10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q/A

AMENDMENT #1

(Mark One)

 X .     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: June 30, 2011

OR

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

For the transition period from:                     to                    

Commission File Number: 000-53105

CLEAR SKIES SOLAR, INC.

(Exact name of Registrant as Specified in Its Charter)

DELAWARE	30-0401535
(State or Other Jurisdiction of Incorporation or	(I.R.S. Employer Identification No.)
Organization)
200 Old Country Road, Suite 610
Mineola, New York	11501-4241
(Address of Principal Executive Offices)	(Zip code)

(516) 282-7652

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES  X  NO .. 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES . NO .

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

Large accelerated filer .	Accelerated filer .	Non-accelerated filer .	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 . NO  X .

As of August 2, 2011, 45,750,000 shares of the issuer’s common stock, $0.001 par value per share, were outstanding.

Explanatory Note

The sole purpose of this Amendment No. 1 to the Quarterly Report on Form 10-Q (the "Form 10-Q") of Carbon 612 Corporation for the quarterly period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011 (Accession Number: (0001078782-11-002224 ), is to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of Regulation S-T.  Exhibit 101 to the Form 10-Q provides the consolidated financial statements and related notes from the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).

No other changes have been made to the Form 10-Q.  This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-Q.

Pursuant to Rule 406T of Regulation S-T, the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

2

 PART II

OTHER INFORMATION

Item 6. Exhibits. .

The following exhibits are filed as part of, or incorporated by reference into, this Report:

Exhibit No.	Description
31.1	Section 302 Certification of Principal Executive Officer (previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
31.2	Section 302 Certification of Principal Financial and Accounting Officer (previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
32.1	Section 906 Certification of Principal Executive Officer and Principal Financial and Accounting Officer(previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
101.INS **	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.

**Filed with this report in accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

3

SIGNATURES

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

	CLEAR SKIES SOLAR, INC.
Date: September 7, 2011	By:	/s/ Ezra J. Green
		Name:	Ezra J. Green
		Title:	President & Chief Executive Officer (Principal Executive Officer)
Date: September 7 , 2011	By:	/s/ Arthur L. Goldberg
		Name:	Arthur L. Goldberg
		Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

4

EXHIBIT INDEX

Exhibit No.	Description
31.1	Section 302 Certification of Principal Executive Officer (previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
31.2	Section 302 Certification of Principal Financial and Accounting Officer (previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
32.1	Section 906 Certification of Principal Executive Officer and Principal Financial and Accounting Officer(previously filed with our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2011).
101.INS **	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.

**Filed with this report in accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

5

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CONDENSED CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $)	Jun. 30, 2011	Dec. 31, 2010
Preferred Stock, par or stated value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Common stock, par or stated value	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	211,253,499	178,920,327
Common Stock, shares outstanding	211,253,499	178,920,327

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Revenues {1}
Contract revenue	$ 1,605,105	$ 123,619	$ 1,605,105	$ 1,784,551
Other	0	21,097	0	46,097
Total revenues	1,605,105	144,716	1,605,105	1,830,648
Cost of revenues	1,274,728	100,687	1,274,728	1,572,898
Gross margin	330,377	44,029	330,377	257,750
Operating expenses
Selling expenses	511,263	85,673	666,331	184,618
General and administrative expenses	768,853	1,057,645	1,794,147	4,313,755
Total operating expenses	1,280,116	1,143,318	2,460,478	4,498,373
Loss from operations	(949,739)	(1,099,289)	(2,130,101)	(4,240,623)
Other income (expense)
Interest income	0	531	0	543
Interest expense	(6,076)	(27,838)	(22,750)	(238,996)
Derivative valuation adjustment	4,235	323,243	550	809,386
Loss on extinguishment of debt	0	(25,756)	0	(25,756)
Amortization of debt discount expense	0	(123,447)	(986)	(387,102)
Total other income (expense)	(1,841)	146,733	(23,186)	158,075
Net loss	(951,580)	(952,556)	(2,153,287)	(4,082,548)
Net loss attributable to noncontrolling interest	(20,626)	(17,309)	(36,460)	(31,019)
Net loss attributable to Clear Skies Solar, Inc.	$ (930,954)	$ (935,247)	$ (2,116,827)	$ (4,051,529)
Net loss per share, basic and diluted	$ 0.00	$ (0.01)	$ (0.01)	$ (0.05)
Weighted average common shares outstanding, basic and diluted	209,854,008	83,355,773	198,015,742	80,265,275

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Document and Entity Information	3 Months Ended
	Jun. 30, 2011	Aug. 03, 2011
Document and Entity Information
Entity Registrant Name	Clear Skies Solar, Inc
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Entity Central Index Key	0001402857
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		213,636,970
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2

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Contracts

3 Months Ended

Jun. 30, 2011

Contracts

Contracts

7. Contracts

The Company generates billings based on the fulfillment of milestones, which are set forth in the signed contract for each project. Milestones may include, but are not limited to, initial permits being obtained, delivery of materials, and when installation is subsequently complete.

As of:	June		December
	30, 2011		31, 2010
Costs incurred on contracts	$	8,434,348	$	7,159,620
Estimated earnings, less foreseeable losses		1,717,566		1,282,209
		10,151,914		8,441,829
Billings to date		(10,089,487)		(8,484,382)
Billings in excess of net costs and estimated earnings/losses	$	62,427	$	(42,553)
These amounts are included in the accompanying June 30, 2011 and December 31, 2010 balance sheets under the following captions:
Costs and estimated earnings in excess of billings	$	104,980	$	-
Billings in excess of costs and estimated earnings		(42,553)		(42,553)
	$	62,427	$	(42,553)

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Recently issued accounting pronouncements

3 Months Ended

Jun. 30, 2011

Recently issued accounting pronouncements

Recently issued accounting pronouncements

3. Recently issued accounting pronouncements

Management does not believe that any recently issued accounting standards if currently adopted would have a material effect on the Company’s condensed consolidated financial statements or the Company’s future results of operations.

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Income Taxes

3 Months Ended

Jun. 30, 2011

Income Taxes

Income Tax Disclosure [Text Block]

9.  Income Taxes

For the three and six months ended June 30, 2011 and 2010, there was no income tax provision or benefit recorded.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes.  The Company's net deferred tax asset is its net operating loss carry forwards of $30,893,305 as of June 30, 2011.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of the assets and liabilities for financial reporting purposes and the amounts reported for income tax purposes. The significant components of the Company's net deferred tax asset are as follows:

Net operating loss carryforward	$	30,893,305
Tax rate		35%
Total deferred tax assets		10,812,656
Valuation allowance		(10,812,656)
Net deferred tax asset	$	-

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Commitment and Contingencies

3 Months Ended

Jun. 30, 2011

Commitment and Contingencies

Commitments and Contingencies Disclosure [Text Block]

8. Commitments and Contingencies

Litigation

From time to time, the Company is a party to various legal matters in the normal course of business, the outcome of which, in the opinion of management, will not have a material adverse effect on the condensed consolidated financial position, results of operations or cash flows of the Company.

Lease Commitments

We lease approximately 3,356 square feet of office space at 200 Old Country Road, Mineola, New York from HUB Properties Trust at a current base rental of $9,521 per month increasing to $9,824 per month on June 1, 2012 and annually thereafter, pursuant to a seven year lease. We also lease approximately 1,740 square feet in Berlin, New Jersey since March 1, 2011 for a sales office pursuant to a 15 month lease at an initial monthly rent of $515 that  increased to $1,087 on June 1, 2011.   Estimated calendar year commitments under non-cancelable operating leases are as follows at June 30, 2011:

		Office space		Other
2011	$	121,938	$	7,313
2012		121,814		7,313
2013		120,100		7,313
2014		123,951		7,313
2015		52,324		3,047
	$	540,127	$	32,299

Employment Agreements

We have entered into employment agreements with Ezra J. Green to serve as our Chief Executive Officer and Chairman, with Thomas J. Oliveri to serve as our President and Chief Operating Officer and with Arthur L. Goldberg to serve as our Chief Financial Officer. These arrangements were entered into in December 2007, March 2008 and January 2008, respectively, and were all amended and restated in November 2008. The initial terms of the amended and restated agreements (the “Agreements”) are three years, with automatic one-year renewals following this three-year period in the absence of a notice of non-renewal as provided for in the Agreements. Pursuant to the Agreements Messrs. Green, Oliveri and Goldberg are to receive minimum annual base salaries of $250,000, $200,000 and $200,000, respectively, for the first three years, and then an agreed upon salary (of not less than the amount specified above) for each future year of employment. Each of Messrs. Green, Oliveri and Goldberg were entitled to annual bonuses based on the financial results of the Company for each of the two years ended December 31, 2009 and 2010. Neither bonus was earned nor paid. If any of such executives’ employment is terminated without cause or if any resign for good reason (as defined in his employment agreement), then we will be obligated to pay the terminated executive, as severance, his then current annual base salary and annual bonuses (as such is defined within his employment agreement) for the remainder of the term..

On November 2, 2010 we and our 66% owned subsidiary, Carbon 612 Corporation, jointly entered into a one year consulting agreement with Infinite Energy Company, LLC for business development services.  The agreement calls for monthly payments for consulting services of $5,000 and expires on October 31, 2011 as well as a payment to the consultant of 8% of the value of solar installation projects presented to us by the consultant and of certain grants to us by third parties.  The obligation for fees at 8% at June 30, 2011 total $60,739.

The minimum future obligations under this agreement for consulting services are as follows:

June 30, 2012	$	30,000
June 30, 2013		20,000
	$	50,000

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Basis of presentation, current status and nature of operations

3 Months Ended

Jun. 30, 2011

Basis of presentation, current status and nature of operations

Basis of presentation, current status and nature of operations

1. Basis of presentation, current status and nature of operations

The accompanying unaudited condensed consolidated financial statements as of June 30, 2011 and for the three and six month periods ended June 30, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information, and with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of Clear Skies Solar, Inc. (the “Company”, “our” or “us”), these unaudited condensed consolidated financial statements include all adjustments necessary to present fairly the information set forth therein. All such adjustments are of a normal recurring nature. Results for interim periods are not necessarily indicative of results to be expected for a full year. The condensed consolidated balance sheet information as of December 31, 2010 was derived from the audited financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, included in the Company’s Annual Report (“Annual Report”) on Form 10-K for the year ended December 31, 2010 as filed with the SEC on April 14, 2011. The interim financial statements contained herein should be read in conjunction with that Annual Report.

Current Status

During the three months ended June 30, 2011, Clear Skies Solar, Inc. (the “Company”, “Clear Skies”, “we” or “our”) performed installation work on eight solar energy projects with a total capacity of about 1.1 megawatts (“mW”) and has evaluated a number of other potential projects. We are also negotiating with several parties for the financing and construction of a number of additional solar energy projects; however, there can be no assurance that we will be successful in these negotiations or that such projects would be profitable. Even if we are successful in negotiating construction agreements after the financing arrangements have been finalized, since we recognize revenue under the percentage of completion method, it could be several months (due to the time for the necessary design and engineering work and the building permit and energy credit application process) after entering into contracts before we begin performance and we are able to report revenue in our financial statements.

Since inception, the Company has incurred losses and negative cash flows from operations and at June 30, 2011, the Company had an accumulated deficit of approximately $30.9 million.  At June 30, 2011 and August 3, 2011 we had approximately $71,000 and $81,000 in cash, respectively.  Based on our current plans and assumptions, which include our expectations relating to the future sale of our equity and debt securities and entering into contracts for the financing and installation of solar energy systems and the resulting cash flows and revenues, we believe that we will have adequate resources to fund our operations for the next twelve months. Notwithstanding our sale of common stock and common stock purchase warrants during the first six months of 2011, for total gross proceeds of $420,000 (before expenses of $24,000), we will need to raise additional funds to pay outstanding vendor invoices and to fund our operations. There can be no assurances, however, that we will be successful in entering into such contracts or arranging sales of our equity or debt securities on terms satisfactory to us, in which case we will probably not be able to continue as a going concern. 

The accompanying condensed consolidated balance sheets do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the potential inability of the Company to continue as a going concern.

Nature of Operations

Clear Skies Group, Inc. (“CSG”) was formed in September 2003 for the purpose of providing turnkey solar electricity installations and renewable energy technology solutions to commercial and residential customers across the United States. CSG commenced operations in August 2005 and received its initial funding in September 2005. Through a reverse merger completed in December 2007, CSG became a wholly owned subsidiary of the Company. We also have proprietary and patented remote monitoring technology under the name XTRAX® with applications in the solar electricity production field and other potential markets. The XTRAX® technology is being finalized and the commercialization of it is expected to begin during 2011 through our 66% owned subsidiary, Carbon 612.  In February 2010, Carbon 612 filed a registration statement on Form 10 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), filed amendments to that registration statement on May 12, 2010, September 30, 2010 and January 19, 2011, and will file another amendment in the near future.  Carbon 612 is itself subject to the reporting requirements of the Exchange Act, and its financial statements are consolidated with our financial statements in this Form 10-Q. The consolidated financial statements include the financial position and operating activities of Carbon 612 Corporation, our 66% owned subsidiary.  All intercompany balances have been eliminated in consolidation.

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Prepaid expenses and deferred financing costs

3 Months Ended

Jun. 30, 2011

Prepaid expenses and deferred financing costs

Prepaid expenses and deferred financing costs

4. Prepaid expenses and deferred financing costs

Prepaid expenses and deferred financing costs at June 30, 2011 and December 31, 2010 are as follows:

		June 30,		December 31,
		2011		2010
Current
Compensation for future services rendered	$	25,814	$	15,814
Prepaid insurance premiums		-		6,901
		25,814		22,715
Non-Current
Deferred financing costs		15,184		9,683
	$	40,998	$	32,398

The Company has entered into agreements with several firms to provide it with both public relations and investor relations advice and services over periods from six months to one year. These agreements call for payments in both cash and common stock and payments are being amortized over the period of each agreement.

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Related party transactions

3 Months Ended

Jun. 30, 2011

Related party transactions

Related party transactions

5. Related party transactions

Arthur Goldberg, our Vice President and Chief Financial Officer, purchased three one year convertible notes each in the amount of $11,000 and maturing on July 28, 2010, July 31, 2010 and January 6, 2011 and received a three year warrant to purchase shares of our common stock with each of the three notes. The first two notes were paid in cash at maturity. The third note was converted to a demand note at its maturity on January 6, 2011 and is still outstanding.  None of the warrants, which can now be exercised to purchase 550,000 shares of our common stock each, have been exercised as of June 30, 2011.  Mr. Goldberg also received 26,250 shares of our common stock in connection with financings in January, 2010 and 100,000 shares of our common stock on July 13, 2010 as part of the financing transaction completed on that date.  In each case Mr. Goldberg acted as part of a group of investors and he paid for and received notes and warrants pro rata with the others in the group. Pursuant to the Carbon 612 November 2009 purchase agreement with a group of investors, Mr. Goldberg purchased 1,500,000 common shares of our 66% owned subsidiary, Carbon 612, and 1,500,000 warrants from Carbon 612, for an aggregate purchase price of $15,000.

See Note 6 for information regarding the re-pricing of stock options previously granted to our non-employee directors and our executive officers, along with all other employees of the Company.

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Stock options, warrants and convertible notes payable

3 Months Ended

Jun. 30, 2011

Stock options, warrants and convertible notes payable

Stock options, warrants and convertible notes payable

6. Stock options, warrants and convertible notes payable

The Company uses the Black-Scholes option pricing model to measure the fair value of its option awards. This model requires the input of highly subjective assumptions including volatility, expected term, risk-free interest rate and dividend yield. As to options that were granted to non-employee consultants, the resulting fair value is recorded as consulting expense on a straight-line basis over the period of service of the consultants and is adjusted to fair value for each reporting period.  

In December 2007 and April 2010, the Company’s shareholders approved the 2007, 2008 and 2009 Equity Incentive Plans, which each provide for the granting to both employees and non-employees of up to 2,500,000 shares of the Company’s common stock pursuant to awards of options and/or restricted stock. On July 12, 2010 the Board of Directors approved the 2010 Equity Incentive Plan which provides for the granting to both employees and non-employees of up to 3,500,000 shares of the Company’s common stock pursuant to awards of options and/or restricted stock.  On February 15, 2011, our Board of Directors amended all outstanding options to our employees and certain non-employees to purchase a total of 10,200,000 shares by reducing the exercise price to $.025 per share, the fair market value at that date as defined in each Plan, and fully vested all options.   In addition, two employees were granted fully vested options, one for 15,000 shares with an exercise price of $.025 per share and the other for 220,000 shares with an exercise price of $.04 per share, in both cases the fair market value at date of grant as defined in the Plan.  The number of options outstanding under all Plans, as of June 30, 2011, was 10,260,000 after the effect of the cancellation of 175,000 options during the six months ended June 30, 2011.  

On May 1, 2008, the Company adopted the Clear Skies Solar, Inc. 2008 Non-Employee Director Compensation Plan, which it amended on November 12, 2008. This plan provides for the granting of up to one million options to non-employee directors, all of which were granted prior to March 31, 2010. On February 15, 2011, the Board modified existing options granted to both non-employee directors by reducing the exercise price to $.0231 per share, the fair market value on that date as defined in this Plan, and fully vested all options outstanding under this Plan.  The non-employee directors each now hold options to purchase 500,000 shares of our common stock.

A summary of the Company’s stock option activity in the six months ending June 30, 2011, for thirteen employees, three consultants and two non-employee directors is as follows:

				Weighted
		Weighted		Average
		Average		Remaining
	Number	Exercise		Contractual
	of	Price per		Term
	Options	Option		(Years)
Outstanding, January 1, 2011	10,200,000	$0.088	(1)	7.52
Granted, February 15, 2011	15,000	$0.025		9.63
Granted, March 15, 2011	220,000	$0.040		9.71
	10,435,000
Cancellations	175,000	$0.025		-
Outstanding, June 30, 2011	10,260,000	-		-
Non-employees directors:
Outstanding, January 1, 2011	1,000,000	$0.162	(2)	7.85
Outstanding, June 30, 2011	1,000,000	$0.023		-

(1) On February 15, 2011, the Board of Directors modified all outstanding options to our employees and certain non-employees to purchase a total of 10,200,000 shares by reducing the exercise price to $.025 per share, the fair market value at that date as defined in each plan, and fully vested all options.

(2) On February 15, 2011, the Board of Directors modified existing options granted to both non-employee directors by reducing the exercise price to $.0231 per share, the fair market value on that date as defined in the Plan, and fully vested all options outstanding under the Plan.

The following table summarizes additional information about the assumptions used to determine the fair value of stock options granted during the three months ended March 31, 2011 (none were granted in the three months ended June 30, 2011):

Risk free rate	2.68 – 3.03%
Stock price volatility	80.54%
Dividend yield	0
Term	4.5 – 6 years
Forfeiture rate	0%

As of June 30, 2011, the Company’s outstanding options granted prior to that date had no intrinsic value due to the stock price on that date of $.02.

Outstanding convertible notes and warrants as of June 30, 2011 were as follows:

		Convertible notes:
		Face		Interest		Conversion		Shares on
		Amount		Rate		Price		Conversion
	$	11,000		5%	$	0.02		550,000	(1)
		25,000		5%	$	0.02		1,250,000	(2)
Total short-term	$	36,000		-		-		1,800,000
		Warrants:
		Number of		Exercise		Expiration
		Shares		Price		Date
		550,000	$	0.02		7/28/2012
		550,000	$	0.02		9/16/2012
		550,000	$	0.02		1/6/2013
		312,500	$	0.02		1/6/2013
		367,500	$	0.02		1/6/2014
		125,000	$	0.18		2/23/2014
		7,000,000	$	0.00		2/24/2014	(3)
		312,500	$	0.16		4/28/2014
		650,000	$	0.14		5/4/2014
		3,000,000	$	0.15		11/30/2014
		25,522,608		variable		3/31/2014	(4)
		405,405	$	.037		3/31/2014	(4)
		39,345,513

(1) This note originally matured on January 6, 2011 and was converted to a demand note.

(2) This note originally matured on January 6, 2011.  In return for a reduction in the conversion price to $.02 the maturity date was extended by one year.  The accompanying warrant was modified to permit the purchase of 312,500 shares at $.02 per share until January 6, 2013 and an additional 367,500 shares at $.02 until January 6, 2014.  These changes were agreed to as of January 4, 2011.

(3) On February 25, 2011, the Company raised $120,000 in a private placement to two Accredited Investors of four million shares of common stock, par value of $.001 per share (the “Common Stock”) and warrants (the “Warrants”) to purchase, for a prepaid amount included in the closing, up to an aggregate of 7 million additional shares of Common Stock. The Warrants are immediately exercisable by the warrant holder by delivery of a completed Subscription Notice to the Company; provided, however, the warrant holder shall not be entitled to exercise the Warrant to acquire that number of shares of Common Stock which would be in excess of the sum of (i) the number of shares of Common Stock beneficially owned by such holder and its affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the exercise of the Warrant with respect to which the determination of this limitation is being made on an exercise date, which would result in beneficial ownership by such holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock on such date.  For the purposes of the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities and Exchange Act of 1934, as amended, and Rule 13d-3 thereunder. Subject to the foregoing, such holder shall not be limited to aggregate exercises which would result in the issuance of more than 4.99%.  The restriction described in this paragraph may be waived, in whole or in part, upon sixty-one (61) days prior notice from such Holder to the Company to increase such percentage to up to 9.99%, but not in excess of 9.99%.  See the Company’s Current Report on Form 8-K filed with the SEC on March 3, 2011.

(4) On March 31, 2011 (the “Effective Date”), the Company raised gross proceeds of $300,000 in a private placement to an Accredited Investor of 12.5 million shares of common stock, par value of $.001 per share (the “Common Stock”), and a three-year immediately exercisable  warrant (the “Warrant”) to purchase, at prices to be determined based on a discount from the market price at the time of exercise unless previously reduced because of earlier anti-dilution adjustment, a total of 25,522,608 additional shares of Common Stock.  The Warrant may not be exercised at times when its exercise would result in ownership by the holder and its affiliates of more than 9.99% of the then outstanding shares of Common Stock.  In connection with the foregoing private placement and for services rendered, the Company issued a three-year immediately exercisable warrant to MidSouth Capital, Inc. (the “MidSouth Warrant”) to purchase 405,405 shares of Common Stock at an exercise price of $0.037 per share. See the Company’s Current Report on Form 8-K filed with the SEC on April 6, 2011.

Carbon 612 Securities Purchase Agreement

On November 13, 2009, our subsidiary, Carbon 612, entered into a Securities Purchase Agreement with a group of investors (the “Purchase Agreement”) that provided for, among other things, the sale by Carbon 612 to the investors of (i) an aggregate of 15,000,000 shares (the “Shares”) of its common stock, par value $0.001 (“Common Stock”) at $.01 per share and (ii) warrants to purchase up to an aggregate of an additional 15,000,000 shares of its Common Stock (the “Warrants”) at $.10 per share. Carbon 612 received gross proceeds in the aggregate amount of $150,000 (before expenses of $37,500) from the sale of the Shares and the Warrants. Immediately after the closing and as of March 31, 2011, Clear Skies owns approximately 66% of Carbon 612’s outstanding shares of Common Stock.  Arthur Goldberg, Chief Financial Officer of Clear Skies and a Vice President, Secretary and Treasurer of Carbon 612, purchased 1,500,000 Shares and 1,500,000 Warrants under the Purchase Agreement, for an aggregate purchase price of $15,000.

The Company has concluded that the anti-dilution provisions in the warrants issued in November 13, 2009, should be accounted for as derivatives and reported as liabilities at fair value in accordance with ASC 815 as of December 31, 2010. Accordingly, the Company recorded a liability in the amount of $60,000 as a derivative liability at December 31, 2010. The Company believes that the estimate of fair value from issuance on November 13, 2009 to June 30, 2011 has remained the same as Carbon 612 has had no other stock offerings and no significant operations during the period.  Once the Company is able to put into place its business plans and commence revenue producing activities, the fair value of this liability may change. Any fair value adjustments of this liability will be recognized in earnings.

Modification of Outstanding Notes

On January 4, 2011, the Company entered into a Clarification Agreement with Alpha Capital Anstalt (“Alpha”) whereby Alpha agreed never to demand payment in cash for notes previously issued to it but to convert the notes into common stock at some point in the future.  As of December 31, 2010, this is shown as an obligation to issue shares based on $37,141 and converted at the rate of one share per $0.007901542.  On February 18, 2011, the holder converted the note (which would have matured on January 6, 2011) in part and acquired 2,500,000 shares of our common stock. The remaining portion of this obligation is $17,388 plus accrued interest of $5,392 to March 31, 2011.   The obligation continues to bear interest at 5% per annum. The remainder of this obligation, plus accrued interest, was converted into 2,891,967 shares of common stock on May 3, 2011.

The $11,000 Note payable to Mr. Goldberg matured on January 6, 2011 and was converted into a demand Note. No other changes were made in the terms of the Note.  Accrued interest on this Note, at 5% per annum, to June 30, 2011 was $815.

When Notes are either paid off or converted, and Warrants are either exercised or cancelled, any associated unamortized deferred financing costs and debt discount are removed from the related accounts and recorded as a charge to interest expense. During the three months ended June 30, 2011 and 2010 $5,554 and $296,641 of deferred financing costs, and zero and $123,447 of debt discount, respectively, were charged to interest expense.  During the six months ended June 30, 2011 and 2010 $21,438 and $558,669 of deferred financing costs, and $986 and $387,102 of debt discount, respectively, were charged to interest expense.   

Unsecured Convertible Promissory Note

On January 4, 2011, the Company entered into an agreement with the holder of a note convertible into our common stock at $.10 per share and maturing on January 6, 2011 in the face amount of $25,000 with interest at 5% per annum.  The conversion price of the note was reduced to $.02 per share and the maturity date was extended one year.  This holder also had a warrant expiring January 6, 2013 to purchase 62,500 share of our common stock at $.10 per share.  This warrant was modified to increase the shares that could be purchased to 312,500 shares at $.02 per share; in addition a new warrant was issued expiring on January 6, 2014 to allow the holder to purchase 367,500 shares of our common stock at $.02 per share.  Both warrants have provisions allowing for a cashless exercise.  Further, the holder received 50,000 shares of restricted common stock as an incentive to enter into this transaction.  Accrued interest on this note to June 30, 2011 was $1,850.

Deferred Financing Costs

Deferred financing costs represent costs incurred in connection with the issuance of the convertible notes payable. Deferred financing costs are being amortized over the term of the financing instrument on a straight-line basis, which approximates the effective interest method. During the three months ended June 30, 2011 and 2010, the Company capitalized deferred financing costs of zero and zero, respectively.  During the six months ended June 30, 2011 and 2010, the Company capitalized deferred financing costs of $26,939 and $512,690, respectively.   During the three months ended June 30, 2011 and 2010, the Company amortized deferred financing costs of $5,554 and $296,641, respectively, to interest expense.  During the six months ended June 30, 2011 and 2010, the Company amortized deferred financing costs of $21,438 and $558,669, respectively, to interest expense.

Embedded Derivative Liabilities are as follows:

Balance at December 31, 2010	$	64,675
Change in fair value included in other income		(550)
Balance at June 30, 2011	$	64,125

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities
Net loss	$ (2,153,287)	$ (4,082,548)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	797	0
Stock-based compensation-options	158,644	221,391
Stock-based compensation-grants	82,500	2,150,500
Amortization of debt discount	986	387,102
Change in fair value of embedded derivative	(550)	(465,834)
Stock issued for consultants/legal services	208,059	0
Amortization of deferred financing costs	21,438	0
Noncash charges related to financings	12,466	0
Increase (decrease) in cash and cash equivalents attributable to changes in operating assets and liabilities:
(Increase) decrease in accounts receivable	(98,636)	150,000
Increase in inventory	(116,306)	0
Increase in costs and estimated earnings in excess of billings	(104,980)	0
Decrease (increase) in prepaid expenses and deferred financing costs	(3,099)	566,633
Increase in security deposits	(58,517)	0
Increase in other assets	(7,501)	(55,298)
Increase in accounts and accrued expenses payable	1,208,278	87,527
Increase in installation warranty liability		35,691
Increase in customer advances	505,968	0
Decrease (increase) in accrued payroll and related taxes	(2,619)	187,853
Net cash used in operating activities	(346,359)	(816,983)
Net cash used in investing activities:
Purchases of equipment	(19,140)	0
Net cash used in investing activities:	(19,140)	0
Cash flows from financing activities
Proceeds from issuance of common stock and warrants	420,000	0
Proceeds from exercise of a warrant	0	385,000
Proceeds from convertible note	0	335,000
Net cash provided by financing activities	420,000	720,000
Net increase (decrease) in cash	54,501	(96,983)
Cash, beginning of period	16,992	132,325
Cash, end of period	71,493	35,342
Supplemental disclosure of non-cash financing and investment activities:
Cash paid for income taxes	994	1,941
Cash paid for interest expense	$ 0	$ 0
Common stock issued in connection with extension of note payable	1,500	16,000

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Summary of significant accounting policies

3 Months Ended

Jun. 30, 2011

Summary of significant accounting policies

Significant Accounting Policies [Text Block]

2. Summary of significant accounting policies

Cash

The Company maintains cash balances which consist of demand deposits with a high-credit quality financial institution. Such amounts have from time to time exceeded FDIC insurance limits. The Company has not experienced any losses on these deposits to date.

Accounts Receivable and Allowance for Doubtful Accounts

The Company regularly evaluates the collectability of its accounts receivable. We carry our accounts receivable at cost less an allowance for doubtful accounts. On a periodic basis, the Company evaluates its accounts receivable and establishes an allowance for doubtful accounts, if necessary, based on a history of past bad debts and collections and current credit conditions. Accounts receivable are written-off as uncollectible on a case-by-case basis at the discretion of management. Accounts receivable consist of trade receivables and when applicable amounts due from state agencies for rebates on state-approved solar systems installed. No rebates from state agencies were included in accounts receivable at June 30, 2011 or December 31, 2010. The Company’s accounts receivable balance as of June 30, 2011 and 2010 was $138,636 and zero, respectively. The allowance for doubtful accounts balance for the same periods was zero and zero, respectively.

Contracts Receivable

Contracts receivable from performing general construction are based on fixed-price contracts.  Contract receivables are due 30 days after issuance of the invoice. Contract retentions are due 30 days after completion of the project and acceptance by the customer. Receivables past due more than 90 days are considered delinquent. Delinquent receivables are written-off based on individual credit evaluation and specific circumstances of the customer.

Property and Equipment

As of December 31, 2009, the Company wrote off the remaining balance of all property and equipment. Prior to that write off, property and equipment were stated at cost less accumulated depreciation and the Company provided for depreciation principally using the straight-line method as follows:

Asset	Useful Life
Computer equipment	3 Years
Equipment and tools	3 Years
Automobile	5 Years

Property and equipment acquisitions from and after January 1, 2011 are capitalized and depreciation is provided as noted above. Depreciation expense for the three months ended June 30, 2011 and 2010 was $797 and zero, respectively.  Depreciation expense for the six months ended June 30, 2011 and 2010 was $797 and zero, respectively.

Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of a long-lived asset may not be recoverable. We periodically evaluate whether events and circumstances have occurred that may warrant revision of the estimated useful lives of its long-lived assets or whether the remaining balance of long-lived assets should be evaluated for impairment. The Company considered the results of operations as a triggering event and wrote off the carrying values of depreciable personal property assets at December 31, 2009.

Critical Accounting Policies

Revenue Recognition and Deferred Revenue: We currently have one primary revenue stream generated by our activities as a prime contractor for the design and installation of solar energy systems. We may have other revenue if we serve as a consultant to others on solar projects or, as we have done in years before 2009, work as a subcontractor for others. These revenue streams have very different characteristics and payment time cycles. Therefore, we apply a different revenue recognition policy to each category.

Contract Revenue: In accordance with ASC 605 we recognize revenues from contracts that we sign directly with the customer using the percentage of completion method. The percentage of completion is calculated by dividing the direct labor and other direct costs incurred by the total estimated direct costs of the project. Contract value is defined as the total value of the contract, plus the value of approved change orders. Estimates of costs to complete are reviewed periodically and modified as required. Provisions are made for the full amount of anticipated losses, on a contract-by-contract basis. These loss provisions are established in the period in which the losses are first determined. Changes in estimates are also reflected in the period they become known. We maintain all risks and rewards of billing. Regardless of the customer’s structure or industry, if we are the lead contractor, then we recognize all revenues from such customers in this manner.  As it relates to revenue to be generated from  XTRAX®, revenue will be recognized when an XTRAX® unit is sold and delivered, or installed under a contract with a third party, the energy production data has been collected and we have transmitted it to the buyer and there is reasonable assurance of payment to us. If we license the technology we will record license revenue as it is earned under the license agreement if there is reasonable assurance of the licensee making payment to us.

Subcontracting and Consulting Revenue: Prior to 2009, we performed installation and other services as a subcontractor. We might do so again and may also perform consulting work for others. These services differ from contract revenue as we are entitled to be compensated for subcontractor or consulting work performed prior to completion of the system. We are paid for all invoiced work so long as we complete tasks satisfactorily and invoice the client for our work in a timely manner. We will book all revenues from projects where we act as subcontractor to our income statement as they are invoiced to the client if we are reasonably assured of payment.

Cost Recognition: Contract costs include all direct materials, labor and equipment costs, and those indirect costs related to performance such as indirect labor, supplies, and tool costs. We make provisions for estimated losses on uncompleted contracts in the period in which such losses are determined. Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income and are recognized in the period in which the revenues are determined.

Costs and estimated earnings in excess of billings consist of our costs to acquire materials that we purchased for projects which had not been completed as of the relevant balance sheet date. These costs are charged to the project as they are installed. Research and Development: Research and development costs related to the XTRAX® technology are charged to expense as incurred.

Manufacturing and Installation Warranties: We offer a five-year warranty on the installation of a system and all equipment and identical supplies other than solar panels and inverters that are covered under the manufacturer’s warranty. The solar panels and the inverters we use have a manufacturer’s warranty period of five to twenty-five years. We assist the customer in the event that the manufacturer’s warranty needs to be used to replace a defective panel or inverter. We record a provision for the installation warranty within cost of revenue — currently at 2% of contract revenue — based on our limited historical experience and future expectations of the probable cost to be incurred in honoring our warranty commitment. As we develop sufficient history the 2% rate would change if appropriate.  The provision charged to expense for the three and six month periods ended June 30, 2011 or 2010 was zero and no warranty costs were incurred in either period.

Issuance of Common Stock: Due to our limited cash resources we have used our common stock to raise capital by way of the sale of common stock, common stock purchase warrants and convertible promissory notes with warrants, and the issuance of common stock to service providers of various types.

Income Taxes: The Company complies with Accounting Standards Codification (“ASC”) 740 related to accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company also complies with the provisions of ASC 740 related to accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transitions.

Loss Per Share: The Company complies with ASC 260 related to calculation of loss per share, which has a dual presentation of basic and diluted loss per share for all periods presented. Basic loss per share excludes dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then share in the loss of the Company. The difference between the number of shares used to compute basic loss per share and diluted loss per share relates to additional shares to be issued upon the assumed exercise of stock options and warrants, net of shares hypothetically repurchased at the average market price with the proceeds of exercise. As the Company reported a net loss for the three and six months ended June 30, 2011 and 2010, the effects of the shares issuable upon exercise of outstanding warrants and options as of June 30, 2011 and 2010 have not been considered in the diluted net loss per common share since these dilutive securities would reduce the loss per common share and become anti-dilutive. As of June 30, 2011, there are 68,582,843 shares reserved for issuance upon the exercise of outstanding warrants, options and convertible notes.

Convertible Notes and Warrants: We evaluate and account for conversion options embedded in convertible instruments in accordance with provisions of ASC 815. This applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative as defined by ASC 815 relating to accounting for derivative instruments and hedging activities and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.

ASC 815 requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under ASC 815 with changes in fair value reported in earnings as they occur, and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. An exception to this rule exists when the host instrument is deemed to be conventional as that term is described under ASC 815. The convertible notes we issued contain adjustment (or ratchet) provisions and accordingly, we determined that the embedded feature within the convertible notes and the warrants are indexed to the Company’s common stock, but the ratchets are only applicable if the Company issues common stock or instruments convertible into common stock below the then applicable conversion or purchase price in the note or warrant. We account for convertible instruments (when we have determined that the embedded conversion options should be bifurcated from their host instruments) as follows: we record a convertible note payable and discounts to the convertible notes for the warrants. The embedded derivative is recorded separately at the grant date and fair valued on a quarterly basis. A gain (loss) on embedded derivative feature is recognized in earnings on a quarterly basis. Discounts under these arrangements are amortized over the term of the notes to their stated date of maturity.

Accounting for Derivative Instruments: The Company accounts for derivative instruments in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended (“SFAS 133”), which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instruments imbedded in other financial instruments or contracts. The Company also considers the EITF 00-19, Accounting for Derivative Financial Instruments Indexed to, and Settled in, a Company’s Own Stock, which provides criteria for determining whether freestanding contracts that are settled in a company’s own stock, including common stock warrants, should be designated as either an equity instrument, an asset or as a liability under SFAS 133. EITF 00-19 and SFAS 133 were codified into ASC Topic 815, Derivatives and Hedging and ASC Topic 718, Compensation — Stock Compensation.

The Company also considers EITF No. 07-5, Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock which was effective for the Company on January 1, 2009. EITF No. 07-5 was codified into ASC Topic 815, which provides guidance for determining whether an equity-linked financial instrument (or embedded feature) issued by an entity is indexed to the entity’s stock, and therefore, qualifying for the first part of the scope exception in paragraph 15-74 of ASC Topic 718. The Company evaluated the conversion feature embedded in its convertible notes payable based on the criteria of ASC Topic 815 to determine whether the conversion feature would be required to be bifurcated from the convertible notes and accounted for separately as derivative liabilities.

Stock Based Compensation: ASC Topic 718, Compensation — Stock Compensation (formerly SFAS 123(R)), requires the Company to measure and recognize compensation expense for all share-based payment awards made to employees and directors based on estimated fair values.

Stock based compensation expense related to stock option grants recognized under ASC Topic 718 for the three months ended June 30, 2011 and 2010 was zero and $126,817, respectively, and for the six months ended June 30, 2011 and 2010 was $241,144 and $2,371,891, respectively. Stock based compensation expense is included in selling general and administrative expense on the accompanying condensed consolidated statements of operations. See Note 6 for additional information.

ASC Topic 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s condensed consolidated statements of operations.

Stock based compensation expense recognized in the Company’s consolidated statements of operations for the three and six months ended June 30, 2011 and 2010 included compensation expense for share-based payment awards based on the grant date fair value estimated in accordance with the provisions of ASC Topic 718. The Company follows the straight-line single option method of attributing the value of stock based compensation to expense. As stock based compensation expense recognized in the condensed consolidated statements of operations for the three and six months ended June 30, 2011 and 2010 is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures. ASC Topic 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The Company used the Black-Scholes option-pricing model (“Black-Scholes model”) as its method of valuation for share-based awards granted. The Company’s determination of fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards and the expected term of the awards.

The Company accounts for non-employee stock based compensation expense in accordance with ASC Topic 505, Equity — Based Payments to Non-Employees (formerly EITF Issue No. 96-18).

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company uses estimates and assumptions to report its accounts receivable, derivatives and contract revenues. Actual results could differ from those estimates.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Jun. 30, 2011	Dec. 31, 2010
Current Assets
Cash	$ 71,493	$ 16,992
Accounts receivable	138,636	40,000
Prepaid expenses	25,814	22,715
Inventory	116,306	0
Costs and estimated earnings in excess of billings	104,980	0
Total current assets	457,229	79,707
Property and equipment:
Land	128,449	128,449
Automobile	19,141	0
Property Plant Equipment gross	147,590	128,449
Less accumulated depreciation	798	0
Property and equipment, net	146,792	128,449
Security deposits	208,517	150,000
Other assets	72,703	67,202
Total assets	885,241	425,358
Current Liabilities
Accounts and accrued expenses payable	2,095,211	889,931
Billing in excess of costs and estimated earnings	42,553	42,553
Customer advances	594,824	88,856
Note payable - short-term	36,000	11,000
Embedded derivative liability	64,125	64,675
Accrued payroll and related taxes	509,855	512,474
Installation warranty liability	166,637	166,637
Estimated loss on uncompleted contracts	109,305	109,305
Total current liabilities	3,618,510	1,885,431
Non-current Liabilities
Note payable - long-term	0	25,000
Obligation to issue common stock	0	36,155
Total non-current liabilities	0	61,155
Total liabilities	3,618,510	1,946,586
Commitments and Contingencies
Stockholders' (deficit) equity
Preferred stock, $.001 par value, 10,000,000 shares authorized, zero shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	0	0
Common stock, $.001 par value, 300,000,000 shares authorized,211,253,499 and 178,920,327 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively	211,253	178,920
Additional paid-in capital	28,068,577	27,160,662
Accumulated deficit	(30,893,305)	(28,777,476)
Clear Skies Solar, Inc. deficiency	(2,613,475)	(1,437,894)
Noncontrolling interest deficiency	(119,794)	(83,334)
Total stockholders' (deficit) equity	(2,733,269)	(1,521,228)
Total liabilities and stockholders' (deficit) equity	$ 885,241	$ 425,358