10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

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

For the transition period from      to               

COMMISSION FILE NUMBER 333-151633

MAGNOLIA SOLAR CORPORATION

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

Nevada	39-2075693
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

54 Cummings Park, Suite 316, Woburn, MA 01801

(Address of principal executive offices) (Zip Code)

Issuer’s telephone Number: (781) 497-2900

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes   x     No o

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

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

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

As of November 13, 2014, the issuer had 39,727,316 shares of common stock outstanding.

1

TABLE OF CONTENTS

		Page
	PART I
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	29
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32
	PART II
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33

2

PART I

FINANCIAL INFORMATION

MAGNOLIA SOLAR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2014 (UNAUDITED) AND DECEMBER 31, 2013
ASSETS
	SEPTEMBER 30,			DECEMBER 31,
	2014			2013
CURRENT ASSETS
Cash	$	34,017		$	118,172
Accounts receivable		210,550			226,625
Prepaid expense		1,417			1,417
Total current assets		245,984			346,214
Fixed assets, net		701			935
OTHER ASSETS
License with related party, net of accumulated amortization		127,745			154,483
Total other assets		127,745			154,483
TOTAL ASSETS	$	374,430		$	501,632
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	548,005		$	451,953
Current portion of Original Issue Discount Senior Secured Convertible
Promissory Note, net of discount		2,400,000			2,400,000
Total current liabilities		2,948,005			2,851,953
TOTAL LIABILITIES		2,948,005			2,851,953
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value, 75,000,000 shares authorized,
38,527,316 and 33,835,268 shares issued and outstanding		38,527			33,836
Additional paid-in capital		2,161,781			1,957,574
Additional paid-in capital - warrants		962,297			962,297
Accumulated deficits		(5,736,180	)		(5,304,028	)
Total stockholders' deficit		(2,573,575	)		(2,350,321	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	374,430		$	501,632

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

3

MAGNOLIA SOLAR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
		NINE MONTHS ENDED SEPTEMBER 30, 2014			NINE MONTHS ENDED SEPTEMBER 30, 2013
REVENUE - net	$	150,256		$	669,784
COST OF REVENUES		92,034			413,978
GROSS PROFIT		58,222			255,806
OPERATING EXPENSES
Indirect and administrative labor		152,605			107,783
Professional fees		96,302			133,374
Depreciation and amortization expense		26,972			27,461
General and administrative		34,513			33,764
Total operating expenses		310,392			302,382
OTHER (INCOME) EXPENSE
Interest expense including amortization of OID
and debt discount, net		179,982			179,900
Forgiveness of debt		-			(4,000	)
Total other (income) expense		179,982			175,900
LOSS BEFORE PROVISION FOR
INCOME TAXES		(432,152	)		(222,476	)
PROVISION FOR INCOME TAXES		-			-
NET LOSS	$	(432,152	)	$	(222,476	)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		36,709,244			29,828,504
NET LOSS PER SHARE	$	(0.01	)	$	(0.01	)

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

4

MAGNOLIA SOLAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

	THREE MONTHS ENDED SEPTEMBER 30, 2014			THREE MONTHS ENDED SEPTEMBER 30, 2013
REVENUE - net	$	68,578		$	126,545
COST OF REVENUES		44,712			67,900
GROSS PROFIT		23,866			58,645
OPERATING EXPENSES
Indirect and administrative labor		44,772			34,026
Professional fees		32,912			25,041
Depreciation and amortization expense		8,991			8,990
General and administrative		11,769			11,272
Total operating expenses		98,444			79,329
NON-OPERATING EXPENSES
Interest expense including amortization of OID
and debt discount, net		59,999			59,949
Forgiveness of debt		-			-
Total non-operating expenses		59,999			59,949
LOSS BEFORE PROVISION FOR
INCOME TAXES		(134,577	)		(80,633	)
PROVISION OF INCOME TAXES		-			-
NET LOSS	$	(134,577	)	$	(80,633	)
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING		38,527,316			31,549,189
NET LOSS PER SHARE	$	(0.00	)	$	(0.00	)
The accompanying notes are an integral part of these consolidated financial statements.

5

MAGNOLIA SOLAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

	NINE			NINE
	MONTHS ENDED			MONTHS ENDED
	SEPT 30, 2014			SEPT 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(432,152	)	$	(222,476	)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Depreciation and amortization expense		26,972			27,461
Stock based compensation		19,898			-
Common stock issued for services rendered		9,000			21,160
Common stock issued for payment of interest		180,000			130,000
Forgiveness of debt		-			(4,000	)
Change in assets and liabilities:
Decrease in accounts receivable		16,075			20,376
Increase in accounts payable and accrued expenses		96,052			73,785
Total adjustments		347,997			268,782
Net cash provided by (used in) operating activities		(84,155	)		46,306
NET INCREASE (DECREASE) IN CASH		(84,155	)		46,306
CASH - BEGINNING OF PERIOD		118,172			135,626
CASH - END OF PERIOD	$	34,017		$	181,932
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	-		$	-
Income taxes	$	1,222		$	-
NON-CASH SUPPLEMENTAL INFORMATION:
Stock issued for services rendered	$	9,000		$	21,160
Stock issued for payment of interest	$	180,000		$	130,000
Stock based compensation	$	19,898		$	-

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

6

 MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 1 – Organization and Nature of Business

The unaudited financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do not contain certain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the December 31, 2013 Form 10-K filed with the SEC, including the audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

Magnolia Solar Corporation (the “Registrant”) through its wholly-owned subsidiary, Magnolia Solar, Inc. (“Magnolia Solar” and together with the Registrant, “we,” “our,” “us,” or the “Company”) is a development stage company focused on developing and commercializing thin film solar cell technologies that employ nanostructured materials and designs.

The Company is pioneering the development of thin film, high efficiency solar cells for applications such as power generation for electrical grids as well as for local applications, including lighting, heating, traffic control, irrigation, water distillation, and other residential, agricultural and commercial uses.

The Company’s technology takes multiple approaches to bringing cell efficiencies close to those realized in silicon based solar cells while also lowering manufacturing costs. The technology uses a different composition of materials than those used by competing thin film cell manufacturers; incorporates additional layers of material to absorb a wider spectrum of light; uses inexpensive substrate materials, such as glass and polymers, lowering the cost of the completed cell compared to silicon based solar cells; and is based on non-toxic materials that do not have adverse environmental effects.

Since 2010, the Company filed a series of U.S. utility patents relating to the technologies under development.

7

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 1 – Organization and Nature of Business (continued)

Reverse Merger

On November 19, 2007, the Registrant, formerly known as Mobilis Relocation Services, Inc. (“Mobilis”), was organized under the laws of the State of Nevada. Mobilis formed Magnolia Solar Acquisition Corp., a wholly-owned subsidiary incorporated in the State of Delaware. Mobilis filed a Certificate of Change to its Articles of Incorporation in order to affect a forward split of the number of authorized shares of common stock which they were authorized to issue, and of the then issued and outstanding shares in a ratio of 1.3157895:1. The forward split occurred in February 2010. All share and per share amounts have been reflected herein post-split.

On December 31, 2009, Mobilis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Magnolia Solar, Inc., a privately held Delaware corporation incorporated on January 8, 2008, and Magnolia Solar Acquisition Corp. (“Acquisition Sub”). Upon closing of the transaction, under the Merger Agreement, Acquisition Sub merged with and into Magnolia Solar, and Magnolia Solar, as the surviving corporation, became a wholly-owned subsidiary of Mobilis. Thereafter, Mobilis changed its name to Magnolia Solar Corporation. The transaction was accounted for as a reverse merger, and the historical financial information is that of Magnolia Solar, Inc.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has been generating revenues from various development contracts with governmental agencies, however the Company has generated losses totaling $432,152 and $222,476 for the nine months ended September 30, 2014 and 2013, respectively. While the Company raised funds in a private placement that it consummated in 2009 (raising $990,000 in $2,660,000 of Original Issue Discount Senior Secured Convertible Promissory Notes (the “2009 Notes”)), at September 30, 2014 and December 31, 2013, it had cash of $34,017 and $118,172, respectively, and will need to raise additional funds to carry out its business plan.

On September 19, 2014, the Company entered into a Share Exchange Agreement (the “Agreement”) with Auzminerals Resource Group Limited, a Singapore corporation (the “Parent”) and Solar Silicon Resources Group Pte Ltd., a wholly owned subsidiary of Parent (“SSRG”).  Upon the terms and subject to the conditions set forth in the Agreement, the Company will acquire SSRG from the Parent through the transfer of all issued and outstanding ordinary shares of SSRG (the “SSRG Shares”) by the Parent to us in exchange (the “Exchange”) for the issuance by us of newly issued shares of our common stock (the “Exchange Shares”) to the Parent. Upon the closing of the Agreement, the Exchange Shares shall at that time constitute ninety-five percent (95%) of the aggregate number of shares of our common stock issued and outstanding, calculated on a fully diluted basis. Consummation of the Exchange (the “Closing”) is subject to a number of closing conditions, including, among other things: (i) the adoption and approval of the certain amendments to the Company’s articles of incorporation by the requisite vote of the Company’s stockholders, including but not limited to approving an increase in our authorized number of shares of common stock sufficient to enable us to issue the Exchange Shares; (ii) absence of litigation that seeks to prohibit the Exchange; (iii) the Company shall be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iv) the accuracy of the representations and warranties, subject to customary materiality qualifiers; and (v) the absence of a Material Adverse Effect (as defined in the Agreement).  The Agreement does not contain a financing condition.

The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations. The Company has had limited operating history to date.

8

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 1 – Organization and Nature of Business (continued)

Going Concern (continued)

On December 29, 2011, the 2009 Notes in the aggregate principal amount of $2,660,000 were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $260,000 converted into an aggregate of 1,040,000 shares of common stock of the Company at an adjusted conversion price of $0.25 per share, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2011 to December 31, 2012 and 2009 Notes in the aggregate principal amount of the remaining $400,000 were amended to extend the maturity date from December 31, 2011 to December 31, 2013, (iii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to adjust the conversion price of such notes from $1.00 per share to $0.25 per share, (iv) 2009 Notes in the aggregate principal amount of $400,000 were amended to provide that such notes shall, from January 1, 2012 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, (v) an aggregate of 1,300,000 shares of common stock of the Company were issued to certain holders of the 2009 Notes, and (vi) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $1.25 per share to $0.50 per share.

On December 21, 2012 and June 27, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2012 to December 31, 2013, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to provide that such notes shall, from January 1, 2013 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, and (iii) the exercise price of warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.50 per share to $0.25 per share.

On December 29 and 31, 2013, the 2009 Notes as described in the preceding paragraphs were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,400,000 were amended to extend the maturity dates from December 31, 2013 to December 31, 2014, and (ii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.25 per share to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the warrants to purchase an aggregate of 2,660,000 shares of common stock from December 31, 2014 to December 31, 2016.

9

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 1 – Organization and Nature of Business (continued)

Going Concern (continued)

There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to the Company. If the Company were to default on its indebtedness, then holders of the notes may foreclose on the debt and seize the Company's assets which may force the Company to suspend or cease operations altogether. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the ability of the Company to continue as a going concern.

The Company may need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of equity or debt that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company may suspend or cease operations altogether.

The development of renewable energy and energy efficiency marks a new era of energy exploration in the United States. The Company continues to explore low cost alternatives for energy solutions which are in line with United States government initiatives for renewable energy sources. The Company hopes that these factors will mitigate the current unstable factors in the United States economy.

Note 2 - Summary of Significant Accounting Policies

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

10

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 2 - Summary of Significant Accounting Policies (continued)

Principles of Consolidation (continued)

The consolidated financial statements include all accounts of the entities at September 30, 2014 as follows:

Name of consolidated subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest at December 31, 2013 and 2012
Magnolia Solar Inc.	Delaware, U.S.A.	January 8, 2008	100%

All inter-company balances and transactions have been eliminated.

Use of Estimates

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

Accounts Receivable

For financial reporting, current earnings are charged and an allowance is credited with a provision for doubtful accounts based on experience. Accounts deemed uncollectible are charged against this allowance. Receivables are reported on the balance sheet net of such allowance. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. The Company believes no allowance for doubtful accounts is necessary at September 30, 2014 or December 31, 2013.

Property and Equipment

Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives (from three to seven years). Additions, renewals, and betterments, unless of a minor amount, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

11

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 2 - Summary of Significant Accounting Policies (continued)

Impairment of Long-Lived Assets

The Company reviews their recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell. The Company’s management has determined that the fair value of long-lived assets exceeds the book value and thus no impairment charge is necessary as of September 30, 2014 or December 31, 2013.

Fair Value of Financial Instruments

In accordance with ASC 820, Fair Value Measurements and Disclosures, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company does not utilize derivative instruments.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Revenue Recognition

Revenue is recognized from private and public sector contracts that are time and material type contracts. These revenues are recognized in accordance with ASC 605, Revenue Recognition. The Company recognizes revenue when; (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable and (4) collectability is reasonably assured.

The Company assesses whether fees are fixed or determinable at the time of sale and recognizes revenue if all other revenue recognition requirements are met. The Company's standard payment terms are net 30 days. Payments that extend beyond 30 days from the contract date but that are due within twelve months are generally deemed to be fixed or determinable based on the Company's successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition.

Revenue from inception to September 30, 2014 has been primarily from research and development grants or contracts to develop solar cells using the Company’s technology.

12

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 2 - Summary of Significant Accounting Policies (continued)

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company had no cash equivalents as of September 30, 2014 or December 31, 2013.

Uncertainty in Income Taxes

The Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2010 to 2013 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented. The following is a reconciliation of the computation for basic and diluted EPS:

	September 30,			September 30,
	2014			2013
Net loss	($	432,152	)	($	222,476	)
Weighted-average common shares
outstanding (Basic)		36,709,244			29,828,504
Weighted-average common stock
Equivalents
Stock options		1,112,821			-
Warrants		3,785,300			3,785,300
Weighted-average common shares
outstanding (Diluted)		41,607,365			33,613,804

13

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 2 - Summary of Significant Accounting Policies (continued)

Stock based compensation

The Company applies ASC No. 718 and ASC Subtopic No. 505-50, Equity-Based Payments to Non Employees, to options and other stock based awards issued to nonemployees. In accordance with ASC No. 718 and ASC Subtopic No. 505-50, the Company uses the Black-Scholes option pricing model to measure the fair value of the options at the measurement date.

Recently Issued Accounting Standards

During August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements.

During June 2014, the FASB issued an Accounting Standards Update No. 2014-10, "Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASU 2014-10")". The objective of ASU 2014-10 is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company has elected early implementation, as permitted by the standard, beginning June 30, 2014. All development stage language disclosures and amounts have been removed as a result of the adoption of ASU 2014-10.

During May 2014, the FASB issued an Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The objective of ASU 2014-09 is to (1) remove inconsistencies and weaknesses in revenue requirements, (2) provide a more robust framework for addressing revenue issues, (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (4) provide more useful information to users of financial statements through improved disclosure requirements, and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effect of this standard on its financial statements.

14

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 2 - Summary of Significant Accounting Policies (continued)

Recently Issued Accounting Standards (continued)

During July 2013, the FASB issued an Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”)”. The objective of ASU 2013-11 is to clarify the financial presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years beginning after December 15, 2013. The Company does not expect that the adoption of ASU 2013-11 will have a significant impact on the presentation of its financial statements.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite - Lived Intangible Assets for Impairment”, on testing for indefinite-lived intangible assets for impairment. The new guidance provides an entity to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years beginning after September 15, 2012. The Company’s adoption of this accounting guidance does not have a material impact on the consolidated financial statements and related disclosures.

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

Note 3 - Stockholders’ Deficit

The Company has 75,000,000 shares of common stock, par value of $0.001 per share authorized.

Shares

Prior to the Reverse Merger as discussed in Note 1, the Company issued 4,473,686 shares of common stock between January and March 2008 at prices ranging from $0.01 to $0.02 per share for a total of $53,000 cash.

In accordance with the Reverse Merger, the Company cancelled 1,973,684 shares of common stock and issued 21,330,000 shares to the former shareholders of Magnolia Solar, Inc. As a result of these transactions, as of December 31, 2009, there were 23,830,000 shares of common stock issued and outstanding.

15

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 3 - Stockholders’ Deficit (continued)

The Company effectuated a 1.3157895:1 forward stock split in February 2010, in accordance with the Merger Agreement which resulted in 23,830,000 shares of common stock issued and outstanding.

On March 10, 2010, the Company issued 75,000 shares of common stock at its fair value price ($0.90 per share) for legal services resulting in a value of $67,500.

On November 22, 2010, the Company issued 25,000 shares of common stock in at its fair value price ($0.60 per share) for consulting services in the value of $15,000.

On February 10, 2011, the Company issued 50,000 shares of common stock at its fair value price ($0.37 per share) for consulting services for a value of $18,500.

In April 2011, the Company issued 250,000 shares of common stock at its fair value price ($0.181 per share) for consulting services for a value of $45,250.

On October 11, 2011, the Company issued 100,000 shares of common stock at its fair value price ($0.15 per share) for consulting services for a value of $15,000.

On December 29, 2011, the Company issued 1,040,000 shares upon conversion of the aggregate principal amount of $260,000 of 2009 Notes. The Company further issued 1,300,000 shares of common stock at its fair value price ($0.21) in connection with the amendment of the 2009 Notes for a value of $273,000.

In April 2012, the Company issued 230,000 shares of common stock at its contract price for consulting services for a value of $230,000.

In May 2012, the Company issued 109,162 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

In June 2012, the Company issued 100,000 shares of common stock at its contract price for consulting services for a value of $100,000.

In July 2012, the Company issued 100,000 shares of common stock at its contract price for consulting services for a value of $100,000.

In July 2012, the Company issued 108,663 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

In August 2012, the Company issued 150,000 shares of common stock at its contract price for consulting services for a value of $150,000.

In November 2012, the Company issued 124,238 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

16

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 3 - Stockholders’ Deficit (continued)

In November 2012, the Company issued 75,000 shares of common stock at its contract price for consulting services for a value of $75,000.

In December 2012, the Company issued 500,000 shares of common stock for consulting services for a value of $35,000 at a fair market value price of $0.07 per share.

In January 2013, the Company issued 211,078 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $10,000.

In April 2013, the Company issued 286,250 shares of common stock for consulting services for a value of $16,660 at a fair market value price of $0.06 per share.

In May 2013, the Company issued 1,675,978 shares of common stock at its fair value price ($0.04 per share) in lieu of interest payment for a value of $60,000.

In August 2013, the Company issued 1,823,708 shares of common stock at its fair value price ($0.04 per share) in lieu of interest payment for a value of $60,000.

In August 2013, the Company issued 140,625 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.06 per share.

In October 2013, the Company issued 1,398,601 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $60,000.

In October 2013, the Company issued 131,965 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.07 per share.

In February 2014, the Company issued 1,048,950 shares of common stock at its fair value price ($0.06 per share) in lieu of interest payment for a value of $60,000.

In March 2014, the Company issued 94,737 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.05 per share.

In April 2014, the Company issued 2,068,965 shares of common stock at its fair value price ($0.03 per share) in lieu of interest payment for a value of $60,000.

In April 2014, the Company issued 160,714 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.03 per share.

In August 2014, the Company issued 1,318,682 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $60,000.

As of September 30, 2014, the Company had 38,527,316 shares issued and outstanding.

17

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 3 - Stockholders’ Deficit (continued)

Warrants

Following the closing of the Reverse Merger in December 2009, the Company issued five-year callable warrants (the “2009 Warrants”) to purchase an aggregate of 2,660,000 shares of common stock exercisable at $1.25 per share to investors in a private placement (the “2009 Private Placement”) and further issued seven year placement agent warrants to purchase an aggregate of 725,300 shares of common stock exercisable at $1.05 per share. On December 29, 2011, the exercise price of both the 2009 Warrants and placement agent warrants was reduced to $0.50 per share.

On December 21, 2012, the exercise price of the 2009 Warrants and placement agent warrants were reduced to $0.25 per share. On December 23, 2013, the exercise price of the 2009 Warrants and placement agent warrants were further reduced to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the 2009 Warrants from December 31, 2014 to December 31, 2016.

On August 15, 2011, the Company issued 400,000 warrants for public relations services. The warrants vest immediately, and are for a term of 5 years with a strike price of $0.50 per share. The warrants have been valued at $59,534 and are reflected in the consolidated financial statements for the year ended September 30, 2014.

As of September 30, 2014, the following warrants are outstanding:

Balance – December 31, 2008	-
Issued – in the 26.6 units	2,660,000	$	0.10
Issued – to Placement Agent	725,300	$	0.10
Balance – December 31, 2009	3,385,300	$	0.10
Balance – December 31, 2010	3,385,300	$	0.10
Issued – for public relations	400,000	$	0.50
Balance – December 31, 2011	3,785,300	$	0.14
Balance – December 31, 2012	3,785,300	$	0.14
Balance – December 31, 2013	3,785,300	$	0.14
Balance – September 30, 2014	3,785,300	$	0.14

18

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 3 - Stockholders’ Deficit (continued)

Stock Options

In May 2014, the Company granted 2,450,000 shares of common stock under the 2013 Incentive Stock Option Plan. Under the 2013 Plan, the Company may grant options to purchase up to 5,500,000 shares of common stock to be granted to Company employees, officers, directors, consultants and advisors. The vesting provisions, exercise price and expiration dates will be established by the Board of Directors (the "Board") of the Company at the date of grant, but incentive stock options may be subject to earlier termination, as provided in the 2013 Plan. As of September 30, 2014, there were 2,335,709 shares available for future grant.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The following table indicates the assumptions made in estimating the fair value for the period ending September 30, 2014:

Dividend yield	0.00	%
Volatility	213.26	%
Risk- free interest rate	0.77	%
Expected term	3.5 Years

Expected volatility was calculated based upon the company’s observed median volatility. The risk-free interest rate assumption is based upon the United States Treasury Bond yield curve in effect at the time of grant for instruments with a similar expected life.

The Company recognized compensation cost related to stock-based compensation in the amount of $19,898, for the period ended September 30, 2014. The Company has not recognized any tax benefits or deductions related to the effects of employee stock-based compensation.

In addition, as of September 30, 2014, approximately $49,313 was related to non-vested options which will be recognized over a weighted-average period of approximately 4.67 years.

No options were exercised under all share-based compensation arrangements for the period ending September 30, 2014.

19

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 3 - Stockholders’ Deficit (continued)

Stock Options (continued)

The following is a summary of stock option activity under the Company's stock option plan:

Outstanding as of December 31, 2013	Number of Options/Shares		Range of Exercise Prices		Weighted- Average Exercise Price
		-	$	0.00	$	0.00
Options granted		2,450,000	$	0.05	$	0.05
Options exercised		-	$	0.00	$	0.00
Options forfeited/expired/cancelled		-	$	0.00	$	0.00
Outstanding as of September 30, 2014		2,450,000	$	0.05	$	0.05
Exercisable as of September 30, 2014		704,375	$	0.05	$	0.05
Exercisable as of December 31, 2013		-	$	0.00	$	0.00

Information about stock options outstanding as of September 30, 2014 is as follows:

Exercise Price		Number of Options Outstanding		Weighted-Average Remaining Contractual Life (years)		Number of Options Exercisable
$	0.05		2,450,000		4.67		704,375
			2,450,000		4.67		704,375

20

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 4 - Property and Equipment

Property and equipment consisted of the following at September 30, 2014 and December 31, 2013:

	September 30, 2014			December 31, 2013
Office equipment and computer	$	6,106		$	6,106
Furniture and fixtures		2,182			2,182
		8,288			8,288
Accumulated depreciation		(7,587	)		(7,353	)
	$	701		$	935

The Company incurred $234 and $724, respectively, in depreciation expense for each of the nine months ended September 30, 2014 and 2013.

Note 5 - License Agreement with Related Party

The Company has entered into a 10-year, renewable, exclusive license with Magnolia Optical Technologies, Inc. (“Magnolia Optical”) on April 30, 2008 for the exclusive rights of the technology related to the application of Optical’s solar cell technology. Magnolia Optical shares common ownership with the Company.

The Company is amortizing the license fee of $356,500 over the 120 month term of the Agreement. Accumulated amortization as of September 30, 2014 was $228,755. Amortization expense for each of the nine months ended September 30, 2014 and 2013 was $26,738, respectively. The Company’s management has determined that the fair value of the license exceeds the book value and thus no further impairment or amortization is necessary as of September 30, 2014 or December 31, 2013.

21

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 6 – Original Issue Discount Senior Secured Convertible Promissory Note

Original Notes

Following the closing of the Reverse Merger in December 2009, the Company issued 26.6 units in the 2009 Private Placement consisting of an aggregate of $2,660,000 of 2009 Notes and 2009 Warrants exercisable into an aggregate of 2,660,000 shares of common stock exercisable at $1.25 per share, for $50,000 per unit for aggregate proceeds to the Company of $990,000. In addition, placement agent warrants to purchase an aggregate of 725,300 shares of common stock exercisable at $1.05 per share were issued. The 2009 Notes are secured by a first-priority security interest in the assets of the Company. Holders of the 2009 Notes and warrants issued in the 2009 Private Placement also have the right to “piggyback” registration of the shares underlying the 2009 Notes and warrants.

Prior to the amendment and restatement of the 2009 Notes, the 2009 Notes were originally due December 31, 2011 and convertible at the option of the holder, into shares of the Company’s common stock at an initial conversion rate of $1.00 per share.

Amended Notes

On December 29, 2011, the Company entered into amendment agreements with holders of the 2009 Notes and 2009 Warrants. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $260,000 were converted into an aggregate of 1,040,000 shares of common stock of the Company at an adjusted conversion price of $0.25 per share, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2011 to December 31, 2012 and 2009 Notes in the aggregate principal amount of the remaining $400,000 were amended to extend the maturity date from December 31, 2011 to December 31, 2013, (iii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to adjust the conversion price of such notes from $1.00 per share to $0.25 per share, (iv) 2009 Notes in the aggregate principal amount of $400,000 were amended to provide that such notes shall, from January 1, 2012 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, (v) an aggregate of 1,300,000 shares of common stock of the Company were issued to certain holders of the 2009 Notes, and (vi) the exercise price of warrants to purchase an aggregate of 3,385,000 shares of common stock was adjusted from $1.25 per share to $0.50 per share.

22

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 6 – Original Issue Discount Senior Secured Convertible Promissory Note (continued)

On December 21, 2012 and on June 27, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2012 to December 31, 2013, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to provide that such notes shall, from January 1, 2013 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, and (iii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.50 per share to $0.25 per share. Upon amendment of the notes, interest was calculated on the entire $2,400,000 of promissory notes at a rate of 10% per year. Interest expense was accrued in the amount of $60,000 per quarter and shares are issued in lieu of cash payments.

On December 29 and 31, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,400,000 were amended to extend the maturity dates from December 31, 2013 to December 31, 2014, (ii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.25 per share to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the warrants to purchase an aggregate of 2,660,000 shares of common stock from December 31, 2014 to December 31, 2016.

As of September 30, 2014, the Company issued 9,888,025 shares of its common stock in lieu of interest payments in the aggregate of $400,000 relating to the 2009 Notes in the aggregate principal of $2,400,000.

As of September 30, 2014, the entire $2,400,000 balance of the amended 2009 Notes remains outstanding. In the transaction, the Company recognized a discount of $1,670,000 which was amortized over the original life of the 2009 Notes. The discount represented the original issue discount. In addition, the Company determined that the value of the warrants in the transaction of $412,830 as a discount to the 2009 Notes. This discount was being amortized as well over the original life of the 2009 Notes.

 As of September 30, 2014, $2,400,000 of the 2009 Notes are classified as a current liability. The modifications made to the debt instruments did not constitute a material modification under ASC 470-50.

23

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 7 – Provision for Income Taxes

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

As of September, 2014, there is no provision for income taxes, current or deferred.

	September 30, 2014
Net operating losses	$	1,146,000
Valuation allowance		(1,146,000	)
	$	-

At September 30, 2014, the Company had a net operating loss carry forward in the amount of approximately $3,369,650 available to offset future taxable income through 2034. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the year ended September 30, 2014 and 2013 is summarized below.

Federal statutory rate	(34.0	)%
State income taxes, net of federal	0.0
Valuation allowance	34.0
	0.0	%

24

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 8 – Commitments and Contingencies

Office Lease

The Company leases office space at two locations that expire between January 31, 2015 and December 31, 2015. Rent expense for the Company’s facilities for the nine months ended September 30, 2014 and 2013 totaled $13,615 and $12,864, respectively.

The future minimum lease payments due under the above mentioned non-cancelable lease agreements are as follows:

Year ending December 31,
	2014	$	4,527
	2015		5,260
		$	9,787

Contract Related Fees

As part of the contract to develop its products, the Company has agreed to pay the contractor 1.5% of future New York state manufactured sales, and 5% of future non-New York state manufactured sales until the entire funds paid by the contractor have been repaid, or 15 years, whichever comes first. As of September 30, 2014, the Company has $1,249,984 of contract related expenses, all of which will be owed to the contractor, contingent upon the sale of the Company’s product. No liability is accrued since no sales have occurred.

Note 9 - Concentration of Credit Risk

The Company maintains its cash in one bank deposit account, which at times may exceed the federally insured limits of $250,000 that exist through September 30, 2014. At September 30, 2014, the Company did not have any uninsured deposits.

25

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 9 - Concentration of Credit Risk (continued)

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company extends credit based on the customers’ financial conditions. The Company does not require collateral or other security to support customer receivables. Credit losses, when realized, have been within the range of management’s expectations. To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers.

	September		September
Concentrations in accounts receivable:	30, 2014		30, 2013
Customer A		62%		*
Customer B		37%		10%
Customer C		*		57%
Customer D		*		26%

	September	September
Concentrations in net revenue:	30, 2014	30, 2013
Customer A	85%	46%
Customer B	*	41%
Customer C	*	10%
* Customer did not exceed 10% for the respective year

Note 10 - Fair Value Measurements

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Quoted prices in active markets for identical assets or liabilities. The Company's Level 1 assets consist of cash and cash equivalents.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

26

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 10 - Fair Value Measurements (continued)

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

September 30, 2014	Level 1		Level 2		Level 3		Total
Cash	$	34,017	$	-	$	-	$	34,017
Total assets	$	34,017	$	-	$	-	$	34,017
Original Issue Discount
Senior Secured Convertible Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000
December 31, 2013		Level 1		Level 2		Level 3		Total
Cash	$	118,172	$	-	$	-	$	118,172
Total assets	$	118,172	$	-	$	-	$	118,172
Original Issue Discount
Senior Secured Convertible Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000

27

MAGNOLIA SOLAR CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2014

Note 10 - Fair Value Measurements (continued)

		Original Issue Discount Senior Secured Convertible Promissory Notes
Balance, January 1, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Conversion of notes to common stock		-
Balance, December 31, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Balance, December 31, 2013	$	2,400,000
Balance, September 30, 2014	$	2,400,000

Note 11 – Subsequent Events

On October 23, 2014, the Company issued 1,200,000 shares of common stock for payment of interest in lieu of cash.

28

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Statements

The information in this report contains forward-looking statements. All statements other than statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. These forward-looking statements can be identified by the use of words such as “believes,” “estimates,” “could,” “possibly,” “probably,” anticipates,” “projects,” “expects,” “may,” “will,” or “should” or other variations or similar words. No assurances can be given that the future results anticipated by the forward-looking statements will be achieved. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.

Overview

We are a development stage company focused on developing and commercializing thin film solar cell technologies that employ nanostructured materials and designs. We are pioneering the development of thin film, high efficiency solar cells for applications such as power generation for electrical grids as well as for local applications, including lighting, heating, traffic control, irrigation, water distillation, and other residential, agricultural and commercial uses.

We intend to become a highly competitive, low cost provider of terrestrial photovoltaic cells for both civilian and military applications. These cells will be based on low cost substrates such as glass and flexible substrates such as stainless steel. Our primary goal is to introduce a product which offers significant cost savings per watt over traditional silicon based solar cells.  To date, we have not generated material revenues or earnings as a result of our activities.

Recent Developments

On September 19, 2014, we entered into a Share Exchange Agreement (the “Agreement”) with Auzminerals Resource Group Limited, a Singapore corporation (the “Parent”) and Solar Silicon Resources Group Pte Ltd., a wholly owned subsidiary of Parent (“SSRG”).  Upon the terms and subject to the conditions set forth in the Agreement, we will acquire SSRG from the Parent through the transfer of all issued and outstanding ordinary shares of SSRG (the “SSRG Shares”) by the Parent to us in exchange (the “Exchange”) for the issuance by us of newly issued shares of our common stock (the “Exchange Shares”) to the Parent. Upon the closing of the Agreement, the Exchange Shares shall at that time constitute ninety-five percent (95%) of the aggregate number of shares of our common stock issued and outstanding, calculated on a fully diluted basis.

Consummation of the Exchange (the “Closing”) is subject to a number of closing conditions, including, among other things: (i) the adoption and approval of the certain amendments to our articles of incorporation by the requisite vote of our stockholders, including but not limited to approving an increase in our authorized number of shares of common stock sufficient to enable us to issue the Exchange Shares; (ii) absence of litigation that seeks to prohibit the Exchange; (iii) we shall be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iv) the accuracy of the representations and warranties, subject to customary materiality qualifiers; and (v) the absence of a Material Adverse Effect (as defined in the Agreement).  The Agreement does not contain a financing condition.

Each of us, the Parent and SSRG have made customary representations and warranties in the Agreement and have covenanted, among other things, that, subject to certain customary exceptions: (i) we will conduct our business in the ordinary course of business consistent with past practice during the interim period between the execution of the Agreement and the Closing; (ii) both SSRG and we will cooperate in preparing and promptly causing to be filed with the Securities and Exchange Commission (the “SEC”) a proxy statement on Schedule 14A and that we will use our reasonable efforts to have the proxy statement cleared for distribution to our stockholders as promptly as practicable after such filing with the SEC; (iii) we will as soon as practicable following clearance by the SEC, take all action necessary to duly call, give notice of, convene and hold a meeting of its stockholders for the purpose of obtaining the requisite stockholder vote to adopt the Amendments (as defined in the Agreement); and (iv) our board of directors will recommend to our stockholders that they vote in favor of the Amendments.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreement and the Exhibits thereto, which is attached as Exhibit 2.1 to our Current Report on Form 8-K filed with the SEC on September 24, 2014.  

29

Since the Merger is subject to approvals and other conditions, there can be no assurance that the Exchange will be consummated in a timely basis or at all.

Results of Operations

Our revenues are derived from research and development grants and contracts awarded to the Company by government and private sector.

Three Months Ended September 30, 2014 Compared to Three Months Ended September 30, 2013

Revenues

Currently we are in our development stage and have recorded $68,578 of revenue for the three months ended September 30, 2014 compared to $126,545 of revenue for the three months ended September 30, 2013, a decrease of $57,967 or 45.81%. We anticipate emerging from the development stage in fiscal 2015. The revenue recorded is from research and development grants or contracts to develop solar cells using Magnolia’s technology.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2014 were $44,712 as compared to $67,900 for the three months ended September 30, 2013, representing a decrease of $23,188, or 34.15%. Cost of revenues were comprised of direct labor, direct travel, materials, and subcontracts for the solar cell development. The decrease in cost of revenues for this period was attributable to reductions in direct labor and subcontractor costs due to work on some contracts being completed and that on another contract being extended.

Operating Expenses

Indirect and Administrative Labor

Indirect and administrative labor expense for the three months ended September 30, 2014 was $44,772 as compared to $34,026 for the three months ended September 30, 2013, an increase of $10,746 or 31.58%. Indirect labor and benefits were comprised of wages for the administrative staff, payroll taxes, health insurance, disability insurance, indirect travel, other administrative expenses and provision for vacation time. The increase in indirect and administrative expenses for this period was primarily attributable to an increase in indirect labor and travel costs due to additional work required on the proposed Exchange.

Professional Fees

Professional fees for the three months ended September 30, 2014 were $32,912 as compared to $25,041 for the three months ended September 30, 2013, representing an increase of $7,871, or 31.43%.  Professional fees were comprised of accounting, business services, public relations, audit, and legal fees. The increase in professional fees for this period was attributable primarily to the value of the shares issued for services rendered offset by the timing of business service costs incurred. 

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended September 30, 2014 were $8,991 as compared to $8,990 for the three months ended September 30, 2013, representing an increase of $1 or .01%. Depreciation and amortization expense was comprised of amortization of the license fee paid for the technology license, amortization of the debt issue, and depreciation on the property and equipment.

General and Administrative

General and administrative expense for the three months ended September 30, 2014 was $11,769 as compared to $11,272 for the three months ended September 30, 2013, an increase of $497 or 4.41%. General and administrative expense was comprised of expenses for office lease, computer, office supplies, dues and subscriptions, worker’s compensation, disability insurance, printing, telephone, business meals, repairs and maintenance, public relations, advertising, state income taxes, business gifts and other miscellaneous items. The increase in general and administrative expense for this period was attributable to public relations expenses.

Interest Expense

Interest expense for the three months ended September 30, 2014 was $59,999 as compared to $59,949 for the three months ended September 30, 2013. Interest expense was comprised of interest incurred on outstanding long-term debt.

Net Loss

Our net loss for the three months ended September 30, 2014 was $134,577, as compared to $80,633 for the three months ended September 30, 2013, representing an increase of $53,944, or 69.90%.

30

Nine Months Ended September 30, 2014 Compared to Nine Months Ended September 30, 2013

Revenues

Currently we are in our development stage and have recorded $150,256 of revenue for the nine months ended September 30, 2014 compared to $669,784 of revenue for the nine months ended September 30, 2013, a decrease of $519,528 or 77.57%. We anticipate emerging from the development stage in fiscal 2015. The revenue recorded is from research and development grants or contracts to develop solar cells using Magnolia’s technology.

Cost of Revenues

Cost of revenues for the nine months ended September 30, 2014 were $92,034 as compared to $413,978 for the nine months ended September 30, 2013, representing a decrease of $321,944, or 77.77%. Cost of revenues were comprised of direct labor, direct travel, materials, and subcontracts for the solar cell development. The decrease in cost of revenues for this period was attributable to reductions in direct labor and subcontractor costs due to work on some contracts being completed and that on another contract being extended. 

Operating Expenses

Indirect and Administrative Labor

Indirect and administrative labor expense for the nine months ended September 30, 2014 was $152,605 as compared to $107,783 for the nine months ended September 30, 2013, an increase of $44,822 or 41.59%. Indirect labor and benefits were comprised of wages for the administrative staff, payroll taxes, health insurance, disability insurance, indirect travel, other administrative expenses and provision for vacation time. The increase in indirect and administrative expenses for this period was primarily attributable to an increase in indirect labor and travel costs due to additional work required on the proposed Exchange.

Professional Fees

Professional fees for the nine months ended September 30, 2014 were $96,302 as compared to $133,374 for the nine months ended September 30, 2013, representing a decrease of $37,072, or 27.80%.  Professional fees were comprised of accounting, business services, public relations, audit, and legal fees. The decrease in professional fees for this period was attributable primarily to the value of the shares issued for services rendered offset by the increase in cost of business services. 

Depreciation and Amortization Expense

Depreciation and amortization expense for the nine months ended September 30, 2014 were $26,972 as compared to $27,461 for the nine months ended September 30, 2013, representing a decrease of $489 or 1.78%. Depreciation and amortization expense was comprised of amortization of the license fee paid for the technology license, amortization of the debt issue, and depreciation on the property and equipment.

General and Administrative

General and administrative expense for the nine months ended September 30, 2014 was $34,513 as compared to $33,764 for the nine months ended September 30, 2013, an increase of $749 or 2.22%. General and administrative expense was comprised of expenses for office lease, computer, office supplies, dues and subscriptions, worker’s compensation, disability insurance, printing, telephone, business meals, repairs and maintenance, public relations, advertising, state income taxes, business gifts and other miscellaneous items. The increase in general and administrative expense for this period was attributable to an increase in computer and public relations expenses.

Interest Expense

Interest expense for the nine months ended September 30, 2014 was $179,982 as compared to $179,900 for the nine months ended September 30, 2013. Interest expense was comprised of interest incurred on outstanding long-term debt.

Net Loss

Our net loss for the nine months ended September 30, 2014 was $432,152, as compared to $222,476 for the nine months ended September 30, 2013, representing a decrease of $209,676, or 94.25%.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures.

31

To date we have financed our operations through internally government grants, the sale of our common stock and the issuance of debt.

At September 30, 2014 and December 31, 2013 we had cash of $34,017 and $118,172, respectively and working capital deficit of $2,702,021 and $2,505,739, respectively. The decrease in working capital was due to decrease in cash and accounts receivable. The opinion of our independent registered public accounting firm on our audited financial statements as of and for the year ended December 31, 2013 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our ability to continue as a going concern is dependent upon raising capital from financing transactions.

Net cash used in operating activities was $84,155 for the nine months ended September 30, 2014, as compared to net cash provided by operating activities of $46,306 for the nine months ended September 30, 2013. The increase in net cash used in operating activities was attributable to an increase in the operating losses offset by a decrease in accounts receivable and an increase in accounts payable.

There were no investing activities for the nine months ended September 30, 2014 or September 30, 2013. There was no cash used in investing activities because we did not add to plant and equipment.

There were no financing activities for the nine months ended September 30, 2014 or September 30, 2013. There were no capital raising transactions during the reporting period.

Since our inception, we have experienced negative cash flow from operations and expect to experience significant negative cash flow from operations in the future. In addition, we have original issue discount notes in the aggregate principal of $2,400,000 that matures on December 31, 2014.  Such indebtedness is secured by substantially all of our assets. If we were to default on our indebtedness, then holders of the notes may foreclose on the debt and seize our assets which may force us to suspend or cease operations altogether.

We will need to raise additional funds in the future so that we can expand our operations and repay our indebtedness due under the original issue senior secured notes. Therefore our continuation as a going concern is dependent on our ability to obtain necessary equity funding to continue operations.  Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, government grants or other financing mechanisms. However, the trading price of our common stock and a downturn in the U.S. equity and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us, or experience unexpected cash requirements that would force us to seek alternative financing. Furthermore, if we issue additional equity or debt securities, stockholders may experience additional dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. The inability to obtain additional capital may restrict our ability to grow and may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we may have to curtail our development plans and possibly cease our operations altogether.

Off-Balance Sheet Arrangements

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

N/A.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were effective such that the information required to be disclosed by us in reports filed under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Changes in Internal Control Over Financial Reporting. During the most recent quarter ended September 30, 2014, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) ) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

32

PART II

ITEM 1. LEGAL PROCEEDINGS.

We are not a party to any pending legal proceeding, nor is our property the subject of a pending legal proceeding, that is not in the ordinary course of business or otherwise material to the financial condition of our business. None of our directors, officers or affiliates is involved in a proceeding adverse to our business or has a material interest adverse to our business.

ITEM 1A. RISK FACTORS.

We have incurred substantial indebtedness that matures on December 31, 2014 and if we were to default, we could be forced to suspend or cease operations altogether.

We have very limited funds and we have $2,400,000 of original issue discount senior secured convertible notes that mature on December 31, 2014. Such indebtedness is secured by substantially all of our assets.  We intend to negotiate with the holders of the notes an extension of the maturity date or an agreement to convert the debt into equity. There can be no assurances that we will be successful in reaching satisfactory agreements with holders of the notes or that we will reach agreement at all. Furthermore, our ultimate success depends upon our ability to raise additional capital. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us. If we were to default on our indebtedness, then holders of the notes may foreclose on the debt and seize our assets which may force us to suspend or cease operations altogether.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES

N/A.

ITEM 5. OTHER INFORMATION.

The following disclosure would have otherwise been filed on Form 8-K under the heading “Item 3.02 Unregistered Sales of Equity Securities”:

On October 23, 2014, we issued 1,200,000 shares of common stock for payment of interest in lieu of cash.

The securities were offered and sold pursuant to an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, as amended and Rule 506 of Regulation D promulgated thereunder since, among other things, the transactions did not involve a public offering and the securities were acquired for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

ITEM 6. EXHIBITS.

Exhibit Number	Description of Exhibit
31.1	Section 302 Certification of Principal Executive Officer
31.2	Section 302 Certification of Principal Financial Officer
32.1	Section 906 Certification of Principal Executive Officer
32.2	Section 906 Certification of Principal Financial Officer
101	The following materials from Magnolia Solar Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statement of Changes in Stockholders’ Equity (Deficit), (iv) the Consolidated Statements of Cash Flow, and (iv) Notes to Consolidated Financial Statements.

33

SIGNATURES

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

	MAGNOLIA SOLAR CORPORATION
Date: November 14, 2014	By:	/s/ Dr. Ashok K. Sood
		Dr. Ashok K. Sood President, Chief Executive Officer and Director (Principal Executive Officer)

Date: November 14, 2014	By:	/s/ Dr.  Yash R. Puri
		Dr. Yash R. Puri Executive Vice-President, Chief Financial Officer and Director (Principal Financial Officer)

34

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dr. Ashok K. Sood, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Magnolia Solar 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 the 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
(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.

Date: November 14, 2014

/s/ Dr. Ashok K. Sood

Dr. Ashok K. Sood

President and Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Dr. Yash R. Puri, certify that:

(1)	I have reviewed this quarterly report on Form 10-Q of Magnolia Solar 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 the 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 the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
(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.

Date: November 14, 2014

/s/ Dr. Yash R. Puri

Dr. Yash R. Puri

Executive Vice-President and Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Magnolia Solar Corporation, (the ‘‘Company’’) on Form 10-Q for quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Dr. Ashok K. Sood,  President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: November 14, 2014

/s/ Dr. Ashok K. Sood

Dr. Ashok K. Sood

President and Chief Executive Officer (Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S. C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Magnolia Solar Corporation, (the ‘‘Company’’) on Form 10-Q for quarter ended September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the ‘‘Report’’), I, Dr. Yash R. Puri,  Executive Vice-President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: November 14, 2014

/s/ Dr. Yash R. Puri

Dr. Yash R. Puri

Executive Vice-President and Chief Financial Officer (Principal Financial Officer)

XML

Property and Equipment (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 8,288	$ 8,288
Accumulated depreciation	(7,587)	(7,353)
Fixed assets, net	701	935
Office equipment and computers
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	6,106	6,106
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property, plant and equipment, gross	$ 2,182	$ 2,182

XML

Subsequent Events (Detail Textuals) (Subsequent Event [Member])	1 Months Ended
	Oct. 23, 2014
Subsequent Event [Member]
Subsequent Event [Line Items]
Common shares issued for payment of interest (in shares)	1,200,000

XML

Commitments and Contingencies (Details) (USD $)	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
2014	$ 4,527
2015	5,260
Operating leases future minimum payments due	$ 9,787

XML

Provision for Income Taxes (Details 1)	9 Months Ended
	Sep. 30, 2014
Provision For Income Taxes [Abstract]
Federal statutory rate	(34.00%)
State income taxes, net of federal	0.00%
Valuation allowance	34.00%
Effective tax rate of income before taxes and federal statutory rate	0.00%

XML

Stockholders' Deficit (Details 2) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Number of Options/Shares
Outstanding, Number of Options/Shares
Options granted, Number of Options/Shares	2,450,000
Options exercised, Number of Options/Shares
Options forfeited/expired/cancelled, Number of Options/Shares
Outstanding, Number of Options/Shares	2,450,000
Exercisable, Number of Options/Shares	704,375
Range of Exercise Prices
Outstanding, Range of Exercise Prices	$ 0.00
Options granted, Range of Exercise Prices	$ 0.05
Options exercised, Range of Exercise Prices	$ 0.00
Options forfeited/expired/cancelled, Range of Exercise Prices	$ 0.00
Outstanding, Range of Exercise Prices	$ 0.05
Exercisable, Range of Exercise Prices	$ 0.05	$ 0.00
Weighted- Average Exercise Price
Outstanding, Weighted- Average Exercise Price	$ 0.00
Options granted, Weighted- Average Exercise Price	$ 0.05
Options exercised, Weighted- Average Exercise Price	$ 0.00
Options forfeited/expired/cancelled, Weighted- Average Exercise Price	$ 0.00
Outstanding, Weighted- Average Exercise Price	$ 0.05
Exercisable, Weighted- Average Exercise Price	$ 0.05	$ 0.00

XML

Organization and Nature of Business (Detail Textuals) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended
	Feb. 28, 2010	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012	Dec. 29, 2011 Convertible Debt [Member]
Debt Instrument [Line Items]
Ratio of forward stock splits issued and outstanding shares	1.3157895:1
Net loss		$ (134,577)	$ (80,633)	$ (432,152)	$ (222,476)
Aggregate principal amount of 2009 notes raising from private placement		990,000		990,000
Aggregate principal amount of 2009 notes		2,400,000		2,400,000				2,660,000
Cash		$ 34,017	$ 181,932	$ 34,017	$ 181,932	$ 118,172	$ 135,626

XML

Concentration of Credit Risk (Details)	9 Months Ended
	Sep. 30, 2014		Sep. 30, 2013
Concentration Risk [Line Items]
Percentage of concentration risk	10.00%
Customer concentration risk | Accounts Receivable | Customer A
Concentration Risk [Line Items]
Percentage of concentration risk	62.00%			[1]
Customer concentration risk | Accounts Receivable | Customer B
Concentration Risk [Line Items]
Percentage of concentration risk	37.00%		10.00%
Customer concentration risk | Accounts Receivable | Customer C
Concentration Risk [Line Items]
Percentage of concentration risk		[1]	57.00%
Customer concentration risk | Accounts Receivable | Customer D [Member]
Concentration Risk [Line Items]
Percentage of concentration risk		[1]	26.00%
Customer concentration risk | Revenue | Customer A
Concentration Risk [Line Items]
Percentage of concentration risk	85.00%		46.00%
Customer concentration risk | Revenue | Customer B
Concentration Risk [Line Items]
Percentage of concentration risk		[1]	41.00%
Customer concentration risk | Revenue | Customer C
Concentration Risk [Line Items]
Percentage of concentration risk		[1]	10.00%

[1] Customer did not exceed 10% for the respective year

XML

Original Issue Discount Senior Secured Convertible Promissory Note (Detail Textuals) (USD $)	12 Months Ended
	Dec. 31, 2009 Unit	Sep. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 21, 2012	Dec. 31, 2011	Dec. 29, 2011	Dec. 31, 2010	Dec. 31, 2008
Class of Warrant or Right [Line Items]
Aggregate principal amount of 2009 notes		$ 2,400,000
Aggregate principal amount of 2009 notes raising from private placement		990,000
Warrant
Class of Warrant or Right [Line Items]
Number of units issued in connection with warrants issue	26.6
Value of warrants	50,000
Aggregate principal amount of 2009 notes raising from private placement	990,000
Number of common stock called by warrants	2,660,000		3,385,300		3,385,300		3,385,300
Exercise price of warrants	$ 0.10	$ 0.14	$ 0.14	$ 0.14	$ 0.50	$ 0.14	$ 1.25	$ 0.10
Number Of Warrants Issued	2,660,000
Warrant | Private Placement
Class of Warrant or Right [Line Items]
Number of common stock called by warrants	2,660,000
Exercise price of warrants	$ 1.25
Original Issue Discount Senior Secured Convertible Promissory Notes
Class of Warrant or Right [Line Items]
Aggregate principal amount of 2009 notes	$ 2,660,000
Aggregate principal amount of shares	2,660,000
Debt instrument convertible conversion price	$ 1.25
Placement Agent Warrants
Class of Warrant or Right [Line Items]
Exercise price of warrants	$ 0.10
Number Of Warrants Issued	725,300
Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 3
Class of Warrant or Right [Line Items]
Initial conversion price	$ 1.00

XML

Stockholders' Deficit (Detail Textuals 2) (USD $)	1 Months Ended		12 Months Ended							0 Months Ended	9 Months Ended		1 Months Ended	12 Months Ended	0 Months Ended	12 Months Ended
	Dec. 21, 2012 Warrant	Dec. 29, 2011 Warrant	Dec. 31, 2013 Warrant	Dec. 31, 2009 Warrant	Sep. 30, 2014 Warrant	Dec. 31, 2012 Warrant	Dec. 31, 2011 Warrant	Dec. 31, 2010 Warrant	Dec. 31, 2008 Warrant	Dec. 23, 2013 Warrant 2009 Private Placement	Sep. 30, 2014 Warrant 2009 Private Placement	Dec. 31, 2009 Warrant 2009 Private Placement	Dec. 29, 2011 Placement Agent Warrants	Dec. 31, 2009 Placement Agent Warrants	Aug. 15, 2011 Public relation services warrant	Dec. 31, 2011 Public relation services warrant	Sep. 30, 2014 Public relation services warrant
Class of Warrant or Right [Line Items]
Term of callable warrants				5 years											5 years
Number of common stock called by warrants	3,385,300	3,385,300	3,385,300	2,660,000								2,660,000
Warrants issued				2,660,000										725,300	400,000	400,000
Exercise price of warrants	$ 0.50	$ 1.25	$ 0.14	$ 0.10	$ 0.14	$ 0.14	$ 0.14	$ 0.10				$ 1.25		$ 0.10	$ 0.50
Value of warrants				$ 50,000													$ 59,534
Reduction in exercise price of warrants	0.25	0.50	0.25							0.10			0.50
Extended warrant expiration											Expiration date of the 2009 Warrants from December 31, 2014 to December 31, 2016.

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Fair Value Measurements (Details) (Fair value on a recurring basis, USD $)	Sep. 30, 2014	Dec. 31, 2013
Total
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash	$ 34,017	$ 118,172
Total assets	34,017	118,172
Original Issue Discount Senior Secured Convertible Promissory Notes	2,400,000	2,400,000
Total liabilities	2,400,000	2,400,000
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash	34,017	118,172
Total assets	34,017	118,172
Original Issue Discount Senior Secured Convertible Promissory Notes
Total liabilities
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash
Total assets
Original Issue Discount Senior Secured Convertible Promissory Notes
Total liabilities
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash
Total assets
Original Issue Discount Senior Secured Convertible Promissory Notes	2,400,000	2,400,000
Total liabilities	$ 2,400,000	$ 2,400,000

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Provision for Income Taxes (Detail Textuals) (USD $)	9 Months Ended
	Sep. 30, 2014
Provision For Income Taxes [Abstract]
Net operating loss carry forward	$ 3,369,650
Taxable income, Description	Through 2034.

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Property and Equipment

9 Months Ended

Sep. 30, 2014

Property and Equipment [Abstract]

Property and Equipment

Note 4 - Property and Equipment

Property and equipment consisted of the following at September 30, 2014 and December 31, 2013:

	September 30,  2014			December 31,  2013
Office equipment and computer	$	6,106		$	6,106
Furniture and fixtures		2,182			2,182
		8,288			8,288
Accumulated depreciation		(7,587	)		(7,353	)
	$	701		$	935

The Company incurred $234 and $724, respectively, in depreciation expense for each of the nine months ended September 30, 2014 and 2013.

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Original Issue Discount Senior Secured Convertible Promissory Note (Detail Textuals 1) (USD $)		1 Months Ended		12 Months Ended							1 Months Ended		1 Months Ended		1 Months Ended			9 Months Ended
	Sep. 30, 2014	Dec. 21, 2012 Warrant	Dec. 29, 2011 Warrant	Dec. 31, 2013 Warrant	Sep. 30, 2014 Warrant	Dec. 31, 2012 Warrant	Dec. 31, 2011 Warrant	Dec. 31, 2010 Warrant	Dec. 31, 2009 Warrant	Dec. 31, 2008 Warrant	Dec. 21, 2012 Original Issue Discount Senior Secured Convertible Promissory Notes	Dec. 29, 2011 Original Issue Discount Senior Secured Convertible Promissory Notes	Dec. 29, 2011 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 1	Dec. 31, 2013 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 1	Dec. 21, 2012 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 2	Dec. 29, 2011 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 2	Dec. 29, 2011 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 3	Sep. 30, 2014 Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 3
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes	$ 2,400,000											$ 2,660,000	$ 260,000	$ 2,400,000	$ 2,000,000	$ 2,000,000	$ 400,000
Aggregate principal amount converted into shares													1,040,000
Debt instrument convertible conversion price													$ 0.25			$ 0.25
Initial conversion price																$ 1.00
Interest conversion rate															10.00%		10.00%
Trading days for interest payment															20 days		20 days
Number of shares issued to holders	9,888,025											1,300,000
Aggregate interest payment																		400,000
Principal amount outstanding for the note maturing on December 31, 2014														2,400,000
Number of common stock called by warrants		3,385,300	3,385,300	3,385,300					2,660,000
Exercise price of warrants		$ 0.50	$ 1.25	$ 0.14	$ 0.14	$ 0.14	$ 0.14	$ 0.10	$ 0.10
Reduction in exercise price of warrants		0.25	0.50	0.25
Interest rate on quarterly basis											10.00%				90.00%		90.00%
Interest expense											2,400,000
Accrued interest expense											$ 60,000

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Summary of Significant Accounting Policies (Detail Textuals)	9 Months Ended
	Sep. 30, 2014
Property, Plant and Equipment [Line Items]
Standard payment term minimum	30 days
Standard payment term maximum	12 months
Property, Plant and Equipment
Property, Plant and Equipment [Line Items]
Estimated useful lives of property, plant and equipment	three to seven years

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Summary of Significant Accounting Policies (Details 1) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Summary of Significant Accounting Policies [Abstract]
Net loss	$ (134,577)	$ (80,633)	$ (432,152)	$ (222,476)
Weighted-average common shares outstanding (Basic)	38,527,316	31,549,189	36,709,244	29,828,504
Weighted-average common stock Equivalents Stock options			1,112,821
Warrants			3,785,300	3,785,300
Weighted-average common shares outstanding (Diluted)			41,607,365	33,613,804

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Original Issue Discount Senior Secured Convertible Promissory Note (Detail Textuals 2) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2009
Original Issue Discount Senior Secured Convertible Promissory Note [Abstract]
Net value of the 2009 notes	$ 2,400,000
Recognized a discount over the original life of the 2009 Notes	1,670,000
Value of the warrants in the transaction of a discount to the 2009 Notes		$ 412,830

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Stockholders' Deficit (Details) (USD $)	12 Months Ended								12 Months Ended	0 Months Ended	12 Months Ended
	Dec. 31, 2009 Warrant	Sep. 30, 2014 Warrant	Dec. 31, 2013 Warrant	Dec. 31, 2012 Warrant	Dec. 21, 2012 Warrant	Dec. 31, 2011 Warrant	Dec. 29, 2011 Warrant	Dec. 31, 2010 Warrant	Dec. 31, 2009 Placement Agent Warrants	Aug. 15, 2011 Public relation services warrant	Dec. 31, 2011 Public relation services warrant
Warrants Outstanding [Roll Forward]
Balance		3,785,300	3,785,300	3,785,300		3,785,300		3,385,300
Issued	2,660,000								725,300	400,000	400,000
Balance	3,385,300	3,785,300	3,785,300	3,785,300		3,785,300		3,385,300
Weighted Average Exercise Price Of Warrants [Roll Forward]
Balance (in dollars per share)		$ 0.14	$ 0.14	$ 0.14	$ 0.50	$ 0.14	$ 1.25	$ 0.10
Issued (in dollars per share)	0.10								0.10		0.50
Balance (in dollars per share)	$ 0.10	$ 0.14	$ 0.14	$ 0.14	$ 0.50	$ 0.14	$ 1.25	$ 0.10	$ 0.10	$ 0.50

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Stockholders' Deficit (Parentheticals) (Details) (Warrant)	Dec. 31, 2009 Unit
Warrant
Class of Warrant or Right [Line Items]
Number of units issued in connection with warrants issue	26.6

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Stockholders' Deficit

9 Months Ended

Sep. 30, 2014

Stockholders' Equity [Abstract]

Stockholders' Equity

Note 3 - Stockholders’ Deficit

The Company has 75,000,000 shares of common stock, par value of $0.001 per share authorized.

Shares

Prior to the Reverse Merger as discussed in Note 1, the Company issued 4,473,686 shares of common stock between January and March 2008 at prices ranging from $0.01 to $0.02 per share for a total of $53,000 cash.

In accordance with the Reverse Merger, the Company cancelled 1,973,684 shares of common stock and issued 21,330,000 shares to the former shareholders of Magnolia Solar, Inc. As a result of these transactions, as of December 31, 2009, there were 23,830,000 shares of common stock issued and outstanding.

The Company effectuated a 1.3157895:1 forward stock split in February 2010, in accordance with the Merger Agreement which resulted in 23,830,000 shares of common stock issued and outstanding.

On March 10, 2010, the Company issued 75,000 shares of common stock at its fair value price ($0.90 per share) for legal services resulting in a value of $67,500.

On November 22, 2010, the Company issued 25,000 shares of common stock in at its fair value price ($0.60 per share) for consulting services in the value of $15,000.

On February 10, 2011, the Company issued 50,000 shares of common stock at its fair value price ($0.37 per share) for consulting services for a value of $18,500.

In April 2011, the Company issued 250,000 shares of common stock at its fair value price ($0.181 per share) for consulting services for a value of $45,250.

On October 11, 2011, the Company issued 100,000 shares of common stock at its fair value price ($0.15 per share) for consulting services for a value of $15,000.

On December 29, 2011, the Company issued 1,040,000 shares upon conversion of the aggregate principal amount of $260,000 of 2009 Notes. The Company further issued 1,300,000 shares of common stock at its fair value price ($0.21) in connection with the amendment of the 2009 Notes for a value of $273,000.

In April 2012, the Company issued 230,000 shares of common stock at its contract price for consulting services for a value of $230,000.

In May 2012, the Company issued 109,162 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

In June 2012, the Company issued 100,000 shares of common stock at its contract price for consulting services for a value of $100,000.

In July 2012, the Company issued 100,000 shares of common stock at its contract price for consulting services for a value of $100,000.

In July 2012, the Company issued 108,663 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

In August 2012, the Company issued 150,000 shares of common stock at its contract price for consulting services for a value of $150,000.

In November 2012, the Company issued 124,238 shares of common stock at its fair value price ($0.09 per share) in lieu of interest payment for a value of $10,000.

In November 2012, the Company issued 75,000 shares of common stock at its contract price for consulting services for a value of $75,000.

In December 2012, the Company issued 500,000 shares of common stock for consulting services for a value of $35,000 at a fair market value price of $0.07 per share.

In January 2013, the Company issued 211,078 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $10,000.

In April 2013, the Company issued 286,250 shares of common stock for consulting services for a value of $16,660 at a fair market value price of $0.06 per share.

In May 2013, the Company issued 1,675,978 shares of common stock at its fair value price ($0.04 per share) in lieu of interest payment for a value of $60,000.

In August 2013, the Company issued 1,823,708 shares of common stock at its fair value price ($0.04 per share) in lieu of interest payment for a value of $60,000.

In August 2013, the Company issued 140,625 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.06 per share.

In October 2013, the Company issued 1,398,601 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $60,000.

In October 2013, the Company issued 131,965 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.07 per share.

In February 2014, the Company issued 1,048,950 shares of common stock at its fair value price ($0.06 per share) in lieu of interest payment for a value of $60,000.

In March 2014, the Company issued 94,737 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.05 per share.

In April 2014, the Company issued 2,068,965 shares of common stock at its fair value price ($0.03 per share) in lieu of interest payment for a value of $60,000.

In April 2014, the Company issued 160,714 shares of common stock for consulting services for a value of $4,500 at a fair market value price of $0.03 per share.

In August 2014, the Company issued 1,318,682 shares of common stock at its fair value price ($0.05 per share) in lieu of interest payment for a value of $60,000.

As of September 30, 2014, the Company had 38,527,316 shares issued and outstanding.

Warrants

Following the closing of the Reverse Merger in December 2009, the Company issued five-year callable warrants (the “2009 Warrants”) to purchase an aggregate of 2,660,000 shares of common stock exercisable at $1.25 per share to investors in a private placement (the “2009 Private Placement”) and further issued seven year placement agent warrants to purchase an aggregate of 725,300 shares of common stock exercisable at $1.05 per share. On December 29, 2011, the exercise price of both the 2009 Warrants and placement agent warrants was reduced to $0.50 per share.

On December 21, 2012, the exercise price of the 2009 Warrants and placement agent warrants were reduced to $0.25 per share. On December 23, 2013, the exercise price of the 2009 Warrants and placement agent warrants were further reduced to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the 2009 Warrants from December 31, 2014 to December 31, 2016.

On August 15, 2011, the Company issued 400,000 warrants for public relations services. The warrants vest immediately, and are for a term of 5 years with a strike price of $0.50 per share. The warrants have been valued at $59,534 and are reflected in the consolidated financial statements for the year ended September 30, 2014.

As of September 30, 2014, the following warrants are outstanding:

Balance – December 31, 2008	-
Issued – in the 26.6 units	2,660,000	$	0.10
Issued – to Placement Agent	725,300	$	0.10
Balance – December 31, 2009	3,385,300	$	0.10
Balance – December 31, 2010	3,385,300	$	0.10
Issued – for public relations	400,000	$	0.50
Balance – December 31, 2011	3,785,300	$	0.14
Balance – December 31, 2012	3,785,300	$	0.14
Balance – December 31, 2013	3,785,300	$	0.14
Balance – September 30, 2014	3,785,300	$	0.14

Stock Options

In May 2014, the Company granted 2,450,000 shares of common stock under the 2013 Incentive Stock Option Plan. Under the 2013 Plan, the Company may grant options to purchase up to 5,500,000 shares of common stock to be granted to Company employees, officers, directors, consultants and advisors. The vesting provisions, exercise price and expiration dates will be established by the Board of Directors (the "Board") of the Company at the date of grant, but incentive stock options may be subject to earlier termination, as provided in the 2013 Plan. As of September 30, 2014, there were 2,335,709 shares available for future grant.

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model. The following table indicates the assumptions made in estimating the fair value for the period ending September 30, 2014:

Dividend yield	0.00	%
Volatility	213.26	%
Risk- free interest rate	0.77	%
Expected term	3.5 Years

Expected volatility was calculated based upon the company’s observed median volatility. The risk-free interest rate assumption is based upon the United States Treasury Bond yield curve in effect at the time of grant for instruments with a similar expected life.

The Company recognized compensation cost related to stock-based compensation in the amount of $19,898, for the period ended September 30, 2014. The Company has not recognized any tax benefits or deductions related to the effects of employee stock-based compensation.

In addition, as of September 30, 2014, approximately $49,313 was related to non-vested options which will be recognized over a weighted-average period of approximately 4.67 years.

No options were exercised under all share-based compensation arrangements for the period ending September 30, 2014.

The following is a summary of stock option activity under the Company's stock option plan:

Outstanding as of December 31, 2013	Number of Options/Shares		Range of Exercise Prices		Weighted- Average Exercise Price
		-	$	0.00	$	0.00
Options granted		2,450,000	$	0.05	$	0.05
Options exercised		-	$	0.00	$	0.00
Options forfeited/expired/cancelled		-	$	0.00	$	0.00
Outstanding as of September 30, 2014		2,450,000	$	0.05	$	0.05
Exercisable as of September 30, 2014		704,375	$	0.05	$	0.05
Exercisable as of December 31, 2013		-	$	0.00	$	0.00

Information about stock options outstanding as of September 30, 2014 is as follows:

Exercise Price		Number of Options Outstanding		Weighted-Average Remaining Contractual Life (years)		Number of Options Exercisable
$	0.05		2,450,000		4.67		704,375
			2,450,000		4.67		704,375

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Stockholders' Deficit (Details 1)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Dividend yield	0.00%
Volatility	213.26%
Risk-free interest rate	0.77%
Expected term	3 years 6 months

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Property and Equipment (Detail Textuals) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Property and Equipment [Abstract]
Depreciation expense	$ 234	$ 724

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Fair Value Measurements (Details 1) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013 Original Issue Discount Senior Secured Convertible Promissory Notes	Dec. 31, 2012 Original Issue Discount Senior Secured Convertible Promissory Notes	Sep. 30, 2014 Original Issue Discount Senior Secured Convertible Promissory Notes
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance		$ 2,400,000	$ 2,400,000	$ 2,400,000
Realized gains/(losses)
Unrealized gains/(losses) relating to instruments still held at the reporting date
Purchases, sales, issuances and settlements, net
Discount on notes
Amortization of discount on notes	1,670,000
Conversion of notes to common stock
Balance		$ 2,400,000	$ 2,400,000	$ 2,400,000

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash	$ 34,017	$ 118,172
Accounts receivable	210,550	226,625
Prepaid expense	1,417	1,417
Total current assets	245,984	346,214
Fixed assets, net	701	935
OTHER ASSETS
License with related party, net of accumulated amortization	127,745	154,483
Total other assets	127,745	154,483
TOTAL ASSETS	374,430	501,632
CURRENT LIABILITIES
Accounts payable and accrued expenses	548,005	451,953
Current portion of Original Issue Discount Senior Secured Convertible Promissory Note, net of discount	2,400,000	2,400,000
Total current liabilities	2,948,005	2,851,953
TOTAL LIABILITIES	2,948,005	2,851,953
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value, 75,000,000 shares authorized, 38,527,316 and 33,835,268 shares issued and outstanding	38,527	33,836
Additional paid-in capital	2,161,781	1,957,574
Additional paid-in capital - warrants	962,297	962,297
Accumulated deficits	(5,736,180)	(5,304,028)
Total stockholders' deficit	(2,573,575)	(2,350,321)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 374,430	$ 501,632

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Provision for Income Taxes (Details) (USD $)	Sep. 30, 2014
Provision For Income Taxes [Abstract]
Net operating losses	$ 1,146,000
Valuation allowance	(1,146,000)
Deferred tax assets operating loss carry forwards net of valuation allowance, total

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Organization and Nature of Business

9 Months Ended

Sep. 30, 2014

Organization and Nature Of Business [Abstract]

Organization and Nature of Business

Note 1 – Organization and Nature of Business

The unaudited financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements and notes are presented as permitted on Form 10-Q and do not contain certain information included in the Company’s annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the December 31, 2013 Form 10-K filed with the SEC, including the audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year.

These unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented.

Magnolia Solar Corporation (the “Registrant”) through its wholly-owned subsidiary, Magnolia Solar, Inc. (“Magnolia Solar” and together with the Registrant, “we,” “our,” “us,” or the “Company”) is a development stage company focused on developing and commercializing thin film solar cell technologies that employ nanostructured materials and designs.

The Company is pioneering the development of thin film, high efficiency solar cells for applications such as power generation for electrical grids as well as for local applications, including lighting, heating, traffic control, irrigation, water distillation, and other residential, agricultural and commercial uses.

The Company’s technology takes multiple approaches to bringing cell efficiencies close to those realized in silicon based solar cells while also lowering manufacturing costs. The technology uses a different composition of materials than those used by competing thin film cell manufacturers; incorporates additional layers of material to absorb a wider spectrum of light; uses inexpensive substrate materials, such as glass and polymers, lowering the cost of the completed cell compared to silicon based solar cells; and is based on non-toxic materials that do not have adverse environmental effects.

Since 2010, the Company filed a series of U.S. utility patents relating to the technologies under development.

Reverse Merger

On November 19, 2007, the Registrant, formerly known as Mobilis Relocation Services, Inc. (“Mobilis”), was organized under the laws of the State of Nevada. Mobilis formed Magnolia Solar Acquisition Corp., a wholly-owned subsidiary incorporated in the State of Delaware. Mobilis filed a Certificate of Change to its Articles of Incorporation in order to affect a forward split of the number of authorized shares of common stock which they were authorized to issue, and of the then issued and outstanding shares in a ratio of 1.3157895:1. The forward split occurred in February 2010. All share and per share amounts have been reflected herein post-split.

On December 31, 2009, Mobilis entered into an Agreement of Merger and Plan of Reorganization (the “Merger Agreement”) with Magnolia Solar, Inc., a privately held Delaware corporation incorporated on January 8, 2008, and Magnolia Solar Acquisition Corp. (“Acquisition Sub”). Upon closing of the transaction, under the Merger Agreement, Acquisition Sub merged with and into Magnolia Solar, and Magnolia Solar, as the surviving corporation, became a wholly-owned subsidiary of Mobilis. Thereafter, Mobilis changed its name to Magnolia Solar Corporation. The transaction was accounted for as a reverse merger, and the historical financial information is that of Magnolia Solar, Inc.

Going Concern

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has been generating revenues from various development contracts with governmental agencies, however the Company has generated losses totaling $432,152 and $222,476 for the nine months ended September 30, 2014 and 2013, respectively. While the Company raised funds in a private placement that it consummated in 2009 (raising $990,000 in $2,660,000 of Original Issue Discount Senior Secured Convertible Promissory Notes (the “2009 Notes”)), at September 30, 2014 and December 31, 2013, it had cash of $34,017 and $118,172, respectively, and will need to raise additional funds to carry out its business plan.

On September 19, 2014, the Company entered into a Share Exchange Agreement (the “Agreement”) with Auzminerals Resource Group Limited, a Singapore corporation (the “Parent”) and Solar Silicon Resources Group Pte Ltd., a wholly owned subsidiary of Parent (“SSRG”).  Upon the terms and subject to the conditions set forth in the Agreement, the Company will acquire SSRG from the Parent through the transfer of all issued and outstanding ordinary shares of SSRG (the “SSRG Shares”) by the Parent to us in exchange (the “Exchange”) for the issuance by us of newly issued shares of our common stock (the “Exchange Shares”) to the Parent. Upon the closing of the Agreement, the Exchange Shares shall at that time constitute ninety-five percent (95%) of the aggregate number of shares of our common stock issued and outstanding, calculated on a fully diluted basis. Consummation of the Exchange (the “Closing”) is subject to a number of closing conditions, including, among other things: (i) the adoption and approval of the certain amendments to the Company’s articles of incorporation by the requisite vote of the Company’s stockholders, including but not limited to approving an increase in our authorized number of shares of common stock sufficient to enable us to issue the Exchange Shares; (ii) absence of litigation that seeks to prohibit the Exchange; (iii) the Company shall be subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); (iv) the accuracy of the representations and warranties, subject to customary materiality qualifiers; and (v) the absence of a Material Adverse Effect (as defined in the Agreement).  The Agreement does not contain a financing condition.

The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity financing to continue operations. The Company has had limited operating history to date.

On December 29, 2011, the 2009 Notes in the aggregate principal amount of $2,660,000 were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $260,000 converted into an aggregate of 1,040,000 shares of common stock of the Company at an adjusted conversion price of $0.25 per share, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2011 to December 31, 2012 and 2009 Notes in the aggregate principal amount of the remaining $400,000 were amended to extend the maturity date from December 31, 2011 to December 31, 2013, (iii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to adjust the conversion price of such notes from $1.00 per share to $0.25 per share, (iv) 2009 Notes in the aggregate principal amount of $400,000 were amended to provide that such notes shall, from January 1, 2012 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, (v) an aggregate of 1,300,000 shares of common stock of the Company were issued to certain holders of the 2009 Notes, and (vi) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $1.25 per share to $0.50 per share.

On December 21, 2012 and June 27, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2012 to December 31, 2013, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to provide that such notes shall, from January 1, 2013 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, and (iii) the exercise price of warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.50 per share to $0.25 per share.

On December 29 and 31, 2013, the 2009 Notes as described in the preceding paragraphs were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,400,000 were amended to extend the maturity dates from December 31, 2013 to December 31, 2014, and (ii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.25 per share to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the warrants to purchase an aggregate of 2,660,000 shares of common stock from December 31, 2014 to December 31, 2016.

There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to the Company. If the Company were to default on its indebtedness, then holders of the notes may foreclose on the debt and seize the Company's assets which may force the Company to suspend or cease operations altogether. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the ability of the Company to continue as a going concern.

The Company may need to raise additional capital to expand operations to the point at which the Company can achieve profitability. The terms of equity or debt that may be raised may not be on terms acceptable by the Company. If adequate funds cannot be raised outside of the Company, the Company may suspend or cease operations altogether.

The development of renewable energy and energy efficiency marks a new era of energy exploration in the United States. The Company continues to explore low cost alternatives for energy solutions which are in line with United States government initiatives for renewable energy sources. The Company hopes that these factors will mitigate the current unstable factors in the United States economy.

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Stockholders' Deficit (Detail Textuals) (USD $)			3 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Mar. 31, 2008 Prior to the reverse merger	Mar. 31, 2008 Prior to the reverse merger Minimum	Mar. 31, 2008 Prior to the reverse merger Maximum
Stockholders Equity Note Disclosure [Line Items]
Common stock, shares authorized	75,000,000	75,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001		$ 0.01	$ 0.02
Common shares issued to founders for cash (in shares)			4,473,686
Common shares issued to founders for cash			$ 53,000

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule of future minimum lease payments due under non-cancelable lease agreements

Year ending December 31,
	2014	$	4,527
	2015		5,260
		$	9,787

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Stockholders' Deficit (Detail Textuals 1) (USD $)	1 Months Ended	9 Months Ended			0 Months Ended			1 Months Ended																						1 Months Ended
	Feb. 28, 2010	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Oct. 11, 2011 Post merger	Feb. 10, 2011 Post merger	Mar. 10, 2010 Post merger	Aug. 31, 2014 Post merger	Apr. 30, 2014 Post merger	Mar. 31, 2014 Post merger	Feb. 28, 2014 Post merger	Oct. 31, 2013 Post merger	Aug. 31, 2013 Post merger	May 31, 2013 Post merger	Apr. 30, 2013 Post merger	Jan. 31, 2013 Post merger	Dec. 31, 2012 Post merger	Nov. 30, 2012 Post merger	Aug. 31, 2012 Post merger	Jul. 31, 2012 Post merger	Jun. 30, 2012 Post merger	May 31, 2012 Post merger	Apr. 30, 2012 Post merger	Dec. 29, 2011 Post merger	Apr. 30, 2011 Post merger	Nov. 22, 2010 Post merger	Feb. 28, 2010 Post merger	Dec. 31, 2009 Post merger	Mar. 31, 2008 Post merger	Dec. 29, 2011 Post merger Original Issue Discount Senior Secured Convertible Promissory Notes
Stockholders Equity Note Disclosure [Line Items]
Cancelled shares of common stock																											1,973,684
Issued shares of common stock																											21,330,000
Common stock issued		38,527,316		33,835,268																								23,830,000	4,473,686
Common stock, shares outstanding		38,527,316		33,835,268																								23,830,000
Ratio of forward stock splits issued and outstanding shares	1.3157895:1
Issued shares of common stock for services					100,000	50,000	75,000		160,714	94,737		131,965	140,625		286,250		500,000	75,000	150,000	100,000	100,000		230,000	100,000	250,000	25,000
Common stock fair value price per share					$ 0.15	$ 0.37	$ 0.90	$ 0.05	$ 0.03	$ 0.05		$ 0.05	$ 0.04	$ 0.04	$ 0.06	$ 0.05	$ 0.07	$ 0.09		$ 0.09		$ 0.09		$ 0.15	$ 0.181	$ 0.60				$ 0.21
Value of common stock for services					$ 15,000	$ 18,500	$ 67,500		$ 4,500	$ 4,500		$ 4,500	$ 4,500		$ 16,660		$ 35,000	$ 75,000	$ 150,000	$ 100,000	$ 100,000		$ 230,000	$ 15,000,000	$ 45,250	$ 15,000
Common shares issued for payment of interest (in shares)								60,000	2,068,965		1,048,950	1,398,601	1,823,708	1,675,978		211,078		124,238		108,663		109,162
Common stock issued for payment of interest		180,000	130,000					1,318,682	60,000		60,000	60,000	60,000	60,000		10,000		10,000		10,000		10,000
Common stock fair value price per share for services									$ 0.03		$ 0.04	$ 0.07	$ 0.06
To reflect the issuance of shares issued in Conversion of OID notes (in shares)																														1,040,000
Sum of aggregate principal amount		2,400,000																												260,000
Issued shares of common stock 2009 notes																														1,300,000
Value of 2009 notes																														$ 273,000

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of financial assets and liabilities measured at fair value on a recurring basis

September 30, 2014	Level 1		Level 2		Level 3		Total
Cash	$	34,017	$	-	$	-	$	34,017
Total assets	$	34,017	$	-	$	-	$	34,017
Original Issue Discount
Senior Secured Convertible  Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000
December 31, 2013		Level 1		Level 2		Level 3		Total
Cash	$	118,172	$	-	$	-	$	118,172
Total assets	$	118,172	$	-	$	-	$	118,172
Original Issue Discount
Senior Secured Convertible  Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000

Schedule of original issue discount secured convertible promissory notes

	Original Issue Discount Senior Secured Convertible Promissory Notes
Balance, January 1, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Conversion of notes to common stock		-
Balance, December 31, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Balance, December 31, 2013	$	2,400,000
Balance, September 30, 2014	$	2,400,000

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2 - Summary of Significant Accounting Policies

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The consolidated financial statements include all accounts of the entities at September 30, 2014 as follows:

Name of consolidated  subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest at December 31, 2013 and 2012
Magnolia Solar Inc.	Delaware,  U.S.A.	January 8, 2008	100%

All inter-company balances and transactions have been eliminated.

Use of Estimates

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

Accounts Receivable

For financial reporting, current earnings are charged and an allowance is credited with a provision for doubtful accounts based on experience. Accounts deemed uncollectible are charged against this allowance. Receivables are reported on the balance sheet net of such allowance. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. The Company believes no allowance for doubtful accounts is necessary at September 30, 2014 or December 31, 2013.

Property and Equipment

Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives (from three to seven years). Additions, renewals, and betterments, unless of a minor amount, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

 Impairment of Long-Lived Assets

The Company reviews their recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell. The Company’s management has determined that the fair value of long-lived assets exceeds the book value and thus no impairment charge is necessary as of September 30, 2014 or December 31, 2013.

Fair Value of Financial Instruments

In accordance with ASC 820, Fair Value Measurements and Disclosures, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company does not utilize derivative instruments.

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Revenue Recognition

Revenue is recognized from private and public sector contracts that are time and material type contracts. These revenues are recognized in accordance with ASC 605, Revenue Recognition. The Company recognizes revenue when; (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable and (4) collectability is reasonably assured.

The Company assesses whether fees are fixed or determinable at the time of sale and recognizes revenue if all other revenue recognition requirements are met. The Company's standard payment terms are net 30 days. Payments that extend beyond 30 days from the contract date but that are due within twelve months are generally deemed to be fixed or determinable based on the Company's successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition.

Revenue from inception to September 30, 2014 has been primarily from research and development grants or contracts to develop solar cells using the Company’s technology.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company had no cash equivalents as of September 30, 2014 or December 31, 2013.

Uncertainty in Income Taxes

The Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2010 to 2013 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented. The following is a reconciliation of the computation for basic and diluted EPS:

	September 30,			September 30,
	2014			2013
Net loss	($	432,152	)	($	222,476	)
Weighted-average common shares
outstanding (Basic)		36,709,244			29,828,504
Weighted-average common stock
Equivalents
Stock options		1,112,821			-
Warrants		3,785,300			3,785,300
Weighted-average common shares
outstanding (Diluted)		41,607,365			33,613,804

Stock based compensation

The Company applies ASC No. 718 and ASC Subtopic No. 505-50, Equity-Based Payments to Non Employees, to options and other stock based awards issued to nonemployees. In accordance with ASC No. 718 and ASC Subtopic No. 505-50, the Company uses the Black-Scholes option pricing model to measure the fair value of the options at the measurement date.

Recently Issued Accounting Standards

During August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements.

During June 2014, the FASB issued an Accounting Standards Update No. 2014-10, "Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASU 2014-10")". The objective of ASU 2014-10 is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company has elected early implementation, as permitted by the standard, beginning June 30, 2014. All development stage language disclosures and amounts have been removed as a result of the adoption of ASU 2014-10.

During May 2014, the FASB issued an Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The objective of ASU 2014-09 is to (1) remove inconsistencies and weaknesses in revenue requirements, (2) provide a more robust framework for addressing revenue issues, (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (4) provide more useful information to users of financial statements through improved disclosure requirements, and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effect of this standard on its financial statements.

During July 2013, the FASB issued an Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”)”. The objective of ASU 2013-11 is to clarify the financial presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years beginning after December 15, 2013. The Company does not expect that the adoption of ASU 2013-11 will have a significant impact on the presentation of its financial statements.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite - Lived Intangible Assets for Impairment”, on testing for indefinite-lived intangible assets for impairment. The new guidance provides an entity to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years beginning after September 15, 2012. The Company’s adoption of this accounting guidance does not have a material impact on the consolidated financial statements and related disclosures.

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Condensed Consolidated Balance Sheets (Parentheticals) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	38,527,316	33,835,268
Common stock, shares outstanding	38,527,316	33,835,268

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Basis of Accounting

Basis of Accounting

The financial statements have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles.

Principles of Consolidation

Principles of Consolidation

The Company applies the guidance of Topic 810 “Consolidation” of the FASB Accounting Standards Codification to determine whether and how to consolidate another entity. Pursuant to ASC Paragraph 810-10-15-10 all majority-owned subsidiaries—all entities in which a parent has a controlling financial interest—shall be consolidated except (1) when control does not rest with the parent, the majority owner; (2) if the parent is a broker-dealer within the scope of Topic 940 and control is likely to be temporary; (3) consolidation by an investment company within the scope of Topic 946 of a non-investment-company investee. Pursuant to ASC Paragraph 810-10-15-8, the usual condition for a controlling financial interest is ownership of a majority voting interest, and, therefore, as a general rule ownership by one reporting entity, directly or indirectly, of more than 50 percent of the outstanding voting shares of another entity is a condition pointing toward consolidation. The power to control may also exist with a lesser percentage of ownership, for example, by contract, lease, agreement with other stockholders, or by court decree. The Company consolidates all less-than-majority-owned subsidiaries, if any, in which the parent’s power to control exists.

The consolidated financial statements include all accounts of the entities at September 30, 2014 as follows:

Name of consolidated  subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest at December 31, 2013 and 2012
Magnolia Solar Inc.	Delaware,  U.S.A.	January 8, 2008	100%

All inter-company balances and transactions have been eliminated.

Use of Estimates

Use of Estimates

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

Accounts receivable

Accounts Receivable

For financial reporting, current earnings are charged and an allowance is credited with a provision for doubtful accounts based on experience. Accounts deemed uncollectible are charged against this allowance. Receivables are reported on the balance sheet net of such allowance. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses. The Company believes no allowance for doubtful accounts is necessary at September 30, 2014 or December 31, 2013.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost and are depreciated on a straight-line basis over their estimated useful lives (from three to seven years). Additions, renewals, and betterments, unless of a minor amount, are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews their recoverability of long-lived assets on a periodic basis whenever events and changes in circumstances have occurred which may indicate a possible impairment. The assessment for potential impairment will be based primarily on the Company’s ability to recover the carrying value of its long-lived assets from expected future cash flows from its operations on an undiscounted basis. If such assets are determined to be impaired, the impairment recognized is the amount by which the carrying value of the assets exceeds the fair value of the assets. Fixed assets to be disposed of by sale will be carried at the lower of the then current carrying value or fair value less estimated costs to sell. The Company’s management has determined that the fair value of long-lived assets exceeds the book value and thus no impairment charge is necessary as of September 30, 2014 or December 31, 2013.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

In accordance with ASC 820, Fair Value Measurements and Disclosures, the carrying amount reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of the immediate or short-term maturity of these financial instruments. The Company does not utilize derivative instruments.

Income Taxes

Income Taxes

The Company accounts for income taxes utilizing the liability method of accounting. Under the liability method, deferred taxes are determined based on differences between financial statement and tax bases of assets and liabilities at enacted tax rates in effect in years in which differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized.

Revenue Recognition

Revenue Recognition

Revenue is recognized from private and public sector contracts that are time and material type contracts. These revenues are recognized in accordance with ASC 605, Revenue Recognition. The Company recognizes revenue when; (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the seller’s price to the buyer is fixed or determinable and (4) collectability is reasonably assured.

The Company assesses whether fees are fixed or determinable at the time of sale and recognizes revenue if all other revenue recognition requirements are met. The Company's standard payment terms are net 30 days. Payments that extend beyond 30 days from the contract date but that are due within twelve months are generally deemed to be fixed or determinable based on the Company's successful collection history on such arrangements, and thereby satisfy the required criteria for revenue recognition.

Revenue from inception to September 30, 2014 has been primarily from research and development grants or contracts to develop solar cells using the Company’s technology.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term investments with maturity of three months or less, when purchased, to be cash equivalents. The Company had no cash equivalents as of September 30, 2014 or December 31, 2013.

Uncertainty in Income Taxes

Uncertainty in Income Taxes

The Company follows ASC 740-10, Accounting for Uncertainty in Income Taxes. This interpretation requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. Management evaluates their tax positions on an annual basis. The Company’s policy is to recognize both interest and penalties related to unrecognized tax benefits expected to result in payment of cash within one year are classified as accrued liabilities, while those expected beyond one year are classified as other liabilities. The Company has not recorded any interest or penalties since its inception.

The Company files income tax returns in the U.S. federal tax jurisdiction and various state tax jurisdictions. The tax years for 2010 to 2013 remain open for examination by federal and/or state tax jurisdictions. The Company is currently not under examination by any other tax jurisdictions for any tax year.

Loss Per Share of Common Stock

Loss Per Share of Common Stock

Basic net loss per common share is computed using the weighted average number of common shares outstanding. Diluted earnings per share (EPS) include additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. Common stock equivalents are not included in the computation of diluted earnings per share when the Company reports a loss because to do so would be anti-dilutive for periods presented. The following is a reconciliation of the computation for basic and diluted EPS:

	September 30,			September 30,
	2014			2013
Net loss	($	432,152	)	($	222,476	)
Weighted-average common shares
outstanding (Basic)		36,709,244			29,828,504
Weighted-average common stock
Equivalents
Stock options		1,112,821			-
Warrants		3,785,300			3,785,300
Weighted-average common shares
outstanding (Diluted)		41,607,365			33,613,804

Stock based compensation

Stock based compensation

The Company applies ASC No. 718 and ASC Subtopic No. 505-50, Equity-Based Payments to Non Employees, to options and other stock based awards issued to nonemployees. In accordance with ASC No. 718 and ASC Subtopic No. 505-50, the Company uses the Black-Scholes option pricing model to measure the fair value of the options at the measurement date.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

During August 2014, the FASB issued ASU No. 2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s consolidated financial statements.

During June 2014, the FASB issued an Accounting Standards Update No. 2014-10, "Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation ("ASU 2014-10")". The objective of ASU 2014-10 is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. The Company has elected early implementation, as permitted by the standard, beginning June 30, 2014. All development stage language disclosures and amounts have been removed as a result of the adoption of ASU 2014-10.

During May 2014, the FASB issued an Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)". The objective of ASU 2014-09 is to (1) remove inconsistencies and weaknesses in revenue requirements, (2) provide a more robust framework for addressing revenue issues, (3) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (4) provide more useful information to users of financial statements through improved disclosure requirements, and (5) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. ASU 2014-09 is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effect of this standard on its financial statements.

During July 2013, the FASB issued an Accounting Standards Update No. 2013-11, “Income Taxes (Topic 740) - Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (“ASU 2013-11”)”. The objective of ASU 2013-11 is to clarify the financial presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. ASU 2013-11 is effective for fiscal years, and interim periods within those years beginning after December 15, 2013. The Company does not expect that the adoption of ASU 2013-11 will have a significant impact on the presentation of its financial statements.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite - Lived Intangible Assets for Impairment”, on testing for indefinite-lived intangible assets for impairment. The new guidance provides an entity to simplify the testing for a drop in value of intangible assets such as trademarks, patents, and distribution rights. The amended standard reduces the cost of accounting for indefinite-lived intangible assets, especially in cases where the likelihood of impairment is low. The changes permit businesses and other organizations to first use subjective criteria to determine if an intangible asset has lost value. The amendments to U.S. GAAP will be effective for fiscal years beginning after September 15, 2012. The Company’s adoption of this accounting guidance does not have a material impact on the consolidated financial statements and related disclosures.

There were other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 13, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	Magnolia Solar Corp
Entity Central Index Key	0001437491
Trading Symbol	mglt
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		39,727,316
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2014

Summary of Significant Accounting Policies [Abstract]

Schedule of all accounts of the entities

Name of consolidated  subsidiary or entity	State or other jurisdiction of incorporation or organization	Date of incorporation or formation (date of acquisition, if applicable)	Attributable interest at December 31, 2013 and 2012
Magnolia Solar Inc.	Delaware,  U.S.A.	January 8, 2008	100%

Schedule of reconciliation of the computation for basic and diluted EPS

	September 30,			September 30,
	2014			2013
Net loss	($	432,152	)	($	222,476	)
Weighted-average common shares
outstanding (Basic)		36,709,244			29,828,504
Weighted-average common stock
Equivalents
Stock options		1,112,821			-
Warrants		3,785,300			3,785,300
Weighted-average common shares
outstanding (Diluted)		41,607,365			33,613,804

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]
REVENUE - net	$ 68,578	$ 126,545	$ 150,256	$ 669,784
COST OF REVENUES	44,712	67,900	92,034	413,978
GROSS PROFIT	23,866	58,645	58,222	255,806
OPERATING EXPENSES
Indirect and administrative labor	44,772	34,026	152,605	107,783
Professional fees	32,912	25,041	96,302	133,374
Depreciation and amortization expense	8,991	8,990	26,972	27,461
General and administrative	11,769	11,272	34,513	33,764
Total operating expenses	98,444	79,329	310,392	302,382
NON-OPERATING EXPENSES
Interest expense including amortization of OID and debt discount, net	59,999	59,949	179,982	179,900
Forgiveness of debt				(4,000)
Total non-operating expenses	59,999	59,949	179,982	175,900
LOSS BEFORE PROVISION FOR INCOME TAXES	(134,577)	(80,633)	(432,152)	(222,476)
PROVISION OF INCOME TAXES
NET LOSS	$ (134,577)	$ (80,633)	$ (432,152)	$ (222,476)
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING	38,527,316	31,549,189	36,709,244	29,828,504
NET LOSS PER SHARE	$ 0.00	$ 0.00	$ (0.01)	$ (0.01)

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Provision for Income Taxes

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Provision for Income Taxes

Note 7 – Provision for Income Taxes

Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

As of September, 2014, there is no provision for income taxes, current or deferred.

	September 30, 2014
Net operating losses	$	1,146,000
Valuation allowance		(1,146,000	)
	$	-

At September 30, 2014, the Company had a net operating loss carry forward in the amount of approximately $3,369,650 available to offset future taxable income through 2034. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.

A reconciliation of the Company’s effective tax rate as a percentage of income before taxes and federal statutory rate for the year ended September 30, 2014 and 2013 is summarized below.

Federal statutory rate	(34.0	)%
State income taxes, net of federal	0.0
Valuation allowance	34.0
	0.0	%

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Original Issue Discount Senior Secured Convertible Promissory Note

9 Months Ended

Sep. 30, 2014

Original Issue Discount Senior Secured Convertible Promissory Note [Abstract]

Original Issue Discount Senior Secured Convertible Promissory Note

Note 6 – Original Issue Discount Senior Secured Convertible Promissory Note

Original Notes

Following the closing of the Reverse Merger in December 2009, the Company issued 26.6 units in the 2009 Private Placement consisting of an aggregate of $2,660,000 of 2009 Notes and 2009 Warrants exercisable into an aggregate of 2,660,000 shares of common stock exercisable at $1.25 per share, for $50,000 per unit for aggregate proceeds to the Company of $990,000. In addition, placement agent warrants to purchase an aggregate of 725,300 shares of common stock exercisable at $1.05 per share were issued. The 2009 Notes are secured by a first-priority security interest in the assets of the Company. Holders of the 2009 Notes and warrants issued in the 2009 Private Placement also have the right to “piggyback” registration of the shares underlying the 2009 Notes and warrants.

Prior to the amendment and restatement of the 2009 Notes, the 2009 Notes were originally due December 31, 2011 and convertible at the option of the holder, into shares of the Company’s common stock at an initial conversion rate of $1.00 per share.

Amended Notes

On December 29, 2011, the Company entered into amendment agreements with holders of the 2009 Notes and 2009 Warrants. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $260,000 were converted into an aggregate of 1,040,000 shares of common stock of the Company at an adjusted conversion price of $0.25 per share, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2011 to December 31, 2012 and 2009 Notes in the aggregate principal amount of the remaining $400,000 were amended to extend the maturity date from December 31, 2011 to December 31, 2013, (iii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to adjust the conversion price of such notes from $1.00 per share to $0.25 per share, (iv) 2009 Notes in the aggregate principal amount of $400,000 were amended to provide that such notes shall, from January 1, 2012 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, (v) an aggregate of 1,300,000 shares of common stock of the Company were issued to certain holders of the 2009 Notes, and (vi) the exercise price of warrants to purchase an aggregate of 3,385,000 shares of common stock was adjusted from $1.25 per share to $0.50 per share.

On December 21, 2012 and on June 27, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to extend the maturity dates from December 31, 2012 to December 31, 2013, (ii) 2009 Notes in the aggregate principal amount of $2,000,000 were amended to provide that such notes shall, from January 1, 2013 onwards, bear interest at the rate of 10% per annum payable on a quarterly basis, upon conversion and at maturity and that such interest may, at the option of the Company, be paid in cash or in shares of common stock of the Company at the interest conversion rate of 90% of the volume weighted average price of the common stock of the Company during the 20 trading days prior to the interest payment date, and (iii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.50 per share to $0.25 per share. Upon amendment of the notes, interest was calculated on the entire $2,400,000 of promissory notes at a rate of 10% per year. Interest expense was accrued in the amount of $60,000 per quarter and shares are issued in lieu of cash payments.

On December 29 and 31, 2013 the 2009 Notes as described in the preceding paragraph were amended. Pursuant to the terms of the amendment agreements, (i) 2009 Notes in the aggregate principal amount of $2,400,000 were amended to extend the maturity dates from December 31, 2013 to December 31, 2014, (ii) the exercise price of the warrants to purchase an aggregate of 3,385,300 shares of common stock was adjusted from $0.25 per share to $0.10 per share. Additionally, the Company also agreed to extend the expiration date of the warrants to purchase an aggregate of 2,660,000 shares of common stock from December 31, 2014 to December 31, 2016.

As of September 30, 2014, the Company issued 9,888,025 shares of its common stock in lieu of interest payments in the aggregate of $400,000 relating to the 2009 Notes in the aggregate principal of $2,400,000.

As of September 30, 2014, the entire $2,400,000 balance of the amended 2009 Notes remains outstanding. In the transaction, the Company recognized a discount of $1,670,000 which was amortized over the original life of the 2009 Notes. The discount represented the original issue discount. In addition, the Company determined that the value of the warrants in the transaction of $412,830 as a discount to the 2009 Notes. This discount was being amortized as well over the original life of the 2009 Notes.

 As of September 30, 2014, $2,400,000 of the 2009 Notes are classified as a current liability. The modifications made to the debt instruments did not constitute a material modification under ASC 470-50.

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Concentration of Credit Risk (Tables)

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Schedule of company performs periodic credit evaluations of its customers

	September		September
Concentrations in accounts receivable:	30, 2014		30, 2013
Customer A		62%		*
Customer B		37%		10%
Customer C		*		57%
Customer D		*		26%

	September	September
Concentrations in net revenue:	30, 2014	30, 2013
Customer A	85%	46%
Customer B	*	41%
Customer C	*	10%
* Customer did not exceed 10% for the respective year

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Stockholders' Deficit (Tables)

9 Months Ended

Sep. 30, 2014

Stockholders' Equity [Abstract]

Schedule of outstanding warrants

Balance – December 31, 2008	-
Issued – in the 26.6 units	2,660,000	$	0.10
Issued – to Placement Agent	725,300	$	0.10
Balance – December 31, 2009	3,385,300	$	0.10
Balance – December 31, 2010	3,385,300	$	0.10
Issued – for public relations	400,000	$	0.50
Balance – December 31, 2011	3,785,300	$	0.14
Balance – December 31, 2012	3,785,300	$	0.14
Balance – December 31, 2013	3,785,300	$	0.14
Balance – September 30, 2014	3,785,300	$	0.14

Schedule of assumptions made in estimating the fair value

Dividend yield	0.00	%
Volatility	213.26	%
Risk- free interest rate	0.77	%
Expected term	3.5 Years

Summary of stock option activity under the Company's stock option plan

Outstanding as of December 31, 2013	Number of Options/Shares		Range of Exercise Prices		Weighted- Average Exercise Price
		-	$	0.00	$	0.00
Options granted		2,450,000	$	0.05	$	0.05
Options exercised		-	$	0.00	$	0.00
Options forfeited/expired/cancelled		-	$	0.00	$	0.00
Outstanding as of September 30, 2014		2,450,000	$	0.05	$	0.05
Exercisable as of September 30, 2014		704,375	$	0.05	$	0.05
Exercisable as of December 31, 2013		-	$	0.00	$	0.00

Schedule of stock options outstanding

Exercise Price		Number of Options Outstanding		Weighted-Average Remaining Contractual Life (years)		Number of Options Exercisable
$	0.05		2,450,000		4.67		704,375
			2,450,000		4.67		704,375

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Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Note 10 - Fair Value Measurements

The Company adopted certain provisions of ASC Topic 820. ASC 820 defines fair value, provides a consistent framework for measuring fair value under generally accepted accounting principles and expands fair value financial statement disclosure requirements. ASC 820’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions. ASC 820 classifies these inputs into the following hierarchy:

Level 1 Quoted prices in active markets for identical assets or liabilities. The Company's Level 1 assets consist of cash and cash equivalents.

Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. 

Financial assets and liabilities measured at fair value on a recurring basis are summarized below:

September 30, 2014	Level 1		Level 2		Level 3		Total
Cash	$	34,017	$	-	$	-	$	34,017
Total assets	$	34,017	$	-	$	-	$	34,017
Original Issue Discount
Senior Secured Convertible  Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000
December 31, 2013		Level 1		Level 2		Level 3		Total
Cash	$	118,172	$	-	$	-	$	118,172
Total assets	$	118,172	$	-	$	-	$	118,172
Original Issue Discount
Senior Secured Convertible  Promissory Notes	$	-	$	-	$	2,400,000	$	2,400,000
Total liabilities	$	-	$	-	$	2,400,000	$	2,400,000

		Original Issue Discount Senior Secured Convertible Promissory Notes
Balance, January 1, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Conversion of notes to common stock		-
Balance, December 31, 2012	$	2,400,000
Realized gains (losses)		-
Unrealized gains (losses) relating to
instruments still held at the reporting date		-
Purchases, sales, issuances and settlements, net		-
Discount on notes		-
Amortization of discount on notes		-
Balance, December 31, 2013	$	2,400,000
Balance, September 30, 2014	$	2,400,000

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 8 – Commitments and Contingencies

Office Lease

The Company leases office space at two locations that expire between January 31, 2015 and December 31, 2015. Rent expense for the Company’s facilities for the nine months ended September 30, 2014 and 2013 totaled $13,615 and $12,864, respectively.

The future minimum lease payments due under the above mentioned non-cancelable lease agreements are as follows:

Year ending December 31,
	2014	$	4,527
	2015		5,260
		$	9,787

Contract Related Fees

As part of the contract to develop its products, the Company has agreed to pay the contractor 1.5% of future New York state manufactured sales, and 5% of future non-New York state manufactured sales until the entire funds paid by the contractor have been repaid, or 15 years, whichever comes first. As of September 30, 2014, the Company has $1,249,984 of contract related expenses, all of which will be owed to the contractor, contingent upon the sale of the Company’s product. No liability is accrued since no sales have occurred.

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Concentration of Credit Risk

9 Months Ended

Sep. 30, 2014

Risks and Uncertainties [Abstract]

Concentration of Credit Risk

Note 9 - Concentration of Credit Risk

The Company maintains its cash in one bank deposit account, which at times may exceed the federally insured limits of $250,000 that exist through September 30, 2014. At September 30, 2014, the Company did not have any uninsured deposits. 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of accounts receivable. The Company extends credit based on the customers’ financial conditions. The Company does not require collateral or other security to support customer receivables. Credit losses, when realized, have been within the range of management’s expectations. To further reduce credit risk associated with accounts receivable, the Company performs periodic credit evaluations of its customers.

	September		September
Concentrations in accounts receivable:	30, 2014		30, 2013
Customer A		62%		*
Customer B		37%		10%
Customer C		*		57%
Customer D		*		26%

	September	September
Concentrations in net revenue:	30, 2014	30, 2013
Customer A	85%	46%
Customer B	*	41%
Customer C	*	10%
* Customer did not exceed 10% for the respective year

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Subsequent Events

9 Months Ended

Sep. 30, 2014

Subsequent Events [Abstract]

Subsequent Events

Note 11 – Subsequent Events

On October 23, 2014, the Company issued 1,200,000 shares of common stock for payment of interest in lieu of cash.

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Stockholders' Deficit (Details 3) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.05	$ 0.00
Number of Options Outstanding	2,450,000
Weighted-Average Remaining Contractual Life (years)	4 years 8 months 1 day
Number of Options Exercisable	704,375
Exercise Price [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise Price	$ 0.05
Number of Options Outstanding	2,450,000
Weighted-Average Remaining Contractual Life (years)	4 years 8 months 1 day
Number of Options Exercisable	704,375

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Concentration of Credit Risk (Detail Textuals) (USD $)	9 Months Ended
	Sep. 30, 2014
Risks and Uncertainties [Abstract]
Federally insured limits exist through September 30, 2014	$ 250,000
Percentage of concentration risk	10.00%

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Provision for Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Tax Disclosure [Abstract]

Schedule of provision for income taxes, current or deferred

	September 30, 2014
Net operating losses	$	1,146,000
Valuation allowance		(1,146,000	)
	$	-

Schedule of effective tax rate as a percentage of income before taxes and federal statutory rate

Federal statutory rate	(34.0	)%
State income taxes, net of federal	0.0
Valuation allowance	34.0
	0.0	%

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Organization and Nature of Business (Detail Textuals 1) (USD $)	1 Months Ended		12 Months Ended
	Dec. 21, 2012	Dec. 29, 2011	Dec. 31, 2013	Sep. 30, 2014	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes				$ 2,400,000
Number of shares issued to holders				9,888,025
Warrant
Debt Instrument [Line Items]
Exercise price of warrants	$ 0.50	$ 1.25	$ 0.14	$ 0.14	$ 0.14	$ 0.14	$ 0.10	$ 0.10
Reduction in exercise price of warrants	0.25	0.50	0.25
Number of common stock called by warrants	3,385,300	3,385,300	3,385,300					2,660,000
Warrants Expiration Date			Dec. 31, 2016
Original Issue Discount Senior Secured Convertible Promissory Notes
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes		2,660,000
Interest rate on quarterly basis	10.00%
Number of shares issued to holders		1,300,000
Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 1
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes		260,000	2,400,000
Aggregate principal amount converted into shares		1,040,000
Debt instrument convertible conversion price		$ 0.25
Principal amount outstanding for the note maturing on December 31, 2014			2,400,000
Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 2
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes	2,000,000	2,000,000
Aggregate principal amount converted into shares
Debt instrument convertible conversion price		$ 0.25
Initial conversion price		$ 1.00
Interest conversion rate	10.00%
Trading days for interest payment	20 days
Interest rate on quarterly basis	90.00%
Original Issue Discount Senior Secured Convertible Promissory Notes Tranche 3
Debt Instrument [Line Items]
Aggregate principal amount of 2009 notes		$ 400,000
Interest conversion rate		10.00%
Trading days for interest payment		20 days
Interest rate on quarterly basis		90.00%

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Commitments and Contingencies (Detail Textuals) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 13,615	$ 12,864
Percentage of future New York state manufactured sales	1.50%
Percentage of future non New York state manufactured sales	5.00%
Term of amount paid to contractor	15 years
Contract related expenses	$ 1,249,984

XML

License Agreement with Related Party (Detail Textuals) (Licensing Agreements, Magnolia Optical Technologies, USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Licensing Agreements | Magnolia Optical Technologies
Finite-Lived Intangible Assets [Line Items]
Term of license agreement	10 years
License costs	$ 356,500
Finite lived intangible assets, accumulated amortization	228,755
Amortization of intangible assets	$ 26,738	$ 26,738

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Condensed Consolidated Statements of Cash Flow (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (432,152)	$ (222,476)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization expense	26,972	27,461
Stock based compensation	19,898
Common stock issued for services rendered	9,000	21,160
Common stock issued for payment of interest	180,000	130,000
Forgiveness of debt		(4,000)
Change in assets and liabilities:
Decrease in accounts receivable	16,075	20,376
Increase in accounts payable and accrued expenses	96,052	73,785
Total adjustments	347,997	268,782
Net cash provided by (used in) operating activities	(84,155)	46,306
NET INCREASE (DECREASE) IN CASH	(84,155)	46,306
CASH - BEGINNING OF PERIOD	118,172	135,626
CASH - END OF PERIOD	34,017	181,932
Cash paid during the period for:
Interest
Income taxes	1,222
NON-CASH SUPPLEMENTAL INFORMATION:
Stock issued for services rendered	9,000	21,160
Stock issued for payment of interest	180,000	130,000
Stock based compensation	$ 19,898

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License Agreement with Related Party

9 Months Ended

Sep. 30, 2014

License Agreement with Related Party [Abstract]

License Agreement with Related Party

Note 5 - License Agreement with Related Party

The Company has entered into a 10-year, renewable, exclusive license with Magnolia Optical Technologies, Inc. (“Magnolia Optical”) on April 30, 2008 for the exclusive rights of the technology related to the application of Optical’s solar cell technology. Magnolia Optical shares common ownership with the Company.

The Company is amortizing the license fee of $356,500 over the 120 month term of the Agreement. Accumulated amortization as of September 30, 2014 was $228,755. Amortization expense for each of the nine months ended September 30, 2014 and 2013 was $26,738, respectively. The Company’s management has determined that the fair value of the license exceeds the book value and thus no further impairment or amortization is necessary as of September 30, 2014 or December 31, 2013.

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Summary of Significant Accounting Policies (Details) (Subsidiary)	9 Months Ended
	Sep. 30, 2014
Subsidiary
Name of consolidated subsidiary or entity	Magnolia Solar, Inc.
Entity Incorporation, State Country Name	Delaware,U.S.A.
Entity Incorporation, Date of Incorporation	Jan. 08, 2008
Attributable interest at December 31, 2013 and 2012	100.00%

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Stockholders' Deficit (Detail Textuals 3) (USD $)	9 Months Ended		0 Months Ended	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	May 31, 2014 Incentive Stock Option Plan [Member]	Sep. 30, 2013 Incentive Stock Option Plan [Member]	Sep. 30, 2014 Incentive Stock Option Plan [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options granted, Number of Options/Shares	2,450,000		2,450,000	5,500,000
Available for future grant					2,335,709
Share-based Compensation	$ 19,898
Non-vested options, Number of Shares	49,313
Weighted-Average Remaining Contractual Life (years)	4 years 8 months 1 day

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2014

Property and Equipment [Abstract]

Schedule of property and equipment

	September 30,  2014			December 31,  2013
Office equipment and computer	$	6,106		$	6,106
Furniture and fixtures		2,182			2,182
		8,288			8,288
Accumulated depreciation		(7,587	)		(7,353	)
	$	701		$	935