10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

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

For the fiscal year ended: MARCH 31, 2012

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-254888

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

 (Exact name of registrant as specified in its charter)

California	33-0230641
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2345 W. Foothill, Suite 12, Upland, CA	91786
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number:(801) 810-9888

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

Securities registered under Section 12(g) of the Act:

Common Stock $.001 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o No x

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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 Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

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

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

The aggregate market value of the voting and non-voting common stock held by non-affiliates as of September 30, 2011 was approximately $11,254,031.

The number of shares outstanding of the issuer’s Common Stock as of June 29, 2012 was 16,659,898.

DOCUMENTS INCORPORATED BY REFERENCE

None.

TABLE OF CONTENTS

	Page
Cautionary Statement Regarding Forward-Looking Information	2
PART I
ITEM 1. BUSINESS	8
ITEM 2. PROPERTIES	8
ITEM 3. LEGAL PROCEEDINGS	8
ITEM 4. MINE SAFETY DISCLOSURES	8
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES	8
ITEM 6. SELECTED FINANCIAL DATA	10
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	F-1 through F-27
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.	14
ITEM 9A. CONTROLS AND PROCEDURES.	14
ITEM 9B. OTHER INFORMATION	15
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	15
ITEM 11. EXECUTIVE COMPENSATION	18
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS	20
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	22
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.	24
ITEM 15. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES	24

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

All statements contained in this Annual Report on Form 10-K, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe", "anticipate", "expect" and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially. Consequently, all of the forward-looking statements made in this Annual Report on Form 10-K are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected consequences to or effects on our business operations. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

The safe harbors of forward-looking statements provided by Section 21E of the Securities Exchange Act of 1934 are unavailable to issuers of penny stock. Our shares may be considered penny stock and such safe harbors set forth under the Private Securities Litigation Reform Act of 1995 may not be available to us.

As used in this Annual Report on Form 10-K, unless the context requires otherwise, "we", "us" or the "Company" or SET Corp. means Sustainable Environmental Technologies Corporation, a California Corporation, and its divisions and subsidiaries.

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PART I

ITEM 1.  BUSINESS

Organizational History

We were incorporated on July 21, 1985 with the name International Beauty Supply Ltd. under the laws of the state of California.  On May 28, 1993, we filed an amendment to the Articles of Incorporation to change our name to L.L. Knickerbocker Co., Inc.  On January 9, 2003, we filed an amendment to the Articles of Incorporation to change our name to RG Global Lifestyles, Inc.  On July 28, 2010, we filed an amendment to the Articles of Incorporation to change our name to our current name, Sustainable Environmental Technologies Corporation.

On January 19, 2012, we filed an amendment to our articles to implement a one for fifteen reverse stock split and decreased our amount of authorized Common and Preferred stock to the amounts as noted below.  However, the aforementioned amendment was not in effect until FINRA’s authorization on January 25, 2012.

The Corporation is authorized to issue 100,000,000 shares of Common Stock, $0.001 par value per share, and 10,000,000 shares of Preferred Stock, $0.001 par value per share.

For the past three (3) years, we have not filed for bankruptcy, receivership or any similar proceeding and have not effected any reclassification or merger, or consolidation.

General Overview of Business

Our business objective is dedicated to responsible resource utilization through environmentally sustainable technologies. With offices in Southern California, Utah, Colorado and North Dakota, our objective is to set the standard for responsible principles of sustainable development.  Through patented technologies and strategic relationship and acquisitions, we intend to solve environmental issues with economic advantages to the consumer. Our technologies are intended to limit our customer’s environmental impact by conserving valuable and diminishing natural resources.

Current and future services include, and are expected to include, innovative eco-technologies that provide patented treatment, recovery, reclamation and re-injection services for Produced Water (which is associated with the oil and gas industry) and the ultra-efficient tri-gen systems that offer combined cooling, heating, and power generation with the added capability of water production from a single energy source.   We offer complete sustainable energy solutions that bridge the gap between existing energy sources and the sustainable energy sources.  Such design and application will meet the needs of tomorrow by preserving the natural resources of today.  We also provide customized services that include design, construction, management, operation and maintenance services, and equipment manufacturing for the industrial and municipal sectors.  With strategic partnerships, through prominent global manufacturers and distributors, we have access to a worldwide sales and distribution network.

The application of proven water treatment systems today is globally in high demand.  So far in the U.S., our focus has been directed to the oil and gas industry where these ever-growing volumes of waste water must be dealt with to assure the continued supply of domestic petroleum products so desperately needed.  This focus will be continued through the next year, and expanded throughout the Americas and into Canada and other countries.  Our wholly owned subsidiary Pro Water, LLC, a Utah Corporation (“PWU”), is currently capitalizing on this opportunity in its Utah facility as discussed below.

Principal Products and Services

Products

PWC Centerline SWD SYSTEM

On August 1, 2011, management formed a wholly owned subsidiary, ProWater, LLC, a Colorado limited liability company (“PWC”), which owns the proprietary Centerline salt water disposal system (“Centerline SWD System”).  Designed by management with experience gained through the building and operating of the Utah facility, Centerline SWD System is a containerized, module, movable system that utilizes green technology to efficiently separate oil, water and other by-products produced from oil and gas operations. Centerline SWD  System is a unique state-of-the-art system that is based on strategic utilization following a three-pronged approach for deriving revenue: 1) sale of oil; 2) sale of water; and the 3) reinjection of cleaned water.  This three-pronged approach enables PWC to derive revenue and safely dispose of the remaining components by selling oil to refiners and providing processed water for use in hydraulic fracturing or water injection. Applied to approved formations, this re-used water is injected thousands of feet below potential ground water zones.

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The Centerline SWD System is a highly automated, self-monitoring, self-diagnostic, modular facility that can be completely built and installed in ninety (90) days. The Centerline SWD System modules are dropped in place, bolted together, and connected to main power lines and can be turned on to heat the balance of the facility while final plumbing connections to the tank farm are completed.  One of the greatest benefits to the modular system is that these portable units can be built in modern climate controlled facilities that allow them to be built year round.  PWC Centerline SWD System facilities are more efficient, requiring less manual labor for the direct benefit of its customers, processing the average water truck in less than half the time of the industry standard.

Centerline SWD System, utilizes Class II SWD wells that are recognized as one of the safest forms of disposing Produced Water.  It would take three separate, simultaneous integrity failures to pose any environmental risk.  With agencies such as the Environmental Protection Agency set to release new national standards for the disposal of Produced Water, generated from shale formations, each Centerline SWD System contains a complex safety system with a series of redundant controls that exceed local, state and federal requirements.  The system is designed in such a way that if it encounters even one safety abnormality, the entire facility is immediately and automatically shut down, it further issues alerts to multiple predetermined individuals.  No further water can be taken into the facility or pumped down hole until the safety issue is evaluated and resolved.

PWC’s Centerline SWD System intelligently combines highly efficient process controls with best in class technologies, and installs them into portable modular buildings. The Centerline SWD System utilizes a horizontal GE™ surface pumping systems (“SPS”) that features a directly-coupled, multistage centrifugal pump that is uniquely designed for high pressure, low to medium flow and environmentally sensitive applications.  The SPS pump has low maintenance requirements, a long run-life and can be easily modified in the field.  The addition of variable speed drives and logic control systems lower operating costs and improve reliability, while providing intelligent monitoring and control capabilities.  Another key advantage of the Centerline SWD System is the ability to maintain full manufacturing and construction capacity year round.  The Centerline SWD System clarifies produced oilfield waters to the extent that they can be used in water-flooding to drive more oil from the earth, and/or allow it to be disposed of in Class II SWD wells. This cleaned water can also be used as frac water in the oilfields where there is new drilling or water flooding activities.

DynIX™ Technology

Our proprietary DynIX™ wastewater treatment technology is based on an ion-exchange process for the treatment and reclamation of Produced Water. The DynIX™ technology can be used as a pre-treatment that allows systems such as reverse osmosis filtration to work more efficiency or as a standalone system that removes sodium and other pollutants from Produced Water allowing it to be returned to the environment within local, state and federal environmental compliance regulations. The successful removal of the treated Produced Water in turn allows energy companies to harvest and sell methane, gas and oil associated with such fields. The Company receives a royalty from the customer for every barrel of Produced Water treated and purified.

In April of 2008, we constructed and successfully tested our first plant in Wyoming in connection with an agreement with Yates Petroleum, Inc. This agreement was structured on a “build, own and operate” economic model whereby we provided a “turnkey” plant to Yates Petroleum and charged a royalty per barrel of cleaned Produced Water. We received a fixed royalty for every barrel of Produced Water treated and purified and maintained ownership of the equipment under a five-year contract.  After unsuccessfully attempting to negotiate a higher royalty rate, we decided to shut the plant down until a buyer could be found.  Subsequent to shutting down the plant, Yates Petroleum, Inc. cancelled its agreement with us.

We have changed our strategy from solely a build-to-sell manufacturing environment to include a royalty-based model whereby we would license its DynIX™ Technology to achieve royalty income.  

MultiGen Technology

The MultiGen technology is a highly efficient, reliable, low-emission and commercially proven integrated solution that uses natural gas, biogas, diesel or other fuels to power a micro-turbine that in turn powers a chiller running our patent-pending air conditioning/water-from-air generation unit. As utilized in Australia, the MultiGen technology was able to achieve up to 95% overall efficiency by the onsite generation of water, air conditioning, electrical power, heating and cooling water.  In addition, as utilized in Australia, the MultiGen technology can save as much as 400 tons of CO2 per year when compared to using grid-supplied electricity. The result is greater efficiencies with respect to water and energy use, significant improvement of security of supply, and a reduction of greenhouse gas emissions, all at less cost.

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When operating on natural gas, the MultiGen technology can reduce grid-supplied power requirements for the same functions by approximately 50% as utilized in Australia. It is ideally suited to locations where natural gas-produced electricity is cheaper than grid supplied, as well as disaster areas and remote areas without existing utility infrastructure.

Unlike typical co-gen and tri-gen systems, the MultiGen technology has a much smaller equipment footprint, requires less maintenance, is quieter, and can be easily retrofitted to existing facilities or installed in new developments

Services

PWU Blue Bench Class II Salt Water Disposal Well in Utah

Through an acquisition of all of the issued and outstanding membership interests of PWU, the Company acquired PWU’s Blue Bench Class II Salt Water Disposal (“SWD”) well.  The Blue Bench Class II SWD well is owned and operated by PWU in Duchesne, Utah and is one of the few, available methods for disposing Produced Water in that area.  PWU’s Blue Bench Class II SWD well takes the Produced Water brought in from customers in Duchesne, Utah and converts that Produced Water into processed water which can be reused when drilling for oil and gas or alternatively safely injected into approved formations thousands of feet below potential ground water zones.

PWU’s SWD well resides on two five-acre parcels. With the exception of a few outlying buildings, PWU’s Blue Bench Class II SWD well has been completely re-designed to increase the capacity for production and allow the Blue Bench Class II SWD well to operate during the winter months. With the completion of the upgrades and automation, the redesigned Blue Bench Class II SWD well is capable of handling over 7,000 barrels of Produced Water per day.  Efficiency and automation designs allow PWU’s Blue Bench Class II SWD well to operate with minimal labor while achieving maximum production results.  PWU’s Blue Bench Class II SWD well serves as a showpiece, as it is a modern and innovative injection well. 

PWC Centerline Salt Water Disposal Wells in North Dakota

Through our wholly owned subsidiary PWC and its wholly owned subsidiary Blue Bench, LLC, a Colorado limited liability company (“BB”) formed on April 5, 2012 we plan to construct three SWD wells utilizing PWC’s Centerline SWD System as described above.

We have completed the drilling and production casing of the first well in Cartwright, North Dakota (the "Cartwright Well").  The portable Centerline SWD System for the salt water disposal well is being built in Casper, Wyoming and is in its final stages of construction.  Thus, we anticipate the completion of this well within the next 45 to 90 days.  The well was drilled on 10 acres of land we have in Cartwright, North Dakota.  This sight has easy highway access and is in a prime drilling area for oil wells in the Bakken formation.

Operational History

Pro Water Utah (“PWU”)

DES Technology

On April 23, 2012 we entered into a letter of intent with Dehydration & Environmental Systems, Inc. (“DES”) to test DES’s DryVac technology at the Blue Bench Class II SWD well.  The DryVac's technology involves a patented filtration, thermal drying and water processing developed and owned by DES to separate solid contaminants found in waste streams such as Produced Water.  We will evaluate this product at our well in Duchesne, Utah to see if this technology would be a valuable addition to all of our SWD wells.  At this time, we believe that this technology has the potential to significantly increase our revenue streams at our SWD wells.

Blue Bench II SWD

On July 7, 2010, we entered into the Pro Water acquisition agreement (the "Pro Water Agreement") to acquire 100% of the membership interests of PWU, from its sole  member, Metropolitan Real Estate, LLC (the “Metropolitan”), a New York limited liability company. Metropolitan is an entity controlled by Horst Franz Geicke, a beneficial owner of the Company.  PWU’s sole business is its ownership and operation of the SWD well and refinery in Duchesne, Utah.  In exchange for the purchase of the membership interest of PWU, we assumed all PWU debts, 1,333,333 shares of our restricted common stock were to be issued, and a convertible secured promissory note (the "Pro Water Note") was to be issued.  The amount of the Pro Water Note was in the amount of $2,000,000, at an interest rate of 5% per annum, payable quarterly over a period of one year commencing on the closing date of the Pro Water Agreement.   In addition, the Pro Water Note had a conversion feature, which at the sole option of the holder, would convert the Pro Water Note into shares of restricted common stock at a price of $1.50 per share.  The Pro Water Note is secured by all of the assets of PWU. Subsequent to the closing of the Pro Water Agreement, PWU became our wholly-owned subsidiary. 

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On July 12, 2010, the terms of the Pro Water Agreement were amended whereby the number of shares of common stock paid to Metropolitan was increased to 2,222,222 (from 1,333,333).  In addition, the conversion rate of the Pro Water Note was also amended.  Previously the Pro Water Note was to be converted at $1.50 per share, however the Pro Water Note was amended so that $1,600,000 of the Pro Water Note would be converted at $3.00 per share and $400,000 would be converted at $0.375 per share.  The Pro Water Note was also amended to have the following payment schedule: i) $100,000 paid on or before September 30, 2010; ii) $200,000 paid on or before December 31, 2010; iii) $200,000 paid on or before March 31, 2011 and vi) the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010, was paid in October of 2010. 

On January 14, 2011, the terms of the Pro Water Note were amended for a second time. As of the date of the second amendment, the unpaid principal amount was $1,880,000. Under the terms of the second amendment, the term of the Pro Water Note was extended for five (5) years and all accrued interest was forgiven.  In addition, our payments were to be in sixty (60) monthly payments of $35,478 commencing January of 2011 and concluding December of 2015, subsequently extended to April 2016. All other terms, including conversion and interest rates have remained the same as in the first amendment to the Pro Water Note. The Company accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period. 

The acquisition of PWU was accounted for as a reverse acquisition in accordance with Accounting Standards Codification (“ASC”) 805 Business Combinations. We determined for accounting and reporting purposes that Pro Water was the acquirer because of the significant holdings and influence of Horst Franz Geicke before and after the acquisition. As a result of the transaction, Horst Franz Geicke, individually and through entities of which he has common control (the “Control Group”) owned in excess of 44% of issued and outstanding common stock of the Company on a diluted basis.

Because SWD wells are essential to the responsible processing of Produced Water from the oil and gas industry, we acquired PWU to expand our water processing services for the disposal of Produced Water. Through PWU’s Blue Bench Class II SWD well in Utah, we have established a customer base and are currently generating a positive monthly cash flow.  Furthermore, since January of 2011, business of PWU’s Blue Bench Class II SWD well has steadily increased as local governments increase regulations and restrictions for disposing Produced Water. While there are several key factors to obtaining new business, the ratio of available business per customer is based solely on the number of oil and gas wells the customer has within the serviceable radius of the injection well.  As new oil and gas wells are developed within the serviceable radius of PWU’s Blue Bench Class II SWD well, the ratio of customers to percentage of business will increase.

ProWater Colorado (“PWC”)

Our wholly owned subsidiary, PWC, in which we plan to develop additional technologies for disposing of salt water from oil and gas wells, including technologies such as Centerline SWD System, and designing, building and operating SWD wells that are used in the oil and gas industry.

Design, Building and Operating SWD Wells

Company management has spent the last two years working in North Dakota and Montana to identify potential SWD well sights, in an effort to obtain operating and drilling permits for the most desirable of those locations for PWC. Currently we have state approval for the Cartwright Well location, and are looking for more sites.  Management’s focus on strategic acquisitions and new site evaluations will be instrumental in the Bakken play and for additional markets in the future.

Management plans on replicating and improving the design and cash flow of the Centerline SWD system and building additional SWD wells in North Dakota and Montana from their experience at PWU’s facility and anticipates that each new Centerline SWD facility will require 2-4 months to begin generating income after the SWD well is complete.

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Centerline SWD System

Our proven dedication to the industry has created partnership opportunities and solid relationships with vendors, customers, and potential customers in Utah, North Dakota and Montana for the Centerline SWD system.  Reports from the United States Geological Survey (“USGS”) show that the Bakken Shale formation could hold more crude oil than the entire Middle East region, which could produce crude oil for the next 20-35 years.  The lack of SWD well locations is currently one of the largest roadblocks holding back the number of crude oil wells in this area.  We are ready to capitalize on this opportunity utilizing PWC’s Centerline SWD systems by managing the building of the related salt-water disposal wells, and through strategic partners in the oil and gas industry.

According to the Wall Street Journal, the Bakken Shale formation is believed to contain billions of barrels of recoverable oil.  Technological improvements in the past two years have taken what was once a small, marginally profitable field and turned it into one of the fastest-growing oil-producing areas in the U.S.  The Bakken Shale has helped North Dakota oil production double in the past three years, surging to 80 million barrels in 2009—tiny relative to the more than seven billion barrels consumed by the U.S. every year, but enough to vault the state past Oklahoma and Louisiana to become the country's fourth-biggest oil producer, after Texas, Alaska and California. If current projections hold, North Dakota's oil production could pass Alaska's by the end of the decade.

Class II SWD wells are the preferred disposal system in the U.S., as many states are banning evaporation pits.  In the state of North Dakota, permitting for evaporation pits is not allowed. Produced Water is commonly shipped to SWD wells by truck, or by a limited number of pipelines.  Oil producers do not want to deal with wastewater disposal and only build disposal wells when commercial disposals are not conveniently available.  This is where through our wholly owned subsidiary PWC, we can become a key partner to these oil producers.   PWC and its Centerline SWD Systems growth and expansion plans in the U.S. over the next two to five years will occur in Three Phases.

In Phase One, PWC expects to deliver one to two Centerline SWD Systems in North Dakota that could generate income by the end of 2012.  In Phase Two, the next two to four additional Centerline SWD Systems are anticipated to be completed in 2013 in North Dakota and Montana.  In Phase Three, we anticipate the leasing and operations of the Centerline SWD System, and the further use of PWC’s technology and design team to assist major oil and gas companies throughout the U.S.

DynIX™

We have signed licensing agreements for Australia and Asia with World Environmental Solutions Pty Ltd (“WES”).  However, currently there are no definitive or pending agreements for DynIX™.

MultiGen

On August 27, 2010, we entered into a Technology Purchase Agreement with World Environmental Solutions Pty Ltd, an Australian company (“WES”).  In exchange for an investment in WES, we purchased certain technologies, including all intellectual property rights and pending patents of WES.  Such patents and patent applications include patent number 20088237617 and patent application number 2010118129.  Both patents relate to the water extraction and electricity generation units, referred to as MultiGen. Multiple Patent Cooperation Treaties have been filed in Canada, Mexico, Nigeria, South Africa and the United States.

Effective September 1, 2011, along with SET IP Holdings LLC, a Utah limited liability company, we entered into an amendment with WES to the aforementioned Technology Purchase Agreement (“Amendment to the TPA”).  Pursuant to the terms of the Amendment to the TPA: (i) our option to purchase 3% of the capital stock of WES has been canceled; (ii) WES’ warrant to purchase 333,333 shares of our common stock at a price of $5.25 per share has been canceled; (iii) WES’ $200,000 convertible secured promissory note issued by us (convertible at $5.25 per share of our common stock), and all security interests granted there under, has been canceled; (iv) our ownership of 12% of the capital stock of WES has been canceled; (v) our payment to WES upon certain terms of WES’ successful installation and sale of a MultiGen unit has been reduced to 250,000 shares of our common stock; (vi) the maximum share issuance by us to WES based on WES royalties paid to us for certain WES sales of MultiGen units has been reduced to 333,333 shares of our common stock; (vii) any shares of our common stock issued to WES pursuant to the Agreement, as amended, shall be restricted from transfer for one year from the date of issuance; (viii) our maximum royalty obligation to WES for our sales of MultiGen units has been reduced to $500,000; (ix) WES shall pay us a royalty of 10% of gross revenues for WES sales of MultiGen units; (x) WES and the Company shall split 75/25 certain fees paid to WES in connection with agency for sales of MultiGen units outside of Australia; and (xi) the parties have covenanted to use their best efforts in regards to maintaining distributor status for sourcing components for the MultiGen units.

On October 17, 2011, we shipped the first order for its high efficiency MultiGen combined cooling, heating and power, plus water generation systems (CCHP +H20) to a commercial facility in Australia for a retrofit construction project. Subject to a successful outcome for this first installation, coordinated by WES, further orders are expected in 2012. Upon a successful launch of the MultiGen in Australia, SET Corp intends to promote the MultiGen throughout the Americas, starting with the USA, in 2012. The first MultiGen is currently being installed in a government Education Institution in NSW Australia. It is expected to be in full production by September 2012.

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Prior Company Businesses

Prior to our business of the development of sustainable environmental technologies, the Company, under prior management, was involved in several business ventures including energy drinks, nutraceuticals, and other consumer, retail and commercial ventures, all of which have been abandoned.

Status of Publicly Announced New Products and Services

See above for discussion in principal products and services.

Competition

PWU has three competitors in Utah. Water Disposal Inc. (“WDI”) has two injection wells that are located in Roosevelt, Utah and are approximately 24 miles further away from the primary oil producers in the vicinity than our well. This is important as the trucking costs are greater than the disposal costs for injecting the water. The closer you are, the lower the overall disposal coast will be. The third disposal site is an evaporation pit one mile further than our facility.

PWC has multiple competitors in North Dakota; Zenith Produced Water has 2 injection wells that are north of Williston and currently taking 5-6,000 barrels between the 2 wells. There is another operator RMI that has 1 well operating and is currently building a second well. They are southeast of Williston and the first one is currently doing 10,000 BPD. Each SWD can service about 50-100 oil wells. Approximately 2,000 permits to drill new wells were issued last year with about the same number slated for this year. This leaves a large shortage of SWD’s to support all of the oil production currently and in the future.

DynIX™ currently has direct competition from Ionics, GE Water, and EMITS Water Discharge Technology.  Many of these competitors have established histories of operation and greater financial resources than the Company, enabling them to finance acquisitions and development opportunities, to pay higher prices for the same opportunities, and to develop and support their own operations. In addition, these companies have greater name recognition.

MultiGen Technology is the first of its kind and does not currently have any competition. As far as similar types of green technology that would be similar would be solar panels or windmills. Although both of these systems produce electrical power they do not provide the additional benefits of producing free heating or air conditioning nor do they produce free water as an additional byproduct. MultiGen provides numerous eco-tech solutions that bridge the gap between existing energy inefficient buildings and the sustainable development and design needs of tomorrow.  By providing a complete sustainable solution, every MultiGen 65 is able to provide 65kWh of electricity, up to 2,000 liters of water per day and provide supplemental air conditioning and heating.  MultiGen is able to produce energy at half the price of the grid, while saving up to 400 tons of carbon each year.  With an average ROI of 20 years for solar, MultiGen has an ROI of 5 years and is 78% more efficient than a comparable solar panel installation.

WES represents two product lines of the Company. The first is the DynIX system for cleaning Produced Water from Coal Bed Methane CBM or Coal Seam Gas CSG wells as they call them in Australia.   Ionics, GE Water, and EMIT Water Discharge Technology would be the same competitors in Au as we sell against here in the US. Many of these competitors have established histories of operation and greater financial resources than the Company, enabling them to finance acquisitions and development opportunities, to pay higher prices for the same opportunities, and to develop and support their own operations. In addition, many of these companies have greater name recognition. As far as the MultiGen technology goes it is so new that there are no direct competitors yet as the product is just being released. As far as similar types of green technology that would be similar would be solar panels or windmills. Although both of these systems produce electrical power they do not provide the additional benefits of producing free heating or air conditioning nor do they produce free water as an additional byproduct.

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Intellectual Property

We own the DynIX™ wastewater technology protected by US patent 8,168,068 and proprietary know how which is expected to form the basis for further patents filings based on the fundamentals in the issued patent.

We have two other pending patents for the MultiGen Technology in Australia, 20088237617 and 2010228129 in addition to multiple Patent Cooperation Treaties which have been filed in Canada, Mexico, Nigeria, South Africa and the United States.

Government Approval

PWU received a permit for passing a Mechanical Integrity Test (“MIT”) test, done by the state of Utah. This permit is valid for five (5) years. In addition to the MIT, we do monthly reporting of all injection numbers to the Utah Department of Oil, Gas, and Mining (“UDOGM”).

The Cartwright Well is currently permitted and the bond has been placed. The state of North Dakota has approved all plans for the construction of the facility and the paperwork is an ongoing providing the state with Sundry reports as the process continues.

 MultiGen Technology has no government permits required other than standard building and electrical permits that would be required for industrial electric and air conditioning installations.

Employees

As of March 31, 2012, we have seven (7) full time and no part time employees. We have two (2) part time consultants that assist with billing and accounting.

ITEM 2.  PROPERTIES

We rent office space to house our corporate operations of approximately 4,330 square feet in Upland, California for approximately $4,763 per month.

We operate the Blue Bench Class II SWD well on approximately 10 acres of owned property in Duchesne, Utah.

We have a surface lease for the Cartwright Well for approximately 10 acres in Cartwright, ND.

ITEM 3.  LEGAL PROCEEDINGS

On April 27, 2012, a Complaint was filed against the Company by a previous consultant, Shani Investments Inc., in the Orange County Superior Court.  The main contention of the Complaint is that there was an alleged  breach of a consulting agreement that was entered into by the Company and the consultant in which the plaintiff claims to have damages.  We have hired a highly experienced litigation attorney who on June 12, 2012 filed a Motion to Strike and a Demurrer.  The Motion to Strike was filed to ask the court to remove inapplicable and superfluous prayers and the Demurrer was filed to assert that the Plaintiff lacked capacity to assert the causes of action and that the causes of action failed to state facts sufficient to constitute the causes of action.

ITEM 4.  MINE SAFETY DISCLOSURES

This item is not applicable.

PART II

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

Market Information

Our Common Stock currently is quoted on the OTCQB under the symbol “SETS”. The following tables set forth the high and low bid information for the Common Stock for each quarter within the last two fiscal years:

8

QUARTERLY COMMON STOCK PRICE RANGES

Quarter Ended	High		Low
June 30, 2010	$	1.80	$	0.45
September 30, 2010	$	1.35	$	0.45
December 31, 2010	$	0.90	$	0.45
March 31, 2011	$	0.75	$	0.60
June 30, 2011	$	2.10	$	0.75
September 30, 2011	$	1.80	$	0.75
December 31, 2011	$	3.00	$	1.05
March 31, 2012	$	2.14	$	1.17

These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

Holders

There were approximately 264 holders of record of our Common Stock as of June 29, 2012.

Dividends

We do not anticipate paying dividends in the foreseeable future.  There are no restrictions on our present ability to pay dividends to shareholders of its Common Stock, other than those prescribed by California law.

Securities authorized for issuance under equity compensation plans

In order to compensate our officers, directors, employees and/or consultants, our Board and stockholders adopted the 2006 Incentive and Non-Statutory Stock Option Plan (the “2006 Plan”), the 2007 Incentive and Non-Statutory Stock Option Plan (“2007 Plan”), and the 2010 Incentive and Non-Statutory Stock Option Plan (“2010 Plan”).

The 2006 Plan has a total of 666,667 shares reserved for issuance, the 2007 Plan has a total of 400,000 shares reserved for issuance, and the 2010 Plan has a total of 1,333,333 shares reserved for issuance.

As of the end of the fiscal year ended March 31, 2012, we have issued the following stock options and shares under the Plans:

Equity Compensation Plan Information

Plan category	Number of securities remaining to be issued upon exercise of outstanding options, warrants and rights (a)		Weighted average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance (c)
Equity compensation plans approved by security holders: 2006 Plan		16,667	$	0.90		118,897
Equity compensation plans approved by security holders: 2007 Plan		26,667	$	0.90		31,367
Equity compensation plans approved by security holders: 2010 Plan		821,666	$	0.78		424,712
Equity compensation not pursuant to a plan		-	$	-		-
Total		865,000	$	0.77		574,976

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Recent Sales of Unregistered Securities

None

ITEM 6.  SELECTED FINANCIAL DATA

This item is not applicable.

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

In addition to historical information, you should read the following discussion and analysis of our financial condition and results of operations together with "Selected Financial Data" and our financial statements and related notes appearing elsewhere in this Annual Report.  This discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under "Risk Factors" in our prior SEC filings and elsewhere in this Annual Report.

For a full discussion of our business please see Item 1 which begins on Pg. 2 of this Report

Results of Operations for the Fiscal Years Ended March 31, 2012 and 2011

The following table summarizes the results of our continuing operations amounts for the periods and dates shown:

	For the Year Ended March 31,
	2012		2011
Combined Statement of Operations Data:
Revenue	$	4,269,529	$	2,617,400
Cost of revenue		1,605,247		1,020,205
Operating expenses		2,123,260		1,351,897
Operating income		541,022		245,298
Other income (expense)		529,462		(674,638	)
Income (loss) from continuing operations		1,070,484		(429,340	)
Net income (loss)	$	2,254,920	$	(355,439	)

Revenues increased $1,652,129 or 63%, for the year ended March 31, 2012 compared to the period of the prior year presented. This increase resulted from a 54% increase in revenue from its major customer that accounted for 81% of revenue compared to 86% for the prior period presented. The increase in revenue is due to the complete redesign and upgrade of the Blue Bench Class II SWD and management’s decision to implement temporary receiving facilities during the redesign process. By guaranteeing customers that they would receive uninterrupted service, the temporary receiving facilities allowed management to secure customers several months in advance of the upgrade completions.  Furthermore by providing customers with exceptional customer service and competitive pricing that does not fluctuate significantly, management has created a marketing edge that separates the Blue Bench Class II SWD from that of local competition.  Due to improvements made subsequent to the prior period presented, the injection well is automated and fully winterized.  The Blue Bench Class II SWD well not only has additional capacity but its increased efficiency for processing produced water, allows four trucks to simultaneously unload.  This greatly reduces wait times and ultimately results in the Company and our customers saving both time and money.

Cost of revenue increased $585,042 or 57%, for the year ended March 31, 2012 compared to the prior period presented. As a percentage of revenues, cost of revenue was 38% compared to 39% in the prior period presented. Items included within cost of revenues represent labor, depreciation and amortization, equipment rental, supplies, utilities, repair and maintenance. Principal factors contributing to the increase in cost of revenue included additional depreciation due to improvements made to the injection well subsequent to the prior comparable period and an increase in variable expenditures such as utilities due to the increased barrels produced. Payroll related costs are primarily fixed due to the minimal staffing required to monitor the facility and thus do not fluctuate significantly from period to period.

Total operating expenses increased $771,363 or 57% for the year ended March 31, 2012 compared to the prior period presented due to the increased operations. Operating expenses include management and administrative personnel costs (including non-cash stock-based compensation), corporate office costs, accounting fees, depreciation and amortization, legal expense, information systems expense, product marketing, sales expense and research and development expenses.  Increased expenditures included approximately $641,000 for stock based compensation, $247,000 in professional fees, $399,000 in salaries and wages, $187,000 in consulting agreements, and general corporate expenditures. In addition, research and development expenses of approximately $125,000 in 2012 represented costs incurred in our development of our initial MultiGen system.

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Total other income was $529,462 for the for the year ended March 31, 2012 compared to an expense of $674,638 for the prior period presented due to an increase in debt settlement negotiations. Other income (expense) includes interest income, interest expense, change in fair value of derivative liability, and gain on settlement of payables and accrued liabilities. The income during the current period was related to approximately $625,000 of write-offs related to a note payable and the related accrued interest, as well as approximately $81,000 for the write-off of certain accounts payable, offset by of amortization expense of $140,000 related to the beneficial conversion feature recorded in connection with the $2.0 million note payable to the former shareholder of PWU.

Segment Results for the Fiscal Years Ended March 31, 2012 and 2011

The following should be read in conjunction with the annual financial results of fiscal 2012 for each reporting segment. See “Notes to Consolidated Financial Statements, Note 12 — Segment Information.” We evaluate the performance of our segments based on net income (loss) from continuing operations. Certain income and charges are not allocated to segments in our management reports because they are not considered in evaluating the segments’ operating performance. The following is a summary of information about profit or loss by segment.

	For the Year Ended March 31, 2012									For the Year Ended March 31, 2011
	Pro Water			SETCORP			Total			Pro Water			SETCORP			Total
Revenues	$	4,269,529		$	-		$	4,269,529		$	2,617,400		$	-		$	2,617,400
Cost of revenues		1,605,247			-			1,605,247			1,020,205			-			1,020,205
Gross profit		2,664,282			-			2,664,282			1,597,195			-			1,597,195
Operating expenses:
General and administrative		469,204			1,528,764			1,997,968			364,642			933,473			1,298,115
Research and development		-			125,292			125,292			-			53,782			53,782
Total operating expenses		469,204			1,654,056			2,123,260			364,642			987,255			1,351,897
Operating income (loss)		2,195,078			(1,654,056	)		541,022			1,232,553			(987,255	)		245,298
Other income (expense):
Interest income		111			644			755			38			37			75
Interest expense		(221,176	)		(82,338	)		(303,514	)		(229,311	)		(510,410	)		(739,721	)
Change in fair value of derivative liability		-			127,438			127,438			-			(102,584	)		(102,584	)
Gain (loss) on settlement of payables and accrued liabilities		(28,256	)		733,039			704,783			-			167,592			167,592
Total other income (expense)		(249,321	)		778,783			529,462			(229,273	)		(445,365	)		(674,638	)
Income (loss) before provision (benefit) for income taxes		1,945,757			(875,273	)		1,070,484			1,003,280			(1,432,620	)		(429,340	)
Provision (benefit) for income taxes								(1,170,275	)								800
Net income (loss) from continuing operations								2,240,759									(430,140	)
Net income from discontinued operations								14,161									74,701
Net income (loss)							$	2,254,920								$	(355,439	)

Pro Water (“PWU” and “PWC”)

All revenues and cost of revenues are associated with the Pro Water segment. See explanation above regarding changes in revenues and cost of revenues.

Total operating expenses increased $104,562 or 29% for the year ended March 31, 2012 compared to the prior period presented due to the corporate salaries and stock compensation allocated of $265,000, increased operations, and improvements made to the Blue Bench Class II SWD well discussed above. Also as a result, as a percentage of revenue, operating expenses decreased from 14% to 11% due to the significant improvement in revenue.

Total other expense increased $20,048 or 9% for the year ended March 31, 2012 compared to the prior period presented due to an increase in financing activities. Other income (expense) includes interest income and interest expense. The increase during the current period was primarily related to $221,000 of interest and amortization expense related to the beneficial conversion feature recorded in connection with the $2.0 million note payable to the former shareholder of Pro Water.

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SET Corp

There is no revenue generated by this segment for any of the periods presented.

Total operating expenses increased $666,801 or 68% for the year ended March 31, 2012 compared to the prior period presented due to approximately $125,000 of research and development related to MultiGen. Operating expenses include management and administrative personnel costs (including non-cash stock-based compensation), corporate office costs, accounting fees, depreciation and amortization, legal expense, information systems expense, product marketing, sales expense and research and development expenses.  Expenditures included approximately $559,000 for stock based compensation, $244,000 in professional fees, $216,000 in salaries and wages, $142,000 in consulting agreements, and general corporate expenditures for our rent, utilities, etc in which were not present in the previous comparable period.

Total other income was $778,783 for the year ended March 31, 2012 compared to total other expense of $445,365 for the prior period presented primarily due to the approximately $625,000 of write-offs related to a note payable and the related accrued interest, as well as approximately $81,000 for the write-off of certain accounts payable, offset by interest expense of $82,000 related to interest accrued on outstanding notes. Also included in other income for the current period was a change in fair value of derivative liability income of $127,438.

Liquidity and Management’s Plans

As shown in the accompanying consolidated financial statements, during the year ended March 31, 2012, we incurred an operating income from continuing operations before income taxes of $1,070,484.  As of March 31, 2012, we had working capital of $1,343,750.  In addition, we operations are primarily concentrated with one customer which represented 81% of total revenues.  During the year ended March 31, 2012, we generated positive cash flows from operations of $249,990. The net income during the year ended March 31, 2012 was primarily due to non-cash charges in connection with the amortization of discounts convertible notes payable due to beneficial conversion features and gain on derivative liability. During the year ended March 31, 2012, we funded operations through cash flows generated from the PWU segment and sales of common stock. In fiscal 2013, we intend to fund operations and pay down liabilities through cash on hand and the positive cash flow being generated by the PWU segment. In addition, we intend to continue to negotiate the settlement of liabilities incurred in connection with the reverse acquisition of SET Corp.

If current and projected revenue growth does not meet Management estimates, the Management may choose to raise additional capital through debt and/or equity transactions, renegotiate current convertible debt obligations, reduce certain overhead costs through the deferral of salaries and other means, and settle liabilities through negotiation.  Currently, we cannot provide assurance that such financing will be available to it on favorable terms, or at all. If, after utilizing the existing sources of capital available to us, further capital needs are identified and if we are not successful in obtaining the financing, it may be forced to curtail its existing or planned future operations. We believe our plans will enable us to continue for a period in excess of one year from the date of the most recent balance sheet.

Operating Activities

Cash provided by operating activities during the years ended March 31, 2012 and 2011 were $249,990 and $566,541, respectively.  In 2012, this was the result of a net income of $2,254,920 offset by non-cash and non-operating items (depreciation, stock-based compensation, change in fair value of warrant liability, stock issued for services, income tax provision, and interest expense from the amortization of debt discounts) totaling $1,118,186 and net usage of current assets and liabilities of $886,744. The decrease in cash provided by operating activities during 2012 from 2011 was primarily due to the increase in our operations which caused assets such as accounts receivable and prepaids to increase. In addition, we have made an effort to decrease our accounts payable.

Investing Activities

Cash used in investing activities during the years ended March 31, 2012 and 2011 were $346,803 and $822,469, respectively. In 2012 and 2011, the primary investing activity was purchase of fixed assets related to the injection well of $346,803 and $858,509 offset by cash provided by the reverse acquisition of $36,040 in 2011. Significant expenditures were made by us to automate, winterize and add additional stations to the injection well for increased production.

Financing Activities

Financing cash flows during the year ended March 31, 2012 amounted to $1,905,280 and consisted of $2,301,250 of proceeds from sale of common stock, payments on a related party convertible note payable of $227,226, and payment on notes payable of $156,914. We used the proceeds to fund operations and make improvements to the DIW. In addition, payments made were in accordance with agreements in place. In the 2011 period, financing cash flows amounted to $80,288 and consisted of capital contributions of $150,000 and proceeds from sale of common stock of $208,000. These contributions were necessary to fund operations and make improvements to the DIW.

12

Critical Accounting Policies

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions.

The methods, estimates, and judgment we use in applying our most critical accounting policies have significant impact on the results we report in our financial statements. The Securities and Exchange Commission (“SEC”) has defined "critical accounting policies" as those accounting policies that are most important to the portrayal of our financial condition and results, and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based upon this definition, our most critical estimates are described below under the heading "Revenue Recognition." We also have other key accounting estimates and policies, but we believe that these other policies either do not generally require us to make estimates and judgments that are as difficult or as subjective, or it is less likely that they would have a material impact on our reported results of operations for a given period. Although we believe that our estimates and assumptions are reasonable, they are based upon information presently available, and actual results may differ significantly from these estimates.

Impairment of Long-Lived and Intangible Assets

We adopted ASC 350Intangibles – Goodwill and Other. The Statement requires that long-lived assets and certain identifiable intangibles held and used by us be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. We evaluate the recoverability of long-lived assets based upon forecasted undercounted cash flows for our pending patents, investment, at cost, and our Blue Bench Class II SWD well. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 350 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent management's best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored.

Revenue Recognition

We generate revenues from our our Blue Bench Class II SWD well. Customers are charged on a per barrel rate for the water in which we dispose. Revenue is recorded when the water is disposed assuming all the revenue recognition criteria stated below are satisfied. In connection with the water disposal, we reclaim oil which is suspended within the water. Periodically, we sell this reclaimed oil to third parties and revenue is recognized upon sale assuming all the revenue recognition criteria stated below are satisfied. We record revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the prices for the services performed and the collectability of those amounts.  In addition, the Company extends credit to customers in which have shown the ability to pay for the services. At times, we extend credit to new customers; however, such is not done until we are satisfied through references, evidence of financial soundness, etc. Provisions for allowances are performed periodically and estimates for uncollectable amounts are recorded as necessary based on our estimates. 

Conversion Features and Warrants Issued With Convertible Debt

Our derivative financial instruments consist of embedded derivatives related to the senior convertible secured notes. These embedded derivatives include the conversion feature and the detachable warrants. As of the inception date of the agreement the debt was not considered conventional as defined in EITF 05-2, “The Meaning of "Conventional Convertible Debt Instruments" in issue No. 00-19”, codified into ASC 815. The accounting treatment of derivative financial instruments requires that we record the conversion feature and related warrants at their fair values and record them at fair value as of each subsequent balance sheet date. Any change in fair value is to be recorded as non-operating, non-cash income or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date, we will record a non-operating, non-cash charge. If the fair value of the derivatives is lower at the subsequent balance sheet date, we will record non-operating, non-cash income.

13

EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” and EITF 00-27, “Application of Issue 98-5 to Certain Convertible Instruments”, both codified into ASC 470 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the to the instruments where derivative accounting (explained above) does not apply. The amount of the value of warrants and beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts relating to the initial recording of the derivatives or beneficial conversion features are accreted over the term of the debt.

Income Taxes

We follow ASC 740, Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The method to estimate the deferred tax asset is based on the feasibility of recoverability of the asset. The valuation allowance applied to the deferred tax asset is based on our relatively short operating history, which is primarily based on one significant customer concentration and the current expansion into a new market and limitations on net operating losses due to the significant change in ownership of the Company in the fiscal year 2011.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required to be filed in this Annual Report, begin on page F-1 of this report.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by SEC Rule 13a-15 or Rule 15d-15, our Chief Executive and Principal Accounting & Financial Officers carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing evaluation, we have concluded that our disclosure controls and procedures are effective as of March 31, 2012 and that they do allow for information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its Chief Executive and Principal Accounting & Financial Officers as appropriate to allow timely decisions regarding required disclosure.

14

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the (i) effectiveness and efficiency of operations, (ii) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and (iii) compliance with applicable laws and regulations. Our internal controls framework is based on the criteria set forth in the Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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.

Changes in Internal Control Over Financial Reporting.

There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

This annual report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permits us to provide only management’s report in this annual report.

ITEM 9B.  OTHER INFORMATION

On April 5, 2012, we entered into a letter agreement (“LOI”) with Cancen Oil Canada Inc., a British Columbia corporation (“Cancen”). Both Cancen and SET Corp. have agreed to abandon the LOI and have continued negotiations and further discussions as to forming a strategic alliance between the parties.

On June 15, 2012, our board of directors voted in favor of filing a restatement of our Articles of Incorporation as attached hereto as Exhibit 3(i) with no amendments thereto with the California Secretary of State. In addition, the board of directors also voted in favor of restating and amending our Bylaws as attached hereto as Exhibit 3(ii).

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

Board of Directors

The Company's Board of Directors currently consists of three (3) directors. The following sets forth certain information about each of the directors:

ROBERT GLASER, 58, DIRECTOR since 2009 and CHIEF EXECUTIVE OFFICER since 2011.  Mr. Glaser is CEO of SET Corp and is responsible for overseeing all quarterly and yearly budgets, assuring corporate compliance with local, state and federal agencies, management of corporate staff and consultants, upholding the company image, achieving sustained growth and managing day to day operations.  Mr. Glaser served over 25 years as President of an American based manufacturing company. Utilizing Six Sigma and Lean Manufacturing disciplines he has received numerous awards for excellence from customers such as DEP Corp and Alberto Culver in addition to accolades for quality and innovation in managing mega projects for Coca-Cola, Disney and Burger King. Mr. Glaser has an extensive background in engineering and has been recognized for achievements in strategic management, while receiving 3 President Awards and ranking in the top 5% of industry CEO’s. His expertise includes electrical and mechanical design, engineering, and machinery building from inception to completion. He has managed work forces of up to 350 people and was known as an industry Guru. Achieving the impossible was the norm. His skills include machinery design, managing large workforces; detail oriented planning, forecasting, and creating short and long term company goals. From 2004-2008 he ran Glaser Corp which did consulting for the container and packaging industry.

On September 25, 2009, the Board of Directors elected Bob Glaser to be an Executive Director of the Company.  From April 2008-December 2010 Mr. Glaser served as SET Corp’s VP of Operations. From June 2006 to April 2008 Mr. Glaser served as an independent consultant to a subsidiary of SET Corp.

STEVE RITCHIE, 66, retired Brig. Gen. USA, DIRECTOR since 2005. Gen. Ritchie became an advisory board member to the Company in August 2005 and subsequently became a Director in October 2005. Prior to joining the Company in these positions, Mr. Ritchie had a career in the US Air Force, culminating with the rank of Brigadier General.

15

KEITH MORLOCK, 36, DIRECTOR AND CORPORATE SECRETARY since 2009. Mr. Morlock is CEO of SET Corp’s wholly owned subsidiary Pro Water and is responsible for the management, sales and operations of its class II deep injection well. Mr. Morlock also serves as President of SET IP Holdings, where he is responsible for the evaluation, testing, certification and expansion of corporate technology and acquisitions. Mr. Morlock has extensive history in GMP, SOP’s and over 14 years of dealing with regulatory agencies including the EPA, SEC and the FDA. He was responsible for implementing and overseeing water treatment designs related to critical areas in pharmaceutical manufacturing. In addition his expertise includes researching, analyzing, and monitoring financial, technological, and demographic factors to capitalize on market opportunities and minimizing competitive activity. He has developed and executed comprehensive operational and marketing plans, both short and long range, to support the sales and revenue objectives of the organization.

On September 25, 2009, the Board of Directors elected Keith Morlock to be an Executive Director of the Company.  From April 2008 to December 2010 Mr. Morlock served as SET Corp’s VP of Business Development.  From December 2006 to April 2008 Mr. Morlock served as a consultant to a subsidiary of SET Corp.

Former Directors

On September 19, 2011, the majority shareholders voted for a new board of directors. Walter Ivison and Bill Ball were not voted back into their positions as Directors of SET Corp.

Current Executive Officers and Significant Employees and Consultants

In addition to Mr. Glaser and Mr. Morlock, whose biographical information is set forth above, during the fiscal year ended March 31, 2012, Cynthia Glaser served as Controller and Principal Accounting and Financial Officer.  

Family Relationships

Bob Glaser, the Company’s Chief Executive Officer and Cynthia Glaser, the Company’s Controller and Principal Accounting and Financial Officer are married.

Involvement in Certain Legal Proceedings

To the best of our knowledge, for the past five years, none of our directors or officers have been involved in any of the following: (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 offenses); (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 Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

Adverse Proceedings

There exists no material proceeding to which any director or officer is a party adverse to us or has a material interest adverse to us.

Compliance with Section 16(A) of the Exchange Act

Section 16 of the Securities Exchange Act of 1934 requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes in ownership. Based on a review of such forms, and Financial we believe that during the last fiscal year, except for the following, all of our executive officers, directors and ten percent shareholders complied with the Section 16 reporting requirements:

● Bill Ball failed to file 2 reports for 2 transactions.

● Horst Geicke did not have any transactions to report.

● Bob Glaser filed 1 report late to report 3 late transactions.

● Cynthia Glaser filed 1 report late to report 3 late transactions.

● Walter Ivison failed to file 2 reports for 2 transactions.

● Keith Morlock filed 1 report late to report 6 late transactions.

● Steve Ritchie filed 1 report late to report 2 late transactions.

16

Code of Ethics

We have adopted a code of ethics that is applicable to our directors and officers. Our code of ethics is posted on our website and can be accessed at WWW.SETCORP.US

Nominating and Compensation Committees

The Board of Directors does not have a standing nominating committee, compensation committee or any committees performing similar functions. As there are only three Directors serving on the Board, it is the view of the Board that all Directors should participate in the process for the nomination and review of potential Director Candidates and for the review of our executive pay practices. It is the view of the Board that the participation of all Directors in the duties of nominating and compensation committees ensures not only as comprehensive as possible a review of Director Candidates and executive compensation, but also that the views of independent, employee, and shareholder Directors are considered.

The Board does not have any formal policy regarding the consideration of director candidates recommended by shareholders; any recommendation would be considered on an individual basis. The Board believes this is appropriate due to the lack of such recommendations made in the past, and its ability to consider the establishment of such a policy in the event of an increase of such recommendations. The Board welcomes properly submitted recommendations from shareholders and would evaluate shareholder nominees in the same manner that it evaluates a candidate recommended by other means. Shareholders may submit candidate recommendations by mail to SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION: 2345 W Foothill, Suite 12 Upland, CA 91786. With respect to the evaluation of director nominee candidates, the Board has no formal requirements or minimum standards for the individuals that it nominates. Rather, the Board considers each candidate on his or her own merits. However, in evaluating candidates, there are a number of factors that the Board generally views as relevant and is likely to consider, including the candidate’s professional experience, his or her understanding of the business issues affecting us, his or her experience in facing issues generally of the level of sophistication that we face, and his or her integrity and reputation. With respect to the identification of nominee candidates, the Board has not developed a formalized process. Instead, its members and our senior management have recommended candidates whom they are aware of personally or by reputation.

Board Meetings and Annual Meeting Attendance

The Board of Directors acted 13 times by unanimous written consent in lieu of a meeting during this period.

We held an Annual Shareholder Meeting for the fiscal year ended March 31, 2010 on April 5, 2011.

Audit Committee

We currently do not have an Audit Committee and the Board of Directors serves this function.

17

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth the compensation of our Executive Officers for the fiscal years ending on March 31, 2012 and 2011.

Name and Principal Position	Year	Salary ($)		Bonus ($)	Stock Awards ($)		Option Awards ($) (3)			Non-Equity Incentive Plan Compensation ($)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
Robert Glaser	2011		119,780	7,200	22,500	(4)		25,000	(2)	-	-	-	174,480
CEO and Director	2012		144,824	14,400	-	(4)		61,000	(2)	-	-	-	220,224
Cynthia Glaser	2011		77,527	4,560	6,750	(4)		-		-	-	-	88,837
Principal Financial Officer	2012		76,417	4,560	-	(4)		10,166		-	-	-	91,143
Keith Morlock	2011		137,934	7,200	22,500	(4)		25,000		-	-	-	192,634
Manager of Pro Water	2012		144,824	14,400	-	(4)		61,000		-	-	-	220,224
Grant King	2011		-	-	113,500	(5)		32,132		-	-	-	145,632
Former CEO and Director (1)	2012		-	-	-	(5)		-		-	-	-	-

(1)   Mr. King resigned as Chief Executive Officer of the Company on August 25, 2010, and did not stand for re-election as Director of the Company on April 5, 2011.

(2)   Options relating to Director Compensation for Mr. Glaser and Mr. Morlock are disclosed on Director Compensation Table.

(3)   See Note 2 to the consolidated financial statements for assumptions used in valuing stock compensation.

(4)   Discretionary performance-based stock bonuses for the fiscal year ended March 31, 2011. There were no stock awards issued for the fiscal year ended March 31, 2012.

(5)   Mr. King elected to receive his salary in stock in lieu of cash. There were no stock or options awarded to Mr. King for Officer or Director Compensation for the fiscal year ended March 31, 2012.

Narrative Disclosure to Summary Compensation Table

Material Employment Terms for Bob Glaser and Keith Morlock

Pursuant to employment agreements adopted on November 1, 2010, as amended on April 7, 2011, Bob Glaser, our CEO, and Keith Morlock, Manager of Pro Water LLC and our Corporate Secretary, earn: (1) annual base salaries of $144,000, (2) have the opportunity for base salary increases, annual cash and stock option bonuses based on Company performance metrics; (3) certain expense reimbursement; and (4) certain executive benefits. As of April 1, 2012, Mr. Glaser and Mr. Morlock both received an increase to their annual base salary pursuant to their aforementioned Employment Agreements and Amendments thereto.  Thus, each shall have an annual updated base salary of $180,000 per year.

If either Mr. Glaser or Mr. Morlock are terminated without cause, as defined in the agreements, such officer shall be entitled to a payment of 8 months of the current base salary and will receive acceleration of vesting of outstanding stock options issued pursuant to the agreements.

18

Material Employment Terms for Cynthia Glaser

Pursuant to an employment agreement adopted on November 1, 2010, Cynthia Glaser, our CFO, earns: (1) an annual base salary of $76,000, (2) has the opportunity for base salary increases, annual cash and stock option bonuses based on Company performance metrics; (3) certain expense reimbursement, and (4) certain executive benefits.

If Mrs. Glaser is terminated without cause, as defined in her agreement, she shall be entitled to a payment of 6 months of her current base salary and will receive acceleration of vesting of outstanding stock options issued pursuant to the agreement.

Director Compensation

The following table sets forth the compensation of our directors for the fiscal years ending on March 31, 2012 and 2011, respectively (if not addressed in the Executive Officer Compensation table above). 

Name	Year	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Steve Ritchie	2011		-		-		32,132		-		-		-		32,132
	2012		-		24,375		62,000		-		-		-		86,375
Bill Ball	2011		-		-		-		-		-		-		-
	2012		-		-		30,000		-		-		-		30,000
Walter Ivison	2011		-		-		-		-		-		-		-
	2012		-		-		30,000		-		-		-		30,000
Robert Glaser	2011		-		-		32,132		-		-		-		32,132
	2012		-		24,375		62,000		-		-		-		86,375
Keith Morlock	2011		-		-		32,132		-		-		-		32,132
	2012		-		24,375		62,000		-		-		-		86,375

(1) See Note 2 to the consolidated financial statements for assumptions used in valuing stock compensation.

19

Outstanding Equity Awards At Fiscal Year End

	Option Awards									Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Robert Glaser		73,333				$	0.375		7/7/2013
		33,333				$	0.75		3/31/2014
		39,563		437		$	0.75		4/4/2021
		12,823		13,844		$	1.20		10/7/2021
										18,750	$	24,375
Keith Morlock		73,333				$	0.375		7/7/2013
		33,333				$	0.75		3/31/2014
		39,563		437		$	0.75		4/4/2021
		12,823		13,844		$	1.20		10/7/2021
										18,750	$	24,375
Steve Ritchie		73,333				$	0.375		7/7/2013
		39,563		437		$	0.75		4/4/2021
		20,000				$	0.90		various dates thru 2014
		12,823		13,844		$	1.20		10/7/2021
Cynthia Glaser		8,333				$	0.75		3/31/2014	18,750	$	24,375
		8,333				$	1.25		3/31/2022

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTAND RELATED STOCKHOLDERS MATTERS

The following table sets forth the current common stock ownership of (i) each person known by us to be the beneficial owner of five percent (5%) or more of our common based upon approximately 16,458,648 shares outstanding as of March 31, 2012, (ii) each officer and director of the Company individually, and (iii) all officers and directors of the Company as a group. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options and/or warrants held by that person that are currently exercisable, as appropriate, or will become exercisable within sixty (60) days of the reporting date are deemed outstanding, even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, each person has sole voting and investment power with respect to the shares of common stock shown, and all ownership is of record and beneficial. The address of each owner is in care of the Company at 2345 W Foothill, Suite 12, Upland, CA 91786.

20

TITLE OF CLASS	NUMBER OF SHARES	NOTE	PERCENT OF CLASS	NAME AND ADDRESS OF BENEFICIAL OWNER
Common	6,586,527	(2)	36.80%	Horst Geicke
				15/F, AIA Central 1 Connaught Road Central Hong Kong
Common	1,333,333	(3)	7.79%	Favour Gain Holdings
				24/F, CDW Building 388 Castle Peak Road Tsuen Wan, New Territories Hong Kong
Common	1,150,000	(4)	6.78%	Brad Scott
				P.O. Box 4005 Bismarck, North Dakota 58503
Common	704,021	(1, 5)	4.23%	Keith Morlock, Secretary and Director
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	593,221	(1, 6)	3.56%	Robert Glaser, CEO and Director
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	169,398	(1, 7)	1.02%	Steve Ritchie, Director
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	36,782	(1)	0.22%	Walter Ivison, Former Director
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	28,429	(1, 8)	0.17%	Cynthia Glaser, Principal Financial Officer
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	10,000	(1)	0.06%	Bill Ball, Former Interim Chairman of Board of Directors
				2345 W. Foothill, Suite 12 Upland, CA 91786
Common	1,495,069	(1)	9.27%	Officers and Directors as a Group

1. All officers and directors as a group (6 persons) Amount to approximately 6.29% of the outstanding stock and 9.27% Beneficial Ownership.

2. Mr. Geicke has 5,145,607 shares of common stock issued and 1,440,919 dilutive shares relating to the convertible secured note as of May 31, 2012.

3. Favour Gain Holdings has 666,667 shares of common stock issued and 666,667 exercisable warrants as of May 31, 2012.

4. Mr. Scott has 650,000 shares of common stock issued and 500,000 exercisable warrants as of May 31, 2012.

5. Mr. Morlock has 531,683 shares of common stock issued and 172,338 vested options as of May 31, 2012.

6. Mr. Glaser has 420,883 shares of common stock issued and 172,338 vested options as of May 31, 2012.

7. Mr. Ritchie has 18,750 shares of common stock issued and 150,648 vested options as of May 31, 2012.

8. Ms. Glaser has 18,703 shares of common stock issued and 9,726 vested options as of May 31, 2012.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

During the fiscal years ended March 31, 2012 and 2011, the Company had the following related party transactions:

Horst Geicke

Convertible Notes Payable to Horst Geicke and Related Entities

On July 7, 2010, we assumed various convertible note agreements with an accredited investor and shareholder for proceeds totaling $775,000 and accrued interest of $50,000. In addition at the Effective Date, a discount on the convertible debt remained of $381,459. On July 7, 2010, the holder converted the note and accrued interest into 2,066,667 shares of our common stock. Upon conversion we, recorded the remaining discount to interest expense. In addition, all accrued interest of $50,000, was forgiven, and treated as a capital contribution due to the related party nature of the transaction as such recorded to additional paid in capital.

Convertible Note Payable to Metropolitan Real Estate LLC

As discussed in Note 1, on July 7, 2010, we entered into an agreement to acquire PWU. In connection with the acquisition, the member of PWU received a $2.0 million secured convertible promissory note payable over the period of one year from the closing date, incurring interest at 5% annually and a conversion feature at the option of the holder into shares of our common stock at a price of $1.50 per share.  The note is secured by all the assets of PWU.  No beneficial conversion feature was recorded in connection with the note as the conversion price represented the closing price of our common stock on the date of the agreement. In addition, we recorded the $2,000,000 convertible note as a reduction to additional paid-in capital as it was deemed to be a return of capital initially contributed to PWU by the member.

On July 12, 2010, the terms of the acquisition were amended whereby the conversion rate of the $2,000,000 related secured convertible promissory note, which previously all converted at $1.50 at the option of the holder, such amended to so that $1,600,000 of the note may be converted at $3.00 per share and $400,000 may be converted at $0.375 per share.  The convertible note was due based on the following: $100,000 paid on or before September 30, 2010, $200,000 paid on or before December 31, 2010, $200,000 paid on or before March 31, 2011 and the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010 was paid in October 2010.  On July 12, 2010, since the conversion price of $0.375 related to $400,000 was significantly less than the fair value of our common stock per the closing market price, a beneficial conversion feature was present. We valued the beneficial conversion feature as of the date of the amended agreement in the amount of $696,000, and recorded the maximum discount allowed of $400,000 against the note. The discount was being amortized over the term of the note using the straight line method due to the relatively short maturity of the note.

On January 14, 2011, the terms of the convertible note were amended. As of the date of the amendment, the unpaid principal amount was $1,880,000. Under the terms of the new agreement, the term of the note was extended to five years and all accrued interest was forgiven. We are to make 60 monthly payments of $35,478 commencing January 2011 and concluding December 2015. All other terms, including conversion and interest rates remained the same. The effective interest rate for the year ended March 31, 2011 was 22%. Under ASC 470, Debt, we accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period which impacted the expected cash flows in excess of 10%. Thus, the existing discount of $183,333 was removed and a new discount, with a beneficial conversion feature of $400,000 was recorded. Due to Geicke being a significant shareholder, no gain or loss was recorded and the result of the extinguishment was recorded to additional paid in capital. At March 31, 2012 and 2011, the $243,310 and $382,455 unamortized discount on the note was allocated between short and long term based on the expected annual amortization of which $109,318 and $139,196 has been allocated to short-term portion with the remaining $133,992 and $394,308 allocated to long-term portion. During the years ended March 31, 2012 and 2011, the Company amortized $139,146 and $17,454 of the discount to interest expense, respectively, using the effective interest method. The note holder requested the principal payments for November and December 2011 and January and February 2012 be deferred. Therefore, payments are added on to the end of the term. The following is the expected amortization for the remaining discount under the effective interest rate method for the years ending March 31: $109,318, $77,964, $45,005, and $11,023 in 2013, 2014, 2015, and 2016, respectively.

22

Robert Glaser

On July 7, 2010, we granted 73,333 stock options to Robert Glaser with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Robert Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 we granted 33,333 stock options to Robert Glaser with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

On April 4, 2011, we granted 40,000 stock options to Robert Glaser with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, we granted 26,667 stock options to Robert Glaser with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2002, we granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014) under the agreement, we agreed to issue 150,000 shares of common stock to Robert Glaser.  See Note 10 for additional information.  On March 31, 2012, we granted 50,000 stock options to Robert Glaser with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

See Note 11 for disclosures regarding an amendment to Robert Glaser’s employment contract.

Cynthia Glaser

On January 13, 2011, the Board of Directors approved the issuance of 10,000 shares of common stock valued at $6,750 to Cynthia Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company we granted 8,333 stock options to Cynthia Glaser with an exercise price of $0.75 per share according to her employment contract. The options vest over one year.

At March 31, 2011, we owed an entity controlled by Cynthia and Robert Glaser $24,085 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $54,500.

On March 31, 2012, we granted 8,333 stock options to Cynthia Glaser with an exercise price of $0.75 per share according to her employment contract. The options vest over one year.

At March 31, 2012, we owed an entity controlled by Cynthia and Robert Glaser $0 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2012 were $24,085.

Keith Morlock

On July 7, 2010, we granted 73,333 stock options to Keith Morlock with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Keith Morlock as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 we granted 33,333 stock options to Keith Morlock with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

At March 31, 2011, we owed an entity controlled by Keith Morlock $35,411 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $16,500.

On April 4, 2011, we granted 40,000 stock options to Keith Morlock with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, we granted 26,667 stock options to Keith Morlock with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2002, we granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014) under the agreement, we agreed to issue 150,000 shares of common stock to Keith Morlock. See Note 10 for additional information.. On March 31, 2012, we granted 50,000 stock options to Keith Morlock with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

See Note 11 for disclosures regarding an amendment to Keith Morlock’s employment contract.

Grant King

On July 7, 2010, we issued 933,333 shares of its common stock to Grant King, the Company’s former Chief Executive Officer and Director in exchange for the conversion of $357,000 of unpaid, accrued and other compensations due to Mr. King. On the Effective Date, we granted 73,333 stock options to Grant King with an exercise price of $0.375 per share. The options vest over one year.

On January 13, 2011, the Board of Directors approved the issuance of 20,000 shares of common stock valued at $13,500 to Grant King as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan.

On March 27, 2012, we granted 75,000 bonus stock options to Grant King with an exercise price of $1.30. The options vest over one year.

See Note 9 for discussion regarding a consulting contract with Grant King.

23

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

Detail of fees paid to dbbmckennon:

a.	Audit Fees:  Aggregate fees billed for professional services rendered for the audit of our annual financial statements for the periods ended March 31, 2012 and 2011, were approximately $104,970 and $35,770, respectively.
b.	Audit-Related Fees:  There were no fees billed for audit-related services for the period ending March 31, 2011.  For the year ended March 31, 2012, fees were approximately $5,000 for review of the Company's SEC comment letters.
c.	Tax Fees.  Fees billed for tax services were $10,500 and $0 for the periods ended March 31, 2012 and 2011, respectively.

Audit Committee Pre-Approval Policies and Procedures

Our Board of Directors who acts as the Audit Committee has policies and procedures that require the pre-approval by the Audit Committee of all fees paid to, and all services performed by, our independent accounting firms. At the beginning of each year, the Audit Committee approves the proposed services, including the nature, type and scope of services contemplated and the related fees, to be rendered by these firms during the year. In addition, Audit Committee pre-approval is also required for those engagements that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the Audit Committee.

Pursuant to the Sarbanes-Oxley Act of 2002, 100% of the fees and services provided as noted above were authorized and approved by the Audit Committee in compliance with the pre-approval policies and procedures described herein.

ITEM 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See Exhibit Index below.

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

	SUSTAINABLE ENVIRONMENTAL TEHCHOLOGIES CORPOATION
Dated: June 29, 2012	/s/ Robert Glaser
	By: Robert Glaser,
	Chief Executive Officer
Dated: June 29, 2012	/s/ Cynthia Glaser
	By: Cynthia Glaser
	Chief Financial and Accounting Officer

24

Pursuant to the requirements of the Securities and 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.

Signature	Title	Date
/s/ Robert Glaser	Director	June 29, 2012
Robert Glaser

/s/ Keith Morlock	Director	June 29, 2012
Keith Morlock

25

EXHIBIT INDEX

Exhibit Number	Description
3(i)	Restated Articles of Incorporation
3(ii)	Amended and Restated Bylaws
10.1	Pro Water Acquisition Agreement and Convertible Secured Promissory Note (1)
10.2	Amendment No. 1 to Pro Water Acquisition Agreement (2)
10.3	Technology Purchase Agreement with World Environmental Solutions Pty Ltd. (3)
10.4	Amendment to Convertible Secured Promissory Note (4)
10.5	Amendment to Technology Purchase Agreement with World Environmental Solutions Pty Ltd. (5)
21.1	Subsidiaries
31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

(1) Incorporated by reference from Exhibit 1.01 to the Company’s Current Report on Form 8-K as filed with the SEC on July 9, 2010

(2) Incorporated by reference from Exhibit 10.1 to the Company’s Annual Report on Form 10-K as filed with the SEC on July 14, 2010.

(3) Incorporated by reference from Exhibit 10 to the Company’s Current Report on Form 8-K as filed with the SEC on September 3, 2010.

(4) Incorporated by reference from Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q as filed with the SEC on February 17, 2011.

(5) Incorporated by reference from Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the SEC on September 8, 2011.

26

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	F-1
Consolidated Balance Sheets	F-2
Consolidated Statements of Operations	F-3
Consolidated Statements of Stockholders’ Equity (Deficit)	F-4
Consolidated Statements of Cash Flows	F-5
Notes to Consolidated Financial Statements	F-6 -- F-27

27

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and Board of Directors

Sustainable Environmental Technologies Corporation

We have audited the accompanying consolidated balance sheets of Sustainable Environmental Technologies Corporation and its subsidiaries (the “Company”) as of March 31, 2012 and 2011, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits 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 consolidated financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as of March 31, 2012 and 2011. Our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sustainable Environmental Technologies Corporation and subsidiaries as of March 31, 2012 and 2011, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States.

/s/ dbbmckennon

dbbmckennon  

Newport Beach, California

June 29, 2012

F-1

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

CONSOLIDATED BALANCE SHEETS

	As of March 31, 2012			As of March 31, 2011
Assets (Note 7)
Current assets:
Cash and cash equivalents	$	1,913,727		$	105,260
Accounts receivable, net of allowance for doubtful accounts of $6,000 and $6,000, respectively		300,112			367,024
Prepaids and other current assets		39,383			36,962
Deferred tax asset		117,126			-
Current assets of discontinued operations		-			410
Total current assets		2,370,348			509,656
Property and equipment, net		2,153,374			1,989,892
Other assets		699,950			40,230
Investment, at cost		-			91,466
Intangible assets, net		248,443			434,519
Goodwill		66,188			66,188
Deferred tax assets, long-term		1,116,964			-
Total Assets	$	6,655,267		$	3,131,951
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	284,488		$	639,343
Accrued salaries, wages, and related party consulting fees		134,235			239,205
Accrued liabilities		178,086			337,905
Income taxes payable		59,200			25,823
Current portion of Related-party convertible notes payable, net of discount of $109,318 and $139,196, respectively		246,012			204,509
Notes payable		124,577			579,753
Current liabilities of discontinued operations		-			119,424
Total current liabilities		1,026,598			2,145,962
Related-party convertible notes payable, net of discount of $133,992 and $394,308, respectively		1,080,172			1,258,707
Notes payable, long-term		-			63,606
Warrant liability		119,846			247,284
Asset retirement obligation		9,900			9,900
Total liabilities		2,236,516			3,725,459
Commitments and Contingencies (Note 11)
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 4,582,827 issued at March 31, 2012 and 2011, none outstanding		-			-
Common stock, $0.001 par value, 100,000,000 and 300,000,000 shares authorized; 16,458,524 and 14,649,296 issued; 16,458,524 and 14,629,962 outstanding at March 31, 2012 and 2011, respectively		16,458			14,630
Additional paid-in capital		6,414,670			3,659,159
Accumulated deficit		(2,012,377	)		(4,267,297	)
Total stockholders' equity (deficit)		4,418,751			(593,508	)
Total Liabilities and Stockholders' Equity (Deficit)	$	6,655,267		$	3,131,951

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

F-2

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED MARCH 31, 2012 AND 2011

	For the Year Ended  March 31,
	2012			2011
Revenues:
Water processing	$	3,510,837		$	2,390,998
Reclaimed oil		758,692			226,402
Total revenues		4,269,529			2,617,400
Cost of revenues:
Water processing		1,376,166			849,461
Reclaimed oil		229,081			170,744
Total cost of revenues		1,605,247			1,020,205
Gross profit		2,664,282			1,597,195
Operating expenses:
General and administrative		1,997,968			1,298,115
Research and development		125,292			53,782
Total operating expenses		2,123,260			1,351,897
Operating income		541,022			245,298
Other income (expense):
Interest income		755			75
Interest expense		(303,514	)		(739,721	)
Change in fair value of derivative liability		127,438			(102,584	)
Other, net		704,783			167,592
Total other expense, net		529,462			(674,638	)
Income before provision (benefit) for income taxes		1,070,484			(429,340	)
Provision (benefit) for income taxes		(1,170,275	)		800
Net income (loss) from continuing operations		2,240,759			(430,140	)
Net income from discontinued operations		14,161			74,701
Net income (loss)	$	2,254,920		$	(355,439	)
Basic net income (loss) available to common stockholders:
Continuing operations	$	0.17		$	(0.03	)
Discontinued operations	$	0.00		$	0.01
Net income (loss)	$	0.17		$	(0.02	)
Diluted net income (loss) available to common stockholders:
Continuing operations	$	0.14		$	(0.03	)
Discontinued operations	$	0.00		$	0.01
Net income (loss)	$	0.14		$	(0.02	)
Weighted average shares - basic		15,028,294			10,943,753
Weighted average shares - diluted		17,313,252			10,943,753

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

F-3

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

FOR THE YEARS ENDED MARCH 31, 2012 AND 2011   

	Common Stock						Additional			Accumulated			Total Stockholders'
	Shares			Amount			Paid-in Capital			Deficit			Equity (Deficit)
Balances - March 31, 2010		2,222,222		$	2,222		$	1,727,778		$	(28,483	)	$	1,701,517
Contributed capital		-			-			150,000			-			150,000
Convertible note payable issued in connection with Pro Water acquisition, including discount of $400,000 for beneficial conversion feature		-			-			(1,600,000	)		-			(1,600,000	)
Reverse acquisition of SET Corp		7,132,193			7,132			99,851			(3,883,375	)		(3,776,392	)
Stock issued for conversion of convertible notes payable		2,066,667			2,067			822,933			-			825,000
Stock issued for cash		468,000			468			207,532			-			208,000
Common stock issued to related parties for services, accrued wages and consulting fees		2,487,833			2,488			1,038,902			-			1,041,390
Common stock issued for services		39,714			40			13,005			-			13,045
Common stock issued in connection with asset acquisition/cost basis investment		133,333			133			99,867			-			100,000
Fair market value of warrants issued in connection with asset acquisition/cost basis investment		-			-			233,599			-			233,599
Common stock issued in settlement of accounts payable and accrued liabilities		80,000			80			485,309			-			485,389
Debt extinguishment		-			-			265,612			-			265,612
Stock-based compensation		-			-			114,771			-			114,771
Net loss		-			-			-			(355,439	)		(355,439	)
Balances - March 31, 2011		14,629,962			14,630			3,659,159			(4,267,297	)		(593,508	)
Stock issued for cash		1,500,000			1,500			2,299,750			-			2,301,250
Cashless Exercise of stock options		20,000			20			14,980			-			15,000
Repurchase of stock options		-			-			(8,000	)		-			(8,000	)
Repurchase of common stock		(3,333	)		(3	)		(3,827	)		-			(3,830	)
Common stock issued to related parties for consulting fees		266,666			266			199,734			-			200,000
Common stock issued for services		40,050			40			46,520			-			46,560
Common stock issued in settlement of accounts payable and accrued liabilities		5,179			5			10,095			-			10,100
Amendment of WES Acquisition		-			-			(183,123	)		-			(183,123	)
Stock-based compensation		-			-			379,382			-			379,382
Net income		-			-			-			2,254,920			2,254,920
Balances - March 31, 2012		16,458,524		$	16,458		$	6,414,670		$	(2,012,377	)	$	4,418,751

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

F-4

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 2012 AND 2011   

	For the Year Ended  March 31,
	2012			2011
Cash flows from operating activities:
Net income (loss)	$	2,254,920		$	(355,439	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of debt discounts related to beneficial conversion features and warrants		143,511			621,782
Gain on settlement of note payable and accrued interest		(624,909	)
Income tax benefit		(1,234,090	)		-
Loss on divestiture of asset held for sale		-			30,000
Settlement of accounts payable and accrued liabilities treated as contributed capital		-			400,000
Loss on disposal of assets		28,256			-
Change in fair value of derivative liabilities		(127,438	)		102,584
Depreciation and amortization		196,167			125,701
Stock-based compensation		640,942			114,771
Gain on settlement of accounts payable		(140,625	)		-
Change in operating assets and liabilities:
Accounts receivable		66,912			(152,571	)
Prepaid expenses		(662,141	)		(47,318	)
Accounts payable		(175,204	)		(158,860	)
Accrued liabilities		(149,688	)		(62,710	)
Income taxes payable		33,377			(51,399	)
Net cash provided by operating activities		249,990			566,541
Cash flows from investing activities:
Purchase of property and equipment		(346,803	)		(858,509	)
Cash provided by reverse acquisition		-			36,040
Net cash used in investing activities		(346,803	)		(822,469	)
Cash flows from financing activities:
Contributed capital		-			150,000
Proceeds from sale of common stock		2,301,250			208,000
Repurchase of common stock		(3,830	)		-
Repurchase of stock options		(8,000	)		-
Payments on related party convertible note payable		(227,226	)		(203,280	)
Payments on notes payable		(156,914	)		(74,432	)
Net cash provided by financing activities		1,905,280			80,288
Net increase in cash		1,808,467			(175,640	)
Cash - beginning of year		105,260			280,900
Cash - end of year	$	1,913,727		$	105,260
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	98,485		$	24,722
Income taxes	$	30,438		$	51,399
Non-cash investing and financing activities:
Issuance of common stock in settlement of accounts payable and accrued liabilities	$	10,100		$	1,539,824
Issuance of convertible note, common stock, and warrants for cost investment and pending patents	$	140,000		$	376,440
Issuance of common stock in connection with convertible debt and accrued interest	$	-		$	825,000
Fair value of beneficial conversion feature recorded on Pro Water note	$	-		$	400,000
Purchase of equipment with note payable	$	-		$	66,035
Issuance of convertible note in connection with Pro Water Acquisition	$	-		$	200,000

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

F-5

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – Organization, History and Significant Accounting Policies and Procedures

Organization and History

Sustainable Environmental Technologies Corporation and subsidiaries (collectively the “Company” or “SET Corp” without the use of personal pronouns) is dedicated to responsible resource utilization through the strategic balance of Environmental, Societal and Economic growth. Headquartered in Southern California, SET Corp is setting the standard for responsible principles of Sustainable Development.  These steadfast values are evident through patented technologies and strategic acquisitions, which solve environmental issues with an economic advantage. SET Corp limits their customer’s environmental impact while conserving valuable and diminishing resources that are essential to future generations.

Current and future services include, and are expected to include innovative echo-technologies that provide patented treatment, recovery, reclamation and re-injection services for produced water (associated with the oil and gas industry) and complete sustainable energy solutions that that bridge the gap between existing energy inefficient buildings and the sustainable development and design needs of tomorrow.

In addition to these areas of expertise SET Corp provides customized services that include design, construction management, operation and maintenance services, and equipment manufacturing for industrial and municipal sectors.  With strategic partnerships, through prominent global manufacturers and distributors, SET Corp has access to a worldwide sales and distribution network. 

Acquisitions

Acquisition

On July 7, 2010 (the “Effective Date”), SET Corp entered into an agreement to acquire Pro Water, LLC ("PWU"), a Utah limited liability company (formerly a Colorado limited liability company) with its sole equity member Metropolitan Real Estate LLC (the “Member), a New York limited liability company. Pro Water owns and operates a Blue Bench Class II salt water disposal ("SWD") well in Duchesne, Utah; the operations were assumed by the Member on October 1, 2009 (“Inception”).  Under the terms of the Agreement, the Company acquired 100% of the equity of PWU from its sole member, and PWU became a wholly-owned subsidiary of the Registrant in exchange for the payment of 1,333,333 shares of the Company’s restricted common stock, a secured convertible promissory note payable quarterly over the period of one year from the closing date in the amount of $2.0 million, with an interest rate of 5% and a conversion feature at the option of the holder into shares of the Company’s common stock at a price of $1.50 per share, and the assumption of Pro Water debts.  The note is secured by all the assets of PWU and the wastewater treatment facility owned by SET Corp. Metropolitan Real Estate LLC is an entity controlled by Horst Franz Geicke, a significant shareholder of the Company.

On July 12, 2010, the terms of the acquisition were amended whereby the number of shares of common stock paid for PWU was increased to 2,222,222 (from 1,333,333), and the conversion rate of the $2,000,000 related secured convertible promissory note, which previously all converted at $1.50 at the option of the holder, such amended to so that $1,600,000 of the note may be converted at $3.00 per share and $400,000 may be converted at $0.375 per share.  The convertible note is due based on the following: $100,000 paid on or before September 30, 2010, $200,000 paid on or before December 31, 2010, $200,000 paid on or before March 31, 2011 and the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010 was paid in October 2010.

On January 14, 2011, the terms of the convertible note were amended. As of the date of the amendment, the unpaid principal amount was $1,880,000. Under the terms of the new agreement, the term of the note was extended to five years and all accrued interest was forgiven. The Company is to make 60 monthly payments of $35,478 commencing January 2011 and concluding December 2015, see Note 7 for minor modification made to the convertible note during fiscal 2012. All other terms, including conversion and interest rates remained the same. The Company accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period. See Note 7 for additional information.

The acquisition of PWU was accounted for as a reverse acquisition in accordance with Accounting Standards Codification (“ASC”) 805 Business Combinations. The Company determined for accounting and reporting purposes that Pro Water is the acquirer because of the significant holdings and influence of the control group of Pro Water before and after the acquisition. As a result of the transaction the Pro Water control group owns in excess of 44% of issued and outstanding common stock of SET Corp on a diluted basis.  In addition, in connection with the acquisition certain members of management were required to sign voting agreements.  As of January, these voting agreements expired. The control group of Pro Water could elect or appoint or to remove a majority of the members of the governing body of the Company due to the significant holdings of the Company’s common stock. The control group of Pro Water could have influence on the organization as they have provided funding for operations of SET Corp, prior to the acquisition, in an attempt to settle debts prior to the reverse acquisition. In addition, the Pro Water control group initially had a $2.0 million note payable, approximately $1,800,000, at March 31, 2011 in which additional influence can be subjected.  In addition, Pro Water is significantly larger than SET Corp in terms of assets and operations. Additionally, the future operations of PWU will be the Company intended primary operations and more indicative of the operations of the consolidated entity on a go forward basis.

F-6

Accordingly, the assets and liabilities of PWU are reported at historical costs and the historical results of PWU will be reflected in this and future SET Corp filings as a change in reporting entity.  The assets and liabilities of SET Corp will be reported at fair value on the date of acquisition, and results of operations will be reported from the date of acquisition.  The assets and liabilities of SET Corp were reported at their carrying values, which approximated fair value, and no goodwill was recorded. The results of SET Corp have been included in the accompanying consolidated financial statements from the Effective Date. The following is a schedule of SET Corp’s assets and liabilities at the Effective Date:

Assets:
Cash and cash equivalents	$	35,630
Prepaid expenses and other current assets		9,827
Current assets of discontinued operations		3,503
Property and equipment		24,667
Other assets		10,231
Assets of discontinued operations, long term		30,000
Total Assets		113,858
Liabilities:
Accounts payable		747,023
Accrued liabilities		1,149,763
State income taxes payable		77,223
Notes payable		455,500
Current liabilities of discontinued operations		230,738
Accounts payable, long term		11,883
Accrued liabilities, long term		684,879
Convertible notes payable, long term		388,541
Warrant liability		144,700
Total Liabilities		3,890,250
Net liabilities in excess of assets	$	(3,776,392	)

Since PWU assumed operations on Inception due to the change in reporting entity, there are no reportable periods in 2009 to compare to those periods reported herein for 2010.  The excess liabilities assumed were accounted for as a deemed distribution through a charge to the Company’s accumulated deficit.

The following unaudited pro forma information was prepared as if the acquisition had taken place at the beginning of the period for the year ended March 31, 2011:

	Pro-Forma Combined
	For the Year Ended  March 31, 2011
Revenue	$	2,617,400
Net loss from continuing operations	$	(756,814	)
Net loss per share:
Basic and diluted - continuing operations	$	(0.00	)

MultiGen Acquisition

On August 27, 2010, we entered into a “Technology Purchase Agreement” with World Environmental Solutions Pty Ltd, an Australian company (“WES”).  In exchange for an investment in WES, we purchased certain technologies, including all intellectual property rights and pending patents of WES.  Such patents and patent applications include patent application number 20088237617 and patent application number 2010228129.  Both patent applications relate to the water extraction and electricity generation units as referred to as MultiGen.

F-7

Effective September 1, 2011, we entered into an amendment with WES to the aforementioned Technology Purchase Agreement (“Amendment to the TPA”).  Pursuant to the terms of the Amendment to the TPA: (i) SET Corp’s option to purchase 3% of the capital stock of WES has been canceled; (ii) WES’ warrant to purchase 333,333 shares of SET Corp’s common stock at a price of $5.25 per share has been canceled; (iii) WES’ $200,000 convertible secured promissory note issued by SET Corp. (convertible at $5.25 per share of SET Corp’s common stock), and all security interests granted there under, has been canceled; (iv) SET Corp’s ownership of 12% of the capital stock of WES has been canceled; (v) SET Corp’s payment to WES upon certain terms of WES’ successful installation and sale of a MultiGen unit has been reduced to 250,000 shares of SET Corp’s common stock; (vi) the maximum share issuance by SET Corp to WES based on WES royalties paid to SET Corp for certain WES sales of MultiGen units has been reduced to 333,333 shares of SET Corp’s common stock; (vii) any shares of SET Corp common stock issued to WES pursuant to the Agreement, as amended, shall be restricted from transfer for one year from the date of issuance; (viii) SET Corp maximum royalty obligation to WES for SET Corp sales of MultiGen units has been reduced to $500,000; (ix) WES shall pay SET Corp a royalty of 10% of gross revenues for WES sales of MultiGen units; (x) WES and SET Corp shall split 75/25 certain fees paid to WES in connection with agency for sales of MultiGen units outside of Australia; and (xi) the parties have covenanted to use their best efforts in regards to maintaining distributor status for sourcing components for the MultiGen units; WES retained 133,333 shares of common stock issued in connection with the original agreement. See Notes 2, 4, and 8 for additional information.

Due to the significant change in the terms of the Technology Purchase Agreement, the Company determined that the Amendment to the TPA represented the establishment of a new agreement. Thus, the Company revalued the 133,333 shares of common stock issued to WES on the date of the Amendment to the TPA resulting in a value of $140,000 being applied to the pending patents. The Company determined that the fair market value of the common stock issued was more representative of fair value than the pending patents received. The net difference between removing the fair value of the items issued under the old Technology Purchase Agreement and the Amendment to the TPA were classified as additional paid in capital, thus, no gain or loss was recorded on the transaction.

Note 2 – Accounting Policies and Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the assets, liabilities and operating results of the Company and its wholly-owned subsidiaries, PWU, ProWater, LLC, a Colorado limited liability company ("PWC"), and SET IP Holdings LLC, a Utah limited liability company ("Set IP"), after elimination of all material inter-company accounts and transactions. OC Energy and balances related to the Company’s former wastewater treatment plant are classified as discontinued operations.

Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the valuation of derivatives, equity instruments such as options and warrants, provision for income taxes and the realization of deferred tax assets. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Derivative instruments include the warrant liability (Level 2). Derivative instruments are valued using standard calculations/models that are primarily based on observable inputs, including volatilities and interest rates. Therefore, derivative instruments are included in Level 2.

F-8

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2012 and 2011. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaids, accounts payable, accrued liabilities, notes payable, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short term in nature or they are payable on demand.

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 31, 2012:

	Level 1		Level 2		Level 3		Total
Assets
Cash  and cash equivalents	$	1,913,727	$	-	$	-	$	1,913,727
Total assets measured at fair value	$	1,913,727	$	-	$	-	$	1,913,727
Liabilities
Derivative instruments	$	-	$	119,846	$	-	$	119,846
Total liabilities measured at fair value	$	-	$	119,846	$	-	$	119,846

The following table presents the Company’s fair value hierarchy for assets measured at fair value on a recurring basis at March 31, 2011:

	Level 1		Level 2		Level 3		Total
Assets
Cash  and cash equivalents	$	105,260	$	-	$	-	$	105,260
Total assets measured at fair value	$	105,260	$	-	$	-	$	105,260
Liabilities
Derivative instruments	$	-	$	247,284	$	-	$	247,284
Total liabilities measured at fair value	$	-	$	247,284	$	-	$	247,284

The Company measures certain assets at fair value on a nonrecurring basis. These assets include cost method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. During the years ended March 31, 2012 and 2011, the Company did not have any significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.

Concentrations

Credit Risk

At times, the Company maintains cash balances at a financial institution in excess of the $250,000 FDIC insurance limit. In addition, at times the Company extends credit to customers in the normal course of business, after an evaluation of the credit worthiness. The Company does not expect to take any unnecessary credit risks causing significant causing write-offs of potentially uncollectible accounts. The Company also maintains reserves for potential credit losses. The Company considers the following factors when determining if collection of a fee is reasonably assured: customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment terms.

Customer

The geographic location of the injection well is a direct factor with relation to the radius of customer’s wells that can be economically serviced. While there are several key factors to obtaining new business, the ratio of available business per customer is based solely on the number of wells the customer has within the serviceable radius of the injection well. As new gas wells are developed within the serviceable radius of the well, the ratio of customers to percentage of business will decrease. Until new wells are developed the expected customer to business ratio are not expected to change. During year ended March 31, 2012, the Company had one (1) customer that accounted for approximately 81% of its revenue and 84% of its accounts receivable at March 31, 2012. During year ended March 31, 2011, the Company had one (1) customer that accounted for approximately 86% of its revenue and 92% of its accounts receivable at March 31, 2011. The loss of our injection well customer would have a significant impact on the Company’s financial results. In addition, we are selling our reclaimed oil to one customer. If there was an issue with this customer, we have additional oil customers that would potentially take this position.

F-9

Cash Equivalents

All highly-liquid investments with a maturity of three (3) months or less are considered to be cash equivalents.

Property and Equipment

Property and equipment are recorded at cost and depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated lives of property and equipment are as follows:

Injection well	20 years
Machinery and equipment, furniture and equipment	Five to ten years
Buildings	25 years
Land	not depreciated

Impairment of Long-Lived and Purchased Intangible Assets

The Company has adopted ASC 350 Intangibles – Goodwill and Other. The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 350 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent management's best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored. At March 31, 2012, the Company has not recognized any impairment of long-lived assets.

Conversion Features and Warrants Issued with Convertible Debt

The Company's derivative financial instruments consist of embedded derivatives related to the senior convertible secured notes. These embedded derivatives include the conversion feature and the detachable warrants. As of the inception date of the agreement the debt was not considered conventional as defined in EITF 05-2, “The Meaning of "Conventional Convertible Debt Instruments" in issue No. 00-19”, codified into ASC 815. The accounting treatment of derivative financial instruments requires that the Company record the conversion feature and related warrants at their fair values and record them at fair value as of each subsequent balance sheet date. Any change in fair value is to be recorded as non-operating, non-cash income or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date, the Company will record a non-operating, non-cash charge. If the fair value of the derivatives is lower at the subsequent balance sheet date, the Company will record non-operating, non-cash income.

EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” and EITF 00-27, “Application of Issue 98-5 to Certain Convertible Instruments”, both codified into ASC 470 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the to the instruments where derivative accounting (explained above) does not apply. The amount of the value of warrants and beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts relating to the initial recording of the derivatives or beneficial conversion features are accreted over the term of the debt.

Investment, at Cost

The Company accounted for their investment in World Environmental Solutions Pty (“WES”) using the cost method due to the limited ownership and influence on the entity. Under the cost method, the investment was recorded at cost at the time of purchase. The Company does not adjust this investment unless the investment is considered impaired or there are liquidating dividends, both of which reduce the investment account. The aggregate carrying amount of our cost-method investment at March 31, 2011 was $91,466, representing a 12% ownership in WES. During the year ended March 31, 2012, the Company removed the cost-method investment in WES based on the change in terms of the agreement as discussed in Note 1 of the financial statements.

Goodwill

Under the current accounting standards, the Company requires that goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to an annual impairment test which has two steps to determine whether an asset impairment exists. The first step of the impairment test identifies potential impairment by comparing the fair value with the carrying amount of the reporting unit, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any. Intangibles with indefinite useful lives are measured for impairment by the amount that the carrying value exceeds the estimated fair value of the intangible. The fair value is calculated using the income approach. Intangible assets with definite useful lives will continue to be amortized over their estimated useful lives. Any impairment is recorded at the date of determination.

F-10

The Company’s policy provides for annual evaluation of goodwill on the first day of the fourth fiscal quarter and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of goodwill is tested at the operating segment level by comparing the segments' net carrying value, including goodwill, to the fair value of the segment. The fair values of our segments are estimated using a combination of the income or discounted cash flows approach and the market approach, which uses comparable market data. If the carrying amount of the segment exceeds its fair value, goodwill is potentially impaired and a second test would be performed to measure the amount of impairment loss, if any. All goodwill is associated with the Pro Water segment. At March 31, 2012, the Company has determined that the fair value of the Pro Water segment is substantially in excess of the carrying value.

Derivative Financial Instruments

Derivative financial instruments, as defined in ASC 815, Accounting for Derivative Financial Instruments and Hedging Activities, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements.

The Company estimates the fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objectively measuring fair values. In selecting the appropriate technique, consideration is give to, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company's operating results will reflect the volatility in these estimate and assumption changes.

Revenue Recognition

For revenue from product sales, the Company recognizes revenue in accordance with ASC 605, Revenue Recognition. The Company generates revenues from its deep injection water disposal well. Customers are charged on a per barrel rate for the water in which the Company disposes. Revenue is recorded when the water is disposed assuming all the revenue recognition criteria stated below are satisfied. In connection with the water disposal, the Company reclaims oil which is suspended within the water. Periodically, the Company sells this reclaimed oil to third parties and revenue is recognized upon sale assuming all the revenue recognition criteria stated below are satisfied. The Company records revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the prices for the services performed and the collectability of those amounts.  In addition, the Company extends credit to customers in which have shown the ability to pay for the services. At times the Company extends credit to new customers; however, such is not done until the Company is satisfied through references, evidence of financial soundness, etc. Provisions for allowances are performed periodically and estimates for uncollectable amounts are recorded as necessary based on management’s estimates. 

Cost of Revenues

Costs of revenues include costs related to revenue recognized; such costs represent labor, depreciation and amortization, equipment rental, supplies, utilities, repair and maintenance.

General and Administrative Expenses

General and administrative expenses include management and administrative personnel costs; corporate office costs; accounting fees, legal expense, information systems expense, and product marketing and sales expense.

Research and Development Expenses

Research and development expenses consist of expenses related to its MultiGen technology, which is still in its preliminary stages and of which its future benefits are uncertain.

F-11

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common shareholders by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated, based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period.

The following is a summary of outstanding securities which have been included in the calculation of diluted net income per share and reconciliation of net income to net income available to common stock holders for the year ended March 31, 2012:

	For the Year Ended March 31, 2012
Weighted average common shares outstanding used in calculating basic earnings per share		15,028,294
Effect of convertible notes payable		1,482,746
Effect of options and warrants		802,212
Weighted average common and common equivalent shares used in calculating diluted earnings per share		17,313,252
Net income as reported	$	2,254,920
Add - Interest on convertible notes payable		225,540
Net income available to common stockholders	$	2,480,460

The Company excluded 2,005,502 warrants from the computation for the year ended March 31, 2012, as their exercise prices were in excess of the average closing market price of the Company’s common stock, causing their effects to be anti-dilutive using the treasury stock method. 

The following is a summary of outstanding securities which have been excluded from the calculation of diluted net loss per share because the effect would have been anti-dilutive for the year ended March 31, 2011:

	For the Year Ended March 31, 2011
Common stock options		163,333
Common stock warrants		-
Convertible notes		1,570,335
		1,733,668

Advertising Costs

The Company expenses all costs of advertising as incurred. The Company expensed $5,052 and $2,667 of advertising costs during the years ended March 31, 2012 and 2011, respectively.

Stock-Based Compensation

ASC 718, Share-Based Payment requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of ASC 718 include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.

The Company adopted ASC 718, which requires disclosure of the fair value and other characteristics of stock options and more prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based compensation on reported net loss. The Company has reflected the expense of such stock based compensation based on the fair value at the grant date for awards consistent with the provisions of ASC 718.

F-12

In connection with the adoption of ASC 718, the fair value of our share-based compensation has been determined utilizing the Black-Scholes pricing model. The fair value of the options granted is amortized as compensation expense on a straight line basis over the requisite service period of the award, which is generally the vesting period. The fair value calculations involve significant judgments, assumptions, estimates and complexities that impact the amount of compensation expense to be recorded in current and future periods. Upon option exercise, the Company issues new shares of stock.

The following weighted average variables were used in the Black Scholes model for all option issuances valued during the fiscal year ended March 31, 2012 and 2011.

Year ended March 31,	Stock Price at Grant Date		Dividend Yield	Exercise Price		Risk Free Interest Rate	Volatility	Average Life
2012	$	1.02	-%	$	1.02	0.83%	264%	5.50
2011	$	0.45	-%	$	0.45	0.39%	257%	4.11

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, codified into ASC 505.  The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete.  In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Segment Reporting

The Company reports its segments under ASC 280, Segment Reporting, which establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. As of March 31, 2012 and 2011, the Company has two segments: PWU and SET Corp, with PWU being the only revenue producing segment.

Income Taxes

The Company follows ASC 740, Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The method to estimate the deferred tax asset is based on the feasibility of recoverability of the asset. The valuation allowance applied to the deferred tax asset is based on the relatively short operating history of the Company primarily based on one significant customer concentration.

Note 3 – Intangible Assets

Customer Relationships

The customer relationships are being amortized over the period of seven years from the acquisition date of October 1, 2009. The goodwill is not subject to amortization and will not be deductible for income tax purposes. During the years ended March 31, 2012 and 2011, the Company recorded amortization expense to cost of goods sold related to the customer relationship of $28,936 and $28,556, respectively. The net carrying value of the customer relationship as of March 31, 2012 was $130,108. Future amortization expense of the customer relationship is expected to be as follows for the years ending March 31: $28,857, $28,857, $28,857 $28,857, and $14,680 in 2013, 2014, 2015, 2016 and 2017, respectively. Goodwill represents expected synergies from the merger of operations. These synergies include a full management team and a formalized corporate organizational structure to expand the operations.  In addition, there were limited intangible assets in which did not qualify for separate recognition, such as an established workforce, but the effects on the consolidated financial statements are immaterial.

F-13

Pending Patents

In connection with the pending patents acquired from WES, the Company is amortizing the value of the patents over an estimated life of 15 years, which is the approximate remaining life and projected cash flows of the pending patents. During the year ended March 31, 2012, the Company amortized $12,166, which is included in general and administrative expense. At March 31, 2012, the net carrying value of the pending patents was $118,335. See Note 1 for a description related to a change in the agreement with WES. As of March 31, 2012, none of the contingent consideration under the WES Agreement had been triggered. As of March 31, 2012, the patent life was approximately 14 years of which $8,452 is expected to be amortized annually until fully amortized.

Note 4 – Property and Equipment

Property and equipment are as follows:

	March 31, 2012			March 31, 2011
Injection well	$	613,976		$	613,976
Machinery and equipment		1,695,072			1,393,046
Buildings		7,500			7,500
Land		51,000			51,000
Furniture and fixtures		36,465			28,464
Accumulated depreciation		(250,639	)		(104,094	)
Total	$	2,153,374		$	1,989,892

During the years ended March 31, 2012 and 2011, the Company recorded depreciation expense of $155,064 and $87,646, respectively.

Asset Retirement Obligations

At March 31, 2012 and 2011, the Company recorded an asset retirement obligation of approximately $9,900 related to the DIW.

Note 5 – Discontinued Operations

The financial results of the Company discontinued operations which consist of OC Energy and the former wastewater plant for the years ended March 31, 2012 and 2011 are as follows:

	For the Year Ended March 31, 2012		For the Year Ended March 31, 2011
Product sales	$	-	$	-
Water treatment royalties		-		-
Income taxes		-		-
Income from discontinued operations after income taxes	$	14,161	$	74,701

The following are the combined condensed balance sheets of OC Energy and the former wastewater treatment plant:

	March 31, 2012		March 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	-	$	410
Total current assets	$	-	$	410
Liabilities
Current liabilities:
Accounts payable	$	-	$	20,116
Accrued liabilities		-		99,307
Total current liabilities	$	-	$	119,423

Management believes there are no contingent liabilities related to discontinued operations.

F-14

Note 6 – Certain Balance Sheet Elements

Accrued Liabilities

The Company’s accrued liabilities are as follows:

	March 31, 2012		March 31, 2011
Accrued interest	$	39,271	$	192,162
Royalty payable		61,995		51,798
Other		76,820		93,945
Total	$	178,086	$	337,905

Note 7 – Notes Payable

Note Payable to Vendor

On the Effective Date, the Company assumed a promissory note to a vendor in settlement of $410,500. The vendor manufactured and installed the Company’s discontinued water treatment facility.  The note bore interest at 10% per annum with a one-time default penalty of 10% of the principal balance, and was secured by the Company’s Interceptor Plant contract and the equipment that was manufactured by the vendor.   During the year ended March 31, 2012, due to the passage of the statute of limitations the Company wrote off to other income the $410,500 note and accrued interest and penalties of $214,409.  The Company received a legal opinion supporting such in connection with the former liability.

MOU Note Payable

On the Effective Date, the Company assumed a promissory note of $45,000 in connection with a memorandum of understanding to purchase SET Corp’s discontinued water treatment plant.   The note bears interest at 10% with a default rate of 18%.  As of March 31, 2012, the note is in default and interest is being accrued at the default rate.

Convertible Notes Payable to Horst Geicke and Related Entities

On the Effective Date, the Company assumed various convertible note agreements with an accredited investor and shareholder for proceeds totaling $775,000 and accrued interest of $50,000.   In addition at the Effective Date, a discount on the convertible debt remained of $381,459. On July 7, 2010, the holder converted the note and accrued interest into 2,066,667 shares of the Company’s common stock. Upon conversion the Company, recorded the remaining discount to interest expense. In addition, all accrued interest of $50,000, was forgiven, and treated as a capital contribution due to the related party nature of the transaction as such recorded to additional paid in capital.

Convertible Note Payable to WES

On August 27, 2010, in connection with the Agreement, the Company issued a convertible promissory note to WES in the amount of $200,000, without interest or maturity, convertible into Company common stock at a rate of $5.25 per share. The convertible note payable is payable at the Company’s discretion. The note is secured by the Technology. On the date of issuance, no beneficial conversion feature was present. The Company determined that they would pay the note in approximately 15 years. Thus, the Company recorded a discount of 11% in the amount of $157,159 against the notes. The discount will be amortized to interest expense over the period of estimated maturity using the effective interest method. During the years ended March 31, 2012 and 2011, the Company recorded interest expense of $4,365 and $6,112, respectively, and extinguished the related unamortized discount of $146,683 to additional paid-in capital during the year ended March 31, 2012. See Note 1 for information regarding the Transaction with WES.

Equipment Loan

In June 2010, the Company entered into a note payable agreement with an equipment provider for a machine in the amount of $38,745. The note bears interest at 7.25% per annum and is payable in 24 equal installments of $1,739, with the first installment due in July 2010. As of March 31, 2012 and 2011, the amount due on this loan was $5,275 and $24,868, respectively.

F-15

Convertible Note Payable to Metropolitan Real Estate LLC

As discussed in Note 1, on July 7, 2010, the Company entered into an agreement to acquire PWU . In connection with the acquisition, the member of PWU received a $2.0 million secured convertible promissory note payable over the period of one year from the closing date, incurring interest at 5% annually and a conversion feature at the option of the holder into shares of the Company’s common stock at a price of $1.50 per share.  The note is secured by all the assets of Pro Water.  No beneficial conversion feature was recorded in connection with the note as the conversion price represented the closing price of the Company’s common stock on the date of the agreement. In addition, the Company recorded the $2,000,000 convertible note as a reduction to additional paid-in capital as it was deemed to be a return of capital initially contributed to Pro Water by the member.

On July 12, 2010, the terms of the acquisition were amended whereby the conversion rate of the $2,000,000 related secured convertible promissory note, which previously all converted at $1.50 at the option of the holder, such amended to so that $1,600,000 of the note may be converted at $3.00 per share and $400,000 may be converted at $0.375 per share.  The convertible note was due based on the following: $100,000 paid on or before September 30, 2010, $200,000 paid on or before December 31, 2010, $200,000 paid on or before March 31, 2011 and the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010 was paid in October 2010.  On July 12, 2010, since the conversion price of $0.375 related to $400,000 was significantly less than the fair value of the Company’s common stock per the closing market price, a beneficial conversion feature was present. The Company valued the beneficial conversion feature as of the date of the amended agreement in the amount of $696,000, and recorded the maximum discount allowed of $400,000 against the note. The discount was being amortized over the term of the note using the straight line method due to the relatively short maturity of the note.

On January 14, 2011, the terms of the convertible note were amended. As of the date of the amendment, the unpaid principal amount was $1,880,000. Under the terms of the new agreement, the term of the note was extended to five years and all accrued interest was forgiven. The Company is to make 60 monthly payments of $35,478 commencing January 2011 and concluding December 2015, which has been extended until April 2016 discussed below. All other terms, including conversion and interest rates remained the same. Under ASC 470, Debt, the Company accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period which impacted the expected cash flows in excess of 10%. Thus, the unamortized discount of $183,333 was removed and a new discount, with a beneficial conversion feature of $400,000 was recorded. Due to Geicke being a significant shareholder, no gain or loss was recorded and the result of the extinguishment was recorded to additional paid in capital. At March 31, 2012 and 2011, the $243,310 and $382,455 unamortized discount on the note was allocated between short and long term based on the expected annual amortization of which $109,318 and $139,196 has been allocated to short-term portion with the remaining $133,992 and $394,308 allocated to long-term portion. During the years ended March 31, 2012 and 2011, the Company amortized $139,146 and $17,454 of the discount to interest expense, respectively, using the effective interest method. The note holder requested the principal payments for November and December 2011 and January and February 2012 be deferred. Therefore, payments are added on to the end of the term. The following is the expected amortization for the remaining discount under the effective interest rate method for the years ending March 31: $109,318, $77,964, $45,005, and $11,023 in 2013, 2014, 2015, and 2016, respectively.

Note Payable to Vendor for Settlement of Accrued Liability

See Note 11 for note payable to vendor for settlement of accrued liability.

Note Payout Schedule

Future principal payments under related party notes payable are expected to be as follows for the years ending March 31: $355,330, $373,509, $392,619, $412,706, and $35,330 in 2013, 2014, 2015, 2016, and 2017, respectively.

F-16

Note 8 – Income taxes

The following table presents the current and deferred income tax provision for federal and state income taxes for the years ended March 31, 2012 and 2011:

	Year Ended March 31,
	2012			2011
Current tax provision:
Federal	$	35,800		$	-
State		28,015			800
Total		63,815			800
Deferred tax provision (benefit)
Federal		(2,270,083	)		(575,438	)
State		(279,113	)		(89,077	)
Valuation allowance		1,315,106			664,515
Total		(1,234,090	)		-
Total provision for income taxes	$	(1,170,275	)	$	800

Current taxes in fiscal 2011 only consist of minimum taxes to the State of California which are insignificant and have not been presented.

Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended March 31, 2012 and 2011are as follows:

	Year Ended March 31,
	2012			2011
US federal statutory income tax rate		34.0%			34.0%
State tax – net of benefit		3.3 %			3.3 %
		37.3 %			37.3 %
Permanent differences		10.5 %			234.3 %
Changes of deferred tax assets		6.0 %			(459.0 %	)
Increase and utilization of net operating losses		(40.5%	)		-%
Decrease (increase) in valuation allowance		(121.2%	)		187.4 %
Effective tax rate		(107.9%	)		0.0 %

The components of the Company’s deferred tax assets and (liabilities) for federal and state income taxes as of March 31, 2012 and 2011 consisted of the following:

	As of March 31,
	2012			2011
Current deferred tax assets (liabilities):
Accrued expenses and other	$	117,126		$	266,225
Total current deferred tax assets		117,126			266,225
Non-current deferred tax assets and liabilities:
State taxes		18,781			(52,320	)
Stock options		192,720			44,761
Property, plant and equipment		(74,593	)		-
Intangibles		6,050			6,329
Others		2,340			2,340
Net operating losses		3,434,725			880,619
Total non-current deferred tax assets		3,580,023			881,729
Valuation allowance	(2,463,059		)		(1,147,954	)
Net deferred tax assets (liabilities)	$	1,234,090		$	-

F-17

During the years ended March 31, 2012 and 2011, the valuation allowance increased by increased by $1,315,105 and decreased by $664,545, respectively.  At March 31, 2012, we determined that our previous valuation allowance amounting to $1,234,090 for certain deferred tax assets consisting primarily of net operating loss carry forwards for federal and state tax reporting was not required as it is likely that these assets will be recovered through future operating income. At March 31, 2012, the Company had approximately $8.9 million of federal and state gross net operating losses allocated to continuing operations available. The net operating loss carry forwards, if not utilized, will begin to expire in 2028 for federal purposes and 2018 for state purposes.

Based on the available objective evidence, including the Company’s limited operating history and current liabilities in excess of assets, management believes it is more likely than not that some of the net deferred tax assets, specifically certain net operating losses, at March 31, 2012, will not be fully realizable. Due to the uncertainty surrounding realization of the remaining deferred tax assets, the Company has provided a valuation allowance of $2,463,059 against its net deferred tax assets at March 31, 2012; a full valuation allowance was recorded at March 31, 2011. We will continue to monitor the recoverability of our net deferred tax assets.

As of March 31, 2012 and 2011, the Company has a State tax liability of $0 and $25,823, respectively, which was the result of previously unpaid taxes by SET Corp. Interest and penalties on such liabilities is immaterial. As of March 31, 2012, the Company has recorded estimated taxes payable for Federal and State of $58,400 which is recorded in accrued liabilities. In addition, due to the significant change in ownership of SET Corp in connection with the acquisition of Pro Water, the Company determined that SET Corp’s historical NOLs have been impaired due to IRS Section 382 limitations. Thus, as discussed above, the net operating losses prior to July 7, 2010 have been reduced based on the Company's calculation and a partial valuation allowance has been recorded as of March 31, 2012.

The Company has filed all United States Federal and State tax returns. The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal return years 2008 through 2012 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the years ended 2007 through 2012 and currently does not have any ongoing tax examinations.

Note 9 – Stockholders’ Equity (Deficit)

General

On December 9, 2011, a majority of the Company’s shareholders, in the form of a written consent authorized the amendment of the Company’s Amended and Restated Articles of Incorporation to decrease the authorized number of shares of common stock to 100,000,000.  The amendment was made effective on January 19, 2012.

Reverse stock split 

On January 25, 2012, the Financial Industries Regulatory Authority ("FINRA") effected a 1 for 15 reverse stock split.  All share and per share information has been adjusted to give effect to the stock split for all periods presented, including all references throughout the consolidated financial statements and accompanying notes.

Series A Preferred Stock

As of March 31, 2012, there are no shares of Series A Preferred Stock (“Series A”) outstanding as all had been converted into common stock prior to the reverse acquisition. Each Series A share is convertible into six shares of the Company’s common stock one year after issuance.  In additions, the Series A has preference over the common stock related to dividends and liquidation. Upon the issuance of 1,000,000 shares of Series A, the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least 75% of the then outstanding shares of Series A, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.

In the event the Company shall at any time after the Series A original issue date and prior to three years from such date, issue additional shares of common stock, without consideration or for a consideration per share less than the applicable Series A conversion price ($0.375/share) in effect immediately prior to such issue, then the Series A conversion price shall be reduced, concurrently with such issue, to the consideration per share received by the Company for such issue or deemed issue of the additional shares of common stock; provided that if such issuance or deemed issuance was without consideration, then the Company shall be deemed to have received an aggregate of $0.15 of consideration for all such additional shares of common stock issued or deemed to be issued, and the conversion ratio will be changed accordingly.

F-18

Capital Contributions

During the year ended March 31, 2011, the former owner of PWU contributed $150,000 to that entity.

Reverse Acquisition

On the Effective Date, July 7, 2010, 7,132,193 shares of common stock were retained by SET Corp’s shareholders as a result of the reverse acquisition. See Note 1 for additional information

Common Stock Issued For Cash

During the year ended March 31, 2011, the Company received proceeds totaling $208,000 resulting in the issuance of 468,000 shares of common stock. 

During the year ended March 31, 2012, the Company received proceeds totaling $2,301,250, net of finders' fees of $73,750 resulting in the issuance of 1,500,000 common stock units, consisting of one share of common stock and one warrant per unit.  The warrants issued had a weighted average exercise price of $2.33 per share, vested immediately and a weighted average term of 1.3 years. See Note 10 for additional warrants granted.

Common Stock Issued to Related Parties for Accrued Liabilities and Services

On July 7, 2010, the Company issued 933,333 shares of its common stock to Grant King, the Company’s former Chief Executive Officer and Director in exchange for the conversion of $357,000 of unpaid, accrued and other compensations due to Mr. King.

On July 7, 2010, the Company issued 650,000 shares of its common stock to Bob Glaser, an Officer and Director in exchange for the conversion of $248,625 of unpaid and accrued compensation due to Mr. Glaser.

On July 7, 2010, the Company issued 466,667 shares of its common stock to Keith Morlock, an Officer and Director in exchange for the conversion of $178,500 of unpaid and accrued compensation due to Mr. Morlock.

On July 8, 2010, the Company issued 66,667 shares of its common stock to Grant King, the Company’s former Chairman of the Board, from its 2006 Incentive and Non Statutory Stock Option Plan in exchange for the conversion of $59,800 of unpaid and accrued compensation due to Mr. King.

In December 2010, the Company issued 96,166 shares of its common stock valued at $51,690 to various individuals on behalf of Grant King, the Company’s former Chief Executive Officer and former Director in exchange for the conversion of $51,690 of unpaid, accrued and other compensations due to Mr. King.

On December 31, 2010, the Company entered into a twenty-four (24) month consulting agreement with Grant King, the former Officer and Director of the Company on the date of grant. Under the agreement, the Company agreed to issue a total of 533,333 shares of common stock in 133,333 increments every six months, payable at the beginning of each six-month period. On the date of the agreement, the Company valued the 533,333 shares at $400,000 based upon the closing market price of the Company’s common stock.  The value of the shares will be expensed over the two-year service period. On January 5, 2011, the Company issued the first 133,333 shares of common stock pursuant to the consulting agreement. On September 19, 2011, the Company issued the second 133,333 shares of common stock pursuant to the consulting agreement. On January 9, 2012, the Company issued the third 133,333 shares of common stock pursuant to the consulting agreement. During the years ended March 31, 2012 and 2011, the Company recorded compensation expense of $200,000 and $50,000, respectively, to general and administrative expenses in connection with this agreement.  See Note 10 for estimated stock-based compensation to be recorded in future years.

On January 13, 2011, the Company’s Board of Directors approved the issuance of 141,667 shares of common stock valued at $106,250 to various officers and consultants of the Company as discretionary compensation bonuses. Compensation bonuses for stock came from the 2010 Plan. The corresponding expense was recorded to general and administrative expense.

F-19

On December 28, 2011, the Company issued 10,000 shares of common stock at $1.05 to Bill Ball, a former member of the Board of Directors of the Company, as compensation.

Common Stock Issued for Services

On July 7, 2010, the Company issued 33,333 shares of its common stock as compensation for past legal services of $9,887 to a third-party consultant which offset amounts payable to the consultant.

On December 15, 2010, the Company issued 6,381 shares of its common stock valued at $3,158 as compensation for past consulting services of $3,158 to a third-party consultant which offset amounts payable to the consultant.

On January 9, 2012, the Company issued 30,050 shares of its common stock as compensation for administrative and legal services of $36,060 to various third-party consultants.

Common Stock Issued to Settle Accounts Payable and Accrued Liabilities

On October 26, 2010, the Company reached a settlement with Catalyx Fluid Solutions, Inc. and all its partners, including Juzer Jangbarwala, formerly a Company director and member of management. Accrued liabilities and accounts payable of $478,407 were settled for $50,000 in cash payments and 45,000 shares of common stock valued at $22,275 on the date of issuance. The Company accounted for the excess amount forgiven of $445,364 as contributed capital recorded within additional paid-in capital due to the related party nature of the transaction.

On November 1, 2010, the Company reached a settlement with a vendor. Accrued liabilities and accounts payable of $16,514 and $10,000, respectively, were settled for $7,465 in cash payments and 20,000 shares of common stock valued at $9,900. The shares of common stock were issued on December 15, 2010. As a result, a gain on settlement of $9,149 was recorded as other income expense.

In March 2011, the Company reached a settlement with a former consultant for in which past due accrued liabilities and accounts payable of $161,600 were settled for $15,000 in cash payments and 13,333 shares of common stock valued at $6,600. As a result, a gain on settlement of $140,000 was recorded as other income expense.

On November 16, 2011, the Company issued 5,179 shares of its common stock to a vendor at $1.95 per share for the settlement of accounts payable of $10,100.

Common Stock Issued to Settle Notes Payable

See Note 7for Convertible Notes Payable converted in to common stock.

Common Stock Repurchased

On October 20, 2011, the Company repurchased 3,333 shares of common stock from an investor at $1.15 per share. The shares were cancelled and therefore are not shown as issued or outstanding.

F-20

Note 10 – Options and Warrants

Options

Plans

On July 7, 2010, a majority of the Company’s shareholders, in the form of a written consent authorized: the amendment of the Company’s Amended and Restated Articles of Incorporation approved the adoption of the Company’s 2010 Incentive and Nonstatutory Stock Option Plan (“2010 Plan”), which reserves 1,333,333 shares of the Company’s common stock for issuance as stock options and grants to qualified recipients. As of March 31, 2012, 424,712 shares were available for issuance under the 2010 Plan.

On the Effective Date, the Company assumed an Incentive and Non-statutory Stock Option Plan adopted by the predecessor entity for issuance of stock options to employees and others. Those plans consisted of the 2006 Incentive and Non-statutory Stock Option Plan (“2006 Plan”) and 2007 Incentive and Non-statutory Stock Option Plan (“2007 Plan”) for issuances of stock options to employees and others. Under the 2006 Plan and 2007 Plan, the Company reserved 666,667 and 400,000 shares for issuance, respectively. As of March 31, 2012, 118,897 and 31,367 grants were available for issuance under the 2006 Plan and 2007 Plan, respectively.

Issuances

On July 7, 2010, the Company granted 400,000 stock options to various employees and consultants with an exercise price of $0.375 per share. The options vested over one year.

On April 4, 2011, the Company granted 200,000 stock options to directors of the Company with an exercise price of $0.75 per share. The options vest over one year. Compensation bonuses for stock came from the 2010 Plan.

On May 9, 2011, the Company granted 36,667 stock options to a consultant with an exercise price of $0.90 per share from the 2010 Plan. The options immediately vested on the date of issuance.

On October 7, 2011, the Company granted 80,000 stock options to three members of the Board of Directors with an exercise price of $1.20 per share. The options vest over one year.

On March 27, 2012, the Company granted 75,000 stock options to Grant King at an exercise price of $1.30 per share. The options vest over one year.

On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 450,000 shares of common stock valued at $585,000 on the date of grant, with the first tranche of 56,250 shares recorded as general and administrative expense during the year ended March 31, 2012 valued at $73,125. The remaining 393,750 shares are valued at $511,875 in which $292,500 will be recognized as general and administrative expense in fiscal 2013 and $219,375 in fiscal 2014.

On March 31, 2012, the Company granted 108,333 stock options to three officers of the Company at an exercise price of $1.25 per share. The options vest over one year.

During the year ended March 31, 2012 and 2011, stock compensation expense, including share grants which have vesting terms to Grant King (disclosed in Note 9) and members of management (disclosed above) was $579,382 and $164,771, respectively. As of March 31, 2012, future compensation expense, including share grants which vest in future periods for the years ending March 31, 2013 and 2014 is $717,916 and $219,375, respectively.

F-21

Although management believes its estimate regarding the fair value of the services to be reasonable, there can be no assurance that all of the subjective assumptions will remain constant, and therefore the valuation of the services may not be a reliable measure of the fair value of stock compensation or stock based payments for consulting services. Expected volatility is based primarily on historical volatility. Historical volatility was computed using weekly pricing observations for recent periods that correspond to the remaining life of the options. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these options. We currently have no reason to believe future volatility over the expected remaining life of these options is likely to differ materially from historical volatility. The expected life is based on the remaining term of the options. The risk-free interest rate is based on U.S. Treasury securities.

The following is a summary of activity of outstanding stock options:

	Number of Shares	Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at March 31, 2010	-	$	-
Options granted	715,263		1.35
Options exercised	-		-
Options cancelled	(113,333)		0.60
Outstanding at March 31, 2011	601,930		1.50
Options granted	500,000		1.02
Options exercised	(20,000)		0.75
Options cancelled	(216,930)		3.26
Outstanding at March 31, 2012	865,000	$	0.77	4.20	$	536,459
Exercisable at March 31, 2012	638,825	$	0.60	3.24	$	385,930

	Exercisable			Unexercisable			Total
Stock Options	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
Above $1.39	-	$	-	-	$	-	-	$	-
Below $1.39	638,825		0.60	226,175		1.25	865,000		0.77
Total Outstanding	638,825	$	0.60	226,175	$	1.25	865,000	$	0.77

Warrants

On the Effective Date, the Company assumed 376,068 of the predecessor entity’s issued and outstanding common stock purchase warrants, previously treated as equity pursuant to the derivative treatment exemption, that were no longer afforded equity treatment. Accordingly, these warrants are recorded as liabilities at fair value at each reporting date. Currently, these warrants have an exercise price of $11.70 and expire in May of 2013; however, these warrants have exercise price reset features in the event the Company issues common stock below the exercise price of the warrants.  During the years ended March 31, 2012 and 2011, the Company recorded gain of $127,438 and loss of $102,584, respectively, for the change in fair value of the warrant liability. As of March 31, 2012 and 2011, the warrant liability was $119,846 and $247,284, respectively.

F-22

All future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2012	March 31, 2011
Annual dividend yield	-		-
Expected life in years	1.17		2.17
Risk-free interest rate	0.19%		0.80%
Expected volatility	176.17%		284%

Expected volatility is based primarily on historical volatility. Historical volatility was computed using weekly pricing observations for recent periods that correspond to the remaining life of the warrants. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities.

The following is a summary of activity of outstanding common stock warrants for the years ended March 31, 2012 and 2011:

	Number  of Shares			Weighted Average  Exercise Price
Balance, March 31, 2010		-		$	-
Warrants granted		1,456,431			6.90
Warrants exercised			-		-
Warrants cancelled		(95,596	)		3.45
Balance, March 31, 2011		1,360,835		$	7.20
Warrants granted		1,500,00			2.33
Warrants exercised			-		-
Warrants cancelled		(855,333	)		5.08
Balance, March 31, 2012		2,005,502		$	4.45
Exercisable, March 31, 2012		2,005,502		$	4.45

Note 11 – Commitments and Contingencies

Operating Leases

In September 2010, the Company entered into an agreement with Koll Business Park for the lease of 1850 square feet of office space at the current Upland address. Rent expense for the fiscal year ended March 31, 2012 and 2011 was $29,304 and $15,968, respectively. The following is the expected minimum payments for the remaining period of the lease for the years ending March 31: $30,266, and $18,019 in 2013 and 2014, respectively. In May 2012 this lease was cancelled. See below.

In March 2012, effective May 2012, the Company entered into a new agreement with Koll Business Park for the lease of 4,333 square feet of office space for a period of four years with rental payments ranging from $2,381 to $5,513.

In March 2012, the Company entered into a land lease in Cartwright, North Dakota. Under the terms of the agreement, the month rent is based upon a fee for barrels produced per month and is for an initial period of fifteen years. The minimum monthly rental amount $750 per month or $9,000 per year.

Manufacturing and Engineering Agreement

In January 2012, PWC entered into a manufacturing and engineering agreement to build part of the Centerline SWD System facility for $1,770,000. To start the process 35% was paid, a second payment of 30% was paid after major components were delivered to the manufacturer. The balance of 35% is due when their portion of the facility is completed and shipped to our ND location. As of March 31, 2012, approximately $619,000 was recorded in other assets on the accompanying balance sheet.

F-23

Legal Proceedings

Yates Petroleum

In connection with cross complaint brought by Yates Petroleum ("Yates") against the Company in the District Court of Johnson County, Wyoming (Case no. CV-2008-0102), as discussed in the Company's prior SEC filings, including its Annual Report on Form 10-K for the fiscal year ended March 31, 2010, on August 2, 2010, Yates' motion to continue hearing on summary judgment was denied, and the Company's motion for alternative dispute resolution was granted.   As of November 30, 2010 an agreement, via arbitration, was reached.  The $236,306 was money YPC paid during the original construction of the plant that was to be repaid to them at the completion of construction. In addition to these monies SET Corp was responsible for the complete removal and remediation of the ponds, buildings and land to its original condition prior to the plant construction.  The agreement dated November 30, 2010 requires that SET Corp pay $175,000 at 10% interest for a 24 month period and remove and remediate the effluent pond. The influent pond and all of the remaining structures and their remediation will be the responsibility of YPC. The asset had a carrying cost of $30,000 that was recorded in discontinued operations.  The accrued liability recorded at $236,306 was reduced by the monthly payments. No gain will be recorded until the Company completes the terms of the agreement. The Company is current on the payments and terms of the agreement. In addition, based on current remediation quotes, the asset retirement obligation was reduced from $200,000 to $99,307 resulting in the difference of $100,693 credited to discontinued operations.

See Note -14 Subsequent Events below.

Employment Agreements

On April 3, 2011, our Board of Directors approved amended employment agreements with Bob Glaser and Keith Morlock effective April 7, 2011. According to the terms of the new agreements, the foregoing officers (1) annual base salaries are: Mr. Glaser $144,000 and Mr. Morlock $144,000 (2) have the opportunity for base salary increases, annual cash and stock option bonuses based on Company performance metrics; and (3) will receive certain expense reimbursement. If any of the officers are terminated without cause, as defined in the agreements, such officer shall be entitled to a payment of eight months of the current base salary and will receive acceleration of vesting of outstanding stock options issued pursuant to the agreements.

Note 12 – Segment Information

The Company reports information about operating segments, as well as disclosures about products and services and major customers. Operating segments are defined as revenue-producing components of the enterprise, which are generally used internally for evaluating segment performance. Management has determined that the water disposal operations of SWD (“Pro Water”) and the operations of SET Corp (“SET Corp”) should be disclosed separately as management reviews financial statements for these entities separately and makes decisions independently of the other entities included within the Company’s financial statements. All intercompany transactions between the reportable segments are eliminated upon consolidation of the Company. At March 31, 2012 and 2011, the Pro Water segment is the only revenue producing segment, see revenue recognition policy for how revenues are recorded. As of March 31, 2012 and 2011, the Company operates in one geographic area.

F-24

The Company evaluates the performance of its segments based on net income (loss) from continuing operations. Certain income and charges are not allocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. The following is a summary of information about profit or loss and assets by segment:

	For the Year Ended March 31, 2012									For the Year Ended March 31, 2011
	Pro Water			SETCORP			Total			Pro Water			SETCORP			Total
Revenues	$	4,269,529		$	-		$	4,269,529		$	2,617,400		$	-		$	2,617,400
Cost of revenues		1,605,247			-			1,605,247			1,020,205			-			1,020,205
Gross profit		2,664,282			-			2,664,282			1,597,195			-			1,597,195
Operating expenses:
General and administrative		469,204			1,528,764			1,997,968			364,642			933,473			1,298,115
Research and development		-			125,292			125,292			-			53,782			53,782
Total operating expenses		469,204			1,654,056			2,123,260			364,642			987,255			1,351,897
Operating income (loss)		2,195,078			(1,654,056	)		541,022			1,232,553			(987,255	)		245,298
Other income (expense):
Interest income		111			644			755			38			37			75
Interest expense		(221,176	)		(82,338	)		(303,514	)		(229,311	)		(510,410	)		(739,721	)
Change in fair value of derivative liability		-			127,438			127,438			-			(102,584	)		(102,584	)
Gain (loss) on settlement of payables and accrued liabilities		(28,256	)		733,039			704,783			-			167,592			167,592
Total other income (expense)		(249,321	)		778,783			529,462			(229,273	)		(445,365	)		(674,638	)
Income (loss) before provision (benefit) for income taxes		1,945,757			(875,273	)		1,070,484			1,003,280			(1,432,620	)		(429,340	)
Provision (benefit) for income taxes								(1,170,275	)								800
Net income (loss) from continuing operations								2,240,759									(430,140	)
Net income from discontinued operations								14,161									74,701
Net income (loss)							$	2,254,920								$	(355,439	)

The geographic location of the injection well is a direct factor with relation to the radius of customer’s wells that can be economically serviced. While there are several key factors to obtaining new business, the ratio of available business per customer is based solely on the number of wells the customer has within the serviceable radius of the injection well.  As new gas wells are developed within the serviceable radius of the well, the ratio of customers to percentage of business will decrease.  Until new wells are developed the expected customer to business ratio are not expected to change. All revenue and receivable concentrations disclosed in Note 2 related to the Pro Water segment.

As of March 31, 2012 and 2011, primarily all of the assets, with the exception of the SET Corp’s pending patents of $118,335 and $130,501, respectively, were within the Pro Water segment.  All assets were located with the United States.

Note 13 – Related Party Transactions

Horst Geicke

See Note 1, 7 and 9 for transactions with Horst Geicke, a significant shareholder of the Company and former member of PWU.

Robert Glaser

On the Effective Date, the Company granted 73,333 stock options to Robert Glaser with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Company’s Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Robert Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 33,333 stock options to Robert Glaser with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

On April 4, 2011, the Company granted 40,000 stock options to Robert Glaser with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, the Company granted 26,667 stock options to Robert Glaser with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 150,000 shares of common stock to Robert Glaser, see Note 10 for additional information. On March 31, 2012, the Company granted 50,000 stock options to Robert Glaser with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

See Note 11 for disclosures regarding an amendment to Robert Glaser’s employment contract.

F-25

Cynthia Glaser

On January 13, 2011, the Company’s Board of Directors approved the issuance of 10,000 shares of common stock valued at $6,750 to Cynthia Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 8,333 stock options to Cynthia Glaser with an exercise price of $0.75 per share according to her employment contract. The options vest over one year.

At March 31, 2011, the Company owes an entity controlled by Cynthia and Robert Glaser $24,085 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $54,500.

On March 31, 2012, the Company granted 8,333 stock options to Cynthia Glaser with an exercise price of $1.25 per share according to her employment contract. The options vest over one year.

At March 31, 2012, the Company owes an entity controlled by Cynthia and Robert Glaser $0 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2012 were $24,085.

Keith Morlock

On the Effective Date, the Company granted 73,333 stock options to Keith Morlock with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Company’s Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Keith Morlock as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 33,333 stock options to Keith Morlock with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

At March 31, 2011, the Company owes an entity controlled by Keith Morlock $35,411 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $16,500.

On April 4, 2011, the Company granted 40,000 stock options to Keith Morlock with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, the Company granted 26,667 stock options to Keith Morlock with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 150,000 shares of common stock to Keith Morlock, see Note 10 for additional information. On March 31, 2012, the Company granted 50,000 stock options to Keith Morlock with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

At March 31, 2012, the company owes an entity controlled by Keith Morlock $0 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2012 were $29,500.

See Note 11 for disclosures regarding an amendment to Keith Morlock’s employment contract.

Grant King

On July 7, 2010, the Company issued 933,333 shares of its common stock to Grant King, the Company’s former Chief Executive Officer and Director in exchange for the conversion of $357,000 of unpaid, accrued and other compensations due to Mr. King. On the Effective Date, the Company granted 73,333 stock options to Grant King with an exercise price of $0.375 per share. The options vested over one year.

On January 13, 2011, the Company’s Board of Directors approved the issuance of 20,000 shares of common stock valued at $13,500 to Grant King as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan.

On March 27, 2012, the Company granted 75,000 stock options to Grant King with an exercise price of $1.30 per share according to his consulting contract. The options vest over one year.

See Note 9 for discussion regarding a consulting contract with Grant King.

F-26

Note 14 – Subsequent Events

On April 27, 2012, a Complaint was filed against the Company by a previous consultant.  On June 12, 2012, the Company filed a Motion to Strike and a Demurrer asking the court to remove inapplicable and superfluous prayers and to assert that the Plaintiff lacked capacity and failed to state facts sufficient to constitute the causes of action.

On April 5, 2012, the Company entered into a letter agreement (“LOI”) with Cancen Oil Canada Inc., a British Columbia corporation (“Cancen”).  Both Cancen and the Company have agreed to abandon the LOI and have continued negotiations and further discussions as to forming a strategic alliance between the parties.

On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 450,000 shares of common stock valued at $585,000 on the date of the grant, with the first tranche of 56,250 shares recorded as general and administrative expense during the year ended March 31, 2012 valued at $73,125. The remaining 393,750 shares are valued at $511,875 in which $292,500 will be recognized as general and administrative expense in fiscal 2013 and $219,375 in fiscal 2014.

On June 13, 2012, the Board of Directors of the Company via unanimous written consent re-priced all of the stock options outstanding under our non-statutory stock options under the Corporation’s 2006, 2007 and 2010 incentive and non-statutory stock option plans at $0.36 per share of common stock of the Company.  The Board of Directors re-priced such stock options to keep such employees and consultants who were granted options incentivized.  The Company has yet to determine the financial statement impact of the transaction.

On June 20, 2012, the Board of Directors via unanimous written consent gave discretionary compensation bonuses in the form of the Company’s common stock to its employees and key consultants for the calendar year 2011.  The total amount of common stock of the Company issued out of the Company’s Incentive and Nonstatutory Stock Option Plans for the bonuses was 145,000 shares total.  Out of the 145,000 shares issued, Robert Glaser received 50,000 shares, Keith Morlock received 50,000 shares, Cynthia Glaser received 25,000 shares and Steve Ritchie received 10,000 shares.

 F-27

EX-3.(I)

Exhibit 3(i)

RESTATED ARTICLES OF INCORPORATION

OF

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

The undersigned certify that:

1. They are the president and secretary of Sustainable Environmental Technologies Corporation, a California corporation.

2. The Articles of Incorporation of this corporation are restated to read as follows:

ARTICLE I

The name of this corporation is Sustainable Environmental Technologies Corporation.

ARTICLE II

The address of the registered office of the Corporation in the State of California is 2345 W Foothill Boulevard, Suite 12, Upland, CA 91786, County of San Bernardino.  The name of its registered agent at such address is Keith Morlock.

ARTICLE III

The purpose of this corporation is to engage in any lawful act or activity for which a corporation may be organized under the general corporation law of California other than the banking business, the trust company business or the practice of a profession permitted to be incorporated by the California Corporation Code.

ARTICLE IV

This corporation is authorized to issue two classes of stock, to be designated respectively, “Common Stock” and “Preferred Stock”. The total number of shares of all classes of stock which the Corporation shall have authority to issue is (i) 100,000,000 shares of Common Stock, $0.001 par value per share, and (ii) 10,000,000 shares of Preferred Stock, $0.001 par value per share.

The Preferred Stock may be issued from time to time in one or more series as the Board of Directors of this corporation may determine.  The Board of Directors is authorized to determine and alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock, and to fix the number of shares of any series of Preferred Stock and the designation of any such series of Preferred Stock.  The Board of Directors, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series.  In case the number of shares of any series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

1

The following is a statement of the designations and the powers, privileges and rights, and the qualifications, limitations or restrictions thereof in respect to Series A of Preferred Stock of the corporation:

A.SERIES A PREFERRED STOCK

10,000,000 shares of the authorized and unissued Preferred Stock of the Corporation are hereby designated “Series A Preferred Stock” with the following rights, preferences, powers, privileges and restrictions, qualifications and limitations. Unless otherwise indicated, references to “Sections” or “Subsections” in this Part A of this Article Fourth refer to sections and subsections of Part A of this Article Fourth.

1.Dividends.

The Corporation shall not declare, pay or set aside any dividends on shares of any other class or series of capital stock of the Corporation (other than dividends on shares of Common Stock payable in shares of Common Stock) unless (in addition to the obtaining of any consents required elsewhere in the Articles of Incorporation) the holders of the Series A Preferred Stock then outstanding shall first receive, or simultaneously receive, a dividend on each outstanding share of Series A Preferred Stock in an amount at least equal to (i) in the case of a dividend on Common Stock or any class or series that is convertible into Common Stock, that dividend per share of Series A Preferred Stock as would equal the product of (A) the dividend payable on each share of such class or series determined, if applicable, as if all shares of such class or series had been converted into Common Stock and (B) the number of shares of Common Stock issuable upon conversion of a share of Series A Preferred Stock, in each case calculated on the record date for determination of holders entitled to receive such dividend or (ii) in the case of a dividend on any class or series that is not convertible into Common Stock, at a rate per share of Series A Preferred Stock determined by (A) dividing the amount of the dividend payable on each share of such class or series of capital stock by the original issuance price of such class or series of capital stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to such class or series) and (B) multiplying such fraction by an amount equal to the Series A Original Issue Price (as defined below); provided that, if the Corporation declares, pays or sets aside, on the same date, a dividend on shares of more than one class or series of capital stock of the Corporation, the dividend payable to the holders of Series A Preferred Stock pursuant to this Section 1 shall be calculated based upon the dividend on the class or series of capital stock that would result in the highest Series A Preferred Stock dividend.  The “Series A Original Issue Price” shall mean $0.15 per share, subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series A Preferred Stock.

2.Liquidation, Dissolution or Winding Up; Certain Mergers, Consolidations and Asset Sales.

2.1Payments to Holders of Series A Preferred Stock.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Series A Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders before any payment shall be made to the holders of Common Stock by reason of their ownership thereof, the greater of (i) an amount per share equal to the Series A Original Issue Price, plus any dividends declared but unpaid thereon, or (ii)  such amount per share as would have been payable had all shares of Series A Preferred Stock been converted into Common Stock pursuant to Section 4 immediately prior to such liquidation, dissolution or winding up (the amount payable pursuant to this sentence is hereinafter referred to as the “Series A Liquidation Amount”).  If upon any such liquidation, dissolution or winding up of the Corporation, the assets of the Corporation available for distribution to its stockholders shall be insufficient to pay the holders of shares of Series A Preferred Stock the full amount to which they shall be entitled under this Subsection 2.1, the holders of shares of Series A Preferred Stock shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts which would otherwise be payable in respect of the shares held by them upon such distribution if all amounts payable on or with respect to such shares were paid in full.

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2.2Payments to Holders of Common Stock.  In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, after the payment of all preferential amounts required to be paid to the holders of shares of Series A Preferred Stock, the remaining assets of the Corporation available for distribution to its stockholders shall be distributed among the holders of shares of Common Stock, pro rata based on the number of shares held by each such holder.

2.3Deemed Liquidation Events.

2.3.1Definition.  Each of the following events shall be considered a “Deemed Liquidation Event” unless the holders of at least 75% of the outstanding shares of Series A Preferred Stock elect otherwise by written notice sent to the Corporation at least 14 days prior to the effective date of any such event:

(a)a merger or consolidation in which

(i)the Corporation is a constituent party or

(ii)a subsidiary of the Corporation is a constituent party and the Corporation issues shares of its capital stock pursuant to such merger or consolidation,

except any such merger or consolidation involving the Corporation or a subsidiary in which the shares of capital stock of the Corporation outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority, by voting power, of the capital stock of (1) the surviving or resulting corporation or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation (provided that, for the purpose of this Subsection 2.3.1, all shares of Common Stock issuable upon exercise of Options (as defined below) outstanding immediately prior to such merger or consolidation or upon conversion of Convertible Securities (as defined below) outstanding immediately prior to such merger or consolidation shall be deemed to be outstanding immediately prior to such merger or consolidation and, if applicable, converted or exchanged in such merger or consolidation on the same terms as the actual outstanding shares of Common Stock are converted or exchanged); or

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(b)the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Corporation or any subsidiary of the Corporation of all or substantially all the assets of the Corporation and its subsidiaries taken as a whole or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Corporation if substantially all of the assets of the Corporation and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Corporation.

2.3.2Effecting a Deemed Liquidation Event.

(a)The Corporation shall not have the power to effect a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(i) unless the agreement or plan of merger or consolidation for such transaction (the “Merger Agreement”) provides that the consideration payable to the stockholders of the Corporation shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2.

(b)In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the California Corporation Code within 90 days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice to each holder of Series A Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Series A Preferred Stock, and (ii) if the holders of at least 75% of the then outstanding shares of Series A Preferred Stock so request in a written instrument delivered to the Corporation not later than 120 days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders (the “Available Proceeds”), to the extent legally available therefor, on the 150th day after such Deemed Liquidation Event, to redeem all outstanding shares of Series A Preferred Stock at a price per share equal to the Series A Liquidation Amount.  Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding sentence, if the Available Proceeds are not sufficient to redeem all outstanding shares of Series A Preferred Stock, the Corporation shall redeem a pro rata portion of each holder’s shares of Series A Preferred Stock to the fullest extent of such Available Proceeds, based on the respective amounts which would otherwise be payable in respect of the shares to be redeemed if the Available Proceeds were sufficient to redeem all such shares, and shall redeem the remaining shares to have been redeemed as soon as practicable after the Corporation has funds legally available therefor.  Prior to the distribution or redemption provided for in this Subsection 2.3.2(b), the Corporation shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business.

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2.3.3Amount Deemed Paid or Distributed.  The amount deemed paid or distributed to the holders of capital stock of the Corporation upon any such merger, consolidation, sale, transfer, exclusive license, other disposition or redemption shall be the cash or the value of the property, rights or securities paid or distributed to such holders by the Corporation or the acquiring person, firm or other entity.  The value of such property, rights or securities shall be determined in good faith by the Board of Directors of the Corporation.

2.3.4Allocation of Escrow.  In the event of a Deemed Liquidation Event pursuant to Subsection 2.3.1(a)(i), if any portion of the consideration payable to the stockholders of the Corporation is placed into escrow and/or is payable to the stockholders of the Corporation subject to contingencies, the Merger Agreement shall provide that (a) the portion of such consideration that is not placed in escrow and not subject to any contingencies (the “Initial Consideration”) shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (b) any additional consideration which becomes payable to the stockholders of the Corporation upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Corporation in accordance with Subsections 2.1 and 2.2 after taking into account the previous payment of the Initial Consideration as part of the same transaction.

3.Voting.

3.1General.  On any matter presented to the stockholders of the Corporation for their action or consideration at any meeting of stockholders of the Corporation (or by written consent of stockholders in lieu of meeting), including election of directors, each holder of outstanding shares of Series A Preferred Stock shall be entitled to cast the number of votes equal to one whole share of Common Stock per share of Series A Preferred Stock.  Except as provided by law or by the other provisions of the Articles of Incorporation, holders of Series A Preferred Stock shall vote together with the holders of Common Stock as a single class.

3.2Series A Preferred Stock Protective Provisions.  At any time when at least 1,000,000 shares of Series A Preferred Stock are outstanding, the Corporation shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least 75% of the then outstanding shares of Series A Preferred Stock, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class:

(a)liquidate, dissolve or wind-up the business and affairs of the Corporation, effect any Deemed Liquidation Event, or consent to any of the foregoing;

(b) amend, alter or repeal any provision of the Articles of Incorporation or Bylaws of the Corporation in a manner that adversely affects the powers, preferences or rights of the Series A Preferred Stock;

(c) create, or authorize the creation of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption, or increase the authorized number of shares of Series A Preferred Stock or increase the authorized number of shares of any additional class or series of capital stock unless the same ranks junior to the Series A Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends and rights of redemption;

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(d) (i) reclassify, alter or amend any existing security of the Corporation that is pari passu with the Series A Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Series A Preferred Stock in respect of any such right, preference or privilege, or (ii) reclassify, alter or amend any existing security of the Corporation that is junior to the Series A Preferred Stock in respect of the distribution of assets on the liquidation, dissolution or winding up of the Corporation, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or pari passu with the Series A Preferred Stock in respect of any such right, preference or privilege; or

(e)           purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Corporation other than (i) redemptions of or dividends or distributions on the Series A Preferred Stock as expressly authorized herein, (ii) dividends or other distributions payable on the Common Stock solely in the form of additional shares of Common Stock and (iii) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Corporation or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof or (iv) as approved by the Board of Directors, including the approval of the Series A Director.

4.Optional Conversion.

The holders of the Series A Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

4.1Right to Convert.

4.1.1Conversion Ratio.  Each share of Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after one (1) year from the initial holder’s date of purchase from the Corporation, and without the payment of additional consideration by the holder thereof, into 6 fully paid and nonassessable shares of Common Stock.  This 1:6 ratio at which shares of Series A Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

4.1.2Termination of Conversion Rights.  In the event of a liquidation, dissolution or winding up of the Corporation or a Deemed Liquidation Event, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any such amounts distributable on such event to the holders of Series A Preferred Stock.

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4.2Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Series A Preferred Stock.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Corporation.  Whether or not fractional shares would be issuable upon such conversion shall be determined on the basis of the total number of shares of Series A Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

4.3Mechanics of Conversion.

4.3.1Notice of Conversion.  In order for a holder of Series A Preferred Stock to voluntarily convert shares of Series A Preferred Stock into shares of Common Stock, such holder shall surrender the Certificate(s) for such shares of Series A Preferred Stock (or, if such registered holder alleges that such Certificate(s) has been lost, stolen or destroyed, a lost Certificate(s) affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such Certificate(s)), at the office of the transfer agent for the Series A Preferred Stock (or at the principal office of the Corporation if the Corporation serves as its own transfer agent), together with written notice that such holder elects to convert all or any number of the shares of the Series A Preferred Stock represented by such Certificate(s) and, if applicable, any event on which such conversion is contingent.  Such notice shall state such holder’s name or the names of the nominees in which such holder wishes the Certificate(s) for shares of Common Stock to be issued.  If required by the Corporation, Certificate(s) surrendered for conversion shall be endorsed or accompanied by a written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or his, her or its attorney duly authorized in writing.  The close of business on the date of receipt by the transfer agent (or by the Corporation if the Corporation serves as its own transfer agent) of such Certificate(s) (or lost Certificate(s) affidavit and agreement) and notice shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such Certificate(s) shall be deemed to be outstanding of record as of such date.  The Corporation shall, as soon as practicable after the Conversion Time, (i) issue and deliver to such holder of Series A Preferred Stock, or to his, her or its nominees, a Certificate for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof and a Certificate for the number (if any) of the shares of Series A Preferred Stock represented by the surrendered Certificate(s) that were not converted into Common Stock, (ii) pay in cash such amount as provided in Subsection 4.2 in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and (iii) pay all declared but unpaid dividends on the shares of Series A Preferred Stock converted.

4.3.2Reservation of Shares.  The Corporation shall at all times when the Series A Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued capital stock, for the purpose of effecting the conversion of the Series A Preferred Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Series A Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Articles of Incorporation.

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4.3.3Effect of Conversion.  All shares of Series A Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor, to receive payment in lieu of any fraction of a share otherwise issuable upon such conversion as provided in Subsection 4.2 and to receive payment of any dividends declared but unpaid thereon.  Any shares of Series A Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series A Preferred Stock accordingly.

4.3.4No Further Adjustment.  Upon any such conversion, no adjustment to the Series A conversion rate shall be made for any declared but unpaid dividends on the Series A Preferred Stock surrendered for conversion or on the Common Stock delivered upon conversion.

4.3.5Taxes.  The Corporation shall pay any and all issue and other similar taxes that may be payable in respect of any issuance or delivery of shares of Common Stock upon conversion of shares of Series A Preferred Stock pursuant to this Section 4.  The Corporation shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series A Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid.

4.4Adjustments to Series A Conversion Ratio for Diluting Issues.

4.4.1Special Definitions.  For purposes of this Article Fourth, the following definitions shall apply:

(a)“Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

(b)“Series A Original Issue Date” shall mean the date on which the first share of Series A Preferred Stock was issued.

(c)“Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for Common Stock, but excluding Options.

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(d)“Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Subsection 4.4.3 below, deemed to be issued) by the Corporation after the Series A Original Issue Date, other than (1) the following shares of Common Stock and (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2), collectively, “Exempted Securities”):

(i)        shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution on Series A Preferred Stock;

(ii)       shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock that is covered by Subsection 4.5, 4.6, 4.7 or 4.8;

(iii)      shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, the Corporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors of the Corporation;

(iv)      shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or shares of Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case provided such issuance is pursuant to the terms of such Option or Convertible Security.

4.4.2Adjustment of Series A Conversion Price Upon Issuance of Additional Shares of Common Stock.  In the event the Corporation shall at any time after the Series A Original Issue Date and prior to three years from such date, issue additional shares of Common Stock, without consideration or for a consideration per share less than the applicable Series A Conversion Price ($0.025/share) in effect immediately prior to such issue, then the Series A Conversion Price shall be reduced, concurrently with such issue, to the consideration per share received by the Corporation for such issue or deemed issue of the Additional Shares of Common Stock; provided that if such issuance or deemed issuance was without consideration, then the Corporation shall be deemed to have received an aggregate of $.001 of consideration for all such Additional Shares of Common Stock issued or deemed to be issued, and the Conversion Ratio will be changed accordingly.

4.4.3Determination of Consideration.  For purposes of this Subsection 4.4, the consideration received by the Corporation for the issue of any Additional Shares of Common Stock shall be computed as follows:

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(e)Cash and Property:  Such consideration shall:

(i)        insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation, excluding amounts paid or payable for accrued interest;

(ii)       insofar as it consists of property other than cash, be computed at the fair market value thereof at the time of such issue, as determined in good faith by the Board of Directors of the Corporation; and

(iii)      in the event additional shares of Common Stock are issued together with other shares or securities or other assets of the Corporation for consideration which covers both, be the proportion of such consideration so received, computed as provided in clauses (i) and (ii) above, as determined in good faith by the Board of Directors of the Corporation.

(f)Options and Convertible Securities.  The consideration per share received by the Corporation for additional shares of Common Stock deemed to have been issued pursuant to Subsection 4.4.3, relating to Options and Convertible Securities, shall be determined by dividing

(i)       the total amount, if any, received or receivable by the Corporation as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such consideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by

(ii)      the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities.

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4.5Adjustment for Stock Splits and Combinations.  If the Corporation shall at any time or from time to time after the Series A Original Issue Date effect a subdivision of the outstanding Common Stock, the Series A Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding.  If the Corporation shall at any time or from time to time after the Series A Original Issue Date combine the outstanding shares of Common Stock, the Series A Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding.  Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

4.6Adjustment for Certain Dividends and Distributions.  In the event the Corporation at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable on the Common Stock in additional shares of Common Stock, then and in each such event the Series A Conversion Price in effect immediately before such event shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Series A Conversion Price then in effect by a fraction:

(1)   the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and

(2)   the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution.

Notwithstanding the foregoing, (a) if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Series A Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Series A Conversion Price shall be adjusted pursuant to this subsection as of the time of actual payment of such dividends or distributions; and (b) that no such adjustment shall be made if the holders of Series A Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event.

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4.7Adjustments for Other Dividends and Distributions.  In the event the Corporation at any time or from time to time after the Series A Original Issue Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in securities of the Corporation (other than a distribution of shares of Common Stock in respect of outstanding shares of Common Stock) or in other property and the provisions of Section 1 do not apply to such dividend or distribution, then and in each such event the holders of Series A Preferred Stock shall receive, simultaneously with the distribution to the holders of Common Stock, a dividend or other distribution of such securities or other property in an amount equal to the amount of such securities or other property as they would have received if all outstanding shares of Series A Preferred Stock had been converted into Common Stock on the date of such event.

4.8Adjustment for Merger or Reorganization, etc.  Subject to the provisions of Subsection 2.3, if there shall occur any reorganization, recapitalization, reclassification, consolidation or merger involving the Corporation in which the Common Stock (but not the Series A Preferred Stock) is converted into or exchanged for securities, cash or other property (other than a transaction covered by Subsections 4.4, 4.6 or 4.7), then, following any such reorganization, recapitalization, reclassification, consolidation or merger, each share of Series A Preferred Stock shall thereafter be convertible in lieu of the Common Stock into which it was convertible prior to such event into the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of the Corporation issuable upon conversion of one share of Series A Preferred Stock immediately prior to such reorganization, recapitalization, reclassification, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors of the Corporation) shall be made in the application of the provisions in this Section 4 with respect to the rights and interests thereafter of the holders of the Series A Preferred Stock, to the end that the provisions set forth in this Section 4 (including provisions with respect to changes in and other adjustments of the Series A Conversion Price) shall thereafter be applicable, as nearly as reasonably may be, in relation to any securities or other property thereafter deliverable upon the conversion of the Series A Preferred Stock.

4.9Articles as to Adjustments.  Upon the occurrence of each adjustment or readjustment of the Series A Conversion Price pursuant to this Section 4, the Corporation at its expense shall, as promptly as reasonably practicable but in any event not later than [10] days thereafter, compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series A Preferred Stock a Articles setting forth such adjustment or readjustment (including the kind and amount of securities, cash or other property into which the Series A Preferred Stock is convertible) and showing in detail the facts upon which such adjustment or readjustment is based.  The Corporation shall, as promptly as reasonably practicable after the written request at any time of any holder of Series A Preferred Stock (but in any event not later than 10 days thereafter), furnish or cause to be furnished to such holder a Articles setting forth (i) the Series A Conversion Price then in effect, and (ii) the number of shares of Common Stock and the amount, if any, of other securities, cash or property which then would be received upon the conversion of Series A Preferred Stock.

4.10Notice of Record Date.  In the event:

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(a)           the Corporation shall take a record of the holders of its Common Stock (or other capital stock or securities at the time issuable upon conversion of the Series A Preferred Stock) for the purpose of entitling or enabling them to receive any dividend or other distribution, or to receive any right to subscribe for or purchase any shares of capital stock of any class or any other securities, or to receive any other security; or

(b)of any capital reorganization of the Corporation, any reclassification of the Common Stock of the Corporation, or any Deemed Liquidation Event; or

(c)of the voluntary or involuntary dissolution, liquidation or winding-up of the Corporation,

then, and in each such case, the Corporation will send or cause to be sent to the holders of the Series A Preferred Stock a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is proposed to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other capital stock or securities at the time issuable upon the conversion of the Series A Preferred Stock) shall be entitled to exchange their shares of Common Stock (or such other capital stock or securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up, and the amount per share and character of such exchange applicable to the Series A Preferred Stock and the Common Stock.  Such notice shall be sent at least [10] days prior to the record date or effective date for the event specified in such notice.

3. The foregoing restatement of the Articles of Incorporation has been duly approved by the board of directors pursuant to Section 902(d) of the California Corporations Code.

We further declare under penalty of perjury under the laws of the State of California that the matters set forth in these Articles are true and correct of our own knowledge.

Dated:  June 15, 2012

/s/ Robert Glaser

Robert Glaser, President

/s/ Keith Morlock

Keith Morlock, Secretary

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EX-3.(II)

Exhibit 3(ii)

AMENDED AND RESTATED BYLAWS

AS OF JUNE 15, 2012

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

a California corporation

TABLE OF CONTENTS

		Page
ARTICLE I	OFFICES	1
Section 1.	Principal Office	1
Section 2.	Other Offices	1
ARTICLE II	DIRECTORS - MANAGEMENT	1
Section 1.	Powers	1
Section 2.	Number and Qualification of Directors	1
Section 3.	Election and Term of Office of Directors	1
Section 4.	Vacancies	2
Section 5.	Removal of Directors	2
Section 6.	Place of Meetings	3
Section 7.	Regular Meetings	3
Section 8.	Special Meetings	3
Section 9.	Waiver of Notice	3
Section 10.	Quorums	4
Section 11.	Adjournment	4
Section 12.	Notice of Adjournment	4
Section 13.	Directors Action by Unanimous Written Consent	4
ARTICLE III	OFFICERS	4
Section 1.	Officers	4
Section 2.	Election of Officers	4
Section 3.	Subordinate Officers, Etc	4
Section 4.	Removal and Resignation of Officers	5
Section 5.	Vacancies	5
Section 6.	Chief Executive Officer	5
Section 7.	Secretary	5
Section 8.	Chief Financial Officer	6
ARTICLE IV	SHAREHOLDERS' MEETINGS	6
Section 1.	Place of Meetings	6
Section 2.	Annual Meeting	6
Section 3.	Special Meetings	7
Section 4.	Notice of Meetings	7
Section 5.	Quorum	8
Section 6.	Adjourned Meeting and Notice Thereof	8
Section 7.	Waiver or Consent by Absent Shareholders	8
Section 8.	Maintenance and Inspection of Bylaws	9
Section 9.	Annual Statement of General Information	9
ARTICLE V	AMENDMENTS TO BYLAWS	10
Section 1.	Amendment by Shareholders	10
Section 2.	Amendment by Directors	10
Section 3.	Record of Amendments	10
ARTICLE VI	SHARES OF STOCK	10
Section 1.	Certificate of Stock	10
Section 2.	Lost or Destroyed Certificates	11
Section 3.	Transfer of Shares	11
Section 4.	Record Date	11
ARTICLE VII	DIVIDENDS	12
ARTICLE VIII	FISCAL YEAR	12
ARTICLE IX	CORPORATE SEAL	12
ARTICLE X	INDEMNITY	12

RESTATED AND AMENDED BYLAWS

OF

SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION

a California corporation

ARTICLE I

OFFICES

Section 1.Principal Office.  The principal executive office of Sustainable Environmental Technologies Corporation (the “Corporation”) shall be located at 2377 W. Foothill Blvd., Suite No. 12, Upland, California 91786. The location may be changed by approval of a majority of the authorized Directors.

Section 2.Other Offices.  The Corporation may also have offices at such other places as the business of the Corporation requires.

ARTICLE II

DIRECTORS

Section 1.Powers.  Subject to the provisions of the California Corporations Code (hereinafter the "Code"), and subject to any limitations in the Articles of Incorporation of the Corporation relating to action required to be approved by the shareholders, as that term is defined in Section 153 of the Code, or by the outstanding shares, as that term is defined in Section 152 of the Code, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board of Directors.  The Board of Directors may delegate the management of the day-to-day operation of the business of the Corporation to a management company or other persons, provided that the business and affairs of the Corporation shall be managed, and all corporate powers shall be exercised, under the ultimate direction of the Board.

Section 2.Number and Qualification of Directors.  The Board of Directors shall have authority to determine the number of directors constituting the Board of Directors; provided, however, that in no event shall the number be less than three or more than five, with the exact number within that range to be fixed by resolution of the Board of Directors.

Section 3.Election and Term of Office of Directors.

3.1 Directors shall be elected at each annual meeting of shareholders, but if any such annual meeting is not held or the directors are not elected at any annual meeting, the directors may be elected at any special meeting of shareholders held for that purpose. Each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until his successor has been elected and qualified.

3.2           Except as may otherwise be provided herein, or in the Articles of Incorporation by way of cumulative voting rights, the members of the Board of Directors of this Corporation, who need not be shareholders, shall be elected by a majority of the votes cast at a meeting of shareholders, by the holders of shares of stock present in person or by proxy, entitled to vote in the election.

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Section 4.Vacancies.

4.1 Vacancies on the Board of Directors, as specified in the Code, except for a vacancy created by the removal of a Director, may be filled by a majority of the remaining Directors, though less than a quorum, or by a sole remaining Director.  Each Director so elected shall hold office until the next annual meeting of the Shareholders and until a successor has been elected and qualified.  A vacancy in the Board of Directors created by the removal of a Director may only be filled by the vote of a majority of the shares entitled to vote represented at a duly held meeting at which a quorum is present, or by the written consent of the holders of a majority of the outstanding shares.

4.2 The Shareholders may elect a Director or Directors at any time to fill any vacancy or vacancies, but any such election by written consent shall require the consent of a majority of the outstanding shares entitled to vote.

4.3 Any Director may resign, effective on giving written notice to the Chairman of the Board, the Chief Executive Officer, the Secretary, or the Board of Directors, unless the notice specifies a later time for that resignation to become effective.  When one or more directors give notice of his or her or their resignation from the Board of Directors, effective at a future date, the Board may fill the vacancy or vacancies to take effect when the resignation or resignations become effective, each Director so appointed to hold office during the remainder of the term of office of the resigning Director(s).

4.4 No reduction of the authorized number of Directors shall have the effect of removing any Director before that Director's term of office expires.

Section 5.Removal of Directors.

5.1 The entire Board of Directors, or any individual Director, may be removed from office as provided by Sections 302, 303, and 304 of the Code.  In such case, the remaining members, if any, of the Board of Directors may elect a successor Director to fill such vacancy for the remaining unexpired term of the Director so removed.

5.2 No Director may be removed (unless the entire Board is removed) when the votes cast against removal or not consenting in writing to such removal would be sufficient to elect such Director if voted cumulatively at an election at which the same total number of votes were cast (or, if such action is taken by written consent, all shares entitled to vote, were voted) and the entire number of Directors authorized at the time of the Directors most recent election were then being elected; and when by the provisions of the Articles of Incorporation the holders of the shares of any class or series voting as a class or series are entitled to elect one or more Directors, any Director so elected may be removed only by the applicable vote of the holders of the shares of that class or series.

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Section 6.Place of Meetings.  Regular and special meetings of the Board of Directors may be held at any place within or outside the State of California which has been designated in the notice of the meeting, or  if there is no notice, designated by written consent or resolution  of all of the members of the Board of Directors. If the place of a regular or special meeting is not designated in the notice or fixed by a written consent or resolution by all members of the Board of Directors, it shall be held at the Corporation's principal executive office.

Section 7.Regular Meetings.

7.1Regular Meetings. Immediately following each annual shareholder's meeting the Board of Directors shall hold a regular meeting to elect officers and transact other business. Such meeting shall be held at the same place as the annual shareholders' meeting or such other place as shall be fixed by the Board of Directors.

7.2Other Regular Meetings.   Other regular meetings of the Board of Directors shall be held at such times and places as are fixed by the Board of Directors.

Section 8.Special Meetings.

8.1 Special meetings of the Board of Directors may be called for any purpose or purposes at any time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the Secretary. Notice of the time, place and purpose of the special meetings shall be given to each Director unless waived or if the action is taken by written consent as described in Section 11 of this Article.

8.2 Notice of the time, place and purpose for special meeting shall be delivered personally or by telephone to each Director, or sent by email, first class mail, addressed to each Director at his or her email or physical address as it is shown in the records of the Corporation.  In case such notice is mailed, it shall be deposited in the United States mail, priority airmail at least four (4) days prior to the holding of the meeting and for Directors residing overseas, at least ten (10) days prior to the time of holding the meeting. In case such notice is delivered personally, by telephone, or by email, it shall be delivered at least three (3) days prior to the time of the holding of the meeting.

Section 9.Waiver of Notice.

9.1 The transactions of any meeting of the Board of Directors, however called, noticed, or wherever held, shall be as valid as though had at a meeting duly held after the regular call and notice if a quorum is present and if, either before or after the meeting, each of the Directors not present signs a written waiver of notice, a consent to holding the meeting or an approval of the minutes thereof.  Waivers of notice or consent need not specify the purposes of the meeting.  All such waivers, consents and approvals shall be filed with the corporate records or made part of the minutes of the meeting.

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9.2 Notice of a meeting shall also be deemed given to any Director who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such Director.

Section 10.Quorums. A majority of the members of the Board of Directors shall constitute a quorum of the Board of Directors for the transaction of business. Every act or decision done or made by the vote of a majority of the Directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, subject to the provisions of Section 310 (Transactions with Interested Directors) and subdivision (e) of Section 317 (Indemnification of Corporate Agents) of the Code.

Section 11.Adjournment.  A majority of the Directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place.

Section 12.Notice of Adjournment.  Notice of the time and place of the holding of an adjourned meeting need not be given, unless the meeting is adjourned for more than 24 hours, in which case notice of such time and place shall be given prior to the time of the adjourned meeting to the Directors who were not present at the time of the adjournment in accordance with Section 9 of this Article.

Section 13.Directors Action by Unanimous Written Consent.  Any action required or permitted to be taken by the Board of Directors may be taken without a meeting and with the same force and effect as if taken by a unanimous vote of Directors, if authorized by a writing signed individually or collectively by all members of the Board of Directors.  Such consent shall be filed with the regular minutes of the Board of Director.

ARTICLE III

OFFICERS

Section 1.Officers.  The principal officers of the Corporation shall be a Chief Executive Officer, a Secretary, and a Chief Financial Officer.  The Corporation may also have, at the discretion of the Board of Direc­tors, a Chairman of the Board and such other officers as may be appointed in accordance with the provisions of Section 3 of this Article III.  Any number of offices may be held by the same person.

Section 2.Election of Officers.  The principal officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 3 or Section 5 of this Article III, shall be chosen by the Board of Directors, and each shall serve at the pleasure of the Board of Directors, subject to the rights, if any, of an officer under any contract of employment.  Each officer shall hold office until his successor shall be duly elected and qualified, or until his death, resignation, or removal in the manner hereinafter provided.

Section 3.Subordinate Officers, Etc.  The Board of Directors may appoint such other officers as the business of the Corporation may require, each of whom shall hold office for such period, have such authority and perform such duties as are provided in these Bylaws or as the Board of Directors may from time to time determine.

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Section 4.Removal and Resignation of Officers.

4.1 Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by a majority of the Directors, at any regular or special meeting of the Board of Directors, or, except in the case of an officer chosen by the Board of Directors, by any officer upon whom such power of removal may be conferred by the Board of Directors.

4.2 Any officer may resign at any time by giving written notice to the Board of Directors.  Any resignation shall take effect on the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective.  Any resignation is without prejudice to the rights, if any, of the Corporation under any contract to which the officer is a party.

Section 5.Vacancies.  A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in the Bylaws for regular appointments to that office.

Section 6.Chief Executive Officer.  The Chief Executive Officer shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation.  The Chief Executive Officer shall attend and report at all meetings of the shareholders and at all meetings of the Board of Directors, and shall have such other powers and duties as may be prescribed by the Board of Directors or these Bylaws.

Section 7.Secretary.

7.1 The Secretary shall keep, or cause to be kept, a book of minutes of all meetings of the Board of Directors and shareholders at the principal executive office of the Corporation or such other place as the Board of Directors may order.  The minutes shall include the time and place of holding the meeting, whether regular or special, and if a special meeting, how authorized, the notice thereof given, and the names of those present at Directors' and committee meetings, the number of shares present or represented at shareholders' meetings and the proceedings thereof.

7.2 The Secretary shall keep, or cause to be kept, at the principal executive office of the Corporation or at the office of the Corporation's transfer agent, a share register, or duplicate share register, showing the names of the shareholders and their addresses; the number and classes or shares held by each; the number and date of certificates issued for the same; and the number and date of cancellation of every certificate surrendered for cancellation.

7.3 The Secretary shall give, or cause to be given, notice of all the meetings of the shareholders and of the Board of Directors required by these Bylaws or by law to be given.  The Secretary shall keep the seal of the Corporation in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or by the Bylaws.

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Section 8.Chief Financial Officer.

8.1 The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, in accordance with generally accepted accounting principles, adequate and correct accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, earnings (or surplus) and shares issued.  The books of account shall, at all reasonable times, be open to inspection by any Director.

8.2 The Chief Financial Officer shall deposit all monies and other valuables in the name and to the credit of the Corporation with such depositaries as may be designated by the Board of Directors.  The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, shall render to the Chief Executive Officer and Directors, whenever they request it, an account of all of the transactions of the Chief Financial Officer and of the financial condition of the Corporation, and shall have such other powers and perform such other duties as may be prescribed by the Board of Directors or these Bylaws.

ARTICLE IV

SHAREHOLDERS MEETINGS

Section 1.Place of Meetings.  Meetings of the shareholders shall be held at any place within or outside the state of California designated by the Board of Directors.  In the absence of any such designation, shareholders' meetings shall be held at the principal executive office of the Corporation.

Section 2.Annual Meeting. The annual meeting of the Shareholders shall be held, each year, as follows:

Time of Meeting:                                           10:00 A.M.

Date of Meeting:                                           August 1

2.3 If this day shall be a legal holiday, then the meeting shall be held on the next succeeding business day, at the same time.  At the annual meeting, the Shareholders shall elect a Board of Directors, consider reports of the affairs of the Corporation and for the transaction of such other business as may be properly brought before the meeting

2.4 If the above date is inconvenient, the annual meeting of Shareholders shall be held, in each year on such day, at such time and such place within or outside the State of California as shall be fixed by the Board of Directors and stated in the notice of the meeting to the shareholders.

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Section 3.Special Meetings

3.1 Special meetings of the Shareholders for any purpose or purposes whatsoever, may be called at any time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, or by any number of shareholders owning or having the right to vote an aggregate of not less than 10% of outstanding shares of capital stock entitled to vote.

3.2 If a special meeting is called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the time of such meeting and the general nature of the business proposed to be transacted, and shall be delivered personally or sent by registered mail or by telegraphic or other facsimile transmission to the Chairman of the Board, the Chief Executive Officer or the Secretary of the Corporation.  The officer receiving such request shall forthwith cause notice to be given to the Shareholders entitled to vote, in accordance with the provisions of Sections 4 and 5 of this Article, that a meeting will be held at the time requested by the person or persons calling the meeting, not less than thirty-five (35) nor more than sixty (60) days after the receipt of the request.  If the notice is not given within twenty (20) days after receipt of the request, the person or persons requesting the meeting may give the notice in the manner provided in these Bylaws or upon application to the Superior Court as provided in the Code.  Nothing contained in this paragraph of this Section shall be construed as limiting, fixing or affecting the time when a meeting of Shareholders called by action of the Board of Directors may be held.

Section 4.Notice of Meetings.

4.1 Notice of any Shareholders meetings, annual or special, shall be given in writing not less than ten (10) days nor more than sixty (60) days before the date of the meeting to Shareholders entitled to vote thereat by the Secretary or the Assistant Secretary, or if there be no such officer, or in the case of said Secretary or Assistant Secretary's neglect or refusal, by any Director or Shareholder.

4.2 Such notices or any reports shall be given personally or by mail or other means of written communication as provided in the Code and shall be sent to the Shareholder's address appearing on the books of the Corporation, or supplied by the Shareholder to the Corporation for the purpose of notice, and in the absence thereof, as provided in the Code by posting notice at a place where the principal executive office of the Corporation is located or by publication at least once in a newspaper of general circulation in the county in which the principal executive office is located.

4.3 Notice of any meeting of Shareholders shall specify the place, the day and the hour of meeting, and (i) in case of a special meeting, the general nature of the business to be transacted and that no other business may be transacted, or (ii) in the case of an annual meeting, those matters which the Board of Directors, at the date of mailing of notice, intends to present for action by the Shareholders.  At any meetings where Directors are elected, notice shall include the names of the nominees, if any, intended at the date of notice to be presented for election.

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4.4           Notice shall be deemed given at the time it is delivered personally or deposited in the mail or sent by other means of written communication.  The officer giving such notice or report shall prepare and file in the minute book of the Corporation an affidavit or declaration thereof.

4.5           If action is proposed to be taken at any meeting for approval of (i) contracts or transactions in which a Director has a direct or indirect financial interest, pursuant to Section 310 of the Code, (ii) an amendment to the Articles of Incorporation, pursuant to Section 902 of the Code, (iii) a reorganization of the Corporation, pursuant to Section 1201 of the Code, (iv) dissolution of the Corporation, pursuant to Section 1900 of the Code, or (v) a distribution to preferred Shareholders, pursuant to Section 2007 of the Code, the notice shall also state the general nature of such proposal.

Section 5.Quorum.

5.1 The holders of a majority of the shares entitled to vote at a Shareholders' meeting, present in person, or represented by proxy, shall constitute a quorum at all meetings of the Shareholders for the transaction of business except as otherwise provided by the Code or by these Bylaws.

5.2 The Shareholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough Shareholders to leave less than a quorum, if any action taken (other than adjournment) is approved by a majority of the shares required to constitute a quorum.

Section 6.Adjourned Meeting and Notice Thereof.

6.1 Any Shareholders' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the shares represented at such meeting, either in person or by proxy, but in the absence of a quorum, no other business may be transacted at such meeting.

6.2           When any meeting of Shareholders, either annual or special, is adjourned to another time or place, notice need not be given for the resumption of the adjourned meeting if the time and place thereof are announced at a meeting at which the adjournment is taken. If a new record date for the adjourned meeting is fixed, or if the adjournment is for more than forty-five (45) days from the date set for the resumption of the original meeting,  the Board of Directors shall set a new record date and notice of any adjourned meeting shall be given to each Shareholder of record entitled to vote at the adjourned meeting in accordance with the provisions of Section 4 of this Article.  At any adjourned meeting, the Corporation may transact any business, which might have been transacted at the original meeting.

Section 7.Waiver or Consent by Absent Shareholders.

7.1 The transactions of any meeting of Shareholders, either annual or special, however called and noticed, shall be valid as though had at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each of the Shareholders entitled to vote, not present in person or by proxy, sign a written waiver of notice, or a consent to the holding of such meeting or an approval of the minutes thereof.

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7.2 The waiver of notice or consent need not specify either the business to be transacted or the purpose of any regular or special meeting of Shareholders, except that if action is taken or proposed to be taken for approval of any of those matters specified in Section E of Section 4.5 of this Article, the waiver of notice or consent shall state the general nature of such proposal.  All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

7.3 Attendance of a person at a meeting shall also constitute a waiver of notice of such meeting, except when the person objects, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened, and except that attendance at a meeting is not a waiver of any right to object to the consideration of matters not included in the notice.  A Shareholder or Shareholders of the Corporation holding at least five percent (5%) in the aggregate of the outstanding voting shares of the Corporation may (i) inspect, and copy the records of Shareholders' names and addresses and shareholdings during usual business hours upon five days prior written demand upon the Corporation, and/or (ii) obtain from the transfer agent by paying such transfer agent's usual charges for such a list, a list of the Shareholders' names and addresses who are entitled to vote for the election of Directors, and their shareholdings, as of the most recent record date for which such list has been compiled or as of a date specified by the Shareholders subsequent to the day of demand.  Such list shall be made available by the transfer agent on or before the later of five (5) days after the demand is received or the date specified therein as the date as of which the list is to be compiled.  The record of Shareholders shall also be open to inspection upon the written demand of any Shareholder or holder of a voting trust certificate, at any time during usual business hours, for a purpose reasonably related to such holder's interest as a Shareholder or as a holder of a voting trust certificate. Any inspection and copying under this Section may be made in person or by an agent or attorney of such Shareholder or holder of a voting trust certificate making such demand.

Section 8.Maintenance and Inspection of Bylaws.  The Corporation shall keep at its principal executive office, or if not in this state, at its principal business office in this state, the original or a copy of the Bylaws amended to date, which shall be open to inspection by the Shareholders at all reasonable times during office hours.  If the principal executive office of the Corporation is outside the state and the Corporation has no principal business office in this state, the Secretary shall, upon written request of any Shareholder, furnish to such Shareholder a copy of the Bylaws as amended to date.

Section 9.Annual Statement of General Information.  The Corporation shall, in a timely manner, in each year, file with the Secretary of State of California, on the prescribed form, the statement setting forth the authorized number of Directors, the names and complete business or residence addresses of all incumbent Directors, the names and complete business or residence addresses of the Chief Executive Officer, Secretary and Chief Financial Officer, the street address of its principal executive office or principal business office in this state and the general type of business constituting the principal business activity of the Corporation, together with a designation of the agent of the Corporation for the purpose of the service of process, all in compliance with the Code.

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ARTICLE V

AMENDMENTS TO BYLAWS

Section 1.Amendment by Shareholders.  All Bylaws of the Corporation shall be subject to alteration or repeal, and new Bylaws may be made by the affirmative vote of shareholders holding of record in the aggregate at least a majority of the outstanding shares of stock entitled to vote in the election of directors at any annual or special meeting of shareholders, provided that the notice or waiver of notice of such meeting shall have summarized or set forth in full therein, the proposed amendment.

Section 2.Amendment by Directors. The Board of Directors shall have power to make, adopt, alter, amend and repeal, from time to time, Bylaws of the Corporation, provided, however, that the shareholders entitled to vote with respect thereto as in this Article V above-provided may alter, amend or repeal Bylaws made by the Board of Directors, except that the Board of Directors shall have no power to change the quorum for meetings of shareholders or of the Board of Directors or to change any provisions of the Bylaws with respect to the removal of directors or the filling of vacancies in the Board resulting from the removal by the shareholders.  If any bylaw regulating an impending election of directors is adopted, amended or repealed by the Board of Directors, there shall be set forth in the notice of the next meeting of shareholders for the election of directors, the Bylaws so adopted, amended or repealed, together with a concise statement of the changes made.

Section 3.Record of Amendments.  Whenever an amendment or new Bylaw is adopted, it shall be copied in the corporate book of Bylaws with the original Bylaws, in the appropriate place. If any Bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written assent was filed shall be stated in the corporate book of Bylaws.

ARTICLE VI

SHARES OF STOCK

Section 1.Certificate of Stock.

1.1 The certificates representing shares of the Corporation's stock shall be in such form as shall be adopted by the Board of Directors, and shall be numbered and registered in the order issued.  The certificates shall bear the following:  the Corporate Seal, the holder's name, the number of shares of stock and the signatures of:  (1) the Chief Executive Officer, and (2) the Secretary or Chief Financial Officer.

1.2 No certificate representing shares of stock shall be issued until the full amount of consideration therefore has been paid, except as otherwise permitted by law.

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1.3 To the extent permitted by law, the Board of Directors may authorize the issuance of certificates for fractions of a share of stock which shall entitle the holder to exercise voting rights, receive dividends and participate in liquidating distributions, in proportion to the fractional holdings; or it may authorize the payment in cash of the fair value of fractions of a share of stock as of the time when those entitled to receive such fractions are determined; or it may authorize the issuance, subject to such conditions as may be permitted by law, of scrip in registered or bearer form over the signature of an officer or agent of the corporation, exchangeable as therein provided for full shares of stock, but such scrip shall not entitle the holder to any rights of a shareholder, except as therein provided.

Section 2.Lost or Destroyed Certificates.  The holder of any certificate representing shares of stock of the Corporation shall immediately notify the Corporation of any loss or destruction of the certificate representing the same. The Corporation may issue a new certificate in the place of any certificate theretofore issued by it, alleged to have been lost or destroyed.  On production of such evidence of loss or destruction as the Board of Directors in its discretion may require, the Board of Directors may, in its discretion, require the owner of the lost or destroyed certificate, or his legal representatives, to give the Corporation a bond in such sum as the Board may direct, and with such surety or sureties as may be satisfactory to the Board, to indemnify the Corporation against any claims, loss, liability or damage it may suffer on account of the issuance of the new certificate.  A new certificate may be issued without requiring any such evidence or bond when, in the judgment of the Board of directors, it is proper to do so.

Section 3.Transfer of Shares.

3.1 Transfer of shares of stock of the Corporation shall be made on the stock ledger of the Corporation only by the holder of record thereof, in person or by his duly authorized attorney, upon surrender for cancellation of the certificate or certificates representing such shares of stock with an assignment or power of transfer endorsed thereon or delivered therewith, duly executed, with such proof of the authenticity of the signature and of authority to transfer and of payment of taxes as the Corporation or its agents may require.

3.2 The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the absolute owner thereof for all purposes and, accordingly, shall not be bound to recognize any legal, equitable or other claim to, or interest in, such share or shares of stock on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law.

Section 4.Record Date.  In lieu of closing the stock ledger of the Corporation, the Board of Directors may fix, in advance, a date not exceeding sixty (60) days, nor less than ten (10) days, as the record date for the determination of shareholders entitled to receive notice of, or to vote at, any meeting of shareholders, or to consent to any proposal without a meeting, or for the purpose of determining shareholders entitled to receive payment of any dividends or allotment of any rights, or for the purpose of any other action.  If no record date is fixed, the record date for the determination of shareholders entitled to notice of, or to vote at, a meeting of shareholders shall be at the close of business on the day next preceding the day on which the notice is given, or, if no notice is given, the day preceding the day on which the meeting is held.  The record date for determining shareholders for any other purpose shall be at the close of business on the day on which the resolution of the directors relating thereto is adopted.  When a determination of shareholders of record entitled to notice of, or to vote at, any meeting of shareholders has been made, as provided for herein, such determination shall apply to any adjournment thereof, unless the directors fix a new record date for the adjourned meeting.

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ARTICLE VII

DIVIDENDS

Subject to applicable law, dividends may be declared and paid out of any funds available therefore, as often, in such amount, and at such time or times as the Board of Directors may determine.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the Corporation shall be March 31, and may be changed by the Board of Directors from time to time subject to applicable law.

ARTICLE IX

CORPORATE SEAL

The corporate seal shall be circular in form, and shall have inscribed thereon the name of the Corporation; the date of its incorporation, and the word "California" to indicate the Corporation was incorporated pursuant to the laws of the State of California.

ARTICLE X

INDEMNITY

Section 1. Every person who was or is a party or is threatened to be made a party to or is involved in any action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the corporation or is or was serving at the request of the corporation or for its benefit as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust, or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the general corporation law of the State of California from time to time against all expenses, liability and loss (including attorneys’ fees, judgments, fines, and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith.  The Board of Directors may, in its discretion, cause the expense of officers and directors incurred in defending a civil or criminal action, suit or proceeding to be paid by the corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the corporation.  No such person shall be indemnified against, or be reimbursed for, any expense or payments incurred in connection with any claim or liability established to have arisen out of his or her own willful misconduct or gross negligence.  Any right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and, which such directors, officers, or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of shareholders, provision of law or otherwise, as well as their rights under this Article.

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Section 2. The Board of Directors may cause the corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the corporation would have the power to indemnify such person.

Section 3. The Board of Directors may from time to time adopt further Bylaws with respect to indemnification and may amend these and such Bylaws to the full extent permitted by the Code.

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CERTIFICATE OF SECRETARY

I, the undersigned, certify that:

1. I am the duly elected and acting Secretary of SUSTAINABLE ENVIRONMENTAL TECHNOLOGIES CORPORATION, a California corporation; and

2. The foregoing Amended and Restated Bylaws, consisting of 13 pages, are the Bylaws of this Corporation as adopted by the Board of Directors.

IN WITNESS WHEREOF, I have subscribed my name and affixed the seal of this Corporation on this 15th day of June, 2012.

/s/ Keith Morlock

KEITH MORLOCK, Secretary

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Robert Glaser, certify that:

1. I have reviewed this annual report on Form 10-K of Sustainable Environmental Technologies Corporation;

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 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 control 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 control over financial reporting.

Dated: June 29, 2012
	By:	/s/ Robert Glaser
		Robert Glaser Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13A-14 AND 15D-14

OF THE SECURITIES EXCHANGE ACT OF 1934

I, Cynthia Glaser, certify that:

1. I have reviewed this annual report on Form 10-K of Sustainable Environmental Technologies Corporation;

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 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 control 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 control over financial reporting.

Dated: June 29, 2012
	By:	/s/ Cynthia Glaser
		Cynthia Glaser
		Chief Financial Officer

EX-32.1

 

Exhibit 32.1

CERTIFICATION 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 Annual Report of Sustainable Environmental Technologies Corporation (the "Company") on Form 10-K for the year ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert Glaser, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 29, 2012

By:	/s/ Robert Glaser
	Robert Glaser
	Chief Executive and Principal Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION 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 Annual Report of Sustainable Environmental Technologies Corporation (the "Company") on Form 10-K for the year ended March 31, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Cynthia Glaser, Chief Financial and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2001, that:

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: June 29, 2012

By:	/s/ Cynthia Glaser
	Cynthia Glaser
	Chief Financial and Principal Accounting Officer

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Note 3 - Intangible Assets

12 Months Ended

Mar. 31, 2012

Intangible Assets Disclosure [Text Block]

Note 3 – Intangible Assets

Customer Relationships

The customer relationships are being amortized over the period of seven years from the acquisition date of October 1, 2009. The goodwill is not subject to amortization and will not be deductible for income tax purposes. During the years ended March 31, 2012 and 2011, the Company recorded amortization expense to cost of goods sold related to the customer relationship of $28,936 and $28,556, respectively. The net carrying value of the customer relationship as of March 31, 2012 was $130,108. Future amortization expense of the customer relationship is expected to be as follows for the years ending March 31: $28,857, $28,857, $28,857 $28,857, and $14,680 in 2013, 2014, 2015, 2016 and 2017, respectively. Goodwill represents expected synergies from the merger of operations. These synergies include a full management team and a formalized corporate organizational structure to expand the operations.  In addition, there were limited intangible assets in which did not qualify for separate recognition, such as an established workforce, but the effects on the consolidated financial statements are immaterial.

Pending Patents

In connection with the pending patents acquired from WES, the Company is amortizing the value of the patents over an estimated life of 15 years, which is the approximate remaining life and projected cash flows of the pending patents. During the year ended March 31, 2012, the Company amortized $12,166, which is included in general and administrative expense. At March 31, 2012, the net carrying value of the pending patents was $118,335. See Note 1 for a description related to a change in the agreement with WES. As of March 31, 2012, none of the contingent consideration under the WES Agreement had been triggered. As of March 31, 2012, the patent life was approximately 14 years of which $8,452 is expected to be amortized annually until fully amortized.

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Note 2 - Accounting Policies and Basis of Presentation

12 Months Ended

Mar. 31, 2012

Basis of Presentation and Significant Accounting Policies [Text Block]

Note 2 – Accounting Policies and Basis of Presentation

Principles of Consolidation

The consolidated financial statements include the assets, liabilities and operating results of the Company and its wholly-owned subsidiaries, PWU, ProWater, LLC, a Colorado limited liability company ("PWC"), and SET IP Holdings LLC, a Utah limited liability company ("Set IP"), after elimination of all material inter-company accounts and transactions. OC Energy and balances related to the Company’s former wastewater treatment plant are classified as discontinued operations.

Estimates

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include the valuation of derivatives, equity instruments such as options and warrants, provision for income taxes and the realization of deferred tax assets. Actual results could differ from those estimates.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 - Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Derivative instruments include the warrant liability (Level 2). Derivative instruments are valued using standard calculations/models that are primarily based on observable inputs, including volatilities and interest rates. Therefore, derivative instruments are included in Level 2.

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of March 31, 2012 and 2011. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaids, accounts payable, accrued liabilities, notes payable, and convertible notes payable. Fair values for these items were assumed to approximate carrying values because of their short term in nature or they are payable on demand.

The following table presents the Company’s fair value hierarchy for assets and liabilities measured at fair value on a recurring basis at March 31, 2012:

	Level 1		Level 2		Level 3		Total
Assets
Cash  and cash equivalents	$	1,913,727	$	-	$	-	$	1,913,727
Total assets measured at fair value	$	1,913,727	$	-	$	-	$	1,913,727
Liabilities
Derivative instruments	$	-	$	119,846	$	-	$	119,846
Total liabilities measured at fair value	$	-	$	119,846	$	-	$	119,846

The following table presents the Company’s fair value hierarchy for assets measured at fair value on a recurring basis at March 31, 2011:

	Level 1		Level 2		Level 3		Total
Assets
Cash  and cash equivalents	$	105,260	$	-	$	-	$	105,260
Total assets measured at fair value	$	105,260	$	-	$	-	$	105,260
Liabilities
Derivative instruments	$	-	$	247,284	$	-	$	247,284
Total liabilities measured at fair value	$	-	$	247,284	$	-	$	247,284

The Company measures certain assets at fair value on a nonrecurring basis. These assets include cost method investments when they are deemed to be other-than-temporarily impaired, assets acquired and liabilities assumed in an acquisition or in a nonmonetary exchange, and property and equipment and intangible assets that are written down to fair value when they are held for sale or determined to be impaired. During the years ended March 31, 2012 and 2011, the Company did not have any significant assets or liabilities that were measured at fair value on a nonrecurring basis in periods subsequent to initial recognition.

Concentrations

Credit Risk

At times, the Company maintains cash balances at a financial institution in excess of the $250,000 FDIC insurance limit. In addition, at times the Company extends credit to customers in the normal course of business, after an evaluation of the credit worthiness. The Company does not expect to take any unnecessary credit risks causing significant causing write-offs of potentially uncollectible accounts. The Company also maintains reserves for potential credit losses. The Company considers the following factors when determining if collection of a fee is reasonably assured: customer credit-worthiness, past transaction history with the customer, current economic industry trends and changes in customer payment terms.

Customer

The geographic location of the injection well is a direct factor with relation to the radius of customer’s wells that can be economically serviced. While there are several key factors to obtaining new business, the ratio of available business per customer is based solely on the number of wells the customer has within the serviceable radius of the injection well. As new gas wells are developed within the serviceable radius of the well, the ratio of customers to percentage of business will decrease. Until new wells are developed the expected customer to business ratio are not expected to change. During year ended March 31, 2012, the Company had one (1) customer that accounted for approximately 81% of its revenue and 84% of its accounts receivable at March 31, 2012. During year ended March 31, 2011, the Company had one (1) customer that accounted for approximately 86% of its revenue and 92% of its accounts receivable at March 31, 2011. The loss of our injection well customer would have a significant impact on the Company’s financial results. In addition, we are selling our reclaimed oil to one customer. If there was an issue with this customer, we have additional oil customers that would potentially take this position.

Cash Equivalents

All highly-liquid investments with a maturity of three (3) months or less are considered to be cash equivalents.

Property and Equipment

Property and equipment are recorded at cost and depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The estimated lives of property and equipment are as follows:

Injection well	20 years
Machinery and equipment, furniture and equipment	Five to ten years
Buildings	25 years
Land	not depreciated

Impairment of Long-Lived and Purchased Intangible Assets

The Company has adopted ASC 350 Intangibles – Goodwill and Other. The Statement requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undercounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets will be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 350 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Long-lived assets, such as property and equipment and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the asset is measured by comparison of its carrying amount to undiscounted future net cash flows the asset is expected to generate. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair market value. Estimates of expected future cash flows represent management's best estimate based on currently available information and reasonable and supportable assumptions. Any impairment recognized is permanent and may not be restored. At March 31, 2012, the Company has not recognized any impairment of long-lived assets.

Conversion Features and Warrants Issued with Convertible Debt

The Company's derivative financial instruments consist of embedded derivatives related to the senior convertible secured notes. These embedded derivatives include the conversion feature and the detachable warrants. As of the inception date of the agreement the debt was not considered conventional as defined in EITF 05-2, “The Meaning of "Conventional Convertible Debt Instruments" in issue No. 00-19”, codified into ASC 815. The accounting treatment of derivative financial instruments requires that the Company record the conversion feature and related warrants at their fair values and record them at fair value as of each subsequent balance sheet date. Any change in fair value is to be recorded as non-operating, non-cash income or expense at each reporting date. If the fair value of the derivatives is higher at the subsequent balance sheet date, the Company will record a non-operating, non-cash charge. If the fair value of the derivatives is lower at the subsequent balance sheet date, the Company will record non-operating, non-cash income.

EITF 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” and EITF 00-27, “Application of Issue 98-5 to Certain Convertible Instruments”, both codified into ASC 470 governs the calculation of an embedded beneficial conversion, which is treated as an additional discount to the to the instruments where derivative accounting (explained above) does not apply. The amount of the value of warrants and beneficial conversion feature may reduce the carrying value of the instrument to zero, but no further. The discounts relating to the initial recording of the derivatives or beneficial conversion features are accreted over the term of the debt.

Investment, at Cost

The Company accounted for their investment in World Environmental Solutions Pty (“WES”) using the cost method due to the limited ownership and influence on the entity. Under the cost method, the investment was recorded at cost at the time of purchase. The Company does not adjust this investment unless the investment is considered impaired or there are liquidating dividends, both of which reduce the investment account. The aggregate carrying amount of our cost-method investment at March 31, 2011 was $91,466, representing a 12% ownership in WES. During the year ended March 31, 2012, the Company removed the cost-method investment in WES based on the change in terms of the agreement as discussed in Note 1 of the financial statements.

Goodwill

Under the current accounting standards, the Company requires that goodwill and intangible assets deemed to have indefinite lives are no longer amortized but are subject to an annual impairment test which has two steps to determine whether an asset impairment exists. The first step of the impairment test identifies potential impairment by comparing the fair value with the carrying amount of the reporting unit, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any. Intangibles with indefinite useful lives are measured for impairment by the amount that the carrying value exceeds the estimated fair value of the intangible. The fair value is calculated using the income approach. Intangible assets with definite useful lives will continue to be amortized over their estimated useful lives. Any impairment is recorded at the date of determination.

The Company’s policy provides for annual evaluation of goodwill on the first day of the fourth fiscal quarter and whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. Impairment of goodwill is tested at the operating segment level by comparing the segments' net carrying value, including goodwill, to the fair value of the segment. The fair values of our segments are estimated using a combination of the income or discounted cash flows approach and the market approach, which uses comparable market data. If the carrying amount of the segment exceeds its fair value, goodwill is potentially impaired and a second test would be performed to measure the amount of impairment loss, if any. All goodwill is associated with the Pro Water segment. At March 31, 2012, the Company has determined that the fair value of the Pro Water segment is substantially in excess of the carrying value.

Derivative Financial Instruments

Derivative financial instruments, as defined in ASC 815, Accounting for Derivative Financial Instruments and Hedging Activities, consist of financial instruments or other contracts that contain a notional amount and one or more underlying (e.g. interest rate, security price or other variable), require no initial net investment and permit net settlement. Derivative financial instruments may be free-standing or embedded in other financial instruments. Further, derivative financial instruments are initially, and subsequently, measured at fair value and recorded as liabilities or, in rare instances, assets.

The Company does not use derivative financial instruments to hedge exposures to cash-flow, market or foreign-currency risks. However, the Company has issued financial instruments including senior convertible notes payable and freestanding stock purchase warrants with features that are either (i) not afforded equity classification, (ii) embody risks not clearly and closely related to host contracts, or (iii) may be net-cash settled by the counterparty. As required by ASC 815, in certain instances, these instruments are required to be carried as derivative liabilities, at fair value, in our financial statements.

The Company estimates the fair values of derivative financial instruments using various techniques (and combinations thereof) that are considered to be consistent with the objectively measuring fair values. In selecting the appropriate technique, consideration is give to, among other factors, the nature of the instrument, the market risks that it embodies and the expected means of settlement. For less complex derivative instruments, such as free-standing warrants, the Company generally uses the Black-Scholes option valuation technique because it embodies all of the requisite assumptions (including trading volatility, estimated terms and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques are highly volatile and sensitive to changes in the trading market price of our common stock, which has a high-historical volatility. Since derivative financial instruments are initially and subsequently carried at fair values, the Company's operating results will reflect the volatility in these estimate and assumption changes.

Revenue Recognition

For revenue from product sales, the Company recognizes revenue in accordance with ASC 605, Revenue Recognition. The Company generates revenues from its deep injection water disposal well. Customers are charged on a per barrel rate for the water in which the Company disposes. Revenue is recorded when the water is disposed assuming all the revenue recognition criteria stated below are satisfied. In connection with the water disposal, the Company reclaims oil which is suspended within the water. Periodically, the Company sells this reclaimed oil to third parties and revenue is recognized upon sale assuming all the revenue recognition criteria stated below are satisfied. The Company records revenue when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the prices for the services performed and the collectability of those amounts.  In addition, the Company extends credit to customers in which have shown the ability to pay for the services. At times the Company extends credit to new customers; however, such is not done until the Company is satisfied through references, evidence of financial soundness, etc. Provisions for allowances are performed periodically and estimates for uncollectable amounts are recorded as necessary based on management’s estimates. 

Cost of Revenues

Costs of revenues include costs related to revenue recognized; such costs represent labor, depreciation and amortization, equipment rental, supplies, utilities, repair and maintenance.

General and Administrative Expenses

General and administrative expenses include management and administrative personnel costs; corporate office costs; accounting fees, legal expense, information systems expense, and product marketing and sales expense.

Research and Development Expenses

Research and development expenses consist of expenses related to its MultiGen technology, which is still in its preliminary stages and of which its future benefits are uncertain.

Earnings Per Common Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income available to common shareholders by the combination of dilutive common share equivalents, comprised of shares issuable under the Company’s share-based compensation plans and the weighted-average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share equivalents, which are calculated, based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an award, if any, the amount of compensation cost, if any, for future service that the Company has not yet recognized, and the estimated tax benefits that would be recorded in paid-in capital, if any, when an award is settled are assumed to be used to repurchase shares in the current period.

The following is a summary of outstanding securities which have been included in the calculation of diluted net income per share and reconciliation of net income to net income available to common stock holders for the year ended March 31, 2012:

	For the Year Ended March 31, 2012
Weighted average common shares outstanding used in calculating basic earnings per share		15,028,294
Effect of convertible notes payable		1,482,746
Effect of options and warrants		802,212
Weighted average common and common equivalent shares used in calculating diluted earnings per share		17,313,252
Net income as reported	$	2,254,920
Add - Interest on convertible notes payable		225,540
Net income available to common stockholders	$	2,480,460

The Company excluded 2,005,502 warrants from the computation for the year ended March 31, 2012, as their exercise prices were in excess of the average closing market price of the Company’s common stock, causing their effects to be anti-dilutive using the treasury stock method. 

The following is a summary of outstanding securities which have been excluded from the calculation of diluted net loss per share because the effect would have been anti-dilutive for the year ended March 31, 2011:

	For the Year Ended March 31, 2011
Common stock options		163,333
Common stock warrants		-
Convertible notes		1,570,335
		1,733,668

Advertising Costs

The Company expenses all costs of advertising as incurred. The Company expensed $5,052 and $2,667 of advertising costs during the years ended March 31, 2012 and 2011, respectively.

Stock-Based Compensation

ASC 718, Share-Based Payment requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of ASC 718 include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans.

The Company adopted ASC 718, which requires disclosure of the fair value and other characteristics of stock options and more prominent disclosure about the effects of an entity’s accounting policy decisions with respect to stock-based compensation on reported net loss. The Company has reflected the expense of such stock based compensation based on the fair value at the grant date for awards consistent with the provisions of ASC 718.

In connection with the adoption of ASC 718, the fair value of our share-based compensation has been determined utilizing the Black-Scholes pricing model. The fair value of the options granted is amortized as compensation expense on a straight line basis over the requisite service period of the award, which is generally the vesting period. The fair value calculations involve significant judgments, assumptions, estimates and complexities that impact the amount of compensation expense to be recorded in current and future periods. Upon option exercise, the Company issues new shares of stock.

The following weighted average variables were used in the Black Scholes model for all option issuances valued during the fiscal year ended March 31, 2012 and 2011.

Year ended March 31,	Stock Price at Grant Date		Dividend Yield	Exercise Price		Risk Free Interest Rate	Volatility	Average Life
2012	$	1.02	-%	$	1.02	0.83%	264%	5.50
2011	$	0.45	-%	$	0.45	0.39%	257%	4.11

The Company's accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of Emerging Issues Task Force (“EITF”) 96-18, “Accounting for Equity Instruments That are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”, codified into ASC 505.  The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor's performance is complete.  In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

Segment Reporting

The Company reports its segments under ASC 280, Segment Reporting, which establishes standards for reporting information regarding operating segments in annual financial statements and requires selected information for those segments to be presented in interim financial reports issued to stockholders. ASC 280 also establishes standards for related disclosures about products and services and geographic areas. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision making group, in making decisions on how to allocate resources and assess performance. As of March 31, 2012 and 2011, the Company has two segments: PWU and SET Corp, with PWU being the only revenue producing segment.

Income Taxes

The Company follows ASC 740, Income Taxes for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The method to estimate the deferred tax asset is based on the feasibility of recoverability of the asset. The valuation allowance applied to the deferred tax asset is based on the relatively short operating history of the Company primarily based on one significant customer concentration.

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Consolidated Balance Sheets (USD $)	Mar. 31, 2012	Mar. 31, 2011
Current assets:
Cash and cash equivalents	$ 1,913,727	$ 105,260
Accounts receivable, net of allowance for doubtful accounts of $6,000 and $6,000, respectively	300,112	367,024
Prepaids and other current assets	39,383	36,962
Deferred tax asset	117,126
Current assets of discontinued operations		410
Total current assets	2,370,348	509,656
Property and equipment, net	2,153,374	1,989,892
Other assets	699,950	40,230
Investment, at cost		91,466
Intangible assets, net	248,443	434,519
Goodwill	66,188	66,188
Deferred tax assets, long-term	1,116,964
Total Assets	6,655,267	3,131,951
Current liabilities:
Accounts payable	284,488	639,343
Accrued salaries, wages, and related party consulting fees	134,235	239,205
Accrued liabilities	178,086	337,905
Income taxes payable	59,200	25,823
Current portion of Related-party convertible notes payable, net of discount of $109,318 and $139,196, respectively	246,012	204,509
Notes payable	124,577	579,753
Current liabilities of discontinued operations		119,424
Total current liabilities	1,026,598	2,145,962
Related-party convertible notes payable, net of discount of $133,992 and $394,308, respectively	1,080,172	1,258,707
Notes payable, long-term		63,606
Warrant liability	119,846	247,284
Asset retirement obligation	9,900	9,900
Total liabilities	2,236,516	3,725,459
Commitments and Contingencies (Note 11)
Stockholders' Equity (Deficit):
Preferred stock, $0.001 par value, 10,000,000 shares authorized; 4,582,827 issued at March 31, 2012 and 2011, none outstanding
Common stock, $0.001 par value, 100,000,000 and 300,000,000 shares authorized; 16,458,524 and 14,649,296 issued; 16,458,524 and 14,629,962 outstanding at March 31, 2012 and 2011, respectively	16,458	14,630
Additional paid-in capital	6,414,670	3,659,159
Accumulated deficit	(2,012,377)	(4,267,297)
Total stockholders' equity (deficit)	4,418,751	(593,508)
Total Liabilities and Stockholders' Equity (Deficit)	$ 6,655,267	$ 3,131,951

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Cash flows from operating activities:
Net income (loss)	$ 2,254,920	$ (355,439)
Amortization of debt discounts related to beneficial conversion features and warrants	143,511	621,782
Gain on settlement of note payable and accrued interest	(624,909)
Income tax benefit	(1,234,090)
Loss on divestiture of asset held for sale		30,000
Settlement of accounts payable and accrued liabilities treated as contributed capital		400,000
Loss on disposal of assets	28,256
Change in fair value of derivative liabilities	(127,438)	102,584
Depreciation and amortization	196,167	125,701
Stock-based compensation	640,942	114,771
Gain on settlement of accounts payable	(140,625)
Change in operating assets and liabilities:
Accounts receivable	66,912	(152,571)
Prepaid expenses	(662,141)	(47,318)
Accounts payable	(175,204)	(158,860)
Accrued liabilities	(149,688)	(62,710)
Income taxes payable	33,377	(51,399)
Net cash provided by operating activities	249,990	566,541
Cash flows from investing activities:
Purchase of property and equipment	(346,803)	(858,509)
Cash provided by reverse acquisition		36,040
Net cash used in investing activities	(346,803)	(822,469)
Cash flows from financing activities:
Contributed capital		150,000
Proceeds from sale of common stock	2,301,250	208,000
Repurchase of common stock	(3,830)
Repurchase of stock options	(8,000)
Payments on related party convertible note payable	(227,226)	(203,280)
Payments on notes payable	(156,914)	(74,432)
Net cash provided by financing activities	1,905,280	80,288
Net increase in cash	1,808,467	(175,640)
Cash - beginning of year	105,260	280,900
Cash - end of year	1,913,727	105,260
Cash paid during the year for:
Interest	98,485	24,722
Income taxes	30,438	51,399
Non-cash investing and financing activities:
Issuance of common stock in settlement of accounts payable and accrued liabilities	10,100	1,539,824
Issuance of convertible note, common stock, and warrants for cost investment and pending patents	140,000	376,440
Issuance of common stock in connection with convertible debt and accrued interest		825,000
Fair value of beneficial conversion feature recorded on Pro Water note		400,000
Purchase of equipment with note payable		66,035
Issuance of convertible note in connection with Pro Water Acquisition		$ 200,000

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Note 1 - Organization, History and Significant Accounting Policies and Procedures

12 Months Ended

Mar. 31, 2012

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 – Organization, History and Significant Accounting Policies and Procedures

Organization and History

Sustainable Environmental Technologies Corporation and subsidiaries (collectively the “Company” or “SET Corp” without the use of personal pronouns) is dedicated to responsible resource utilization through the strategic balance of Environmental, Societal and Economic growth. Headquartered in Southern California, SET Corp is setting the standard for responsible principles of Sustainable Development.  These steadfast values are evident through patented technologies and strategic acquisitions, which solve environmental issues with an economic advantage. SET Corp limits their customer’s environmental impact while conserving valuable and diminishing resources that are essential to future generations.

Current and future services include, and are expected to include innovative echo-technologies that provide patented treatment, recovery, reclamation and re-injection services for produced water (associated with the oil and gas industry) and complete sustainable energy solutions that that bridge the gap between existing energy inefficient buildings and the sustainable development and design needs of tomorrow.

In addition to these areas of expertise SET Corp provides customized services that include design, construction management, operation and maintenance services, and equipment manufacturing for industrial and municipal sectors.  With strategic partnerships, through prominent global manufacturers and distributors, SET Corp has access to a worldwide sales and distribution network. 

Acquisitions

Acquisition

On July 7, 2010 (the “Effective Date”), SET Corp entered into an agreement to acquire Pro Water, LLC ("PWU"), a Utah limited liability company (formerly a Colorado limited liability company) with its sole equity member Metropolitan Real Estate LLC (the “Member), a New York limited liability company. Pro Water owns and operates a Blue Bench Class II salt water disposal ("SWD") well in Duchesne, Utah; the operations were assumed by the Member on October 1, 2009 (“Inception”).  Under the terms of the Agreement, the Company acquired 100% of the equity of PWU from its sole member, and PWU became a wholly-owned subsidiary of the Registrant in exchange for the payment of 1,333,333 shares of the Company’s restricted common stock, a secured convertible promissory note payable quarterly over the period of one year from the closing date in the amount of $2.0 million, with an interest rate of 5% and a conversion feature at the option of the holder into shares of the Company’s common stock at a price of $1.50 per share, and the assumption of Pro Water debts.  The note is secured by all the assets of PWU and the wastewater treatment facility owned by SET Corp. Metropolitan Real Estate LLC is an entity controlled by Horst Franz Geicke, a significant shareholder of the Company.

On July 12, 2010, the terms of the acquisition were amended whereby the number of shares of common stock paid for PWU was increased to 2,222,222 (from 1,333,333), and the conversion rate of the $2,000,000 related secured convertible promissory note, which previously all converted at $1.50 at the option of the holder, such amended to so that $1,600,000 of the note may be converted at $3.00 per share and $400,000 may be converted at $0.375 per share.  The convertible note is due based on the following: $100,000 paid on or before September 30, 2010, $200,000 paid on or before December 31, 2010, $200,000 paid on or before March 31, 2011 and the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010 was paid in October 2010.

On January 14, 2011, the terms of the convertible note were amended. As of the date of the amendment, the unpaid principal amount was $1,880,000. Under the terms of the new agreement, the term of the note was extended to five years and all accrued interest was forgiven. The Company is to make 60 monthly payments of $35,478 commencing January 2011 and concluding December 2015, see Note 7 for minor modification made to the convertible note during fiscal 2012. All other terms, including conversion and interest rates remained the same. The Company accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period. See Note 7 for additional information.

The acquisition of PWU was accounted for as a reverse acquisition in accordance with Accounting Standards Codification (“ASC”) 805 Business Combinations. The Company determined for accounting and reporting purposes that Pro Water is the acquirer because of the significant holdings and influence of the control group of Pro Water before and after the acquisition. As a result of the transaction the Pro Water control group owns in excess of 44% of issued and outstanding common stock of SET Corp on a diluted basis.  In addition, in connection with the acquisition certain members of management were required to sign voting agreements.  As of January, these voting agreements expired. The control group of Pro Water could elect or appoint or to remove a majority of the members of the governing body of the Company due to the significant holdings of the Company’s common stock. The control group of Pro Water could have influence on the organization as they have provided funding for operations of SET Corp, prior to the acquisition, in an attempt to settle debts prior to the reverse acquisition. In addition, the Pro Water control group initially had a $2.0 million note payable, approximately $1,800,000, at March 31, 2011 in which additional influence can be subjected.  In addition, Pro Water is significantly larger than SET Corp in terms of assets and operations. Additionally, the future operations of PWU will be the Company intended primary operations and more indicative of the operations of the consolidated entity on a go forward basis.

Accordingly, the assets and liabilities of PWU are reported at historical costs and the historical results of PWU will be reflected in this and future SET Corp filings as a change in reporting entity.  The assets and liabilities of SET Corp will be reported at fair value on the date of acquisition, and results of operations will be reported from the date of acquisition.  The assets and liabilities of SET Corp were reported at their carrying values, which approximated fair value, and no goodwill was recorded. The results of SET Corp have been included in the accompanying consolidated financial statements from the Effective Date. The following is a schedule of SET Corp’s assets and liabilities at the Effective Date:

Assets:
Cash and cash equivalents	$	35,630
Prepaid expenses and other current assets		9,827
Current assets of discontinued operations		3,503
Property and equipment		24,667
Other assets		10,231
Assets of discontinued operations, long term		30,000
Total Assets		113,858
Liabilities:
Accounts payable		747,023
Accrued liabilities		1,149,763
State income taxes payable		77,223
Notes payable		455,500
Current liabilities of discontinued operations		230,738
Accounts payable, long term		11,883
Accrued liabilities, long term		684,879
Convertible notes payable, long term		388,541
Warrant liability		144,700
Total Liabilities		3,890,250
Net liabilities in excess of assets	$	(3,776,392	)

Since PWU assumed operations on Inception due to the change in reporting entity, there are no reportable periods in 2009 to compare to those periods reported herein for 2010.  The excess liabilities assumed were accounted for as a deemed distribution through a charge to the Company’s accumulated deficit.

The following unaudited pro forma information was prepared as if the acquisition had taken place at the beginning of the period for the year ended March 31, 2011:

	Pro-Forma Combined
	For the Year Ended  March 31, 2011
Revenue	$	2,617,400
Net loss from continuing operations	$	(756,814	)
Net loss per share:
Basic and diluted - continuing operations	$	(0.00	)

MultiGen Acquisition

On August 27, 2010, we entered into a “Technology Purchase Agreement” with World Environmental Solutions Pty Ltd, an Australian company (“WES”).  In exchange for an investment in WES, we purchased certain technologies, including all intellectual property rights and pending patents of WES.  Such patents and patent applications include patent application number 20088237617 and patent application number 2010228129.  Both patent applications relate to the water extraction and electricity generation units as referred to as MultiGen.

Effective September 1, 2011, we entered into an amendment with WES to the aforementioned Technology Purchase Agreement (“Amendment to the TPA”).  Pursuant to the terms of the Amendment to the TPA: (i) SET Corp’s option to purchase 3% of the capital stock of WES has been canceled; (ii) WES’ warrant to purchase 333,333 shares of SET Corp’s common stock at a price of $5.25 per share has been canceled; (iii) WES’ $200,000 convertible secured promissory note issued by SET Corp. (convertible at $5.25 per share of SET Corp’s common stock), and all security interests granted there under, has been canceled; (iv) SET Corp’s ownership of 12% of the capital stock of WES has been canceled; (v) SET Corp’s payment to WES upon certain terms of WES’ successful installation and sale of a MultiGen unit has been reduced to 250,000 shares of SET Corp’s common stock; (vi) the maximum share issuance by SET Corp to WES based on WES royalties paid to SET Corp for certain WES sales of MultiGen units has been reduced to 333,333 shares of SET Corp’s common stock; (vii) any shares of SET Corp common stock issued to WES pursuant to the Agreement, as amended, shall be restricted from transfer for one year from the date of issuance; (viii) SET Corp maximum royalty obligation to WES for SET Corp sales of MultiGen units has been reduced to $500,000; (ix) WES shall pay SET Corp a royalty of 10% of gross revenues for WES sales of MultiGen units; (x) WES and SET Corp shall split 75/25 certain fees paid to WES in connection with agency for sales of MultiGen units outside of Australia; and (xi) the parties have covenanted to use their best efforts in regards to maintaining distributor status for sourcing components for the MultiGen units; WES retained 133,333 shares of common stock issued in connection with the original agreement. See Notes 2, 4, and 8 for additional information.

Due to the significant change in the terms of the Technology Purchase Agreement, the Company determined that the Amendment to the TPA represented the establishment of a new agreement. Thus, the Company revalued the 133,333 shares of common stock issued to WES on the date of the Amendment to the TPA resulting in a value of $140,000 being applied to the pending patents. The Company determined that the fair market value of the common stock issued was more representative of fair value than the pending patents received. The net difference between removing the fair value of the items issued under the old Technology Purchase Agreement and the Amendment to the TPA were classified as additional paid in capital, thus, no gain or loss was recorded on the transaction.

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Consolidated Balance Sheets (Parentheticals) (USD $)	Mar. 31, 2012	Mar. 31, 2011
Allowance for doubtful accounts (in Dollars)	$ 6,000	$ 6,000
Discount on related party convertible notes payable (in Dollars)	109,318	139,196
Discount on related party convertible notes payable, long-term (in Dollars)	$ 133,992	$ 394,308
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares issued	4,582,827	4,582,827
Preferred stock shares outstanding	0	0
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	300,000,000
Common stock shares issued	16,458,524	14,649,296
Common stock shares outstanding	16,458,524	14,629,962

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Note 11 - Commitments and Contingencies

12 Months Ended

Mar. 31, 2012

Commitments and Contingencies Disclosure [Text Block]

Note 11 – Commitments and Contingencies

Operating Leases

In September 2010, the Company entered into an agreement with Koll Business Park for the lease of 1850 square feet of office space at the current Upland address. Rent expense for the fiscal year ended March 31, 2012 and 2011 was $29,304 and $15,968, respectively. The following is the expected minimum payments for the remaining period of the lease for the years ending March 31: $30,266, and $18,019 in 2013 and 2014, respectively. In May 2012 this lease was cancelled. See below.

In March 2012, effective May 2012, the Company entered into a new agreement with Koll Business Park for the lease of 4,333 square feet of office space for a period of four years with rental payments ranging from $2,381 to $5,513.

In March 2012, the Company entered into a land lease in Cartwright, North Dakota. Under the terms of the agreement, the month rent is based upon a fee for barrels produced per month and is for an initial period of fifteen years. The minimum monthly rental amount $750 per month or $9,000 per year.

Manufacturing and Engineering Agreement

In January 2012, PWC entered into a manufacturing and engineering agreement to build part of the Centerline SWD System facility for $1,770,000. To start the process 35% was paid, a second payment of 30% was paid after major components were delivered to the manufacturer. The balance of 35% is due when their portion of the facility is completed and shipped to our ND location. As of March 31, 2012, approximately $619,000 was recorded in other assets on the accompanying balance sheet.

Legal Proceedings

Yates Petroleum

In connection with cross complaint brought by Yates Petroleum ("Yates") against the Company in the District Court of Johnson County, Wyoming (Case no. CV-2008-0102), as discussed in the Company's prior SEC filings, including its Annual Report on Form 10-K for the fiscal year ended March 31, 2010, on August 2, 2010, Yates' motion to continue hearing on summary judgment was denied, and the Company's motion for alternative dispute resolution was granted.   As of November 30, 2010 an agreement, via arbitration, was reached.  The $236,306 was money YPC paid during the original construction of the plant that was to be repaid to them at the completion of construction. In addition to these monies SET Corp was responsible for the complete removal and remediation of the ponds, buildings and land to its original condition prior to the plant construction.  The agreement dated November 30, 2010 requires that SET Corp pay $175,000 at 10% interest for a 24 month period and remove and remediate the effluent pond. The influent pond and all of the remaining structures and their remediation will be the responsibility of YPC. The asset had a carrying cost of $30,000 that was recorded in discontinued operations.  The accrued liability recorded at $236,306 was reduced by the monthly payments. No gain will be recorded until the Company completes the terms of the agreement. The Company is current on the payments and terms of the agreement. In addition, based on current remediation quotes, the asset retirement obligation was reduced from $200,000 to $99,307 resulting in the difference of $100,693 credited to discontinued operations.

See Note -14 Subsequent Events below.

Employment Agreements

On April 3, 2011, our Board of Directors approved amended employment agreements with Bob Glaser and Keith Morlock effective April 7, 2011. According to the terms of the new agreements, the foregoing officers (1) annual base salaries are: Mr. Glaser $144,000 and Mr. Morlock $144,000 (2) have the opportunity for base salary increases, annual cash and stock option bonuses based on Company performance metrics; and (3) will receive certain expense reimbursement. If any of the officers are terminated without cause, as defined in the agreements, such officer shall be entitled to a payment of eight months of the current base salary and will receive acceleration of vesting of outstanding stock options issued pursuant to the agreements.

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Document And Entity Information (USD $)	12 Months Ended
	Mar. 31, 2012	Jun. 29, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	Sustainable Environmental Technologies Corp
Document Type	10-K
Current Fiscal Year End Date	--03-31
Entity Common Stock, Shares Outstanding		16,514,898
Entity Public Float		$ 13,730,000
Amendment Flag	false
Entity Central Index Key	0000932136
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

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Note 12 - Segment Information

12 Months Ended

Mar. 31, 2012

Segment Reporting Disclosure [Text Block]

Note 12 – Segment Information

The Company reports information about operating segments, as well as disclosures about products and services and major customers. Operating segments are defined as revenue-producing components of the enterprise, which are generally used internally for evaluating segment performance. Management has determined that the water disposal operations of SWD (“Pro Water”) and the operations of SET Corp (“SET Corp”) should be disclosed separately as management reviews financial statements for these entities separately and makes decisions independently of the other entities included within the Company’s financial statements. All intercompany transactions between the reportable segments are eliminated upon consolidation of the Company. At March 31, 2012 and 2011, the Pro Water segment is the only revenue producing segment, see revenue recognition policy for how revenues are recorded. As of March 31, 2012 and 2011, the Company operates in one geographic area.

The Company evaluates the performance of its segments based on net income (loss) from continuing operations. Certain income and charges are not allocated to segments in the Company’s management reports because they are not considered in evaluating the segments’ operating performance. The following is a summary of information about profit or loss and assets by segment:

	For the Year Ended March 31, 2012									For the Year Ended March 31, 2011
	Pro Water			SETCORP			Total			Pro Water			SETCORP			Total
Revenues	$	4,269,529		$	-		$	4,269,529		$	2,617,400		$	-		$	2,617,400
Cost of revenues		1,605,247			-			1,605,247			1,020,205			-			1,020,205
Gross profit		2,664,282			-			2,664,282			1,597,195			-			1,597,195
Operating expenses:
General and administrative		469,204			1,528,764			1,997,968			364,642			933,473			1,298,115
Research and development		-			125,292			125,292			-			53,782			53,782
Total operating expenses		469,204			1,654,056			2,123,260			364,642			987,255			1,351,897
Operating income (loss)		2,195,078			(1,654,056	)		541,022			1,232,553			(987,255	)		245,298
Other income (expense):
Interest income		111			644			755			38			37			75
Interest expense		(221,176	)		(82,338	)		(303,514	)		(229,311	)		(510,410	)		(739,721	)
Change in fair value of derivative liability		-			127,438			127,438			-			(102,584	)		(102,584	)
Gain (loss) on settlement of payables and accrued liabilities		(28,256	)		733,039			704,783			-			167,592			167,592
Total other income (expense)		(249,321	)		778,783			529,462			(229,273	)		(445,365	)		(674,638	)
Income (loss) before provision (benefit) for income taxes		1,945,757			(875,273	)		1,070,484			1,003,280			(1,432,620	)		(429,340	)
Provision (benefit) for income taxes								(1,170,275	)								800
Net income (loss) from continuing operations								2,240,759									(430,140	)
Net income from discontinued operations								14,161									74,701
Net income (loss)							$	2,254,920								$	(355,439	)

The geographic location of the injection well is a direct factor with relation to the radius of customer’s wells that can be economically serviced. While there are several key factors to obtaining new business, the ratio of available business per customer is based solely on the number of wells the customer has within the serviceable radius of the injection well.  As new gas wells are developed within the serviceable radius of the well, the ratio of customers to percentage of business will decrease.  Until new wells are developed the expected customer to business ratio are not expected to change. All revenue and receivable concentrations disclosed in Note 2 related to the Pro Water segment.

As of March 31, 2012 and 2011, primarily all of the assets, with the exception of the SET Corp’s pending patents of $118,335 and $130,501, respectively, were within the Pro Water segment.  All assets were located with the United States.

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Consolidated Statements of Operations (USD $)	12 Months Ended
	Mar. 31, 2012	Mar. 31, 2011
Revenues:
Water processing	$ 3,510,837	$ 2,390,998
Reclaimed oil	758,692	226,402
Total revenues	4,269,529	2,617,400
Cost of revenues:
Water processing	1,376,166	849,461
Reclaimed oil	229,081	170,744
Total cost of revenues	1,605,247	1,020,205
Gross profit	2,664,282	1,597,195
Operating expenses:
General and administrative	1,997,968	1,298,115
Research and development	125,292	53,782
Total operating expenses	2,123,260	1,351,897
Operating income	541,022	245,298
Other income (expense):
Interest income	755	75
Interest expense	(303,514)	(739,721)
Change in fair value of derivative liability	127,438	(102,584)
Other, net	704,783	167,592
Total other expense, net	529,462	(674,638)
Income before provision (benefit) for income taxes	1,070,484	(429,340)
Provision (benefit) for income taxes	(1,170,275)	800
Net income (loss) from continuing operations	2,240,759	(430,140)
Net income from discontinued operations	14,161	74,701
Net income (loss)	$ 2,254,920	$ (355,439)
Basic net income (loss) available to common stockholders:
Continuing operations (in Dollars per share)	$ 0.17	$ (0.03)
Discontinued operations (in Dollars per share)	$ 0.00	$ 0.01
Net income (loss) (in Dollars per share)	$ 0.17	$ (0.02)
Diluted net income (loss) available to common stockholders:
Continuing operations (in Dollars per share)	$ 0.14	$ (0.03)
Discontinued operations (in Dollars per share)	$ 0.00	$ 0.01
Net income (loss) (in Dollars per share)	$ 0.14	$ (0.02)
Weighted average shares - basic (in Shares)	15,028,294	10,943,753
Weighted average shares - diluted (in Shares)	17,313,252	10,943,753

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Note 6 - Certain Balance Sheet Elements

12 Months Ended

Mar. 31, 2012

Supplemental Balance Sheet Disclosures [Text Block]

Note 6 – Certain Balance Sheet Elements

Accrued Liabilities

The Company’s accrued liabilities are as follows:

	March 31, 2012		March 31, 2011
Accrued interest	$	39,271	$	192,162
Royalty payable		61,995		51,798
Other		76,820		93,945
Total	$	178,086	$	337,905

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Note 5 - Discontinued Operations

12 Months Ended

Mar. 31, 2012

Discontinued Operations, Policy [Policy Text Block]

Note 5 – Discontinued Operations

The financial results of the Company discontinued operations which consist of OC Energy and the former wastewater plant for the years ended March 31, 2012 and 2011 are as follows:

	For the Year Ended March 31, 2012		For the Year Ended March 31, 2011
Product sales	$	-	$	-
Water treatment royalties		-		-
Income taxes		-		-
Income from discontinued operations after income taxes	$	14,161	$	74,701

The following are the combined condensed balance sheets of OC Energy and the former wastewater treatment plant:

	March 31, 2012		March 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	-	$	410
Total current assets	$	-	$	410
Liabilities
Current liabilities:
Accounts payable	$	-	$	20,116
Accrued liabilities		-		99,307
Total current liabilities	$	-	$	119,423

Management believes there are no contingent liabilities related to discontinued operations.

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Note 13 - Related Party Transactions

12 Months Ended

Mar. 31, 2012

Related Party Transactions Disclosure [Text Block]

Note 13 – Related Party Transactions

Horst Geicke

See Note 1, 7 and 9 for transactions with Horst Geicke, a significant shareholder of the Company and former member of PWU.

Robert Glaser

On the Effective Date, the Company granted 73,333 stock options to Robert Glaser with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Company’s Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Robert Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 33,333 stock options to Robert Glaser with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

On April 4, 2011, the Company granted 40,000 stock options to Robert Glaser with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, the Company granted 26,667 stock options to Robert Glaser with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 150,000 shares of common stock to Robert Glaser, see Note 10 for additional information. On March 31, 2012, the Company granted 50,000 stock options to Robert Glaser with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

See Note 11 for disclosures regarding an amendment to Robert Glaser’s employment contract.

Cynthia Glaser

On January 13, 2011, the Company’s Board of Directors approved the issuance of 10,000 shares of common stock valued at $6,750 to Cynthia Glaser as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 8,333 stock options to Cynthia Glaser with an exercise price of $0.75 per share according to her employment contract. The options vest over one year.

At March 31, 2011, the Company owes an entity controlled by Cynthia and Robert Glaser $24,085 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $54,500.

On March 31, 2012, the Company granted 8,333 stock options to Cynthia Glaser with an exercise price of $1.25 per share according to her employment contract. The options vest over one year.

At March 31, 2012, the Company owes an entity controlled by Cynthia and Robert Glaser $0 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2012 were $24,085.

Keith Morlock

On the Effective Date, the Company granted 73,333 stock options to Keith Morlock with an exercise price of $0.375 per share. The options vest over one year. On January 13, 2011, the Company’s Board of Directors approved the issuance of 33,333 shares of common stock valued at $22,500 to Keith Morlock as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan. On March 31, 2011 the Company granted 33,333 stock options to Keith Morlock with an exercise price of $0.75 per share according to his employment contract. The options vest over one year.

At March 31, 2011, the Company owes an entity controlled by Keith Morlock $35,411 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2011 were $16,500.

On April 4, 2011, the Company granted 40,000 stock options to Keith Morlock with an exercise price of $0.75 per share. The options vest over one year. On October 7, 2011, the Company granted 26,667 stock options to Keith Morlock with an exercise price of $1.20 per share. The options vest over one year. On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 150,000 shares of common stock to Keith Morlock, see Note 10 for additional information. On March 31, 2012, the Company granted 50,000 stock options to Keith Morlock with an exercise price of $1.20 per share according to his employment contract. The options vest over one year.

At March 31, 2012, the company owes an entity controlled by Keith Morlock $0 for management services previously provided under a consulting contract. Payments to this entity during the year ended March 31, 2012 were $29,500.

See Note 11 for disclosures regarding an amendment to Keith Morlock’s employment contract.

Grant King

On July 7, 2010, the Company issued 933,333 shares of its common stock to Grant King, the Company’s former Chief Executive Officer and Director in exchange for the conversion of $357,000 of unpaid, accrued and other compensations due to Mr. King. On the Effective Date, the Company granted 73,333 stock options to Grant King with an exercise price of $0.375 per share. The options vested over one year.

On January 13, 2011, the Company’s Board of Directors approved the issuance of 20,000 shares of common stock valued at $13,500 to Grant King as discretionary compensation bonuses. Compensation bonuses for stock came from the equity bonus plan.

On March 27, 2012, the Company granted 75,000 stock options to Grant King with an exercise price of $1.30 per share according to his consulting contract. The options vest over one year.

See Note 9 for discussion regarding a consulting contract with Grant King.

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Note 9 - Stockholders' Equity (Deficit)

12 Months Ended

Mar. 31, 2012

Stockholders' Equity Note Disclosure [Text Block]

Note 9 – Stockholders’ Equity (Deficit)

General

On December 9, 2011, a majority of the Company’s shareholders, in the form of a written consent authorized the amendment of the Company’s Amended and Restated Articles of Incorporation to decrease the authorized number of shares of common stock to 100,000,000.  The amendment was made effective on January 19, 2012.

Reverse stock split 

On January 25, 2012, the Financial Industries Regulatory Authority ("FINRA") effected a 1 for 15 reverse stock split.  All share and per share information has been adjusted to give effect to the stock split for all periods presented, including all references throughout the consolidated financial statements and accompanying notes.

Series A Preferred Stock

As of March 31, 2012, there are no shares of Series A Preferred Stock (“Series A”) outstanding as all had been converted into common stock prior to the reverse acquisition. Each Series A share is convertible into six shares of the Company’s common stock one year after issuance.  In additions, the Series A has preference over the common stock related to dividends and liquidation. Upon the issuance of 1,000,000 shares of Series A, the Company shall not, either directly or indirectly by amendment, merger, consolidation or otherwise, do any of the following without (in addition to any other vote required by law or the Articles of Incorporation) the written consent or affirmative vote of the holders of at least 75% of the then outstanding shares of Series A, given in writing or by vote at a meeting, consenting or voting (as the case may be) separately as a class.

In the event the Company shall at any time after the Series A original issue date and prior to three years from such date, issue additional shares of common stock, without consideration or for a consideration per share less than the applicable Series A conversion price ($0.375/share) in effect immediately prior to such issue, then the Series A conversion price shall be reduced, concurrently with such issue, to the consideration per share received by the Company for such issue or deemed issue of the additional shares of common stock; provided that if such issuance or deemed issuance was without consideration, then the Company shall be deemed to have received an aggregate of $0.15 of consideration for all such additional shares of common stock issued or deemed to be issued, and the conversion ratio will be changed accordingly.

Capital Contributions

During the year ended March 31, 2011, the former owner of PWU contributed $150,000 to that entity.

Reverse Acquisition

On the Effective Date, July 7, 2010, 7,132,193 shares of common stock were retained by SET Corp’s shareholders as a result of the reverse acquisition. See Note 1 for additional information

Common Stock Issued For Cash

During the year ended March 31, 2011, the Company received proceeds totaling $208,000 resulting in the issuance of 468,000 shares of common stock. 

During the year ended March 31, 2012, the Company received proceeds totaling $2,301,250, net of finders' fees of $73,750 resulting in the issuance of 1,500,000 common stock units, consisting of one share of common stock and one warrant per unit.  The warrants issued had a weighted average exercise price of $2.33 per share, vested immediately and a weighted average term of 1.3 years. See Note 10 for additional warrants granted.

Common Stock Issued to Related Parties for Accrued Liabilities and Services

On July 7, 2010, the Company issued 933,333 shares of its common stock to Grant King, the Company’s former Chief Executive Officer and Director in exchange for the conversion of $357,000 of unpaid, accrued and other compensations due to Mr. King.

On July 7, 2010, the Company issued 650,000 shares of its common stock to Bob Glaser, an Officer and Director in exchange for the conversion of $248,625 of unpaid and accrued compensation due to Mr. Glaser.

On July 7, 2010, the Company issued 466,667 shares of its common stock to Keith Morlock, an Officer and Director in exchange for the conversion of $178,500 of unpaid and accrued compensation due to Mr. Morlock.

On July 8, 2010, the Company issued 66,667 shares of its common stock to Grant King, the Company’s former Chairman of the Board, from its 2006 Incentive and Non Statutory Stock Option Plan in exchange for the conversion of $59,800 of unpaid and accrued compensation due to Mr. King.

In December 2010, the Company issued 96,166 shares of its common stock valued at $51,690 to various individuals on behalf of Grant King, the Company’s former Chief Executive Officer and former Director in exchange for the conversion of $51,690 of unpaid, accrued and other compensations due to Mr. King.

On December 31, 2010, the Company entered into a twenty-four (24) month consulting agreement with Grant King, the former Officer and Director of the Company on the date of grant. Under the agreement, the Company agreed to issue a total of 533,333 shares of common stock in 133,333 increments every six months, payable at the beginning of each six-month period. On the date of the agreement, the Company valued the 533,333 shares at $400,000 based upon the closing market price of the Company’s common stock.  The value of the shares will be expensed over the two-year service period. On January 5, 2011, the Company issued the first 133,333 shares of common stock pursuant to the consulting agreement. On September 19, 2011, the Company issued the second 133,333 shares of common stock pursuant to the consulting agreement. On January 9, 2012, the Company issued the third 133,333 shares of common stock pursuant to the consulting agreement. During the years ended March 31, 2012 and 2011, the Company recorded compensation expense of $200,000 and $50,000, respectively, to general and administrative expenses in connection with this agreement.  See Note 10 for estimated stock-based compensation to be recorded in future years.

On January 13, 2011, the Company’s Board of Directors approved the issuance of 141,667 shares of common stock valued at $106,250 to various officers and consultants of the Company as discretionary compensation bonuses. Compensation bonuses for stock came from the 2010 Plan. The corresponding expense was recorded to general and administrative expense.

On December 28, 2011, the Company issued 10,000 shares of common stock at $1.05 to Bill Ball, a former member of the Board of Directors of the Company, as compensation.

Common Stock Issued for Services

On July 7, 2010, the Company issued 33,333 shares of its common stock as compensation for past legal services of $9,887 to a third-party consultant which offset amounts payable to the consultant.

On December 15, 2010, the Company issued 6,381 shares of its common stock valued at $3,158 as compensation for past consulting services of $3,158 to a third-party consultant which offset amounts payable to the consultant.

On January 9, 2012, the Company issued 30,050 shares of its common stock as compensation for administrative and legal services of $36,060 to various third-party consultants.

Common Stock Issued to Settle Accounts Payable and Accrued Liabilities

On October 26, 2010, the Company reached a settlement with Catalyx Fluid Solutions, Inc. and all its partners, including Juzer Jangbarwala, formerly a Company director and member of management. Accrued liabilities and accounts payable of $478,407 were settled for $50,000 in cash payments and 45,000 shares of common stock valued at $22,275 on the date of issuance. The Company accounted for the excess amount forgiven of $445,364 as contributed capital recorded within additional paid-in capital due to the related party nature of the transaction.

On November 1, 2010, the Company reached a settlement with a vendor. Accrued liabilities and accounts payable of $16,514 and $10,000, respectively, were settled for $7,465 in cash payments and 20,000 shares of common stock valued at $9,900. The shares of common stock were issued on December 15, 2010. As a result, a gain on settlement of $9,149 was recorded as other income expense.

In March 2011, the Company reached a settlement with a former consultant for in which past due accrued liabilities and accounts payable of $161,600 were settled for $15,000 in cash payments and 13,333 shares of common stock valued at $6,600. As a result, a gain on settlement of $140,000 was recorded as other income expense.

On November 16, 2011, the Company issued 5,179 shares of its common stock to a vendor at $1.95 per share for the settlement of accounts payable of $10,100.

Common Stock Issued to Settle Notes Payable

See Note 7for Convertible Notes Payable converted in to common stock.

Common Stock Repurchased

On October 20, 2011, the Company repurchased 3,333 shares of common stock from an investor at $1.15 per share. The shares were cancelled and therefore are not shown as issued or outstanding.

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Note 7 - Notes Payable

12 Months Ended

Mar. 31, 2012

Debt Disclosure [Text Block]

Note 7 – Notes Payable

Note Payable to Vendor

On the Effective Date, the Company assumed a promissory note to a vendor in settlement of $410,500. The vendor manufactured and installed the Company’s discontinued water treatment facility.  The note bore interest at 10% per annum with a one-time default penalty of 10% of the principal balance, and was secured by the Company’s Interceptor Plant contract and the equipment that was manufactured by the vendor.   During the year ended March 31, 2012, due to the passage of the statute of limitations the Company wrote off to other income the $410,500 note and accrued interest and penalties of $214,409.  The Company received a legal opinion supporting such in connection with the former liability.

MOU Note Payable

On the Effective Date, the Company assumed a promissory note of $45,000 in connection with a memorandum of understanding to purchase SET Corp’s discontinued water treatment plant.   The note bears interest at 10% with a default rate of 18%.  As of March 31, 2012, the note is in default and interest is being accrued at the default rate.

Convertible Notes Payable to Horst Geicke and Related Entities

On the Effective Date, the Company assumed various convertible note agreements with an accredited investor and shareholder for proceeds totaling $775,000 and accrued interest of $50,000.   In addition at the Effective Date, a discount on the convertible debt remained of $381,459. On July 7, 2010, the holder converted the note and accrued interest into 2,066,667 shares of the Company’s common stock. Upon conversion the Company, recorded the remaining discount to interest expense. In addition, all accrued interest of $50,000, was forgiven, and treated as a capital contribution due to the related party nature of the transaction as such recorded to additional paid in capital.

Convertible Note Payable to WES

On August 27, 2010, in connection with the Agreement, the Company issued a convertible promissory note to WES in the amount of $200,000, without interest or maturity, convertible into Company common stock at a rate of $5.25 per share. The convertible note payable is payable at the Company’s discretion. The note is secured by the Technology. On the date of issuance, no beneficial conversion feature was present. The Company determined that they would pay the note in approximately 15 years. Thus, the Company recorded a discount of 11% in the amount of $157,159 against the notes. The discount will be amortized to interest expense over the period of estimated maturity using the effective interest method. During the years ended March 31, 2012 and 2011, the Company recorded interest expense of $4,365 and $6,112, respectively, and extinguished the related unamortized discount of $146,683 to additional paid-in capital during the year ended March 31, 2012. See Note 1 for information regarding the Transaction with WES.

Equipment Loan

In June 2010, the Company entered into a note payable agreement with an equipment provider for a machine in the amount of $38,745. The note bears interest at 7.25% per annum and is payable in 24 equal installments of $1,739, with the first installment due in July 2010. As of March 31, 2012 and 2011, the amount due on this loan was $5,275 and $24,868, respectively.

Convertible Note Payable to Metropolitan Real Estate LLC

As discussed in Note 1, on July 7, 2010, the Company entered into an agreement to acquire PWU . In connection with the acquisition, the member of PWU received a $2.0 million secured convertible promissory note payable over the period of one year from the closing date, incurring interest at 5% annually and a conversion feature at the option of the holder into shares of the Company’s common stock at a price of $1.50 per share.  The note is secured by all the assets of Pro Water.  No beneficial conversion feature was recorded in connection with the note as the conversion price represented the closing price of the Company’s common stock on the date of the agreement. In addition, the Company recorded the $2,000,000 convertible note as a reduction to additional paid-in capital as it was deemed to be a return of capital initially contributed to Pro Water by the member.

On July 12, 2010, the terms of the acquisition were amended whereby the conversion rate of the $2,000,000 related secured convertible promissory note, which previously all converted at $1.50 at the option of the holder, such amended to so that $1,600,000 of the note may be converted at $3.00 per share and $400,000 may be converted at $0.375 per share.  The convertible note was due based on the following: $100,000 paid on or before September 30, 2010, $200,000 paid on or before December 31, 2010, $200,000 paid on or before March 31, 2011 and the remaining amount of $1,500,000 with unpaid interest on or before June 30, 2011. The $100,000 payment due in September 2010 was paid in October 2010.  On July 12, 2010, since the conversion price of $0.375 related to $400,000 was significantly less than the fair value of the Company’s common stock per the closing market price, a beneficial conversion feature was present. The Company valued the beneficial conversion feature as of the date of the amended agreement in the amount of $696,000, and recorded the maximum discount allowed of $400,000 against the note. The discount was being amortized over the term of the note using the straight line method due to the relatively short maturity of the note.

On January 14, 2011, the terms of the convertible note were amended. As of the date of the amendment, the unpaid principal amount was $1,880,000. Under the terms of the new agreement, the term of the note was extended to five years and all accrued interest was forgiven. The Company is to make 60 monthly payments of $35,478 commencing January 2011 and concluding December 2015, which has been extended until April 2016 discussed below. All other terms, including conversion and interest rates remained the same. Under ASC 470, Debt, the Company accounted for the change in terms of the debt as an extinguishment of the debt due to the significant change in the repayment period which impacted the expected cash flows in excess of 10%. Thus, the unamortized discount of $183,333 was removed and a new discount, with a beneficial conversion feature of $400,000 was recorded. Due to Geicke being a significant shareholder, no gain or loss was recorded and the result of the extinguishment was recorded to additional paid in capital. At March 31, 2012 and 2011, the $243,310 and $382,455 unamortized discount on the note was allocated between short and long term based on the expected annual amortization of which $109,318 and $139,196 has been allocated to short-term portion with the remaining $133,992 and $394,308 allocated to long-term portion. During the years ended March 31, 2012 and 2011, the Company amortized $139,146 and $17,454 of the discount to interest expense, respectively, using the effective interest method. The note holder requested the principal payments for November and December 2011 and January and February 2012 be deferred. Therefore, payments are added on to the end of the term. The following is the expected amortization for the remaining discount under the effective interest rate method for the years ending March 31: $109,318, $77,964, $45,005, and $11,023 in 2013, 2014, 2015, and 2016, respectively.

Note Payable to Vendor for Settlement of Accrued Liability

See Note 11 for note payable to vendor for settlement of accrued liability.

Note Payout Schedule

Future principal payments under related party notes payable are expected to be as follows for the years ending March 31: $355,330, $373,509, $392,619, $412,706, and $35,330 in 2013, 2014, 2015, 2016, and 2017, respectively.

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Note 8 - Income taxes

12 Months Ended

Mar. 31, 2012

Income Tax Disclosure [Text Block]

Note 8 – Income taxes

The following table presents the current and deferred income tax provision for federal and state income taxes for the years ended March 31, 2012 and 2011:

	Year Ended March 31,
	2012			2011
Current tax provision:
Federal	$	35,800		$	-
State		28,015			800
Total		63,815			800
Deferred tax provision (benefit)
Federal		(2,270,083	)		(575,438	)
State		(279,113	)		(89,077	)
Valuation allowance		1,315,106			664,515
Total		(1,234,090	)		-
Total provision for income taxes	$	(1,170,275	)	$	800

Current taxes in fiscal 2011 only consist of minimum taxes to the State of California which are insignificant and have not been presented.

Reconciliations of the U.S. federal statutory rate to the actual tax rate for the years ended March 31, 2012 and 2011are as follows:

	Year Ended March 31,
	2012			2011
US federal statutory income tax rate		34.0%			34.0%
State tax – net of benefit		3.3 %			3.3 %
		37.3 %			37.3 %
Permanent differences		10.5 %			234.3 %
Changes of deferred tax assets		6.0 %			(459.0 %	)
Increase and utilization of net operating losses		(40.5%	)		-%
Decrease (increase) in valuation allowance		(121.2%	)		187.4 %
Effective tax rate		(107.9%	)		0.0 %

The components of the Company’s deferred tax assets and (liabilities) for federal and state income taxes as of March 31, 2012 and 2011 consisted of the following:

	As of March 31,
	2012			2011
Current deferred tax assets (liabilities):
Accrued expenses and other	$	117,126		$	266,225
Total current deferred tax assets		117,126			266,225
Non-current deferred tax assets and liabilities:
State taxes		18,781			(52,320	)
Stock options		192,720			44,761
Property, plant and equipment		(74,593	)		-
Intangibles		6,050			6,329
Others		2,340			2,340
Net operating losses		3,434,725			880,619
Total non-current deferred tax assets		3,580,023			881,729
Valuation allowance	(2,463,059		)		(1,147,954	)
Net deferred tax assets (liabilities)	$	1,234,090		$	-

During the years ended March 31, 2012 and 2011, the valuation allowance increased by increased by $1,315,105 and decreased by $664,545, respectively.  At March 31, 2012, we determined that our previous valuation allowance amounting to $1,234,090 for certain deferred tax assets consisting primarily of net operating loss carry forwards for federal and state tax reporting was not required as it is likely that these assets will be recovered through future operating income. At March 31, 2012, the Company had approximately $8.9 million of federal and state gross net operating losses allocated to continuing operations available. The net operating loss carry forwards, if not utilized, will begin to expire in 2028 for federal purposes and 2018 for state purposes.

Based on the available objective evidence, including the Company’s limited operating history and current liabilities in excess of assets, management believes it is more likely than not that some of the net deferred tax assets, specifically certain net operating losses, at March 31, 2012, will not be fully realizable. Due to the uncertainty surrounding realization of the remaining deferred tax assets, the Company has provided a valuation allowance of $2,463,059 against its net deferred tax assets at March 31, 2012; a full valuation allowance was recorded at March 31, 2011. We will continue to monitor the recoverability of our net deferred tax assets.

As of March 31, 2012 and 2011, the Company has a State tax liability of $0 and $25,823, respectively, which was the result of previously unpaid taxes by SET Corp. Interest and penalties on such liabilities is immaterial. As of March 31, 2012, the Company has recorded estimated taxes payable for Federal and State of $58,400 which is recorded in accrued liabilities. In addition, due to the significant change in ownership of SET Corp in connection with the acquisition of Pro Water, the Company determined that SET Corp’s historical NOLs have been impaired due to IRS Section 382 limitations. Thus, as discussed above, the net operating losses prior to July 7, 2010 have been reduced based on the Company's calculation and a partial valuation allowance has been recorded as of March 31, 2012.

The Company has filed all United States Federal and State tax returns. The Company has identified the United States Federal tax returns as its “major” tax jurisdiction. The United States Federal return years 2008 through 2012 are still subject to tax examination by the United States Internal Revenue Service; however, we do not currently have any ongoing tax examinations. The Company is subject to examination by the California Franchise Tax Board for the years ended 2007 through 2012 and currently does not have any ongoing tax examinations.

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Note 10 - Options and Warrants

12 Months Ended

Mar. 31, 2012

Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block]

Note 10 – Options and Warrants

Options

Plans

On July 7, 2010, a majority of the Company’s shareholders, in the form of a written consent authorized: the amendment of the Company’s Amended and Restated Articles of Incorporation approved the adoption of the Company’s 2010 Incentive and Nonstatutory Stock Option Plan (“2010 Plan”), which reserves 1,333,333 shares of the Company’s common stock for issuance as stock options and grants to qualified recipients. As of March 31, 2012, 424,712 shares were available for issuance under the 2010 Plan.

On the Effective Date, the Company assumed an Incentive and Non-statutory Stock Option Plan adopted by the predecessor entity for issuance of stock options to employees and others. Those plans consisted of the 2006 Incentive and Non-statutory Stock Option Plan (“2006 Plan”) and 2007 Incentive and Non-statutory Stock Option Plan (“2007 Plan”) for issuances of stock options to employees and others. Under the 2006 Plan and 2007 Plan, the Company reserved 666,667 and 400,000 shares for issuance, respectively. As of March 31, 2012, 118,897 and 31,367 grants were available for issuance under the 2006 Plan and 2007 Plan, respectively.

Issuances

On July 7, 2010, the Company granted 400,000 stock options to various employees and consultants with an exercise price of $0.375 per share. The options vested over one year.

On April 4, 2011, the Company granted 200,000 stock options to directors of the Company with an exercise price of $0.75 per share. The options vest over one year. Compensation bonuses for stock came from the 2010 Plan.

On May 9, 2011, the Company granted 36,667 stock options to a consultant with an exercise price of $0.90 per share from the 2010 Plan. The options immediately vested on the date of issuance.

On October 7, 2011, the Company granted 80,000 stock options to three members of the Board of Directors with an exercise price of $1.20 per share. The options vest over one year.

On March 27, 2012, the Company granted 75,000 stock options to Grant King at an exercise price of $1.30 per share. The options vest over one year.

On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 450,000 shares of common stock valued at $585,000 on the date of grant, with the first tranche of 56,250 shares recorded as general and administrative expense during the year ended March 31, 2012 valued at $73,125. The remaining 393,750 shares are valued at $511,875 in which $292,500 will be recognized as general and administrative expense in fiscal 2013 and $219,375 in fiscal 2014.

On March 31, 2012, the Company granted 108,333 stock options to three officers of the Company at an exercise price of $1.25 per share. The options vest over one year.

During the year ended March 31, 2012 and 2011, stock compensation expense, including share grants which have vesting terms to Grant King (disclosed in Note 9) and members of management (disclosed above) was $579,382 and $164,771, respectively. As of March 31, 2012, future compensation expense, including share grants which vest in future periods for the years ending March 31, 2013 and 2014 is $717,916 and $219,375, respectively.

Although management believes its estimate regarding the fair value of the services to be reasonable, there can be no assurance that all of the subjective assumptions will remain constant, and therefore the valuation of the services may not be a reliable measure of the fair value of stock compensation or stock based payments for consulting services. Expected volatility is based primarily on historical volatility. Historical volatility was computed using weekly pricing observations for recent periods that correspond to the remaining life of the options. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these options. We currently have no reason to believe future volatility over the expected remaining life of these options is likely to differ materially from historical volatility. The expected life is based on the remaining term of the options. The risk-free interest rate is based on U.S. Treasury securities.

The following is a summary of activity of outstanding stock options:

	Number of Shares	Weighted Average Exercise Price		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at March 31, 2010	-	$	-
Options granted	715,263		1.35
Options exercised	-		-
Options cancelled	(113,333)		0.60
Outstanding at March 31, 2011	601,930		1.50
Options granted	500,000		1.02
Options exercised	(20,000)		0.75
Options cancelled	(216,930)		3.26
Outstanding at March 31, 2012	865,000	$	0.77	4.20	$	536,459
Exercisable at March 31, 2012	638,825	$	0.60	3.24	$	385,930

	Exercisable			Unexercisable			Total
Stock Options	Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price		Number of Shares	Weighted Average Exercise Price
Above $1.39	-	$	-	-	$	-	-	$	-
Below $1.39	638,825		0.60	226,175		1.25	865,000		0.77
Total Outstanding	638,825	$	0.60	226,175	$	1.25	865,000	$	0.77

Warrants

On the Effective Date, the Company assumed 376,068 of the predecessor entity’s issued and outstanding common stock purchase warrants, previously treated as equity pursuant to the derivative treatment exemption, that were no longer afforded equity treatment. Accordingly, these warrants are recorded as liabilities at fair value at each reporting date. Currently, these warrants have an exercise price of $11.70 and expire in May of 2013; however, these warrants have exercise price reset features in the event the Company issues common stock below the exercise price of the warrants.  During the years ended March 31, 2012 and 2011, the Company recorded gain of $127,438 and loss of $102,584, respectively, for the change in fair value of the warrant liability. As of March 31, 2012 and 2011, the warrant liability was $119,846 and $247,284, respectively.

All future changes in the fair value of these warrants will be recognized currently in earnings until such time as the warrants are exercised or expire. These common stock purchase warrants do not trade in an active securities market, and as such, we estimate the fair value of these warrants using the Black-Scholes option pricing model using the following assumptions:

	March 31, 2012	March 31, 2011
Annual dividend yield	-		-
Expected life in years	1.17		2.17
Risk-free interest rate	0.19%		0.80%
Expected volatility	176.17%		284%

Expected volatility is based primarily on historical volatility. Historical volatility was computed using weekly pricing observations for recent periods that correspond to the remaining life of the warrants. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants. We currently have no reason to believe future volatility over the expected remaining life of these warrants is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants. The risk-free interest rate is based on U.S. Treasury securities.

The following is a summary of activity of outstanding common stock warrants for the years ended March 31, 2012 and 2011:

	Number  of Shares			Weighted Average  Exercise Price
Balance, March 31, 2010		-		$	-
Warrants granted		1,456,431			6.90
Warrants exercised			-		-
Warrants cancelled		(95,596	)		3.45
Balance, March 31, 2011		1,360,835		$	7.20
Warrants granted		1,500,00			2.33
Warrants exercised			-		-
Warrants cancelled		(855,333	)		5.08
Balance, March 31, 2012		2,005,502		$	4.45
Exercisable, March 31, 2012		2,005,502		$	4.45

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Consolidated Statements of Stockholders Equity (Deficit) (USD $)	Common Stock [Member]	Additional Paid-in Capital [Member]	Other Additional Capital [Member]	Retained Earnings [Member]	Total
Balances - March 31 at Mar. 31, 2010	$ 2,222	$ 1,727,778	$ (28,483)	$ 1,701,517
Balances - March 31 (in Shares) at Mar. 31, 2010	2,222,222
Contributed capital		150,000		150,000
Convertible note payable issued in connection with Pro Water acquisition, including discount of $400,000 for beneficial conversion feature		(1,600,000)		(1,600,000)
Reverse acquisition of SET Corp	7,132	99,851	(3,883,375)	(3,776,392)
Reverse acquisition of SET Corp (in Shares)	7,132,193
Stock issued for conversion of convertible notes payable	2,067	822,933		825,000	825,000
Stock issued for conversion of convertible notes payable (in Shares)	2,066,667
Stock issued for cash	468	207,532		208,000
Stock issued for cash (in Shares)	468,000
Common stock issued to related parties	2,488	1,038,902		1,041,390
Common stock issued to related parties (in Shares)	2,487,833
Common stock issued for services	40	13,005		13,045
Common stock issued for services (in Shares)	39,714
Common stock issued in connection with asset acquisition/cost basis investment	133	99,867		100,000
Common stock issued in connection with asset acquisition/cost basis investment (in Shares)	133,333
Fair market value of warrants issued in connection with asset acquisition/cost basis investment		233,599		233,599
Common stock issued in settlement of accounts payable and accrued liabilities	80	485,309		485,389
Common stock issued in settlement of accounts payable and accrued liabilities (in Shares)	80,000
Debt extinguishment		265,612		265,612
Stock-based compensation		114,771		114,771
Net income/loss			(355,439)	(355,439)	(355,439)
Balances - March 31 at Mar. 31, 2011	14,630	3,659,159	(4,267,297)	(593,508)
Balances - March 31 (in Shares) at Mar. 31, 2011	14,629,962
Stock issued for cash	1,500	2,299,750		2,301,250
Stock issued for cash (in Shares)	1,500,000
Cashless Exercise of stock options	20	14,980		15,000
Cashless Exercise of stock options (in Shares)	20,000
Repurchase of stock options		(8,000)		(8,000)	(8,000)
Repurchase of common stock	(3)	(3,827)		(3,830)	(3,830)
Repurchase of common stock (in Shares)	(3,333)
Common stock issued to related parties	266	199,734		200,000
Common stock issued to related parties (in Shares)	266,666
Common stock issued for services	40	46,520		46,560
Common stock issued for services (in Shares)	40,050
Common stock issued in settlement of accounts payable and accrued liabilities	5	10,095		10,100
Common stock issued in settlement of accounts payable and accrued liabilities (in Shares)	5,179
Amendment of WES Acquisition		(183,123)		(183,123)
Stock-based compensation		379,382		379,382
Net income/loss			2,254,920	2,254,920	2,254,920
Balances - March 31 at Mar. 31, 2012	$ 16,458	$ 6,414,670	$ (2,012,377)	$ 4,418,751
Balances - March 31 (in Shares) at Mar. 31, 2012	16,458,524

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Note 4 - Property and Equipment

12 Months Ended

Mar. 31, 2012

Property, Plant and Equipment Disclosure [Text Block]

Note 4 – Property and Equipment

Property and equipment are as follows:

	March 31, 2012			March 31, 2011
Injection well	$	613,976		$	613,976
Machinery and equipment		1,695,072			1,393,046
Buildings		7,500			7,500
Land		51,000			51,000
Furniture and fixtures		36,465			28,464
Accumulated depreciation		(250,639	)		(104,094	)
Total	$	2,153,374		$	1,989,892

During the years ended March 31, 2012 and 2011, the Company recorded depreciation expense of $155,064 and $87,646, respectively.

Asset Retirement Obligations

At March 31, 2012 and 2011, the Company recorded an asset retirement obligation of approximately $9,900 related to the DIW.

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Note 14 - Subsequent Events

12 Months Ended

Mar. 31, 2012

Subsequent Events [Text Block]

Note 14 – Subsequent Events

On April 27, 2012, a Complaint was filed against the Company by a previous consultant.  On June 12, 2012, the Company filed a Motion to Strike and a Demurrer asking the court to remove inapplicable and superfluous prayers and to assert that the Plaintiff lacked capacity and failed to state facts sufficient to constitute the causes of action.

On April 5, 2012, the Company entered into a letter agreement (“LOI”) with Cancen Oil Canada Inc., a British Columbia corporation (“Cancen”).  Both Cancen and the Company have agreed to abandon the LOI and have continued negotiations and further discussions as to forming a strategic alliance between the parties.

On March 27, 2012, the Company granted common stock to three board members which vest over a twenty-four (24) month period, starting April 1, 2012 and then the first of each quarter thereafter (ending January 1, 2014). Under the agreement, the Company agreed to issue a total of 450,000 shares of common stock valued at $585,000 on the date of the grant, with the first tranche of 56,250 shares recorded as general and administrative expense during the year ended March 31, 2012 valued at $73,125. The remaining 393,750 shares are valued at $511,875 in which $292,500 will be recognized as general and administrative expense in fiscal 2013 and $219,375 in fiscal 2014.

On June 13, 2012, the Board of Directors of the Company via unanimous written consent re-priced all of the stock options outstanding under our non-statutory stock options under the Corporation’s 2006, 2007 and 2010 incentive and non-statutory stock option plans at $0.36 per share of common stock of the Company.  The Board of Directors re-priced such stock options to keep such employees and consultants who were granted options incentivized.  The Company has yet to determine the financial statement impact of the transaction.

On June 20, 2012, the Board of Directors via unanimous written consent gave discretionary compensation bonuses in the form of the Company’s common stock to its employees and key consultants for the calendar year 2011.  The total amount of common stock of the Company issued out of the Company’s Incentive and Nonstatutory Stock Option Plans for the bonuses was 145,000 shares total.  Out of the 145,000 shares issued, Robert Glaser received 50,000 shares, Keith Morlock received 50,000 shares, Cynthia Glaser received 25,000 shares and Steve Ritchie received 10,000 shares.