to purchase shares of our common stock.

Convertible Securities

As of April 14, 2009 the Company had no outstanding securities, other than warrants and options, convertible into shares of the Company’s stock.

Dividends

The Company has not declared any cash dividends since inception and does not anticipate paying any dividends in the near future. The payment of cash dividends is within the discretion of the board of directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. There are no restrictions that currently limit the Company's ability to pay cash dividends on its common stock other than those generally imposed by applicable state law.

Transfer Agent and Registrar

Our transfer agent is Michael Anzeman at Madison Stock Transfer, Inc., located at 1688 East 16th Street, Suite 7, Brooklyn, New York, 11229. His phone number is (718) 627-4453.

Purchases of Equity Securities made by the Issuer and Affiliated Purchasers

None.

Recent Sales of Unregistered Securities

None.

ITEM 6.     SELECTED FINANCIAL DATA

Not required.

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

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this current report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this current report. Our fiscal year end is December 31.

Discussion and Analysis

The Company’s plan of operation for the coming year is to identify and acquire a favorable business opportunity through merger or acquisition. We have not yet entered into any agreement, nor do we have any commitment or understanding to enter into or become engaged in any transaction, as of the date of this filing.

The Company’s plan of operation over the next twelve months will require a minimum of $100,000 to identify a suitable business opportunity for development through merger or acquisition. Should the Company decide to develop a business opportunity through merger or acquisition, our funding requirements will change. We will also require up to $1,000,000 to satisfy amounts payable. Financing to meet these cash requirements is not currently available.

Results of Operations

During the year ended December 31, 2008, the Company was focused on (i) suspending research and development activities in connection with cold fusion technologies, including closing its Los Alamos, New Mexico research facility, (ii) winding down its intended carbon sequestration business in connection with its formerly majority owned subsidiary, Planktos Corp., including the disposing of its research vessel and essentially all of its other assets, (iii) pursued financing commitments for its plan of operation, (iv) beginning the search for a business opportunity to develop through merger or acquisition, and (v) satisfying continuous public disclosure requirements.

The Company has not generated any revenues since inception. Since we have suspended operations and have no current ability to generate revenue, we expect to continue to incur losses for the foreseeable future.

Net Income/Loss

For the period from January 5, 1994 (inception) to December 31, 2008 the Company recorded a net loss of $14,978,690. Net income for the year ended December 31, 2008 was $395,834 as compared to net losses of $3,259,823 for the year ended December 31, 2007. Net income in the current period can be attributed to the sale of our research vessel related to our Planktos Corp.’s “iron-fertilization” program. Further, the loss from our continuing operations decreased as a result of the suspension of both our “cold fusion” research and development program and our “iron-fertilization” prove out program which primarily resulted in a decrease in general and administrative expenses and research and development expenses.
 
We expect to continue to incur losses over the next twelve months as the Company seeks out another business opportunity for development through merger or acquisition.

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Income Tax Expense (Benefit)

The Company may have a prospective income tax benefit resulting from a net operating loss carryforward and start up costs that could offset future operating profits.

Impact of Inflation

The Company believes that inflation has had a negligible effect on operations over the past three years.

Capital Expenditures

During the year ended December 31, 2007 Planktos Corp., the Company’s former majority owned subsidiary, purchased a research vessel for $800,000 which vessel was sold during the year ended December 31, 2008 for $1,000,000. Otherwise, the Company has expended no significant amount on capital expenditures for the period from inception to December 31, 2008.

Liquidity and Capital Resources

The Company is in the development stage and, since inception, has experienced significant changes in liquidity, capital resources and stockholders’ equity. We have been funded since inception from public or private debt or equity placements or by major shareholders in the form of loans. All of our projects have been experimental in nature and virtually all of the financing raised to date has been either allocated for or related to research and the development activities.

The Company had a working capital deficit of $1,051,357 as of December 31, 2008. Our current and total assets were $51,686, consisting of cash of $13,853 and other receivables of $37,833. Our current liabilities totaled $1,067,043, which included a note payable to a related party of $376,521, advances payable of $439,842, and accounts payable with accrued expenses of $96,934. Long term liabilities totaled $126,008. Net stockholders' deficit in the Company was $1,015,357 as of December 31, 2008.

Cash flow used in operating activities was $8,999,874 for the period from inception to December 31, 2008. Cash flow used in operating activities for the year ended December 31, 2008 was $761,391 as compared to $3,556,256 for the year ended December 31, 2007. The decrease in cash flow used in operating activities in the current period was due primarily to a decrease in net losses.

Cash flow provided by investing activities was $3,040,494 for the period from inception to December 31, 2008. Cash flow provided by investing activities for the year ended December 31, 2008 was $1,000,749 as compared to $2,176,878 for the year ended December 31, 2007. Cash flows provided by investing activities in the current period can be attributed to the sale of the research vessel formerly owned by Planktos Corp.

Cash flow provided by financing activities was $5,973,233 for the period from inception to December 31, 2008. Cash used in financing activities for the year ended December 31, 2008 was $236,300 as compared to cash provided by financing activities of $1,186,261 for the year ended December 31, 2007. Cash flow used in financing activities in the current period can be attributed to the repayment of related party loans and advances as well as for discontinued operations.

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The Company’s current assets are insufficient to conduct its plan of operation over the next twelve months and it will have to seek additional debt or equity financing to fund operations. The Company has no current commitments or arrangements with respect to, or immediate sources of funding. Further, no assurances can be given that funding is available or available to the Company on acceptable terms. The Company’s shareholders would be the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and we have no agreement formal or otherwise. The Company’s inability to obtain funding has had a material adverse affect on our plan of operation and will continue to diminish our ongoing businesses.
 

The Company does not expect to pay cash dividends in the foreseeable future.
 
The Company had no lines of credit or other bank financing arrangements.
 
The Company has no defined benefit plan or contractual commitment with any of its officers or directors.

The Company has no current plans for the purchase or sale of any plant or equipment.

The Company currently has no employees and has no plans to hire any employees in the near future.

Off Balance Sheet Arrangements

As of December 31, 2008 we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to stockholders.

Critical Accounting Policies

In the notes to the audited consolidated financial statements for the year ended December 31, 2008 included in the Company’s Form 10-K, the Company discussed those accounting policies that are considered to be significant in determining the results of operations and our financial position. We believe that the accounting principles utilized by us conform to accounting principles generally accepted in the United States of America.

The preparation of financial statements requires management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, warranty obligations, product liability, revenue, and income taxes. We base our estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
 

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Going Concern

The Company’s independent public accounting firm has issued a report on our consolidated financial statements that expressed substantial doubt as to the Company’s ability to continue as a going concern as a result of recurring losses, lack of revenue-generating activities and an accumulated deficit of $14,978,690 as of December 31, 2008. The Company’s ability to continue as a going concern is subject to our ability to obtain funding from outside sources. Management’s plan to address our ability to continue as a going concern, include: (i) obtaining funding from private placement sources; (ii) obtaining additional funding from the sale of our securities; (iii) generating revenues from the development of a business opportunity through acquisition or merger; and (iv) obtaining loans and grants from various financial institutions, where possible. Although management believes that it will be able to obtain the necessary funding to allow us to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.

Forward Looking Statements and Factors That May Affect Future Results and Financial Condition

The statements contained in the section titled Management’s Discussion and Analysis of Financial Condition and Results of Operations, with the exception of historical facts, are forward looking statements. A safe-harbor provision may not be applicable to the forward looking statements made in this current report Forward looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:
 

·      the sufficiency of existing capital resources;

·      our anticipated financial performance;

  ·     our ability to raise additional capital to fund cash requirements for future operations;

·      uncertainties related to the development of our technologies;

·      the volatility of the stock market; and

  ·     general economic conditions.

We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated, including the factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than is required by law.

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Stock-Based Compensation

We have adopted SFAS No. 123 (revised 2004) (SFAS No. 123R), Share-Based Payment, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and instead generally requires that such transactions be accounted for using a fair-value-based method. We use the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, Accounting for Stock-Based Compensation. We have elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006, the first day of our fiscal year 2006. Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro forma provisions of SFAS No. 123. Prior to the adoption of SFAS No 123R, we measured compensation expense for our employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. We applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company’s employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.

We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with SFAS No. 123 and the conclusions reached by the Emerging Issues Task Force (“EITF”) in Issue No. 96-18. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by EITF 96-18.

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Recent Accounting Pronouncements

In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60” (SFAS 163). This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted.  The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.
 
In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 162, “The Heirarchy of Generally Accepted Accounting Principles” (SFAS No. 162). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The sources of accounting principles that are generally accepted are categorized in descending order of authority as follows:
 

a. FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB

b. FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position

c. AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics)

d. Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.

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In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (SFAS No. 161). This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is intended to enhance the current disclosure framework in Statement 133. The Statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms of the risks that the entity is intending to manage. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format should provide a more complete picture of the location in an entity’s financial statements of both the derivative positions existing at period end and the effect of using derivatives during the reporting period. Disclosing information about credit-risk-related contingent features should provide information on the potential effect on an entity’s liquidity from using derivatives. Finally, this Statement requires cross-referencing within the footnotes, which should help users of financial statements locate important information about derivative instruments.  The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 

Not required.

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 

Our audited financial statements for the years ended December 31, 2008 and 2007 are attached hereto as F-1 through F-22.

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Solar Energy Limited

(A Development Stage Company)
Consolidated Financial Statements

December 31, 2008

Page

     Report of Independent Registered Public Accounting Firm     F-2

Consolidated Balance Sheets                                                F-3

Consolidated Statements of Operations                                 F-4
 
Consolidated Statements of Stockholders’ Deficit                  F-5
 
Consolidated Statements of Cash Flows                               F-10
 

     Notes to Consolidated Financial Statements                          F-12

F-1

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Board of Directors

Solar Energy Limited
Palm Desert, California

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the accompanying consolidated balance sheets of Solar Energy Limited (a development stage company) as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ deficit and cash flows for the years then ended and for the period from January 5, 1994 (inception) through December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Solar Energy Limited (a development stage company) as of December 31, 2008 and 2007, and the results of its operations, stockholders deficit and its cash flows for the years then ended and for the period from January 5, 1994 (inception) through December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company’s significant operating losses and negative working capital raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding the resolution of this issue are also discussed in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Williams & Webster, P.S.
 

Williams & Webster, P.S.

Certified Public Accountants

Spokane, Washington
April 13, 2009

F-2

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
				December 31,		December 31,
				2008		2007
ASSETS
CURRENT ASSETS
	Cash		$	13,853	$	10,795
	Other receivable			37,833		-
		TOTAL CURRENT ASSETS		51,686		10,795
OTHER ASSETS
	Net assets disposed subsidiary			-		848,841
TOTAL ASSETS			$	51,686	$	859,636
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
	Accounts payable and accrued expenses		$	96,934	$	106,882
	Accrued interest - related party			27,738		10,892
	Other current liabilities			-		4,464
	Advances payable			439,842		355,013
	Notes payable to related party			376,521		512,821
	Debenture payable, net of discount			100,000		-
	Accrued interest			26,000		-
		TOTAL CURRENT LIABILITIES		1,067,043		990,072
LONG-TERM LIABILITIES
	Debenture payable, net of discount			-		81,261
	Accrued interest			-		14,064
		TOTAL LONG-TERM LIABILITIES		-		95,325
	Net liabilities and minority interest of disposed subsidiary			-		485,430
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT
	Common stock, 50,000,000 shares authorized; $0.0001 par value, 18,423,309 and 21,923,309 shares issued
	and outstanding, respectively			1,842		2,192
	Additional paid-in capital			13,961,491		14,661,141
	Accumulated deficit during development stage			(14,978,690)		(15,374,524)
		TOTAL STOCKHOLDERS' DEFICIT		(1,015,357)		(711,191)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT			$	51,686	$	859,636

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

F-3

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
								From Inception
								(January 5,
								1994)
				Year Ended				through
				December 31,		December 31,		December, 31
				2008		2007		2008
REVENUES			$	-	$	-	$	-
EXPENSES
	General and administrative			291,559		1,187,898		6,220,908
	Research and development			-		186,511		2,671,638
	Impairment of patents			-		-		39,648
	Impairment of goodwill			-		-		14,118
		TOTAL EXPENSES		291,559		1,374,409		8,946,312
LOSS FROM OPERATIONS				(291,559)		(1,374,409)		(8,946,312)
OTHER INCOME (EXPENSES)
	Other income			-		-		349,886
	Financing costs			-		(514,300)		(1,477,800)
	Gain (loss) on investments			-		-		17,200
	Gain (loss) on sale or disposal of assets			-		-		(10,867)
	Gain (loss) on derivative instrument			-		18,221		29,551
	Gain on forgiveness of debt			-		-		172,227
	Interest income (expense), net			(28,406)		(22,933)		(112,782)
	Amortization of discount on debenture payable			(18,739)		(8,411)		(29,551)
	Gain (loss) on sale of subsidiary			-		-		120,711
		TOTAL OTHER INCOME (EXPENSE)		(47,145)		(527,423)		(941,425)
LOSS FROM CONTINUING OPERATIONS				(338,704)		(1,901,832)		(9,887,737)
DISCONTINUED OPERATIONS
	Gain (Loss) on discontinued operations			734,538		(1,357,991)		(5,090,953)
NET INCOME (LOSS)			$	395,834	$	(3,259,823)	$	(14,978,690)
	NET INCOME (LOSS) PER COMMON SHARE,
	CONTINUING OPERATIONS, BASIC AND DILUTED $			(0.02)	$	(0.09)
	NET INCOME (LOSS) PER COMMON SHARE,
	DISCONTINUED OPERATIONS, BASIC $			0.04	$	(0.06)
	NET INCOME (LOSS) PER COMMON SHARE,
	DISCONTINUED OPERATIONS, DILUTED $			0.03	$	(0.06)
	NET INCOME (LOSS) PER COMMON SHARE, BASIC $			0.02	$	(0.15)
	NET INCOME (LOSS) PER COMMON SHARE, DILUTED $			0.02	$	(0.15)
	WEIGHTED AVERAGE NUMBER OF COMMON
	SHARES OUTSTANDING, BASIC $			19,398,719	$	21,127,281
	WEIGHTED AVERAGE NUMBER OF COMMON
	SHARES OUTSTANDING, DILUTED $			21,148,719	$	21,127,281

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

F-4

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
						Deficit
						Accumulated
				Additional	Share	During	Total
		Common Stock		Paid-in	Subscriptions	Development	Stockholders'
		Shares	Amount	Capital	Received	Stage	Equity
Balance, January 5, 1994 (Inception)		-	$ -	$ -	$ -	$ -	$ -
	1/5/94 Stock issued for Organization Costs	125,000	13	2,487	-	-	2,500
	Net Loss for the Year Ended December 31, 1994	-	-	-	-	(500)	(500)
Balance, December 31, 1994		125,000	13	2,487	-	(500)	2,000
	Net Loss for the Year Ended December 31, 1995	-	-	-	-	(500)	(500)
Balance, December 31, 1995		125,000	13	2,487	-	(1,000)	1,500
	10/96 Shares Issued for Cash at $20.00 Per Share	1,300	1	25,999	-	-	26,000
	11/96 Shares Issued for Cash at $0.90 Per Share	831	-	763	-	-	763
	12/96 Shares Issued for Cash at $2.00 Per Share	125	-	251	-	-	251
	Stock Split Rounding Adjustment	595	(1)	1	-	-	-
	Net Loss for the Year Ended December 31, 1996	-	-	-	-	(24,013)	(24,013)
Balance, December 31, 1996		127,851	13	29,501	-	(25,013)	4,501
	Net Loss for the Year Ended December 31, 1997	-	-	-	-	(4,000)	(4,000)
Balance, December 31, 1997		127,851	13	29,501	-	(29,013)	501
	1/98 Shares Issued for Acquisition of Hydro-Air Tech., Inc.	70,400	7	(7)	-	-	-
	6/98 Shares Issued for Cash at $1.00 Per Share	780,000	78	779,922	-	-	780,000
	7/98 Shares Issued for Cash at $10.00 Per Share	12,500	1	124,999	-	-	125,000
	11/98 Shares Issued for Cash at $1.00 Per Share	200,000	20	199,980	-	-	200,000
	Net Loss for the Year Ended December 31, 1998	-	-	-	-	(939,446)	(939,446)
Balance, December 31, 1998		1,190,391	119	1,134,394	-	(968,459)	166,054

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

F-5

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
						Deficit
						Accumulated
				Additional	Share	During	Total
		Common Stock		Paid-in	Subscriptions	Development	Stockholders'
		Shares	Amount	Capital	Received	Stage	Equity
Balance, December 31, 1998 (forward)		1,190,391	119	1,134,394	-	(968,459)	166,054
	1/99 Shares Issued for Cash at $10.00 Per Share	10,000	1	99,999	-	-	100,000
	1/99 Shares Issued for Acquisition of Renewable Energy Corporation at $12.00 Per Share	35,000	4	419,996	-	-	420,000
	10/99 Shares Issued for Cash at $1.80 Per Share	80,000	8	143,990	-	-	143,998
	Net Loss for the Year Ended December 31, 1999	-	-	-	-	(957,086)	(957,086)
Balance, December 31, 1999		1,315,391	132	1,798,379	-	(1,925,545)	(127,034)
	Net Loss for the Year Ended December 31, 2000	-	-	-	-	(925,899)	(925,899)
Balance, December 31, 2000		1,315,391	132	1,798,379	-	(2,851,444)	(1,052,933)
	7/01 Shares Issued for Rounding in Connection with 10:1 Exchange	35,396	4	(4)	-	-	-
	8/01 Shares Issued for Cash at $0.23 Per Share	350,000	35	81,215	-	-	81,250
	10/01 Shares Issued for Cash at $0.25 Per Share	50,000	5	12,495	-	-	12,500
	10/01 Shares Issued to Settle Debt at $0.33 Per Share	1,507,739	151	502,808	-	-	502,959
	10/01 Shares Issued for Services at $0.33 Per Share	113,682	11	37,504	-	-	37,515
	11/01 Shares Issued for Cash at $0.51 Per Share	275,000	27	141,223	-	-	141,250
	Net Loss for the Year Ended December 31, 2001	-	-	-	-	(465,476)	(465,476)
Balance, December 31, 2001		3,647,208	365	2,573,620	-	(3,316,920)	(742,935)
	8/02 Shares Issued for Cash at $0.30 Per Share	56,113	5	16,995	-	-	17,000
	Net Loss for the Year Ended December 31, 2002	-	-	-	-	(213,045)	(213,045)
Balance, December 31, 2002		3,703,321	370	2,590,615	-	(3,529,965)	(938,980)

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

F-6

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
									Deficit
									Accumulated
					Additional		Share		During		Total
			Common Stock		Paid-in		Subscriptions		Development		Stockholders'
			Shares	Amount	Capital		Received		Stage		Equity
Balance, December 31, 2002 (forward)			3,703,321	370	2,590,615		-		(3,529,965)		(938,980)
	1/03 Shares Issued For Cash at $0.30 Per Share		23,000	2	6,898		-		-		6,900
	2/03 Shares Issued For Cash at $0.30 Per Share		60,000	6	17,994		-		-		18,000
	9/03 Shares Issued to Settle Debt at $0.30 Per Share		2,734,954	274	820,213		-		-		820,487
	10/03 Shares Issued for Services at $0.20 Per Share	200,000		20	39,980	-		-		40,000
	10/03 Shares Issued for Cash at $0.30 Per Share	150,000		15	44,985	-		-		45,000
	Net Loss for the Year Ended December 31, 2003	-		-	-	-		(281,905)		(281,905)
Balance, December 31, 2003		6,871,275		687	3,520,685	-		(3,811,870)		(290,498)
	3/04 Shares Issued to For Cash at $0.20 Per Share	450,000		45	89,955	-		-		90,000
	5/04 Shares Issued for Cash at $0.25 Per Share	200,000		20	49,980	-		-		50,000
	Net Loss for the Year Ended December 31, 2004	-		-	-	-		(91,450)		(91,450)
Balance, December 31, 2004		7,521,275		752	3,660,620	-		(3,903,320)		(241,948)

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

F-7

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
									Deficit
									Accumulated
					Additional		Share		During		Total
			Common Stock		Paid-in		Subscriptions		Development		Stockholders'
			Shares	Amount	Capital		Received		Stage		Equity
Balance, December 31, 2004 (forward)		7,521,275		752	3,660,620	-		(3,903,320)		(241,948)
	1/05 Shares Issued For Services at $0.21 Per Share	600,000		60	125,940	-		-		126,000
	3/05 Shares Issued For Cash at $0.20 Per Share	25,000		3	4,997	-		-		5,000
	5/05 Shares Issued For Cash at $0.20 Per Share	700,000		70	139,930	-		-		140,000
	5/05 Fair Value of Warrants issued at $0.25 per warrant	-		-	182,200	-		-		182,200
	6/05 Shares Issued For Cash at $0.25 Per Share	400,000		40	99,960	-		-		100,000
	6/05 Shares Issued For Cash at $0.35 Per Share	50,000		5	61,996	-		-		62,001
	7/05 Shares Issued For Cash at $0.20 Per Share	180,000		18	35,982	-		-		36,000
	7/05 Fair Value of Warrants issued at $0.25 per warrant	-		-	71,200	-		-		71,200
	8/05 Shares Issued For Cash at $0.20 Per Share	100,000		10	19,990	-		-		20,000
	8/05 Fair Value of Warrants issued at $0.25 per warrant	-		-	46,900	-		-		46,900
	8/05 Shares Issued For Services at $0.58 Per Share	500,000		50	289,950	-		-		290,000
	10/05 Shares Issued For Services at $1.20 Per Share	105,000		10	125,990	-		-		126,000
	10/05 Shares Issued For Cash at $0.20 Per Share	40,000		4	7,996	-		-		8,000
	10/05 Shares Issued For Cash at $0.35 Per Share	200,000		20	69,980	-		-		70,000
	10/05 Fair Value of Warrants issued at $0.40 per warrant	-		-	128,400	-		-		128,400
	10/05 Subscriptions received	-		-	-	20,000		-		20,000
	11/05 Shares Issued For Acquisitions of Planktos, Inc. at $1.00 Per Share	1,500,000		150	1,499,850	-		-		1,500,000
	11/05 Shares Issued For Acquisitions of D2Fusion, Inc. at $1.00 Per Share	2,000,000		200	1,999,800	-		-		2,000,000
	12/05 Shares Issued For Cash at $0.20 Per Share	705,000		71	140,929	-		-		141,000
	12/05 Fair Value of Warrants issued at $0.25 per warrant	-		-	350,400	-		-		350,400
	12/05 Shares Issued For Cash at $0.35 Per Share	300,000		30	104,970	-		-		105,000
	12/05 Fair Value of Warrants issued at $0.40 per warrant	-		-	184,400	-		-		184,400
	Net Loss for the Year Ended December 31, 2005	-		-	-	-		(6,602,698)		(6,602,698)
Balance, December 31, 2005		14,926,275		1,493	9,352,380	20,000		(10,506,018)		(1,132,145)

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

F-8

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
									Deficit
									Accumulated
					Additional		Share		During		Total
			Common Stock		Paid-in		Subscriptions		Development		Stockholders'
			Shares	Amount	Capital		Received		Stage		Equity
Balance, December 31, 2005 (forward)		14,926,275		1,493	9,352,380	20,000		(10,506,018)		(1,132,145)
	2/06 Shares Issued For Cash at $0.25 Per Share	705,000		70	176,180	-		-		176,250
	3/06 Shares Issued For Cash at $0.25 Per Share	80,000		8	19,992	(20,000)		-		-
	3/06 Shares Issued For Cash at $0.40 Per Share	20,000		2	7,998	-		-		8,000
	5/06 Shares and Warrants Issued for Cash at $0.33 Per Unit	500,000		50	164,950	-		-		165,000
	6/06 Shares Issued For Cash at $0.28 Per Share	3,540,212		354	1,001,853	-		-		1,002,207
	7/06 Shares Issued For Cash at $0.27 Per Share	66,222		6	17,961	-		-		17,967
	8/06 Shares Issued For Cash at $0.27 Per Share	4,100		1	1,106	-		-		1,107
	8/06 Shares and Warrants Issued for Cash at $0.35 Per Unit	31,500		3	11,022	-		-		11,025
	Net loss, year ended December 31, 2006	-		-	-	-		(1,608,683)		(1,608,683)
Balance, December 31, 2006		19,873,309		1,987	10,753,442	-		(12,114,701)		(1,359,272)
	5/07 Shares and Warrants Issued for Cash at $0.35 Per Unit	342,857		34	119,966					120,000
	5/07 Shares and Warrants Issued for Debt at $0.35 Per Unit	807,143		81	282,419					282,500
	5/07 Shares Issued For Cash at $0.25 Per Share	500,000		50	124,950					125,000
	5/7/07 Fair Value of Warrants issued at $0.40 per warrant				489,600					489,600
	5/07 Shares Issued For Services at $0.50 Per Share	300,000		30	149,970					150,000
	8/9/07 reverse acquisition of Planktos Corp.				2,691,104					2,691,104
	10/1/07 Fair Value of Warrants issued at $0.40 per warrant				24,700					24,700
	10/07 Shares Issued For Cash at $0.25 Per Share	100,000		10	24,990					25,000
	Net Loss for the Year Ended December 31, 2007	-		-	-	-		(3,259,823)		(3,259,823)
Balance, December 31, 2007		21,923,309		2,192	14,661,141	-		(15,374,524)		(711,191)
	4/11/08 Fair value of shares received in separation agreement and intangible assets	(3,500,000)		(350)	(699,650)					(700,000)
	Net Income for the Year Ended December 31, 2008							395,834		395,834
Balance, December 31, 2008		18,423,309		$ 1,842	$13,961,491	$ -		$(14,978,690)		$(1,015,357)

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

F-9

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
									From Inception
									(January 5,
									1994)
					Year Ended				through
					December 31,		December 31,		December 31,
					2008		2007		2008
CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(338,704)	$	(1,901,832)	$	(9,887,737)
	Adjustments to reconcile net loss to net cash used in operating activities:
	(Net of Acquisition/Sale)
		Amortization and depreciation			-		9,165		212,809
		Amortization on discount of debentures			18,739		8,411		29,551
		Bad debt			-		-		250,000
		Stock issued for services			-		150,000		856,851
		Services for pre-paid expense			-		-		169,165
		(Gain) Loss on derivative			-		(18,221)		(29,551)
		Stock issued for R&D expenses			-		-		439,900
		Loss on sale of assets			-		-		10,867
		Gain on investments			-		-		(17,199)
		Loss on sale of subsidiary			-		-		(120,711)
		Gain on forgiveness of debt			-		-		(172,227)
		Impairment of patents			-		-		39,648
		Financing costs			-		514,300		1,477,800
		Impairment of goodwill			-		-		14,118
		Minority interest			-		-		(123,856)
		(Increase) decrease in:
			Other receivable		(37,833)		-		(37,794)
			Deposits		-		-		(24,883)
			Prepaid expenses		-		26,357		22,500
		Increase (decrease) in:
			Accounts payable and bank overdraft		(9,948)		202,946		328,574
			Accrued expenses and other current liabilities		-		18,549		271,877
			Deferred revenues		-		-		250,000
			Minority interest		-		66,120		66,120
		Net cash used by continuing operating activities			(367,746)		(924,205)		(5,974,178)
		Net cash used by discontinued operating activities			(393,645)		(2,632,051)		(3,025,696)
		Net cash used by operating activities		$	(761,391)	$	(3,556,256)	$	(8,999,874)

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

F-10

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SOLAR ENERGY LIMITED
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
								From Inception
								(January 5,
								1994)
				Year Ended				through
				December 31,		December 31,		December 31,
				2008		2007		2008
(Continued) CASH FLOWS PROVIDED BY INVESTING ACTIVITIES:
	Cash acquired from sale of subsidiary		$	-	$	-	$	180,000
	Cash acquired from subsidiary			-		2,973,604		3,221,116
	Cash paid to subsidiary			-		-		(107,568)
	Cash paid to Renewable Energy Corporation and Sunspring, Inc.			-		-		(2,076)
	Cash paid for patent costs			-		-		(106,318)
	Cash paid for property & equipment			-		(796,726)		(868,572)
	Cash paid for deposits			-		-		(4,837)
	Cash received on sale of assets			-		-		23,000
	Cash paid for notes receivable			-		-		(295,000)
	Discontinued operations			1,000,749		-		1,000,749
		Net cash provided by investing activities		1,000,749		2,176,878		3,040,494
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
	Issued stock for cash			-		270,000		3,917,469
	Cash received from related party notes payable and advances			154,200		916,261		1,690,343
	Cash repaid to related party notes payable and advances			(290,500)		.		(290,500)
	Proceeds from debenture payable			-		-		100,000
	Cash received from advances by shareholders			-		-		2,044,099
	Cash paid on debt financing			-		-		(1,388,178)
	Discontinued operations			(100,000)				(100,000)
	Net cash provided (used) by financing activities			(236,300)		1,186,261		5,973,233
	NET INCREASE (DECREASE) IN CASH			3,058		(193,117)		13,853
CASH, BEGINNING OF PERIOD				10,795		203,912		-
CASH, END OF PERIOD			$	13,853	$	10,795	$	13,853
SUPPLEMENTAL CASH FLOW INFORMATION:
	Interest paid		$	-	$	-	$	17,195
	Income taxes paid		$	-	$	-	$	-

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

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 1 – DESCRIPTION AND HISTORY OF BUSINESS AND BASIS OF PRESENTATION

Solar Energy Limited (the “Company”) is in the development stage according to Financial Accounting Standards Board Statement No. 7 and is currently focusing its attention on raising capital in order to pursue its goals.

On August 10, 2005, the Company entered into a stock purchase agreement to acquire 100% of the issued and outstanding stock of Planktos, Inc. (“Planktos”) for the purchase price of $1,500,000 by issuing a 5 year term convertible debenture bearing an interest rate of 5%. The proprietary greenhouse emission technology acquired as a result of this acquisition is focused on taking advantage of the Kyoto Protocol which enables companies and governments to offset regulated greenhouse emission restrictions by investing in CO2 reduction programs in exchange for certified emission reduction (“CER”) credits. These CER credits are traded much like commodities and have their own market of which they are listed for sale. In determining the purchase price, consideration was given to previous amounts invested in developing this technology up to the point of acquisition. On November 21, 2005, the debenture was converted into 1,500,000 of the Company’s restricted common shares.

On August 17, 2005, the Company and its wholly owned subsidiary, Planktos, executed an Iron-Fertilization Prove-Out and Purchase Agreement with Diatom Corporation (“Diatom”) whereby Diatom committed to assist the Company in providing developmental funding for a marine “iron-fertilization” prove out program in exchange for exclusive marketing and intellectual property rights to Planktos’s CO2 sequestration process. Planktos expected the cost of the prove out program to be $1,290,000 of which Diatom has agreed to provide up to 25%. The Company was responsible for funding the remainder of the developmental expense. The agreement provided for a royalty agreement which will entitle Planktos and the Company to 75% of net sales revenue generated by Diatom from the sale of CER credits created from the sequestration process until the Company and Planktos have recouped their costs. Thereafter, the Company and Planktos will be entitled to 25% of net sales revenue generated by Diatom from the sale of CERs. Diatom has paid $250,000 in cash for the exclusive marketing and intellectual property rights. Since the Company committed to fund 75% of the estimated cost to develop the program, a provision for the estimated loss on the contract of $967,500 was recognized. During the fourth quarter of 2007 and subsequent to the year ended December 31, 2007, Planktos’ “iron-fertilization” prove out program was suspended and its operations were discontinued. Planktos terminated all employees, liquidated substantially all of its assets and closed its Foster City, California office.

On August 18, 2005, the Company entered into a stock purchase agreement to acquire 100% of the issued and outstanding stock of D2Fusion, Inc. (“D2Fusion”) for the purchase price of $2,000,000 by issuing a 5 year term convertible debenture bearing an interest rate of 5%. The proprietary solid-state fusion technology acquired as a result of this acquisition is aimed at entry level heat and energy applications for homes and industry with the ultimate goal of producing heat and electricity at a fraction of today’s cost and with no emissions. In determining the purchase price, consideration was given to previous amounts invested in developing this technology up to the point of acquisition. On November 21, 2005, the debenture was converted into 2,000,000 of the Company’s restricted common shares.

On August 9, 2007 the Company and Diatom completed the sale of 100% of the issued and outstanding shares of Planktos. Diatom issued 45,000,000 restricted shares of common stock to the Company which represents 53% of the outstanding common stock of Diatom. As part of this transaction Diatom changed its name to Planktos Corp. This transaction was in essence an acquisition of Planktos Corp. and was accounted for in accordance with the principles for reverse acquisition accounting.

F-12

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 1 – DESCRIPTION AND HISTORY OF BUSINESS AND BASIS OF PRESENTATION (Contintued)

On April 11, 2008, the Company entered into an agreement with the founder of Planktos, Inc. and D2 Fusion, Inc. where the Company returned to authorized capital stock a total of 3,500,000 of its common shares issued as part of the August 10, 2005 and August 18, 2005 stock purchase agreements.

On November 13, 2008, the Company sold its 45,000,000 restricted shares of Planktos Corp. to a Maidon Services Limited for $200,000 of which $125,000 in cash was received on closing and $75,000 was due within fourteen months with an option to convert into Planktos Corp. shares at $0.25 per share. These financial statements include the losses from January 1, 2008 to November 12, 2008 of Planktos Corp. and its wholly owned subsidiary, Planktos.
 

NOTE 2 – Summary of Significant Accounting Policies

This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.

Accounting Method

The Company’s financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents

For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents.

Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents. The Company places its cash and cash equivalents at well-known, quality financial institutions.

Derivative Instruments

The Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities – Deferral of the Effective Date of FASB No. 133”, SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities”, and SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities”, which is effective for the Company as of its inception. These statements establish accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
 
 

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 2 – Summary of Significant Accounting Policies (Contintued)

Derivative Instruments (continued)

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change. Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes.

The Company issued convertible debt and accounts for that debt according to SFAS 133 and subsequent pronouncements. Consequently, management recognizes its convertible debt contract as containing a derivative instrument and accounts for the derivative according to generally accepted accounting principles in the U.S.

During the year ended December 31, 2006, the Company issued a debenture for a total of $100,000. The debenture included provisions for the conversion of the debt and interest into shares of the Company’s common stock or into CO2 Tonnes. Since Planktos Inc. had suspended its operations, the conversion into CO2 Tonnes is no longer available and the debenture is accounted for as a promissory note with fixed interest. See Note 7.
 

Development Stage Activities

The Company has been in the development stage since inception. The Company has no revenues from its planned operations. The Company is in the development stage according to Financial Accounting Standards Board Statement No. 7 and is currently focusing its attention on raising capital in order to pursue its goals.

Earnings (Loss) Per Share

The Company adopted Statement of Financial Accounting Standards No. 128, which provides for calculation of "basic" and "diluted" earnings per share. Basic earnings (loss) per share includes no dilution and is computed by dividing net income (loss) available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings (loss) per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings per share. For the fiscal year 2008, diluted net loss per share was the same as basic net loss per share as the common stock equivalents outstanding were considered anti-dilutive. For the fiscal year 2008, the Company had a net loss from continuing operations and net income from discontinued operations, therefore earnings per share on a fully diluted basis to include common stock equivalents is disclosed.

As of December 31, 2008, the Company had outstanding common stock options of 500,000, common stock warrants of 1,250,000.
 

As of December 31, 2007, the Company had outstanding common stock options of 500,000 common stock warrants of 1,681,500, and convertible debt subject to beneficial conversion of 894,617 common shares. The above options and warrants were deemed to be antidilutive for the Company’s year end of December 31, 2007.

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 2 – Summary of Significant Accounting Policies (Contintued)

Fair Value Measurements

Effective January 1, 2008, the Company adopted Financial Accounting Standards Board (FASB) SFAS No.157, Fair Value Measurements (SFAS 157). The provisions of SFAS 157 are applicable to all of the Company’s assets and liabilities that are measured and recorded at fair value. SFAS 157 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants. SFAS 157 establishes a fair value hierarchy that gives the highest priority to observable inputs and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy defined by SFAS 157 are described below.

Level 1:     Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2:     Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3:     Pricing inputs that are generally unobservable inputs and not corroborated by market data.

The Company does not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2008. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2008.

Going Concern

As shown in the accompanying financial statements, the Company had a negative working capital of $1,051,357 and an accumulated deficit of $14,978,690 incurred through December 31, 2008. The Company is currently seeking out a new business opportunity that might, if successful, mitigate those factors which raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Foreign Currency Translation Gains/Losses

The Company has adopted Financial Accounting Standard No. 52. Monetary assets and liabilities denominated in foreign currencies are translated into United States dollars at rates of exchange in effect at the balance sheet date. Gains or losses are included in income for the year, except gains or losses relating to long-term debt which are deferred and amortized over the remaining term of the debt. Non-monetary assets, liabilities and items recorded in income arising from transactions denominated in foreign currencies are translated at rates of exchange in effect at the date of the transaction. The Company’s functional currency is the U.S. dollar.

Goodwill

Under SFAS No. 142, goodwill must be tested annually for impairment using a two step process, the first process is to test the carrying value of the reporting unit vs. fair value. The second process tests if the carrying value exceeds fair value. If so, the carrying value is then compared vs. the fair value of goodwill to measure the amount of goodwill impairment loss, if any. The Company uses such methods as present value of discounted cash flows, prices of similar assets, independent appraisals, and other valuation techniques to determine fair value.

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 2 – Summary of Significant Accounting Policies (Contintued)

Impaired Asset Policy

The Company adopted Statement of Financial Accounting Standards No. 144, “Accounting for Impairment of Disposal of Long-Lived Assets.” In complying with this standard, the Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amount whenever events or changes in circumstances indicate that an asset may not be recoverable.

Principles of Consolidation

The December 31, 2008 financial statements include the accounts of Solar Energy Limited and its subsidiaries: Hydro-Air Technologies, Inc.; Sunspring, Inc.; Renewable Energy Limited, and; D2 Fusion, Inc. plus the net loss of Planktos Corp. and its wholly owned subsidiary, Planktos Inc. from January 1, 2008 to November 12, 2008 which is shown as discontinued operations. All intercompany accounts and transactions have been eliminated in the consolidation.

Provision for Taxes

Income taxes are provided based upon the liability method of accounting pursuant to Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes.” Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by SFAS No. 109 to allow recognition of such an asset.

At December 31, 2008 and 2007, the Company had gross deferred tax assets calculated at an expected rate of 35% of approximately $3,582,000 and $3,469,000, respectively, principally arising from net operating loss carryforwards for income tax purposes. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the deferred tax asset, a valuation allowance of $3,582,000 and $3,469,000 has been established at December 31, 2008 and 2007, respectively.

The significant components of the Company’s deferred tax assets at December 31, 2008 and 2007 are as follows:

	December 31, 2008	December 31, 2007
Net Operating Losses Carryforward Cumulative	$ 10,233,000	$ 9,913,000
Gross deferred tax assets (liabilities):
Deferred tax asset before allowance	$ 3,582,000	$ 3,469,000
Valuation allowance	(3,582,000)	(3,469,000)
Net deferred tax asset	$ -	$ -

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 2 – Summary of Significant Accounting Policies (Contintued)

Reclassification

Certain prior year amounts in the accompanying financial statements have been reclassified to comply to fiscal 2008 presentation. The reclassification principally consists of reporting discontinued operation items. Their reclassification has resulted in no change to the Company’s accumulated deficit or net loss presented.

Recent Accounting Pronouncements

In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 163, “Accounting for Financial Guarantee Insurance Contracts—an interpretation of FASB Statement No. 60” (SFAS 163). This Statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This Statement also clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement to be used to account for premium revenue and claim liabilities. Those clarifications will increase comparability in financial reporting of financial guarantee insurance contracts by insurance enterprises. This Statement requires expanded disclosures about financial guarantee insurance contracts. The accounting and disclosure requirements of the Statement will improve the quality of information provided to users of financial statements. This Statement is effective for financial statements issued for fiscal years beginning after December 15, 2008, and all interim periods within those fiscal years, except for some disclosures about the insurance enterprise’s risk-management activities. This Statement requires that disclosures about the risk-management activities of the insurance enterprise be effective for the first period (including interim periods) beginning after issuance of this Statement. Except for those disclosures, earlier application is not permitted.  The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.
 
In May, 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 162, “The Heirarchy of Generally Accepted Accounting Principles” (SFAS No. 162). This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States (the GAAP hierarchy). The sources of accounting principles that are generally accepted are categorized in descending order of authority as follows:

a. FASB Statements of Financial Accounting Standards and Interpretations, FASB Statement 133 Implementation Issues, FASB Staff Positions, and American Institute of Certified Public Accountants (AICPA) Accounting Research Bulletins and Accounting Principles Board Opinions that are not superseded by actions of the FASB

b. FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and Accounting Guides and Statements of Position

c. AICPA Accounting Standards Executive Committee Practice Bulletins that have been cleared by the FASB, consensus positions of the FASB Emerging Issues Task Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts (EITF D-Topics)

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 2 – Summary of Significant Accounting Policies (Contintued)

Recent Accounting Pronouncements (Continued)

d. Implementation guides (Q&As) published by the FASB staff, AICPA Accounting Interpretations, AICPA Industry Audit and Accounting Guides and Statements of Position not cleared by the FASB, and practices that are widely recognized and prevalent either generally or in the industry.

The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.

In March 2008, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (SFAS No. 161). This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is intended to enhance the current disclosure framework in Statement 133. The Statement requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation. This disclosure better conveys the purpose of derivative use in terms of the risks that the entity is intending to manage. Disclosing the fair values of derivative instruments and their gains and losses in a tabular format should provide a more complete picture of the location in an entity’s financial statements of both the derivative positions existing at period end and the effect of using derivatives during the reporting period. Disclosing information about credit-risk-related contingent features should provide information on the potential effect on an entity’s liquidity from using derivatives. Finally, this Statement requires cross-referencing within the footnotes, which should help users of financial statements locate important information about derivative instruments.  The adoption of this statement will have no material effect on the Company’s financial condition or results of operations.

Revenue Recognition

The Company recognizes revenue for product sales when there is a mutually executed sales contract, when the products are shipped and title passes to customers, when the contract price and terms are fixed, and when collectibility is reasonably assured.

Use of Estimates

The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues, and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts.

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 3 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has limited cash, no revenues, and an accumulated deficit since the inception of $14,978,690. These factors indicate that the Company may be unable to continue in existence. The Company is currently putting business plans in place which will, if successful, mitigate these factors which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans includes the following: (1) obtaining funding from private placement sources; (2) obtaining additional funding from the sale of the Company’s securities; (3) establishing revenues from commercializing of its project; and (4) obtaining loans and grants from various financial institutions, where possible. The financial statements do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue existence.

NOTE 4 – OTHER RECEIVABLE
 

Other receivable represents the amount due from Maidon Services as part of the stock purchase agreement dated November 12, 2008 reduced for assumed liabilities in excess of agreed upon amounts.

NOTE 5 – NET ASSETS OF DISPOSED SUBSIDIARY

The net assets of the disposed subsidiary include cash, deposit and the vessel including marine equipment.

 December 31,     December 31,
                                                             2008 2007

Research Vessel “Weatherbird II”       $       -                $ 800,000
Marine Equipment                                        -23,306
                                                                   -                  823,306
Accumulated Depreciation                            -35,745
Net Vessel & Equipment                      $       -$ 787,561

NOTE 6 – Stockholders’ Equity Transactions

During 2007, the Company issued 1,250,000 shares of common stock for a private placement for $145,000 in cash and related party note payable debt settlement of $282,500 for net proceeds of $427,500, 500,000 shares of common stock from the exercise of warrants for cash proceeds of $125,000 and 300,000 shares of common stock for services valued at $150,000.
 
During 2008, the Company received and cancelled 3,500,000 common shares as part of a separation agreement with the prior CEO related to the discontinued operations. As a result, the Company recognized a gain of $700,000. (See Note 11)
 

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 7 – Related Party TRANSACTIONS

The note payable from Regal RV Resorts, Inc., an entity controlled by the former CEO of the Company, as of December 31, 2008 was $376,521 of which $175,000 is uncollateralized and bears no interest while $201,521 of the loan is uncollateralized and bears 6% per annum and is due upon demand. The accrued interest owing on this loan at December 31, 2008 and December 31, 2007 was $27,738 and $10,892, respectively. This note includes further advances in fiscal year 2008 of $154,200 and repayments of $290,500. For the year ending 2008, Regal RV Resorts, Inc. received $90,000 in consulting fees.
 

NOTE 8 – Debenture Payable

The Company has a debenture payable which bears interest at 10% per year for a three year term. Principal and interest may be converted into common shares of the Company at an average trading price of the previous 10 days once the holder has given the Company notice of conversion. Upon such notice, the maximum conversion price is $0.75 per common share. The holder of the debenture also had the right, at its option, to convert the principal and interest amount due into CO2 tons at any time prior to the end of the three year term, at a rate of one United States Dollar ($1.00) per CO2 ton, subject to Company’s ability to deliver such CO2 tons at the time of conversion. During 2008, Planktos Inc. discontinued operations thus eliminating the conversion option into CO2 tons and the market price of the Company’s common stock at year end was below the conversion price of $0.75.

The original $100,000 debenture was discounted by $29,551 in order to reflect the derivative portion of the note. During 2008, this discount was amortized by $18,739 to the full discounted derivative portion of $29,551 when Planktos Inc. discontinued operations. As of December 31, 2008, the Company owed $100,000 in principal and accrued interest of $26,008.

NOTE 9 – STOCK OPTIONS

On January 1, 2006, the Company adopted SFAS No. 123 (revised 2004) (“SFAS No. 123R”), “Share-Based Payment”, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise’s equity instruments or that may be settled by the issuance of such equity instruments. In January 2005, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB) No. 107, which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R eliminates the ability to account for stock-based compensation transactions using the intrinsic value method under Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and instead generally requires that such transactions be accounted for using a fair-value-based method. The Company uses the Black-Scholes-Merton (“BSM”) option-pricing model to determine the fair-value of stock-based awards under SFAS No. 123R, consistent with that used for pro forma disclosures under SFAS No. 123, “Accounting for Stock-Based Compensation.” The Company has elected the modified prospective transition method as permitted by SFAS No. 123R and accordingly prior periods have not been restated to reflect the impact of SFAS No. 123R. The modified prospective transition method requires that stock-based compensation expense be recorded for all new and unvested stock options, restricted stock, restricted stock units, and employee stock purchase plan shares that are ultimately expected to vest as the requisite service is rendered beginning on January 1, 2006. The Company has adopted the requirements of SFAS No. 123R for the fiscal year beginning on January 1, 2006 under the prospective method.

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 9 – STOCK OPTIONS (Contintued)

Stock-based compensation expense for awards granted prior to January 1, 2006 is based on the grant date fair-value as determined under the pro-forma provisions of SFAS No. 123.

Prior to the adoption of SFAS No. 123R, the Company measured compensation expense for its employee stock-based compensation plans using the intrinsic value method prescribed by APB Opinion No. 25. The Company applied the disclosure provisions of SFAS No. 123 as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure,” as if the fair-value-based method had been applied in measuring compensation expense. Under APB Opinion No. 25, when the exercise price of the Company’s employee stock options was equal to the market price of the underlying stock on the date of the grant, no compensation expense was recognized.

Information with respect to the Company’s stock options at December 31, 2008 is as follows:
 

                                                                                                        Weighted
                                                                                  Stock               Exercise               Average
                                                                               Options          Price          Exercise     

Outstanding at January 1, 2007                                  500,000              $     .33                  $     .33

      Granted                                                                        -                       -                             -     
      Exercised                                                                     -                       -                             -     
      Forfeited                                                                      -     -          -      

Outstanding at December 31, 2007                             500,000                    .33                         .33

      Granted                                                                        -                       -                             -     
      Exercised     -                     .33                         .33     
      Forfeited                                                                       -     -      -     

Outstanding at December 31, 2008     500,000$ .33$ .33

NOTE 10 – WARRANTS
 

A summary of the Company’s warrants at December 31, 2008 and December 31, 2007 and the changes for 2008 are as follows:

		Weighted	Weighted
		Average	Average
	Warrants	Exercise	Remaining
	Outstanding	Price	Life
Balance, December 31, 2006	1,931,5 00	0.33	0.81
Issued	1,250,000	0.40	1.84
Exercised / Cancelled / Expired	(1,400,000)	(0.30)	-
Balance, December 31, 2007	1,781,500	0.40	1.02
Issued	-	-	-
Exercised / Cancelled / Expired	(531,500)	(0.40)	-
Balance December 31, 2008	1,250,0 00	$ 0.40	0.37 years

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Solar Energy Limited

(A Development Stage Company)
Notes to the Consolidated Financial Statements

December 31, 2008

NOTE 11 – DISCONTINUED OPERATIONS

In December 2007, the Company’s majority owned subsidiary, Planktos Corp., suspended its Iron-Fertilization Prove-Out operations and initiated negotiations for the sale of the related assets (See Note 1).  Accordingly, this business component has been presented as discontinued operations within the consolidated financial statements in accordance with SFAS No. 144, “ Accounting for the Impairment or Disposal of Long-Lived Assets” and EITF 03-13. As discussed in Note 1, Planktos Corp was engaged in research related to creation and sales of “Kyoto Protocol” certified emission reduction credits.

The loss from disposal of discontinued operations for the year ended December 31, 2007 includes Planktos operations of $2,841,810 and the recognition of previously recorded deferred revenues of $250,000 and provision for loss on contract of $967,500. 

The gain on discontinued operations for the year ended December 31, 2008 includes Planktos’ loss from operations of $210,190 from January 1, 2008 to November 12, 2008, the recognition of a $212,439 gain from the sale of the Weatherbird II, D2 Fusion’s loss from operations of $34,181, and a gain of $700,000 from the cancellation of the 3,500,000 shares.

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ITEM 9     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.     CONTROLS AND PROCEDURES (ITEM 9A (T))

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of December 31, 2008. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
 
Based on that evaluation, the Company’s management concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and such information was accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
 

Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the chief executive officer and the chief financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
 

·      Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

·      Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and

·      Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
 

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The Company’s management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008 based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified material weaknesses in internal control over financial reporting.
 
A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
 

The material weaknesses as identified by management are disclosed below.
 

Lack of Appropriate Independent Oversight.  The board of directors has not provided an appropriate level of oversight of the Company’s consolidated financial reporting and procedures for internal control over financial reporting since there are, at present, no independent directors who could provide an appropriate level of oversight, including challenging management’s accounting for and reporting of transactions. Our lack of appropriate independent oversight has been a material weakness since the resignation of two of our directors in the current annual period. While this control deficiency did not result in any audit adjustments to our 2008 or 2007 interim or annual financial statements, it could have resulted in material misstatement that might have been prevented or detected by independent oversight. Accordingly we have determined that this control deficiency constitutes a material weakness.
 

Failure to Segregate Duties. Management has not maintained any segregation of duties within the Company due to its reliance on a single individual to fill the role of chief executive officer, chief financial officer and principal accounting officer. Our failure to segregate duties has been a material weakness since the annual period ended December 31, 2004 through the annual period of this report. While this control deficiency did not result in any audit adjustments to our 2008 or 2007 interim or annual financial statements, it could have resulted in a material misstatement that might have been prevented or detected by a segregation of duties. Accordingly we have determined that this control deficiency constitutes a material weakness.

Sufficiency of Accounting Resources. The Company has a highly complex organizational structure, and limited accounting personnel to prepare its financial statements, including the consolidation of the Company and its subsidiaries. The insufficiency of our accounting resources has been a material weakness since the annual period ended December 31, 2004 through the annual period of this report. While this control deficiency did not result in any audit adjustments to our 2008 or 2007 interim or annual financial statements, it did result in certain errors in the consolidation of the Company and its subsidiaries that were not detected by the Company’s internal control over financial reporting.

As a result of the material weaknesses in internal control over financial reporting described above, the Company’s management has concluded that, as of December 31, 2008, that the Company’s internal control over financial reporting was not effective based on the criteria in Internal Control – Integrated Framework issued by the COSO.
 

 
 
 

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The Company intends, as capital resources allow, to remedy its material weaknesses by:

·      Forming an audit committee made up of independent directors that will oversee management (we have begun this process by seeking out individuals who might act as independent directors).

·      Engaging an individual to serve as chief financial officer and principal accounting officer to segregate the duties of chief executive officer and chief financial officer (our chief executive officer is in the process of seeking out an individual willing to serve as chief financial officer and principal accounting officer).

Despite the Company’s intention to remedy its material weaknesses in the manner described, the actions required to accomplish these objectives will require the Company to engage additional personnel which actions may not be possible in the near term due to our limited financial resources and operations.

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this annual report.

Changes in Internal Controls over Financial Reporting

During the period ended December 31, 2008, there has been no change in internal control over financial reporting that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

9B.           OTHER INFORMATION

None.

PART III

ITEM 10     DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Officers and Directors

The following table sets forth the name, age and position of each director and executive officer of the Company:

Name	Age	Year Elected/Appointed	Positions Held
Michael James Gobuty	70	2008	CEO, CFO, PAO and Director

Michael James Gobuty was appointed as chief executive officer, chief financial officer, principal accounting officer and as a director on September 12, 2008.

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Mr. Gobuty earned a Bachelor of Arts degree from the University of Winnipeg. He was involved for many years as a consultant to the international garment industry based on years of experience in leather outerwear and sportswear. Mr. Gobuty has been active in hockey serving as team president and owner. He has also been involved in financing and developing real estate properties.

Mr. Gobuty is not a director of any reporting corporations other than the Company.

No other persons are expected to make any significant contributions to the Company’s executive decisions who are not executive officers or directors of the Company.
 

Term of Office

Our directors are appointed for a one (1) year term to hold office until the next annual meeting of our shareholders or until removed from office in accordance with our bylaws. Our executive officers are appointed by our Board of Directors and hold office until removed by the board.

Family Relationships
 
There are no family relationships between or among the directors or executive officers

Involvement in Certain Legal Proceedings
 
To the best of our knowledge, during the past five years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.

Compliance with Section 16(A) of the Exchange Act

Based solely upon a review of Forms 3, 4 and 5 furnished to the Company, we are aware of the following person who, during the period ended December 31, 2008, failed to file, on a timely basis, reports required by Section 16(a) of the Securities Exchange Act of 1934:

·      Michael James Gobuty, our director and executive officer, failed to file on Form 3, 4 or 5

·      Nelson Skalbania, a former director and executive officer, failed to file on Form 4 or 5

Code of Ethics

The Company has adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions. The Company has incorporated a copy of its Code of Ethics as Exhibit 14 to this form 10-K. Further, our Code of Ethics is available in print, at no charge, to any security holder who requests such information by contacting us.

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Board of Directors Committees

The board of directors has not established an audit committee. An audit committee typically reviews, acts on and reports to the board of directors with respect to various auditing and accounting matters, including the recommendations and performance of independent auditors, the scope of the annual audits, fees to be paid to the independent auditors, and internal accounting and financial control policies and procedures. Certain stock exchanges currently require companies to adopt a formal written charter that establishes an audit committee that specifies the scope of an audit committee’s responsibilities and the means by which it carries out those responsibilities. In order to be listed on any of these exchanges, the Company will be required to establish an audit committee. The board of directors has not established a compensation committee. The Company’s board of directors has not established a compensation committee.

Director Compensation

Directors currently are not reimbursed for out-of-pocket costs incurred in attending meetings nor are they compensated for their service as directors. The Company may compensate directors in the future.

ITEM 11     EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Since the Company has limited operations, no compensation was paid as of the annual period ended December 31, 2008, to retain the services of our current executive officer. However, in the event that the Company expands it operations, the amount we deem appropriate to compensate our executive officer may change in accordance with market forces though we have no specific formula to determine future compensation at this time. Executive compensation may include salaries, options and other compensatory elements for our executive officer and any future executive employees. Decisions as to executive compensation would be based on the type of operations, the scale of those operations and available capital resources.

The Company paid executive compensation for the annual period ended December 31, 2008 to its former chief executive officer pursuant to a consulting agreement with a related entity in the amount of $90,000. The consulting agreement was terminated by mutual agreement as of October 31, 2008 due to insufficient capital resources to maintain this compensation arrangement. Executive compensation for the periods ended and December 31, 2007 and December 31, 2006 was $60,000 for each period.
 

The increase in executive compensation paid in the current annual period over the two prior annual periods can be attributed to the appointment of Nelson Skalbania as our new chief executive officer for much of the annual period ended December 31, 2008. Mr. Skalbania had a pre-existing relationship with the Company based on a consulting agreement with a related entity the terms and conditions of which were in excess of that paid to our prior chief executive officer. Although the Company has limited resources at this time for executive compensation it anticipates that executive compensation will be paid in future periods.

Tables

The following table provides summary information for the years 2008, 2007, and 2006 concerning cash and non-cash compensation paid or accrued by the Company to or on behalf of (i) the chief executive officer and (ii) any other employee to receive compensation in excess of $100,000.

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Summary Compensation Table
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation ($)	All Other Compensation ($)	Total ($)
Michael James Gobuty* CEO, CFO, and PAO	2008 2007 2006	- - -	- -	- - -	- - -	- - -	- - -	- - -	- - -
Nelson Skalbania** CEO, CFO, and PAO	2008 2007 2006	- - -	- - -	- - -	- - -	- - -	- - -	90,000** - -	90,000 - -
Andrew Wallace*** CEO, CFO, and PAO	2008 2007 2006	- 60,000 60,000	- - -	- - -	- - -	- - -	- - -	- - -	- 60,000 60,000

*     Appointed as chief executive officer, chief financial officer and principal accounting officer on September 10, 2008.

**Appointed as chief executive officer, chief financial officer and principal accounting officer on January 4, 2008 and resigned on September 10, 2008; Mr. Skalbania is the principal of Regal RV Resorts, Inc. which entity had a consulting agreement with the Company dated December 1, 2005 for $120,000 and 200,000 shares of common stock per year. The consulting agreement was mutually terminated on October 31, 2008.

***     Resigned as chief executive officer, chief financial officer and principal accounting officer on January 4, 2008.

We have no “Grants of Plan-Based Awards,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and Stock Vested,” “Pension Benefits,” “Nonqualified Deferred Compensation,” or “Post Employment Payments” to report.

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ITEM 12     SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information concerning the ownership of the Company’s 18,423,309 shares of common stock issued and outstanding as of April 14, 2009 with respect to: (i) all directors; (ii) each person known by us to be the beneficial owner of more than five percent of our common stock; and (iii) our directors and executive officers as a group.

Names and Addresses of Managers and Beneficial Owners	Title of Class	Number of Shares	Percent of Class
Michael James Gobuty 73200 El Paseo, Suite 2H Palm Desert, California 92260	Common	0	0
Nelson Skalbania* 145-925 West Georgia Street, Vancouver, British Columbia  V6C 3L2	Common	300,000	14.4
Regal RV Resorts, Inc.** 145-925 West Georgia Street, Vancouver, British Columbia  V6C 3L2	Common	1,350,000	7.3
Bay Cove Capital Corp.* 7371 Brandywine Place Vancouver, British Columbia V5S 3Z7	Common	1,314,954	7.1
Central Shipping Investment, Inc. 145-925  West Georgia Street, Vancouver, British Columbia V6C 3L2	Common	1,410,000	7.7
Officer and Directors as a Group (1)	Common	0	0%

*     Nelson Skalbania is the beneficial owner of 2,964,954 shares held in his own name, Regal RV Resorts, Inc., and Bay Cove Capital Corp.

**     Regal RV Resorts, Inc. holds 1,150,000 warrants to purchase 1,150,000 shares at $0.40 cents.

ITEM 13     CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

None of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction in the period covered by this report or in any presently proposed transaction which, in either case, has or will materially affect us, except as follows:

The Company owed Regal RV Resorts, Inc. $376,521 at December 31, 2008 due on demand consisting of loans and amounts due under a consulting agreement dated December 1, 2005, as amended of which $175,000 bears no interest while $201,521 bears interest at 6% per annum. The accrued interest owing on the interest bearing amount at December 31, 2008 was $27,738. Nelson Skalbania is a former officer and director of the Company. He is in addition an affiliate owner of more than 10% of the Company’s common stock as a principal of Regal RV Resorts, Inc. and Bay Cove Capital Corp.

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Director Independence

The Company is quoted on the OTC Bulletin Board inter-dealer quotation system, which does not have director independence requirements. However, for purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 4200(a)(15). NASDAQ Rule 4200(a)(15) states that a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. We do not consider the Company to have any independent directors at this time.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 

Audit Fees

Williams & Webster, P.S., provided audit services in connection with its annual report for the fiscal years ended December 31, 2008 and 2007. The aggregate of fees billed by Williams & Webster for the audit of the Company’s financial statements was $34,500 in 2008 and $33,681 in 2007.

Audit Related Fees

Williams & Webster, P.S., billed to the Company no fees in 2008 or 2007 for professional services that are reasonably related to the audit of the Company’s financial statements that are not disclosed in “Audit Fees” above.

Tax Fees

Williams & Webster, P.S., billed to the Company no fees in 2008 or 2007 for professional services rendered in connection with the preparation of the Company's tax return for the period.

All Other Fees

Williams & Webster, P.S., billed to the Company no fees in 2008 or 2007 for professional services rendered or any other services not disclosed above.

Audit Committee Pre-Approval

The Company does not have a standing audit committee. Therefore, all services provided to the Company by Williams & Webster, P.S. were pre-approved by the Company’s board of directors. Williams & Webster, P.S. performed all work only with their permanent full time employees.

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PART IV

ITEM 15.     EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Consolidated Financial Statements

The following documents are filed under “Item 8. Financial Statements and Supplementary Data,” pages F-1 through F-22, and are included as part of this Form 10-K:

     Financial Statements of The Company for the years ended December 31, 2008 and 2007:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income
Consolidated Statements of Stockholders’ Deficit
Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements     

(b) Exhibits

The exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 30 of this Form 10-K, and are incorporated herein by this reference.

(c) Financial Statement Schedules

We are not filing any financial statement schedules as part of this Form 10-K because such schedules are either not applicable or the required information is included in the financial statements or notes thereto.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Solar Energy Limited	Date
/s/ Michael James Gobuty By: Michael James Gobuty Its: Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director	April 14, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	Date
/s/ Michael James Gobuty Michael James Gobuty Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer and Director	April 14, 2009

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EXHIBITS

Exhibit     Description

3(i) *      Articles of Incorporation (incorporated by reference to the Company’s Form 10-SB filed with the Securities and Exchange Commission on January 28, 1999).

3(ii) *      By-laws (incorporated herein by reference to the Company’s Form 10-SB filed with the Commission on January 28, 1999).

10(i) *          Acquisition Agreement with D2Fusion Inc., dated August 18, 2005 (incorporated by reference to the Company’s Form 8-K filed with the Commission on August 19, 2005).

10(ii) *     Consulting Agreement with Bay Cove Capital Corp. dated December 1, 2005 (incorporated by reference to the Company's Form 10-QSB filed with the Commission on August 21, 2007).

10(iii) *     Securities Exchange Agreement and Plan of Exchange with Planktos Corp. (formerly Diatom Corporation) dated January 12, 2007 (incorporated by reference to the Company’s Form 8-K filed with the Commission on January 19, 2007).

10(iv) *     Amendment to Consulting Agreement with Bay Cove Capital Corp. and Regal RV Resorts, Inc. dated May 1, 2007(incorporated by reference to the Company's Form 10-QSB filed with the Commission on August 21, 2007).

10(v) *     Securities Exchange Agreement and Plan of Exchange with Enwin Resources, Inc. dated May 31, 2007 (incorporated by reference to the Company’s Form 8-K filed with the Commission on June 4, 2007).

10(vi) *     Release and Settlement Agreement with Russ George dated February 22, 2008 (incorporated by reference to the Company’s Form 8-K filed with the Commission on March 21, 2008).

10(vii) *          Purchase Agreement with Maidon Services Limited dated November 12, 2008 (incorporated by reference to the Company’s Form 8-K filed with the Commission on December 17, 2008).

14 *     Code of Ethics adopted March 30, 2004 (incorporated herein by reference to Form 10-KSB dated April 1, 2004).

21           Subsidiaries (attached).

31      Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (attached).

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

      *      Incorporated by reference to previous filings of the Company.

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EX-21

EXHIBIT 21

Solar Energy Limited

D2Fusion, Inc.

(100% ownership)

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EX-31

EXHIBIT 31

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael James Gobuty, certify that:

1. I have reviewed this report on Form 10-K of Solar Energy Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date: April 14, 2009

/s/ Michael James Gobuty

Michael James Gobuty

Chief Executive Officer and Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

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

In connection with the report on Form 10-K of Solar Energy Limited for the annual period ended December 31, 2008 as filed with the Securities and Exchange Commission on the date hereof, I, Michael James Gobuty, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
 

(1)      This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in this report fairly represents, in all material respects, the financial condition of the registrant at the end of the period covered by this r eport and results of operations of the registrant for the period covered by this report.

Date: April 14, 2009

/s/ Michal James Gobuty

Michael James Gobuty

Chief Executive Officer and Chief Financial Officer
 

This certification accompanies this report pursuant to §906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the registrant for the purposes of §18 of the Securities Exchange Act of 1934, as amended. This certification shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of this report), irrespective of any general incorporation language contained in such filing.
 
A signed original of this written statement required by §906 has been provided to the registrant and will be retained by the registrant and furnished to the Securities and Exchange Commission or its staff upon request.

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