- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2011 or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________

Commission File Number: 000-52107

HELIX WIND, CORP.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	20-4069588
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

13125 Danielson Street, Suite 104
Poway, California	92064
(Address of Principal Executive Offices)	(Zip Code)

(858) 513-1033

(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 þ 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 such shorter period that the registrant was required to submit and post such files). Yes þ 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

As of August 15, 2011, 1,922,000,000 shares of common stock of the registrant were outstanding.

HELIX WIND, CORP.

Quarterly Report on Form 10-Q for the period ended June 30, 2011

INDEX

		Page
	PART I - FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Shareholders’ Deficit	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	37
Item 4.	Controls and Procedures.	38
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings.	39
Item 1A.	Risk Factors.	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	47
Item 3.	Defaults Upon Senior Securities.	47
Item 4.	(Removed and Reserved)	47
Item 5.	Other Information.	47
Item 6.	Exhibits.	47

PART I - FINANCIAL INFORMATION

HELIX WIND, CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

Item 1. Financial Statements

	June 30, 2011 (unaudited)			December 31, 2010 (as restated)
ASSETS

CURRENT ASSETS

Cash	$	11,704		$	87,395
Prepaid expenses and other current assets		6,341			2,475
Total current assets		18,045			89,870

Equipment, net		229,582			291,981
Patents		97,872			79,916

Total assets	$	345,499		$	461,767

LIABILITIES AND SHAREHOLDERS’ DEFICIT

CURRENT LIABILITIES
Accounts payable	$	954,179		$	936,858
Accrued compensation		191,117			291,117
Accrued interest		582,100			380,977
Other accrued liabilities		94,411			94,404
Accrued taxes		8,464			16,114
Deferred revenue		-			34,494
Short term debt		448,164			543,164
Convertible notes payable to related party		144,837			144,837
Convertible notes payable, net of discount		73,886			53,265
Derivative liability		5,332,759			4,120,046
	$	7,829,917		$	6,615,276
COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 1,000,000 and zero shares issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		100			-
Common stock, $0.0001 par value, 1,750,000,000 shares authorized, 1,750,000,000 and 1,021,482,054 issued and outstanding as of June 30, 2011 and December 31, 2010, respectively		175,000			102,148
Additional paid in capital		38,930,911			37,735,035
Accumulated deficit		(46,590,429	)		(43,990,692	)

Total shareholders’ deficit		(7,484,418	)		(6,153,509	)
Total liabilities and shareholders’ deficit	$	345,499		$	461,767

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

HELIX WIND, CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010

REVENUES	$	-		$	-		$	-		$	5,637

COST OF SALES		-			-			-			4,455

GROSS MARGIN		-			-			-			1,182

OPERATING COSTS AND EXPENSES
Research and development		11,040			90,060			26,326			183,361
Selling, general and administrative		344,638			872,004			651,005			1,480,172

LOSS FROM OPERATIONS		(355,678	)		(962,064	)		(677,331	)		(1,662,351	)

OTHER INCOME (EXPENSES)
Other income (loss)		(13,002)			-			87,455			416
Loss on acquisition agreement termination		-			(4,626	)		-			(2,158,591	)
Interest expense		(897,924	)		(1,411,509	)		(2,856,361	)		(6,195,618	)
Loss on debt extinguishment		-			-			-			-
Change in fair value of derivative liability		(676,081	)		(140,243	)		847,300			25,789,829
Total other income (expense)		(1,587,007	)		(1,556,378	)		(1,921,606	)		17,436,036

INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES	$	(1,942,685	)	$	(2,518,442	)	$	(2,598,937	)	$	15,773,685

PROVISION FOR INCOME TAXES		-			-			(800	)		(800	)

NET INCOME (LOSS)	$	(1,942,685	)	$	(2,518,442	)	$	(2,599,737	)	$	15,772,885

NET INCOME (LOSS) PER SHARE - BASIC	$	(0.00	)	$	(0.03	)	$	(0.00	)	$	0.26
NET INCOME (LOSS) PER SHARE – DILUTED	$	(0.00	)	$	(0.03	)	$	(0.00	)	$	0.02

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC		1,750,000,000			77,621,636			1,664,884,201			61,516,085
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - DILUTED		1,750,000,000			77,621,636			1,664,884,201			744,599,373

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

HELIX WIND, CORP.

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT

(Unaudited)

									Additional					Total
	Preferred Stock				Common Stock				Paid-in		Accumulated			Shareholders'
	Shares		Par Value		Shares		Par Value		Capital		Deficit			Deficit


BALANCE – December 31, 2010		-		-		1,021,482,054		102,148		37,735,035		(43,990,692	)		(6,153,509	)
Share based payments										100,403					100,403
Stock issued upon note conversion						728,517,946		72,852		633,073					705,925
Convertible preferred shares		1,000,000		100						462,400					462,500
Net (loss)												(2,599,737	)		(2,599,737	)
BALANCE –June 30, 2011		1,000,000		100		1,750,000,000		175,000		38,930,911		(46,590,429	)		(7,484,418	)

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

HELIX WIND, CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended
	June 30, 2011			June 30, 2010

OPERATING ACTIVITIES
Net income (loss)	$	(2,599,737	)	$	15,772,885
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization		49,495			60,068
Share based payments		100,403			(462,500	)
Change in fair value of derivative liability		(847,300	)		(25,789,830	)
Interest in connection with derivative liability		2,096,632			2,343,929
Net loss on disposition of equipment		14,544			-
Write off of debt discount on converted debt		225,752			1,791,257
Amortization of debt discount		249,628			27,556
Loss on acquisition agreement termination		-			2,158,591
Gain on issuance of stock for company expenses		-			(416	)
Issuance of preferred stock for accrued compensation		100,000			-
Issuance of preferred stock for short term debt		95,000			-
Issuance of stock for consulting services		-			250,000
Issuance of stock for fundraising		-			577,000
Issuance of stock for payment of debt		-			1,887,000
Issuance of stock for note amendment		-			4,000
Changes in operating assets and liabilities:
Accounts receivable		-			875
Inventory		-			42,605
Other current assets		(3,450	)		(8	)
Accounts payable		17,322			135,185
Accrued compensation		(100,000	)		22,907
Accrued interest		283,177			132,939
Related party payable		-			(59,042	)
Deferred revenue		(34,494	)		83,920
Short term debt		(95,000	)		-
Accrued liabilities		(7,650	)		(1,838	)
Net cash used in operating activities		(455,678	)		(1,022,917	)

INVESTING ACTIVITIES
Purchase of equipment		(1,640	)		-
Patents		(18,373	)		-
Net cash used in investing activities		(20,013	)		-

FINANCING ACTIVITIES
Proceeds from convertible notes payable		400,000			892,000
Proceeds from short term notes payable		-			715,000
Principal payments on short term notes payable		-			(459,621	)
Net cash provided by financing activities		400,000			1,147,379

Net increase (decrease) in cash		(75,691	)		124,462

Cash – beginning of period		87,395			-

Cash – end of period	$	11,704		$	124,462

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES
Derivative liability on warrants issued with convertible notes payable	$	-		$	4,194,944
Conversion of accrued interest to convertible preferred stock	$	38,500		$	-
Convertible preferred stock issued to holders of convertible notes payable for satisfaction of convertible notes payable	$	229,000		$	-
Accrued interest on convertible notes payable converted to additional paid in capital	$	43,554		$	191,206
Discount on St. George notes at issuance	$	(127,500	)	$	-
Financing charge for violation of St. George note	$	1,113,464		$	877,215
Issuance of convertible note in lieu of liabilities owed to former CEO	$	-		$	144,837
Interest charge for penalty in violation of short term debt	$	-		$	20,000
Conversion of derivative liability to additional paid in capital due to conversion of convertible notes payable	$	436,619		$	2,468,520
Escrow of shares for former employee related to St. George bridge financing	$	-		$	480
Conversion of convertible notes payable to additional paid in capital	$	225,752		$	2,383,257
Conversion of warrants to additional paid in capital	$	-		$	738,112
Conversion of convertible notes payable and warrants into common stock and new issues	$	72,852		$	7,662
Issuance of convertible preferred stock	$	100		$	-

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

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

1.	ORGANIZATION

Helix Wind, Corp. (“Helix Wind”) was incorporated under the laws of the State of Nevada on January 10, 2006 (Inception) and has its headquarters located in Poway, California. Helix Wind was originally named Terrapin Enterprises, Inc. On February 11, 2009, Helix Wind’s wholly-owned subsidiary, Helix Wind Acquisition Corp. was merged with and into Helix Wind, Inc. (“Subsidiary”), which survived and became Helix Wind’s wholly-owned subsidiary (the “Merger”). On April 16, 2009, Helix Wind changed its name from Clearview Acquisitions, Inc. to Helix Wind, Corp., pursuant to an Amendment to its Articles of Incorporation filed with the Secretary of State of Nevada. Unless the context specifies otherwise, as discussed in Note 2, references to the “Company” refers to Subsidiary prior to the Merger, and Helix Wind, Corp. and the Subsidiary combined thereafter.

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies presented below is designed to assist in understanding the company’s condensed consolidated financial statements. Such financial statements and accompanying notes are the representation of the Company’s management, who is responsible for their integrity and objectivity.

Reverse Merger Accounting

Since former Subsidiary security holders owned, after the Merger, approximately 80% of Helix Wind’s shares of common stock, and as a result of certain other factors, including that all members of the Company’s executive management are from Subsidiary, Subsidiary is deemed to be the acquiring company for accounting purposes and the Merger was accounted for as a reverse merger and a recapitalization in accordance with generally accepted accounting principles in the United States (“GAAP”). These condensed consolidated financial statements reflect the historical results of Subsidiary prior to the Merger and that of the combined Company following the Merger, and do not include the historical financial results of Helix Wind prior to the completion of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated as capital stock shares reflecting the exchange ratio in the Merger. In conjunction with the Merger, the Company received cash of $270,229 and assumed net liabilities of $66,414.

Condensed Consolidated Financial Statements

The accompanying unaudited condensed consolidated financial statements primarily reflect the financial position, results of operations and cash flows of Subsidiary (as discussed above). The accompanying unaudited condensed consolidated financial statements of Subsidiary have been prepared in accordance with GAAP for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, these interim financial statements do not include all of the information and footnotes required by GAAP for annual financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011, or for any other period. Amounts related to disclosures of December 31, 2010 balances within these interim condensed consolidated financial statements were derived from the audited 2010 consolidated financial statements and notes thereto filed on amended Form 10-K/A on July 26, 2011 as restated.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued )

Use of Estimates

These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for Subsidiary included in Helix Wind’s Current Report on amended Form 10-Q/A on July 27, 2011 as restated with the SEC. In preparing these condensed consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.

Going Concern

The accompanying condensed consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. Such assumption contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has a working capital deficit of $2,479,113 excluding the derivative liability of $5,332,759, an accumulated deficit of $46,590,429 at June 30, 2011, recurring losses from operations of $677,331 and negative cash flow from operating activities of $455,678 for the six months ended June 30, 2011. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

The Company’s continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing as may be required, and ultimately to attain profitability. During 2010 and the first six months of 2011, the Company raised funds through the issuance of convertible notes payable to investors and through a private placement of the Company’s securities to investors to provide additional working capital. The Company plans to obtain additional financing through the sale of debt or equity securities.

The company currently has insufficient capital and personnel to fulfill potential orders for its products and has had to severely curtail its operations beginning February 2010. The Company is seeking additional capital to be able to restart operations and is exploring other alternatives for its intellectual property and other assets. There can be no assurances that the Company will be able to obtain sufficient capital for its operations, or that there will be other alternatives for its intellectual property and other assets.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and wholly-owned Subsidiary. All intercompany transactions and balances have been eliminated in consolidation.

Patents

Patents represent external legal costs incurred for filing patent applications and their maintenance, and purchased patents. Amortization for patents is recorded using the straight-line method over the lesser of the life of the patent or its estimated useful life. No amortization has been recorded on these expenditures in accordance with Company policy not to depreciate patents until the patent has been approved and issued by the United States Patent Office or by the various international patent authorities.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued )

Impairment of Long-Lived Assets

Long-lived assets must be reviewed for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. If the cost basis of a long-lived asset is greater than the projected future undiscounted net cash flows from such asset, an impairment loss is recognized. Impairment losses are calculated as the difference between the cost basis of an asset and its estimated fair value. No impairment losses were recognized at June 30, 2011 or December 31, 2010.

Equipment

Equipment is stated at cost, and is being depreciated using the straight-line method over the estimated useful lives of the related assets ranging from three to five years. Non Recurring Equipment (NRE) tooling that was placed in service and paid in full as of June 30, 2011 and December 31, 2010 is capitalized and is being depreciated over 5 years. Tooling that has been partially paid for as of June 30, 2011 and December 31, 2010 was recognized as a prepaid noncurrent asset. Costs and expenses incurred during the planning and operating stages of the Company’s website are expensed as incurred. Costs incurred in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website’s estimated useful life or period of benefit. Expenditures for repairs and maintenance are charged to expense in the period incurred. At the time of retirement or other disposition of equipment and website development, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recorded in results of operations. During the three and six months ended June 20, 2011, loss on disposal of test equipment no longer used amounted to $14,544.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued )

Advertising

The Company expenses advertising costs as incurred. During the six months ended June 30, 2011 and 2010, the Company incurred and expensed $2,210 and $5,040, respectively, in advertising expenses, which are included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

Research and Development Costs

Costs incurred for research and development are expensed as incurred. Purchased materials that do not have an alternative future use and the cost to develop prototypes of production equipment are also expensed. Costs incurred after the production process is viable and a working model of the equipment has been completed will be capitalized as long-lived assets. For the three months ended June 20, 2011 and 2010, research and development costs incurred were $11,040 and $90,060, respectively. For the six months ended June 30, 2011 and 2010, research and development costs incurred were $26,326 and $183,361, respectively.

Deferred Revenue

The Company receives a deposit for up to 50% of the sales price when the purchase order is received from a customer, which is recorded as deferred revenue until the product is shipped. The Company did not receive any purchase orders from domestic and international customers to purchase company product during the quarter ended June 30, 2011. The Company had deferred revenue of $0 and $34,494 as of June 30, 2011 and December 31, 2010, respectively. The balance from December 31, 2010 was reclassified to accounts payable as production of units has currently been suspended.

Income Taxes

In July 2009, ASC 740, Income Taxes, (formally FIN 48, Accounting for Uncertainty in Income Taxes – An Interpretation of FASB Statement No. 109) establishes a single model to address accounting for uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. FIN 48 also provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted the provisions of ASC-740. Upon adoption, the Company recognized no adjustment in the amount of unrecognized tax benefits.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued )

Share Based Compensation

The Company accounts for its share-based compensation in accordance with ASC 718-20. Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

The Company estimates the fair value of employee stock options granted using the Black-Scholes Option Pricing Model. Key assumptions used to estimate the fair value of stock options include the exercise price of the award, the fair value of the Company’s common stock on the date of grant, the expected option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on the Company’s common stock.

Revenue Recognition

The Company’s revenues are recorded in accordance with the FASB ASC No. 605, “Revenue Recognition” The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is reasonably assured. In instances where final acceptance of the product is specified by the customer or is uncertain, revenue is deferred until all acceptance criteria have been met.

Fair Value of Financial Instruments

The fair value accounting guidance defines fair value that “the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date”. The definition is based on an exit price rather than an entry price, regardless of whether the entity plans to hold or sell the asset. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring the fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying value of the derivative liability is based on valuation comprised of Level 2 inputs and assumptions, which are based on significant other observable inputs of variable reference rates and volatilities.

Basic and Diluted Net Income (Loss) per Common Share

The Company calculates basic and diluted net income (loss) per common share used the weighted average number of common shares outstanding during the periods presented.

Potentially dilutive common stock equivalents include the common stock issuable upon the exercise of warrants, stock options and convertible debt. As of June 30, 2011, the weighted average number of common shares outstanding totaled 1,664,884,201, and the total diluted common stock equivalents at June 30, 2011 totaled 1,750,000,000 which equals the total authorized common shares of the Company.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

2.	BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ( Continued )

Recent Accounting Pronouncements

In January 2010, the FASB issued revised authoritative guidance that requires more robust disclosures about the different classes of assets and liabilities measured at fair value, the valuation techniques and inputs used, the activity in Level 3 fair value measurements, and the transfers between Levels 1, 2 and 3. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009 (which is January 1, 2010 for the Company) except for the disclosures about purchases, sales, issuances, and settlements in the roll forward activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and the interim periods within those fiscal years (which is January 1, 2011 for the Company). Early application is encouraged. The revised guidance was adopted as of January 1, 2010. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial position, results of operations and cash flows.

In May 2011, the Financial Accounting Standards Board ("FASB") issued a new accounting standard on fair value measurements that clarifies the application of existing guidance and disclosure requirements, changes certain fair value measurement principles and requires additional disclosures about fair value measurements. The standard is effective for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of this accounting guidance to have a material impact on its consolidated financial statements and related disclosures.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

EQUIPMENT

Equipment consisted of the following as of June 30, 2011 and December 31, 2010:

	June 30, 2011			December 31, 2010

Equipment	$	47,897		$	49,260
NRE tooling		424,903			424,903
Test facility		-			83,477
Leasehold improvements		10,254			10,254
Web site development costs		13,566			13,566
		496,620			581,460
Accumulated depreciation		(267,038	)		(289,479	)

	$	229,582		$	291,981

During the three and six months ended June 20, 2011, loss on disposal of test equipment no longer used amounted to $14,544.

DEBT

Short Term Debt

Short term debt was $448,164 as of June 30, 2011 and $543,164 at December 31, 2010.

At June 30, 2011, short term debt includes $348,164 and $100,000 received from two non-related parties during 2009. The two promissory notes have a term of 1 year and accrue interest at prime (3.25% at June 30, 2011) plus 1%. During the second quarter 2011, $95,000 of short term debt was exchanged for convertible preferred shares of stock.

At December 31, 2010, this included two promissory notes from non-related parties totaling $95,000. The promissory notes have an interest rate of 20% and were extended in the first quarter 2010. In addition, short term debt includes $348,164 and $100,000 received from two non-related parties during 2009. The two promissory notes have a term of 1 year and accrue interest at prime (3.25% at December 31, 2010) plus 1%.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Convertible Notes Payable and Convertible Notes Payable to Related Party

Convertible notes payable totaled $4,384,825 as of June 30, 2011 as described below. In connection with the convertible notes payable issued, the Company issued an aggregate of 15,797,888 warrants. As of June 30, 2011, there were 12,994,028 outstanding warrants. All of the convertible notes payable and warrants contain an anti-dilution provision which “re-set” the related conversion rate and exercise price, if any, subsequent equity linked instruments are issued with rates lower than those of the outstanding equity linked instruments. The accounting literature related to the embedded conversion feature and warrants issued in connection with the convertible notes payable is discussed under note 5 below.

	Amount		Discount			Convertible Notes Payable, net of discount		Convertible Notes Payable Related Party, net of discount

Exchange Notes	$	619,705	$	(619,516	)	$	189	$	-
Reverse Merger Notes		-		-			-		-
New Convertible Notes		3,765,120		(3,546,586	)		73,697		144,837
	$	4,384,825	$	(4,166,102	)	$	73,886	$	144,837

Exchange Notes – Convertible Notes Payable and Convertible Notes Payable to Related Party, net of discount

During the period ended June 30, 2011, $86,000 of the Exchange Notes was converted into convertible preferred stock of the Company (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). The Company is amortizing the remaining portion of debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the period ended June 30, 2011, there was $7,908 amortized under this amortization method.

Reverse Merger Notes-Convertible Notes Payable, net of discount

During the period ended June 30, 2011, $100,000 of the Reverse Merger Notes was converted into convertible preferred stock of the Company (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted). The Company is amortizing the debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the period ended June 30, 2011, there was $840 amortized under this amortization method. As of June 30, 2011, the Reverse Merger Notes were fully converted.

New Convertible Notes-Convertible Notes Payable, net of discount

During the period ended June 30, 2011, $43,000 of the New Convertible Notes was converted into convertible preferred stock of the Company (the unamortized debt discount related to the converted notes was immediately charged to interest expense on the day the notes were converted).The Company is amortizing the remaining portion of debt discount using the effective interest method over the term of the convertible notes payable which is three years. During the period ended June 30, 2011 there was $16,080 amortized under this amortization method.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

During the period ended June 30, 2011, the Company’s activity related to convertible notes payable issued to St. George Investments is as follow:

During the period ended June 30, 2011, the Company’s notes payable balance with St. George increased by $474,551. Included in the total amount of the increase during the period, $325,000 was issued as five additional notes for $65,000 each under a Note Purchase Agreement that was executed in first quarter 2011 (see Form 10Q/A filed July 27, 2011), and $149,551 of the increase was interest from previous financings with St. George Investments.

Additional Notes

The Company issued five additional notes of $65,000 each for a total of $325,000 for the period ended June 30, 2011. The amount to be provided under each Additional Note is $50,000 after the original issue discount.

The Additional Note matures six months from the date of issuance. If there is a default the Note will accrue interest at the rate of 15% per annum. The number of shares of Common Stock to be issued upon such conversion of the First Note shall be determined by dividing (i) the conversion amount under the First Note by (ii) the lower of (1) 100% of the volume-weighted average price of the Company’s Common Stock (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty (20) trading days immediately preceding the date set forth on the notice of conversion, or (2) 50% of the lower of (A) the average VWAP over the five (5) trading days immediately preceding the date set forth in the notice of conversion or (B) the VWAP on the day immediately preceding the date set forth in the notice of conversion.

The Additional Note provides that upon each occurrence of any of the triggering events the outstanding balance under the First Note shall be immediately and automatically increased to 125% of the outstanding balance in effect immediately prior to the occurrence of such Trigger Event, and upon the first occurrence of a Trigger Event, (i) the outstanding balance, as adjusted above, shall accrue interest at the rate of 15% per annum until the First Note is repaid in full, and (ii) the Investor shall have the right, at any time thereafter until the First Note is repaid in full, to (a) accelerate the outstanding balance under the First Note, and (b) exercise default remedies under and according to the terms of the First Note; provided, however, that in no event shall the balance adjustment be applied more than two times. The Trigger Events include the following: (i) a decline in the five-day average daily dollar volume of the Company Common Stock in its primary market to less than $10,000 of volume per day; (ii) a decline in the average VWAP for the Common Stock during any consecutive five day trading period to a per share price of less than one half of one cent ($0.0005); (iii) the occurrence of any Event of Default under the First Note (other than an Event of Default for a Trigger Event which remains uncured or is not waived) that is not cured for a period exceeding ten business days after notice of a declaration of such Event of Default from Investor, or is not waived in writing by the Investor. An Event of Default under the First Note includes (i) a failure to pay any amount due under the First Note when due; (ii) a failure to deliver shares upon conversion of the First Note; (iii) the Company breaches any covenant, representation or other term or condition in the Purchase Agreement, Note or other transaction document; (iv) having insufficient authorized shares; (v) an uncured Trigger Event; or (vi) upon bankruptcy events.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Other Convertible Notes-Convertible Notes Payable, net of discount

During the year ended December 31, 2010, the Company issued a convertible note payable to Ian Gardner, a former officer of the Company. The note has a principal balance of $144,837 and is convertible into common stock of the company at a rate of $0.50. The note accrues interest at a rate of 9% per annum and all principal and accrued interest is due August 22, 2012. The convertible feature on this convertible note payable does not contain any re-set features and is convertible at fixed rates.

The Company analyzed this note for possible discounts on the conversion feature and concluded this is no beneficial conversion feature since the stock price on the date of issuance is less than the conversion rate of $0.50. The stock price on the date of issuance was $0.20.

As of June 30, 2011, convertible notes payable, related party, is $144,837.

Warrants

At June 30, 2011, the fair value of all warrants issued in connection with convertible notes payable and convertible notes payable to related party is estimated to be $3,248. Management estimated the fair value of the warrants based upon the application of the Binomial Lattice Model using the following assumptions: expected term of 0.5 year; risk free interest rate of 0.10%; volatility of 67.5% and expected dividend yield of zero.

5.	DERIVATIVE LIABILITIES

The Company issued financial instruments in the form of warrants, convertible notes payable, and convertible preferred stock with conversion features. All of these instruments have variable conversion rates and contain anti-dilution provisions which “re-set” the related conversion rate and exercise price if any subsequent equity linked instruments are issued with rates lower than those of the outstanding equity linked instruments.

The conversion features included in the above referenced instruments were analyzed for derivative liabilities under GAAP and the Company has determined that they meet the definition of a derivative liability due to the contracts obligations. Derivative instruments shall also be measured at fair value at each reporting period with gains and losses recognized in current earnings. The Company calculated the fair value of these instruments using the Binomial Lattice Model. The significant assumptions used in the calculation of the instrument’s fair value are detailed in the table below.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Derivative Liability - Embedded Conversion Features

During the six months ended June 30, 2011, the Company recorded a derivative liability of $2,507,125 for the issuance of convertible notes payable and convertible preferred stock. During the six months ended June 30, 2011, none of these instruments were converted into common stock of the Company. The Company performed a final mark-to-market adjustment for the derivative liability related to the convertible notes and convertible preferred stock and the carrying amount of the derivative liability related to the conversion feature was $672,833. During the six months ended June 30, 2011, the Company recognized other income of $847,300 based on the change in fair value (mark-to market adjustment) of the derivative liability associated with the embedded conversion features in the accompanying statement of operations. The value of the derivative liability associated with the embedded conversion features was $5,329,511 at June 30, 2011.

Derivative Liability - Warrants

During the six months ended June 30, 2011, the Company recognized an expense of $3,248 based on the change in fair value (mark-to-market adjustment) of the derivative liability associated with the warrants in the accompanying statement of operations. The value of the derivative liability associated with the warrants was $3,248 at June 30, 2011. During the six months ending June 30, 2011, there were no warrants exercised on a cashless basis.

These derivative liabilities have been measured in accordance with fair value measurements, as defined by GAAP. The valuation assumptions are classified within Level 2 inputs. The following table represents the Company’s derivative liability activity for both the embedded conversion features and the warrants:

December 31, 2010 (as restated)	$	4,120,046
Issuance of derivative financial instruments		2,507,125
Conversion or cancellation of derivative financial instruments		(447,112	)
Mark-to-market adjustment to fair value at June 30, 2011		(847,300	)
June 30, 2011	$	5,332,759

These instruments were not issued with the intent of effectively hedging any future cash flow, fair value of any asset, liability or any net investment in a foreign operation. The instruments do not qualify for hedge accounting, and as such, all future changes in the fair value will be recognized currently in earnings until such time as the instruments are exercised, converted or expire. The following assumptions were used to determine the fair value of the derivative liabilities for the period ended of June 30, 2011 and the year ended December 31, 2010:

Weighted- average volatility		63.6% - 70.1%
Expected dividends		0.0%
Expected term	0.5 to 1 year
Risk-free rate	0.10% to 0.29%

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

6.	INCOME TAXES

There was no income tax expense recorded for the six months ended June 30, 2011 due to the Company’s net losses and a 100% valuation allowance on deferred tax assets.

7.	STOCK BASED COMPENSATION

Stock-based compensation cost is measured at the date of grant, based on the calculated fair value of the stock-based award, and is recognized as expense over the employee’s requisite service period (generally the vesting period of the award).

On February 9, 2009, the Company’s Board of Directors adopted the 2009 Equity Incentive Plan authorizing the Board of Directors or a committee to issue options exercisable for up to an aggregate of 13,700,000 shares of common stock. The Company's Share Employee Incentive Stock Option Plan was approved by the shareholders of the Company and the definitive Schedule 14C Information Statement was filed with the SEC on July 14, 2009.

The following weighted average assumptions were used in estimating the fair value of share-based payment arrangements as of June 30, 2011 and June 30, 2010:

Annual dividends	0
Expected volatility	59% - 75%
Risk-free interest rate	1.76% - 2.70%
Expected life	5 years

Since there is insufficient stock price history that is at least equal to the expected or contractual terms of the Company’s options, the Company has calculated volatility using the historical volatility of similar public entities in the Company’s industry. In making this determination and identifying a similar public company, the Company considered the industry, stage, life cycle, size and financial leverage of such other entities. This resulted in an expected volatility of 59% to 75%.

The expected option term in years is calculated using an average of the vesting period and the option term, in accordance with the “simplified method” for “plain vanilla” stock options allowed under GAAP.

The risk free interest rate is the rate on a zero-coupon U.S. Treasury bond with a remaining term equal to the expected option term. The expected volatility is derived from an industry-based index, in accordance with the calculated value method.

The Company is required to estimate the number of forfeitures expected to occur and record expense based upon the number of awards expected to vest. At June 30, 2011, the Company expects all remaining awards issued will be fully vested over the expected life of the awards. For the six months ended June 30, 2011, 4,990,000 employee options were forfeited. The Company made no adjustment for compensation previously recognized on these forfeitures as these awards were vested on the forfeiture date.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Stock Option Activity

A summary of stock option activity for the period ended June 30, 2011 and June 30, 2010 is as follows:

				Weighted
				Average
	Number			Exercise
	Shares			Price

Options outstanding at December 31, 2009		11,051,240		$	0.58
Granted		3,000,000			0.01
Exercised		-			-
Forfeited		(4,603,740	)		0.50
Options outstanding at June 30, 2010		9,447,500		$	0.01

Options outstanding at December 31, 2010		7,700,000		$	0.03
Granted		-			-
Exercised		-			-
Forfeited		(4,990,000	)		0.01
Options outstanding at June 30, 2011		2,710,000		$	0.05

The following table summarizes information about stock options outstanding and exercisable as of June 30, 2011 and June 30, 2010:

	June 30, 2011						June 30, 2010
	Outstanding			Exercisable			Outstanding		Exercisable

Number of shares			2,710,000			2,017,580		9,447,500		6,224,376
Weighted average remaining contractual life			3.86			3.84		4.04		3.74
Weighted average exercise price per share		$	0.05		$	0.05	$	0.01	$	0.50
Aggregate intrinsic value		$	-		$	-	$	-	$	-

The closing price at June 30, 2011 and June 30, 2010 was $0.0005 and $0.01, respectively.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price as of June 30, 2011 and the weighted average exercise price multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on June 30, 2011. This intrinsic value will vary as the Company’s stock price fluctuates.

Compensation expense arising from stock option grants was $100,403 and $462,500 for the six months ended June 30, 2011 and 2010, respectively.

The amount of unrecognized compensation cost related to non-vested awards at June 30, 2011 was $239,998. The weighted average period in which this amount is expected to be recognized is 1.16 years.

Stock options outstanding and exercisable at June 30, 2011, and the related exercise price and remaining contractual life are as follows:

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Remaining

Weighted

Remaining

Number of

Average

Contractual

Number of

Average

Contractual

Exercise

Options

Exercise

Life of Options

Options

Exercise

Life of Options

Price

Outstanding

Price

Outstanding

Exercisable

Price

Exercisable

$0.01

2,510,000

0.01

3.96 yrs

1,846,722

0.01

3.96 yrs

$0.50

200,000

0.50

2.62 yrs

170,858

0.50

2.62 yrs

2,710,000

0.05

3.86 yrs

2,017,580

0.05

3.84 yrs

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2010

(Unaudited)

8.	CAPITAL STOCK

Common Stock Issued

We are authorized to issue up to 1,750,000,000 shares of common stock, par value $0.0001 per share. Although the Company does not know the exact amount of dilution which may occur, the number of common shares outstanding on a diluted basis which would result from the conversion or exercise of all outstanding convertible notes, warrants and options is 1,750,000,000. As of July 6, 2011, the Company amended its Articles of Incorporation and is now authorized to issue up to 100,000,000,000 shares of the Company’s common stock.

Preferred Stock Issued

We are authorized to issue up to 5,000,000 shares of preferred stock, par value $0.0001 per share. During the second quarter of 2011, the Company issued 1,000,000 shares of its convertible preferred stock. The fair value of the preferred shares issued was valued at $462,500. The preferred stock is designated as Series A Preferred Stock. The Series A Preferred Stock shall not be entitled to receive any cash dividends or any other form of dividends. The conversion rights are the same as the Company's existing convertible notes payable.

9.	COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company signed a revocable license agreement with Apex Telecom, LLC to rent office space at 13125 Danielson Street, Suite 101 Poway, CA, 92064. The license period is on a month to month basis beginning effective April 19, 2010 through March 31, 2011, subject to certain provisions, at a current rate of $3,230 per month. The Company extended the license period on a month to month basis at the same rate through June 30, 2011 with the landlord. This license agreement expired on June 30, 2011. The Company then signed a revocable license agreement with Pomerado Leasing No. 9 LP to rent office space at 13125 Danielson Street, Suite 104, Poway, CA 92064. The license period is on a month to month basis effective July 1, 2011, subject to certain provisions, at a current rate of $1,650 per month.

The Company leased a test facility in California for $300 per month under a lease which expired on October 31, 2008. Under a new lease effective November 1, 2008, the rent increased to $450 per month. The initial term of this lease is November 1, 2008 through October 31, 2009, with a one-year renewal option for each of the next five years which calls for no increase in rent during the renewal periods. The lease was renewed November 1, 2009. The company terminated this lease effective April 30, 2011.

Manufacturing Agreement

The East West accounts payable was $0 and $ 187,105 at June 30, 2011 and 2010 respectively and the Company had a commitment to pay East West $237,505 for cost related to the prospective manufacturing of inventory and tooling. The Company will record the $237,505 as part of its inventory, tooling and other expenses when legal title transfers from East West to the Company consistent with the Company’s policy for inventory as described in Note 2. On January 25, 2011, the Company received notice from East West that East West deems the Professional Services Agreement dated June 14, 2008 between the Company and East West to be “null and void” due to the Company’s past due amounts owed to East West and not being able to resolve the outstanding balance at this time.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

9.	COMMITMENTS AND CONTINGENCIES (Continued)

Legal Matters

From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting the Company from selling one or more products or engaging in other activities. The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that period or future periods.

On March 5, 2010, the Company received a summons to appear in the Supreme Court of the State of New York, County of New York, in a lawsuit filed by Crystal Research Associates, LLC (“Crystal”) alleging the Company failed to pay for services rendered by Crystal in the amount of $33,750, which is recorded in accounts payable as of June 30, 2011. On July 19, 2010 the Company received notice that it had defaulted in responding to the lawsuit.

On March 23, 2010, the Company received a Writ of Summons issued from the Superior Court of the State of New Hampshire, Rockingham County, to respond to a lawsuit filed by Alternative Energies, LLC (“Waterline”) relating to claims against the Company under its distribution contract with Waterline. The lawsuit does not specify an amount of damages claimed. As previously announced, the Company did receive a claim from Waterline seeking damages of approximately $250,000. The Company’s legal counsel responded to the Writ of Summons on May 4, 2010 and the Company is defending itself in the lawsuit. Waterline is currently a distributor of the Company’s products. The Company has not accrued any amount as it expects that it will not have any obligation to pay any amounts under this lawsuit.

Effective April 1, 2010, the Company completed a Settlement Agreement and Mutual Release with Kenneth O. Morgan pursuant to which the Company paid Kenneth O. Morgan the amount of $150,000 in settlement of the previously announced litigation between the parties. Pursuant to the terms of the Settlement Agreement, Kenneth O. Morgan agreed to dismiss his lawsuit against the Company and Scott Weinbrandt, and the Company agreed to dismiss its counterclaims against Kenneth O. Morgan.

On May 21, 2011, a complaint was filed by Ian Gardner, the Company’s former CEO and a director, against the Company and a director and officer of the Company asserting causes of action against the defendants for breach of certain contracts, breach of the covenants of good faith and fair dealing, fraud in the inducement, intentional and negligent misrepresentation, alter ego and declaratory relief. Mr. Gardner’s suit seeks approximately $150,000 in stated damages as well as additional unstated damages. The Company has accrued its anticipated obligation of approximately $95,000 in the financial statements as of December 31, 2010. The company has denied these allegations. On June 20, 2011 all parties to the lawsuit entered into a Settlement Agreement and Mutual General Release providing for the settlement of the litigation and mutual release of all claims whereby the Company agreed to reimburse Mr. Gardner $20,000 in legal costs, accrued in the financials as of June 30, 2011. Payment terms will be over a four month period, with an additional one time contingent payment of approximately $95,000 based on a successful financing for the Company of a minimum of $2,500,000.

On September 29, 2010, the Company received a summons to appear in the Superior Court in the State of California, County of San Diego, in a lawsuit filed by Gordon & Rees LLP alleging the Company failed to pay for legal services rendered in the amount of $107,110. The Company did not respond to the lawsuit within the 30 day period required to respond. On March 8, 2011, the Superior Court of California, County of San Diego granted Gordon & Rees LLP’s request for a default judgment in the amount of $110,938 in the previously announced lawsuit against the Company. The total outstanding balance is recorded in accounts payable as of June 30, 2011. On August 1, 2011, the Company received a Notice of Levy/Enforcement of Judgment from Gordon & Rees LLP in connection with their default judgment against the Company in the amount of $110,938 pursuant to which Gordon & Rees LLP seized $62,485 in cash from the Company’s bank account. The Company does not have the cash to pay the remainder amounts due from the judgment and expects the default judgment and Notice of Levy/Enforcement of Judgment to have a material adverse effect on the Company and its assets.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

9.	COMMITMENTS AND CONTINGENCIES (Continued)

On October 6, 2010, the Company received notice issued from the Superior Court of the State of California, County of Orange, of a lawsuit filed by Bluewater Partners, S.A. (“Bluewater”) against the Company seeking damages in the amount of $647,254 relating to allegations that the Company breached its obligations to repay Bluewater under promissory notes issued by the Company. The Company has promissory notes due to Bluewater recorded in short term debt on the balance sheet in the amount of $348,164 (before accrued interest), but does not believe any additional amounts are owed to Bluewater. The Company does not have sufficient capital resources as of the date of this report to repay any amounts to Bluewater, and the Company has not responded to the lawsuit as of the date of this report. On March 2, 2011, the Company received notice that the Superior Court of the State of California, County of Orange (the “Court”) had granted Bluewater Partners, S.A. (“Bluewater”) request for a default judgment in the amount of $647,254 in the previously announced litigation involving the Bluewater promissory notes with the

Company. Management does not believe the Company owes any amounts over what has been recorded however, the Company does not have the cash to pay the judgment and expects the default judgment to have a material adverse effect on the Company and its assets.

On January 21, 2011, the Company received notice from legal counsel for Squar, Milner, Peterson, Miranda & Williamson, LLP (“Squar Milner”), the Company’s former independent auditor, that Squar Milner has requested a default judgment in its lawsuit against the Company. Squar Milner filed a lawsuit in Orange County Superior Court regarding the alleged unpaid balanced owed by the Company to Squar Milner in the amount of approximately $73,000. On May 2, 2011, the Company confirmed that the Orange County Superior Court has entered a default judgment against the Company. Any judgment against the Company resulting from the lawsuit would have a material adverse effect on the Company. The total outstanding balance is recorded in accounts payable as of June 30, 2011.

On March 18, 2011, the Company received notice that on March 11, 2011 East West Consulting, Ltd. and Steve Polaski (the “East West Parties”) filed a complaint in the Superior Court of the State of California, County of San Diego, against the Company and Kevin Claudio relating to a professional services agreement and employment agreement between the parties, and the conversion of certain accounts receivable into shares of Company stock. The East West Parties are seeking damages in the sum of over $4,000,000. Management does not believe the Company is obligated to East West for this claim, however any judgment against the Company resulting from the lawsuit would have a material adverse effect on the Company and its assets.

On July 19, 2011, the Company received notice that Scott Weinbrandt filed a lawsuit against the Company in the Superior Court of the State of California, County of San Diego (the “Court”), alleging breach of contract and seeking an unspecified amount of damages (but in excess of $25,000) against the Company relating to the employment agreement he had with the Company. Scott Weinbrandt is a former officer and director of the Company. As of June 30, 2011, the Company has included in accrued compensation portions owed to Mr. Weinbrandt. Any judgment against the Company resulting from the lawsuit could have a material adverse effect on the Company and its assets.

The Company is not presently a party to any other pending or threatened legal proceedings.

Executive Compensation

An employment agreement executed with the Company’s Chief Financial Officer (CFO) on April 22, 2010 calls for a base salary of $200,000 per annum May 1, 2010 through December 31, 2010; $225,000 per annum January 1, 2011 through December 31, 2011; and $250,000 per annum beginning January 1, 2012. During the period ended June 30, 2011, $100,000 of accrued officers' compensation was converted to shares of the Company’s convertible preferred stock.

HELIX WIND, CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

10.	SUBSEQUENT EVENTS

Recent new accounting standards require that management disclose the date to which subsequent events have been evaluated and the basis for such date. Accordingly, management has evaluated subsequent events through August 15, 2011, the date upon which the financial statements were issued.

Effective as of July 1, 2011, the Company closed a financing transaction under a Note Purchase Agreement with St. George Investments, LLC, an Illinois limited liability company pursuant to which, among other things, the Company issued a convertible secured promissory note in the aggregate principal amount of $72,500 (First Note). The Purchase Agreement also provides that, subject to meeting certain conditions, and no Event of Default has occurred under any of the notes, the Investor may, in its sole and absolute discretion, loan to the Company an additional principal amount of up to $195,000 pursuant to three additional convertible secured promissory notes in the principal amount of $50,000 each on or about each two week anniversary of the issuance of the First Note during the three consecutive two week periods immediately following the issuance of the First Note, for a total aggregate additional net amount of $150,000 (after deducting the original issue discount amounts of $15,000 for each additional note).

On July 19, 2011, the Company received notice that Scott Weinbrandt filed a lawsuit against the Company in the Superior Court of the State of California, County of San Diego (the “Court”), alleging breach of contract and seeking an unspecified amount of damages (but in excess of $25,000) against the Company relating to the employment agreement he had with the Company. Scott Weinbrandt is a former officer and director of the Company. Any judgment against the Company resulting from the lawsuit could have a material adverse effect on the Company and its assets.

On July 26, 2011, the Company filed an amended and restated Form 10K/A for the period ended December 31, 2010.

On July 27, 2011, the Company filed an amended and restated Form 10Q/A for the period ended March 31, 2011.

Effective July 28, 2011 and pursuant to the Schedule 14C previously filed and as distributed in accordance with the “access and notice” rules adopted by the Securities and Exchange Commission, the holders of a majority of the voting rights of the Company’s outstanding common and preferred stock, approved resolutions to amend the Company’s Articles of Incorporation. As amended, the Company’s Articles of Incorporation now authorize the issuance of up to 100,000,000,000 shares of the Company’s Common Stock and, at the same time, the amendment retained the authorization for up to 5,000,000 shares of the Company’s Preferred Stock (as previously authorized prior to the amendment).

On July 28, 2011, the Company received a notice from St. George Investments, LLC, a Illinois limited liability company notifying the Company that a liquidity default had occurred under the four Convertible Secured Promissory Notes dated March 31, 2011, April 15, 2011, April 30, 2011, May 18, 2011 and May 31, 2011, each in the principal amount of $65,000, made by the Company in favor of St. George.

On July 29, 2011, the Company issued 172,000,000 shares of the Company’s Common Stock upon conversion to a holder of 92,973 shares of the Company’s Series A Preferred Stock previously issued.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and Factors Affecting Future Results

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the "Securities Act," and Section 21E of the Securities Exchange Act of 1934 or the "Exchange Act." These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or anticipated results.

In some cases, you can identify forward looking statements by terms such as "may," "intend," "might," "will," "should," "could," "would," "expect," "believe," "anticipate," "estimate," "predict," "potential," or the negative of these terms. These terms and similar expressions are intended to identify forward-looking statements. The forward-looking statements in this report are based upon management's current expectations and belief, which management believes are reasonable. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor or combination of factors, or factors we are aware of, may cause actual results to differ materially from those contained in any forward looking statements. You are cautioned not to place undue reliance on any forward-looking statements. These statements represent our estimates and assumptions only as of the date of this report. Except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

You should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including:

	●	new competitors are likely to emerge and new technologies may further increase competition;

	●	our operating costs may increase beyond our current expectations and we may be unable to fully implement our current business plan;

	●	our ability to obtain future financing or funds when needed;

	●	our ability to successfully obtain a diverse customer base;

	●	our ability to protect our intellectual property through patents, trademarks, copyrights and confidentiality agreements;

	●	our ability to attract and retain a qualified employee base;

	●	our ability to respond to new developments in technology and new applications of existing technology before our competitors;

	●	acquisitions, business combinations, strategic partnerships, divestures, and other significant transactions may involve additional uncertainties; and

	●	our ability to maintain and execute a successful business strategy.

Other risks and uncertainties include such factors, among others, as market acceptance and market demand for our products and services, pricing, the changing regulatory environment, the effect of our accounting policies, potential seasonality, industry trends, adequacy of our financial resources to execute our business plan, our ability to attract, retain and motivate key technical, marketing and management personnel, and other risks described from time to time in periodic and current reports we file with the United States Securities and Exchange Commission, or the "SEC." You should consider carefully the statements under "Item 1A. Risk Factors" and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements and could materially and adversely affect our business, operating results and financial condition. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the applicable cautionary statements.

Basis of Presentation

The following management’s discussion and analysis is intended to provide additional information regarding the significant changes and trends which influenced our financial performance for the six month period ended June 30, 2011. This discussion should be read in conjunction with the unaudited financial statements and notes as set forth in this Report.

Certain statements contained in this Quarterly Report on Form 10-Q are forward-looking in nature and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance or achievements to be materially different from any future results. For a discussion of some of the factors that might cause such a difference, see the Forward-Looking Statements section above or Item 1A – Risk Factors in this Quarterly Report on Form 10-Q.

Overview

Helix Wind is a small wind Solutions Company focused on the renewable alternative energy market. Helix Wind’s headquarters are located in Poway, CA (San Diego area).

Helix Wind provides energy independence utilizing wind – a resource that never runs out. Wind power is an abundant, renewable, emissions free energy source that can be utilized on large and small scales. At the soul of Helix Wind lies the belief that energy self sufficiency is a responsible and proactive goal that addresses the ever-increasing consequences of legacy energy supply systems.

In January 2011, the Company was awarded a Notice of Allowance from the United States Patent and Trademark Office relating to a United States patent application that was filed in 2007. The application broadly covers segmented, helical rotors used in wind-driven turbines and the Company believes this patent will restrict the ability of its competitors from making, using, or selling wind turbines similar to the Company's S322 and S594 products.

In the period ended June 30, 2011, Kevin Claudio, Company’s Chief Financial Officer, was appointed as a director of the Company. Mr. Claudio is considered to be the principal financial officer of the Company. The Board of Directors is currently comprised of Mr. Claudio and Mr. James Tilton, who joined the board in first quarter 2011.

There is substantial doubt about our ability to continue as a “going concern” because the Company has incurred continuing losses from operations, has a significant working capital deficit, and has outstanding liabilities which significantly exceed its existing cash resources.

Plan of Operations

Helix Wind’s strategy is to pursue selected opportunities that are characterized by reasonable entry costs, favorable economic terms, high reserve potential relative to capital expenditures and the availability of existing technical data that may be further developed using current technology.

Revenues

We generate substantially all of our net sales from the sale of small wind turbines. Helix Wind uses a mix of a direct and indirect distribution model. Direct sales personnel are employed to offer extra coverage of the United States as a vast majority of our lead generation is from this area. We continue to rollout our distribution network. Our structure is built on a non-exclusivity of territory but exclusivity of leads. Therefore, we define a reasonable territory the distributors can cover from a sales and service point of view. We demand no reselling of our products as well as define a retail price which must be adhered to by all distributors, as a condition of their agreement with Helix Wind. Pricing in the Euro zone is subject to the fluctuation of the exchange rate between the euro and U.S. dollar. Distributors must adhere to the price guidelines which are based on our U.S. retail price, subject to adjustment each quarter to take into account the currency exchange on the last day of the previous quarter. Confirmation of an order is given on receipt of a signed purchase agreement with a 50% deposit in U.S. dollars. Sales are recognized and title and risk is passed on delivery to customers in the United States and by delivery CIF to international locations. Our customers do not have extended payment terms or rights of cancellation under these contracts.

Cost of Sales

Our cost of sales includes the cost of raw material and components such as blades, rotors, invertors, mono poles and other components. Other items contributing to our cost of sales are the direct assembly labor and manufactured overhead from our component suppliers and East West, a Thailand company that managed the manufacturing and distribution of our products. Overall, we would expect our cost of sales per unit to decrease as production lots ramp to meet the product demands from our customers.

Gross Profit

Gross profit is affected by numerous factors, including our average selling prices, distributor discounts, foreign exchange rates, and our manufacturing costs. Another factor impacting gross profits is the ramp of production going forward. As a result of the above, gross profits may vary from quarter to quarter and year to year.

Research and development.

Research and development expense consists primarily of salaries and personnel-related costs and the cost of products, materials and outside services used in our process and product research and development activities.

Selling, general and administrative

Selling, general and administrative expense consists primarily of salaries and other personnel-related costs, professional fees, insurance costs, travel expense, other selling expenses as well as share based compensation expense relating to stock options. We expect these expenses to increase in the near term, both in absolute dollars and as a percentage of net sales, in order to support the growth of our business as we expand our sales and marketing efforts, improve our information processes and systems and implement the financial reporting, compliance and other infrastructure required by a public company. Over time, we expect selling, general and administrative expense to decline as a percentage of net sales as our net sales increase.

Other Expenses

Interest expense, net of amounts capitalized, is incurred on various debt financings as well as the amount recorded for the derivative liability associated with the 9% convertible notes and warrants. Any interest income earned on our cash, cash equivalents and marketable securities is netted in other expenses as it is immaterial.

Use of estimates

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, net sales and expenses and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to inventories, intangible assets, income taxes, warranty obligations, marketable securities valuation, derivative financial instrument valuation, end-of-life collection and recycling, contingencies and litigation and share based compensation. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Results of Operations

For the three months ended June 30, 2011 compared to the three months ended June 30, 2010

Revenues

There was no revenue in the three months ended June 30, 2011 or 2010.

Cost of Revenues

There was no revenue and therefore, no cost of revenues for the three months ended June 30, 2011 or 2010.

Gross profit

There was no gross profit in the three months ended June 30, 2011 or 2010.

Research and development

Cost incurred for research and development are expensed as incurred. Research and development expense decreased by $79,020 from $90,060 in the three months ended June 30, 2010 to $11,040 in the three months ended June 30, 2011. The decrease primarily related to the decrease of $68,994 relating to product development and testing as well as a decrease of $10,026 for share based compensation expense related to stock options for second quarter.

Selling, general and administrative

Selling, general and administrative expense decreased by $527,366 from $872,004 in the three months ended June 30, 2010 to $344,638 in the three months ended June 30, 2011. The reduction related primarily to a decrease in share based payments related to stock options of $215,343, compensation to management and employees decreasing by $78,539, supply expense decreasing by $85,900, rent decreasing by $4,837, professional and legal settlement costs decreasing by $148,161 and various other expenses decreasing by $910. The Company is no longer actively operating and has only 3 employees. These decreases were offset by an increase in various miscellaneous expenses of $6,324.

Other expense

Other expenses increased by $30,629 from $1,556,378 in the three months ended June 30, 2010 to $1,587,007 in the three months ended June 30, 2011, primarily as a result of a decrease in interest expense from the change in fair value of the convertible notes and convertible preferred stock of $513,585, offset by an increase in the fair value of the derivative liability of $535,838 and an increase in other expenses of $8,376.

Provision for income taxes

We made no provision for income taxes for the three months ended June 30, 2011 or 2010 due to net losses incurred except for minimum tax liabilities. We have determined that due to our continuing operating losses as well as the uncertainty of the timing of profitability in future periods, we should fully reserve our deferred tax assets.

Net loss

Net loss decreased by $575,757 from $2,518,442 in the three months ended June 30, 2010 to $1,942,685 in the three months ended June 30, 2011, primarily as a result of a decrease in operating expenses of $381,017. In addition, there was a decrease in interest expense of $513,585 recorded for the fair value of the convertible notes and convertible preferred stock and a decrease of share based compensation of $225,369, offset by an increase in the fair value of the derivative liability of $535,838, all non-cash charges. The remaining amount of net loss relates to various operational and other expenses for the existing business.

For the six months ended June 30, 2011 compared to the six months ended June 30, 2010

Revenues

Revenue decreased by $5,637 from $5,637 in the six months ended June 30, 2010 to $0 in the six months ended June 30, 2011, as a result of no revenues in the first six months of 2011 compared to shipping 1 S322 model to a customer in the first six months of 2010.

Cost of Revenues

The cost of revenues decreased by $4,455 from $4,455 for the six months ended June 30, 2010 to $0 in the six months ended June 30, 2011 as a direct result of the sales decrease for the first six months of 2011. The cost of revenues in the first six months of 2010 represented the direct product costs from the manufacturer associated with the bill of material for the S322 received by customer.

Gross profit

Gross profit decreased by $1,182 from $1,182 in the six months ended June 30, 2010 to $0 in the six months ended June 30, 2011, reflecting the decrease in revenue. The Company’s first product shipments to customers occurred in 2009.

Research and development

Cost incurred for research and development are expensed as incurred. Research and development expense decreased by $157,035 from $183,361 in the six months ended June 30, 2010 to $26,326 in the six months ended June 30, 2011, primarily as a result of the decrease of $133,279 relating to product development and testing as well as a $23,756 reduction to share based compensation expense related to stock options.

Selling, general and administrative

Selling, general and administrative expense decreased by $829,167 from $1,480,172 in the six months ended June 30, 2010 to $651,005 in the six months ended June 30, 2011, primarily as a result of compensation to management and employees decreasing by $241,998, shipping decreasing by $33,721, financing costs relating to stock replenishment decreasing by $132,000, rent expense decreasing by $16,522, telephone expense decreasing by $6,117, supply costs decreasing by $85,776, professional and legal settlement costs decreasing by $893,436 and other various expenses decreasing by $6,256. These decreases were offset by an increase of $586,659 for share based payments related to stock options.

Other expense

Other expenses increased by $19,357,642 from income of $17,436,036 in the six months ended June 30, 2010 to other expense of $1,922,606 in the six months ended June 30, 2011, primarily as a result of the change in fair value of the derivative liability increasing by $24,942,529, interest expense relating to the fair value of the convertible notes and convertible preferred stock and other expenses decreasing by $3,426,296 and loss recorded for a fee on the early termination of a potential acquisition decreasing by $2,158,591.

Provision for income taxes

The $800 provision for income taxes for the six months ended June 30, 2011 and 2010 related to the California minimum franchise tax. We have determined that due to our continuing operating losses as well as the uncertainty of the timing of profitability in future periods, we should fully reserve our deferred tax assets.

Net loss

The net income decreased by $18,372,622 from net income of $15,772,885 in the six months ended June 30, 2010 to a net loss of $2,599,737 in the six months ended June 30, 2011, primarily as a result of the decrease for the change in the fair value of the derivative liability of $24,942,529, an increase in share based compensation of $562,903, offset by a decrease in interest expense of $3,339,257, and a $2,158,591 decrease in a loss on an acquisition agreement termination, all non-cash charges. In addition, there was a $1,549,105 decrease in operating expenses. The remaining amount of net loss relates to various operational and other expenses for the existing business.

Going Concern

There is substantial doubt about our ability to continue as a “going concern” because the Company has incurred continuing losses from operations, has a working capital deficit of $2,479,113 excluding the derivative liability of $5,332,759, and an accumulated deficit of approximately $46,590,429 at June 30, 2011.

Financial Condition and Liquidity

Liquidity and Capital Resources

Cash flow information is as follows:

	Six Months Ended June 30,						Twelve Months Ended June 30,
	2011			2010			2011			2010

Operating activities	$	(456	)	$	(1,023	)	$	(1,089	)	$	(2,359	)
Investing activities	$	(20	)	$	-		$	(33	)	$	(119	)
Financing activities	$	400		$	1,147		$	1,010		$	2,412

Cash used in operating activities was approximately $456,000 and $1,023,000 for the period ended June 30, 2011 and June 30, 2010, respectively. The $456,000 cash used for the period ended June 30, 2011 was primarily the result of the net loss of approximately $2,600,000 and a change in the fair value of the derivative liability of approximately $503,000, offset by interest recorded in connection with the derivative liability of approximately $1,752,000, accrued interest on convertible notes of approximately $283,000, write off of the debt discount on converted debt of approximately $226,000, amortization of debt discount of approximately $250,000, stock based compensation of approximately $100,000 and other changes of approximately $36,000. The $1,023,000 cash used for the period ended June 30, 2010 was primarily the result of the net income of approximately $15,773,000, decreased by the change in the fair value of the derivative liability of approximately $25,790,000 and a decrease in stock based compensation of approximately $463,000. These decreases were offset by interest recorded in connection with the derivative liability of approximately $2,344,000, a write off of debt discount on converted debt of approximately $1,791,000, accrued interest on convertible notes of approximately $133,000, amortization of debt discount of approximately $28,000, the issuance of stock for expenses and debt of $2,718,000, the loss on an acquisition agreement termination of approximately $2,159,000, and other charges of approximately $284,000.

Cash used in investing activities was approximately $20,000 and $0 for the period ended June 30, 2011 and June 30, 2010, respectively, and was primarily a result of our investment in the patent of our wind turbine technology.

Cash provided by financing activities was $400,000 and approximately $1,147,000 for the period ended June 30, 2011 and June 30, 2010, respectively. The $400,000 received during the first six months of 2011 represented cash proceeds from convertible notes issued to St. George Investments. The $1,607,000 received during the first six months of 2010 consisted of proceeds from convertible and short-term notes primarily from St. George Investments, offset by principal payments of approximately $460,000 primarily to Bluewater Partners reducing their short term notes and other payments made to non-related parties.

As of June 30, 2011 and June 30, 2010, Helix Wind had a total working capital deficit of approximately $7,811,872 and $6,817,214 respectively. The negative working capital in 2011 results primarily from the derivative liability relating to the convertible notes, convertible preferred notes and fair value of the warrants of $5,332,759, short term debt of $448,164, accounts payable of $954,180, accrued compensation of $191,116, accrued interest of $582,100, convertible notes, net of discount, of $218,723 and various other accrued liabilities of $84,830. The negative working capital in 2010 results primarily from the derivative liability relating to the convertible notes and fair value of the warrants of $4,502,222 short term debt of $620,907, accounts payable of $1,182,505, accrued interest of $322,790, accrued compensation of $288,487, convertible notes payable, net of discount, of $172,393 and offset by net assets in excess of various other accrued liabilities of $272,090. The loss of $2,599,737 for the six months ended June 30, 2011 was comprised of expenses of $2,856,361 for interest related to the derivative liability, $26,326 for research and development, $2,210 for sales and marketing, share based compensation for stock options of $100,403 offset by a net decrease of $847,300 resulting from the change in fair value of derivative liability relating to the convertible notes and fair value of the warrants and interest, and the balance for working capital relating to general and administrative expenses. The income of $15,772,885 for the six months ended June 30, 2010 was comprised of a decrease of $25,789,829 in change in fair value of derivative liabilities, offset by a loss of $2,158,591 on the early termination of a potential acquisition, interest expense of $6,195,618, and the balance in the Company’s first quarter 2010 operating expenses.

The Company has funded its operations to date through the private offering of debt and equity securities.

The Company expects significant capital expenditures during the next 12 months. We currently anticipate that we will need substantial cash and liquidity for operations for the next 12 months and we do not have sufficient cash on hand to meet this requirement. These anticipated expenditures are for manufacturing of systems for potential orders, infrastructure, overhead, and working capital purposes.

The Company presently does not have any available credit, bank financing or other external sources of liquidity. Due to its brief history and historical operating losses, the Company’s operations have not been a source of liquidity. The Company will need to obtain additional capital in order to expand operations and become profitable. In order to obtain capital, the Company may need to sell additional shares of its common stock or borrow funds from private lenders. There can be no assurance that the Company will be successful in obtaining additional funding.

The Company will need additional investments in order to continue operations. Additional investments are being sought, but the Company cannot guarantee that it will be able to obtain such investments. Financing transactions may include the issuance of equity or debt securities, obtaining credit facilities, or other financing mechanisms. However, the trading price of the Company’s common stock and a downturn in the U.S. stock and debt markets could make it more difficult to obtain financing through the issuance of equity or debt securities. Additionally, because the Company has exhausted all of its authorized shares of common stock, the Company will need to amend its articles of incorporation to authorize the issuance of additional shares before it can sell any additional shares. The Company believes it will be difficult or impossible to raise additional funding without amending its Articles of Incorporation to increase its authorized shares. Even if the Company is able to raise the funds required, it is possible that it could incur unexpected costs and expenses, fail to collect significant amounts owed to it, or experience unexpected cash requirements that would force it to seek alternative financing. Further, if the Company amends its articles of incorporation to increase its authorized shares and issues 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 the Company’s common stock.

The Company currently has insufficient capital and personnel to fulfill orders for its products and has had to severely curtail its operations beginning in February 2010. The Company is seeking additional capital to be able to ramp its operations back up, and is exploring other alternatives for its intellectual property and other assets. There can be no assurances that the Company will be able to obtain sufficient capital for its operations, or that there will be other alternatives for its intellectual property and other assets.

Effective January 20, 2011, the Company’s previously announced purchase order with one of its distributor’s to provide twenty-four (24) S594 wind turbines for a facility in the midwest has been cancelled due to the Company's failure to perform in a timely fashion and each Party’s inability to finalize definitive terms, conditions and timeline to perform under the purchase order at this time.

Off-balance sheet arrangements

We have no off-balance sheet arrangements.

Contractual Obligations

Effective as of July 1, 2011, the Company closed a financing transaction under a Note Purchase Agreement (the “ Purchase Agreement ”) with St. George Investments, LLC, an Illinois limited liability company (the “ Investor ”) pursuant to which, among other things, the Company issued a convertible secured promissory note in the aggregate principal amount of $72,500 (the “ First Note ”). The Purchase Agreement also contains representations, warranties and indemnifications by the Company and the Investor.

The Purchase Agreement also provides that, subject to meeting certain conditions, and no Event of Default has occurred under any of the notes, the Investor may, in its sole and absolute discretion, loan to the Company an additional principal amount of up to $195,000 pursuant to three additional convertible secured promissory notes in the principal amount of $50,000 each (the “ Additional Notes ”) on or about each two week anniversary of the issuance of the First Note during the three consecutive two week periods immediately following the issuance of the First Note, for a total aggregate additional net amount of $150,000 (after deducting the original issue discount amounts of $15,000 for each Additional Note).

The following is a brief summary of each of those agreements. These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that was filed on Form 8-K July 6, 2011. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.

Purchase Agreement

Pursuant to the Purchase Agreement, so long as the First Note is outstanding, the Company will not (i) incur any new indebtedness for borrowed money without the prior written consent of the Investor; provided, however the Company may incur obligations under trade payables in the ordinary course of business consistent with past practice without the consent of the Investor; (ii) grant or permit any security interest (or other lien or other encumbrance) in or on any of its assets; and (iii) enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any affiliate of the Company, or amend or modify any agreement related to any of the foregoing, except on terms that are no less favorable, in any material respect, than those obtainable from any person who is not an affiliate.

First Note and Additional Notes; Confession of Judgment, Security Agreements and Guaranties

The First Note has an original issue discount of $15,000 and an obligation to pay $7,500 of the Investor’s transaction fees. Accordingly, the amount provided under the First Note is $50,000. The First Note matures 6 months from the date of issuance. If there is a default the Note will accrue interest at the rate of 15% per annum. The number of shares of Common Stock to be issued upon such conversion of the First Note shall be determined by dividing (i) the conversion amount under the First Note by (ii) the lower of (1) 100% of the volume-weighted average price of the Company’s Common Stock (the “VWAP”) for the three (3) trading days with the lowest VWAP during the twenty (20) trading days immediately preceding the date set forth on the notice of conversion, or (2) 50% of the lower of (A) the average VWAP over the five (5) trading days immediately preceding the date set forth in the notice of conversion or (B) the VWAP on the day immediately preceding the date set forth in the notice of conversion. The shares deliverable to the Investor must be delivered electronically, via DWAC or DTC, if the Company is eligible. If the Company does not deliver shares issuable upon conversion of the Note within three days of a conversion notice, the Company must pay the Investor a penalty of 1.5% of the conversion amount added to the balance of the First Note per day. The number of shares the Note is convertible into is subject to customary anti-dilution provisions.

The First Note provides that upon each occurrence of any of the triggering events described below (each, a “ Trigger Event ”), the outstanding balance under the First Note shall be immediately and automatically increased to 125% of the outstanding balance in effect immediately prior to the occurrence of such Trigger Event,, and upon the first occurrence of a Trigger Event, (i) the outstanding balance, as adjusted above, shall accrue interest at the rate of 15% per annum until the First Note is repaid in full, and (ii) the Investor shall have the right, at any time thereafter until the First Note is repaid in full, to (a) accelerate the outstanding balance under the First Note, and (b) exercise default remedies under and according to the terms of the First Note; provided, however , that in no event shall the balance adjustment be applied more than two (2) times. The Trigger Events include the following: (i) a decline in the average VWAP for the Common Stock during any consecutive five (5) day trading period to a per share price of less than one half of one cent ($0.0002); (iii) the occurrence of any Event of Default under the First Note (other than an Event of Default for a Trigger Event which remains uncured or is not waived) that is not cured for a period exceeding ten (10) business days after notice of a declaration of such Event of Default from Investor, or is not waived in writing by the Investor.

An Event of Default under the First Note includes (i) a failure to pay any amount due under the First Note when due; (ii) a failure to deliver shares upon conversion of the First Note; (iii) the Company breaches any covenant, representation or other term or condition in the Purchase Agreement, Note or other transaction document; (iv) having insufficient authorized shares; (v) an uncured Trigger Event; or (vi) upon bankruptcy events.

The First Note is subject to a Confession of Judgment executed by the Company in favor of the Investor which may be perfected by the Investor in the Event of Default, and is subject to a Security Agreement executed by the Company in favor of the Investor in which the Company’s obligations under the First Note are secured by the assets of the Company. The Company’s obligations under the First Note are also guaranteed by the Company’s wholly-owned subsidiary.

Each of the three Additional Notes in the principal amount of $65,000.00 has substantially similar terms to the terms of the First Note. The amount to be provided under each Additional Note is $50,000 after the original issue discount. Each of the three Additional Notes is also subject to a Confession of Judgment, Security Agreement and Guaranty executed by the Company’s wholly owned subsidiary. Any Event of Default or Trigger Event under the First Note or Additional Notes will provide the Investor the right to exercise all of its remedies under the Purchase Agreement, the First Note and Additional Notes, and each of the Confession of Judgment, Security Agreement and Guaranty.

Other Terms

The First Note and the Additional Notes contain certain limitations on conversion and exercise. They provide that no conversion or exercise may be made if, after giving effect to the conversion and/or exercise, the Investor would own in excess of 9.99% of the Company’s outstanding shares of Common Stock.

Other than Excepted Issuances (described below), if the First Note and Additional Notes are outstanding, the Company agrees to issue shares or securities convertible for shares at a price (including an exercise price) which is less than the conversion price of the First Note or Additional Notes, then the conversion price and exercise price, as the case may be, shall be reduced to the price of any such securities. The only Excepted Issuances are (i) the Company’s issuance of securities to strategic licensing agreements or other partnering agreements which are not for the purpose of raising capital and no registration rights are granted and (ii) the Company’s issuance to employee, directors and consultants pursuant to plans outstanding.

The Purchase Agreement also contains certain negative covenants regarding the Company and its operation, including, without limitation that the Company may not arrange or facilitate the sale or exchange of any existing securities of the Company, including without limitation warrants, options, convertible debt instruments, or other securities convertible into or exchangeable for shares of Common Stock or other equity of the Company (“ Existing Securities ”), held by any party other than the Investor, and the Company may not to enter into any debt settlement agreement or similar agreement or arrangement with any party other than the Investor to settle or exchange Existing Securities for share of Common Stock or other equity of the Company.

The First Note and Additional Notes were offered and sold in reliance on the exemption from registration afforded by Rule 506 of Regulation D promulgated under Section 4(2) of the Securities Act of 1933, as amended. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the Investor in connection with the offering.

These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements that are attached as exhibits on Forms 8-K for these transactions. Readers should review those agreements for a more complete understanding of the terms and conditions associated with this transaction.

Critical Accounting Policies

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our unaudited condensed consolidated financial statements for the six months ended June 30, 2011 and 2010, which have been prepared in accordance with GAAP.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States 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 periods. Actual results could differ from those estimates. Significant estimates include those related to the debt discount, valuation of derivative liabilities and stock based compensation, and those associated with the realization of long-lived assets.

Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of the impairment review, assets are reviewed on an asset-by-asset basis. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of each asset to future net cash flows expected to be generated by such asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount which the carrying amount of the assets exceeds the fair value of the assets. The Company has appropriately evaluated its equipment and patents for impairment as of June 30, 2011 and December 31, 2010 and through each period and does not believe that the assets are impaired as of each reporting date. Management will continue to assess the valuation of its equipment and patents as it restructures.

Derivative Liabilities and Classification

We evaluate free-standing instruments (or embedded derivatives) indexed to the Company’s common stock to properly classify such instruments within equity or as liabilities in our financial statements. Accordingly, the classification of an instrument indexed to our stock, which is carried as a liability, must be reassessed at each balance sheet date. If the classification changes as a result of events during a reporting period, the instrument is reclassified as of the date of the event that caused the reclassification. There is no limit on the number of times a contract may be reclassified.

Stock Based Compensation

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company” as defined by Rule 229.10(f)(1), we are not required to provide the information required by this Item 3.

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 ("Exchange Act"), our management, under the supervision and with the participation of our Chief Operating Officer (who is our executive principal officer) and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of June 30, 2011, the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief Operating Officer and Chief Financial Officer concluded that, as of June 30, 2011, our disclosure controls and procedures were not effective. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

We have identified material weaknesses in our internal control over financial reporting related to the following matters:

●

We identified a lack of sufficient segregation of duties. Specifically, this material weakness is such that the design over these areas relies primarily on detective controls and could be strengthened by adding preventative controls to properly safeguard company assets.

●

Management has identified a lack of sufficient personnel in the accounting function due to our limited resources with appropriate skills, training and experience to perform certain tasks as it relates to valuation of share based payments, the valuation of warrants, and other complex debt / equity transactions. Specifically, this material weakness lead to segregation of duties issues and resulted in adjustments to the condensed consolidated financial statements and disclosures, share based payments, valuation of warrants and other equity transactions.

Our plan to remediate those material weaknesses remaining is as follows:

●

Improve the effectiveness of the accounting group by continuing to augment our existing resources with additional consultants or employees to improve segregation procedures and to assist in the analysis and recording of complex accounting transactions. We plan to mitigate the segregation of duties issues by hiring additional personnel in the accounting department once we generate significantly more revenue, or raise significant additional working capital.

●

Improve segregation procedures by strengthening cross approval of various functions including quarterly internal audit procedures where appropriate.

During the most recent fiscal quarter, there has not occurred any change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

On March 5, 2010, the Company received a summons to appear in the Supreme Court of the State of New York, County of New York, in a lawsuit filed by Crystal Research Associates, LLC (“Crystal”) alleging the Company failed to pay for services rendered by Crystal in the amount of $33,750. On July 19, 2010 the Company received notice that it had defaulted in responding to the lawsuit.

On May 21, 2011, a complaint was filed by Ian Gardner, the Company’s former CEO and a director, against the Company and a director and officer of the Company asserting causes of action against the defendants for breach of certain contracts, breach of the covenants of good faith and fair dealing, fraud in the inducement, intentional and negligent misrepresentation, alter ego and declaratory relief. Mr. Gardner’s suit seeks approximately $150,000 in stated damages as well as additional unstated damages. The Company has accrued its anticipated obligation of approximately $95,000 in the financial statements as of December 31, 2010. The company has denied these allegations. On June 20, 2011 all parties to the lawsuit entered into a Settlement Agreement and Mutual General Release providing for the settlement of the litigation and mutual release of all claims whereby the Company agreed to reimburse Mr. Gardner $20,000, accrued in the financials as of June 30,211, in legal costs over a four month period, and to pay Mr. Gardner an additional one time contingent payment of approximately $95,000 based on a successful financing for the Company of a minimum of $2,500,000.

On September 29, 2010, the Company received a summons to appear in the Superior Court in the State of California, County of San Diego, in a lawsuit filed by Gordon & Rees LLP alleging the Company failed to pay for legal services rendered in the amount of $107,110. The Company did not respond to the lawsuit within the 30 day period required to respond. On March 8, 2011, the Superior Court of California, County of San Diego granted Gordon & Rees LLP’s request for a default judgment in the amount of $110,938 in the previously announced lawsuit against the Company. The total outstanding balance is recorded in accounts payable as of June 30, 2011. On August 1, 2011, the Company received a Notice of Levy/Enforcement of Judgment from Gordon & Rees LLP in connection with their default judgment against the Company in the amount of $110,938.18 pursuant to which Gordon & Rees LLP seized $62,485 in cash from the Company’s bank account. The Company does not have the cash to pay the remainder amounts due from the judgment and expects the default judgment and Notice of Levy/Enforcement of Judgment to have a material adverse effect on the Company and its assets.

Item 1A. Risk Factors .

This report includes forward-looking statements about our business and results of operations that are subject to risks and uncertainties. See "Forward-Looking Statements," above. Factors that could cause or contribute to such differences include those discussed below. In addition to the risk factors discussed below, we are also subject to additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of these known or unknown risks or uncertainties actually occur, our business could be harmed substantially.

Risks Related To Our Financial Condition and Our Business

Our auditors have expressed substantial doubt about our ability to continue as a “going concern.” Accordingly, there is significant doubt about our ability to continue as a going concern.

Our business began recording minimal revenues in 2009 and we may never become profitable. As of June 30, 2011, we had an accumulated deficit of $46,590,429 and a negative working capital of $2,479,113 excluding the derivative liability of $5,332,759. A significant amount of capital will be necessary to advance the development of our products to the point at which they will become commercially viable and these conditions raise substantial doubt about our ability to continue as a going concern.

If we continue incurring losses and fail to achieve profitability, we may have to cease our operations. Our financial condition raises substantial doubt that we will be able to continue as a “going-concern”, and our independent auditors included an explanatory paragraph regarding this uncertainty in their report on our financial statements as of June 30, 2011. These financial statements do not include any adjustments that might result from the uncertainty as to whether we will continue as a “going-concern”. Our ability to continue as a “going-concern” is dependent upon our generating cash flow sufficient to fund operations. Our business plans may not be successful in addressing these issues. If we cannot continue as a “going-concern”, you may lose your entire investment in us.

We do not have sufficient cash on hand. If we do not generate sufficient revenues from sales among other factors, we will be unable to continue our operations.

We estimate that within the next 12 months we will need substantial cash and liquidity for operations, and we do not have sufficient cash on hand to meet this requirement. Although we are seeking additional sources of debt or equity financings, there can be no assurances that we will be able to obtain any additional financing. We recognize that if we are unable to generate sufficient revenues or obtain debt or equity financing, we will not be able to earn profits and may not be able to continue operations.

There is limited history upon which to base any assumption as to the likelihood that we will prove successful, and we may not be able to continue to generate enough operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

Additionally, as described in more detail below, the significant dilution to the current number of outstanding shares of Company common stock, which is expected to occur from the conversion of the Company’s currently outstanding convertible promissory notes and warrants makes obtaining additional financing very difficult.

We have numerous lawsuits pending against the Company, several of which have resulted in judgments against the Company, and insufficient capital resources to retain legal counsel to respond to the lawsuits; we expect additional lawsuits to occur from unpaid creditors of the Company.

As described in Part II, Item 1 “Legal Proceedings”, the Company has numerous lawsuits pending against it, several of which have resulted in judgments against the Company for substantial sums of money, and reasonably expects additional lawsuits to be filed by creditors with outstanding unsatisfied debt obligations owed to them by the Company. The Company has insufficient capital to retain legal counsel to defend itself in these actions and/or may not have any defense against the legal actions claiming the Company owes the creditor for services provided. Additionally, the Company does not have sufficient capital to pay the judgments which have been awarded against the Company The default judgments which have been awarded against the Company, and additional judgments in any of these pending lawsuits or future lawsuits, could result in the seizure of all remaining assets of the Company which would have a material adverse effect on the Company. If the judgments remain unpaid, the Company may be forced to seek the protection afforded by Chapter 7 of the federal bankruptcy laws, or seek the protection of state insolvency laws, which would have a material adverse effect on the Company and its shareholders.

We have a limited operating history and if we are not successful in continuing to grow the business, then we may have to scale back or even cease ongoing business operations.

We have a very limited history of revenues from operations (approximately $1,300,000 from inception to date). We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to sign customer contracts or operate on a profitable basis. As we are in the early production stage, potential investors should be aware of the difficulties normally encountered in commercializing the product. If the business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in us.

If we are unable to obtain additional funding, business operations will be harmed and if we do obtain additional financing then existing shareholders may suffer substantial dilution.

We anticipate that we will require substantial cash and liquidity, which we do not have at this time, to fund continued operations for the next twelve months, depending on revenue, if any, from operations. Additional capital will be required to effectively support the operations and to otherwise implement our overall business strategy. We currently do not have any contracts or commitments for additional financing. There can be no assurance that financing will be available in amounts or on terms acceptable to us, if at all. The inability to obtain additional capital will 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 will likely be required to curtail and possibly cease operations. Any additional equity financing may involve substantial dilution to then existing shareholders.

We have significant debt obligations, and if we fail to restructure or repay or outstanding indebtedness, the lenders may take actions that would have a material adverse impact on the Company.

The Company has significant outstanding indebtedness. As of June 30, 2011, the Company had a gross aggregate outstanding principal balance of $4,384,825 in convertible debt obligations. If the lenders under these convertible notes do not convert their notes to common stock and demand repayment, the Company does not have sufficient cash to pay its debt obligations. Our failure to repay this debt could result in events of default under the convertible notes which provide the lenders with certain rights, including the right to institute an involuntary bankruptcy proceeding against the Company. If the debt remains unpaid past the due dates and the lenders choose to exercise their rights of default, the Company may be forced to seek the protection afforded by Chapter 7 of the federal bankruptcy laws which would have a material adverse effect on the Company. The Company’s default on its debt obligations or potential need to seek protection under the federal bankruptcy laws raise substantial doubt about our ability to continue as a going concern.

Because we are small and have insufficient capital, we may have to limit business activity which may result in a loss of your investment.

Because we are small and do not have much capital, we must limit our business activity. As such we may not be able to manufacture product or complete the sales and marketing efforts required to drive our sales. In that event, if we cannot generate revenues, you will lose your investment.

If we are unable to continue to retain the services of Messrs. James Tilton and Kevin Claudio, or if we are unable to successfully recruit qualified Officers and Board members, management and company personnel having experience in the small wind turbine industry, we may not be able to continue operations.

Our success depends to a significant extent upon the continued services of Mr. James Tilton, Chief Operating Officer and Mr. Kevin Claudio, Chief Financial Officer. The loss of the services of Mr. Tilton and Mr. Claudio could have a material adverse effect on our strategy and prospective business. These individuals are committed to devoting substantially all of their time and energy to us. This employee could leave us with little or no prior notice. We do not have “key person” life insurance policies covering any of our employees. Additionally, there are a limited number of qualified technical personnel with significant experience in the design, development, manufacture, and sale of our wind turbines, and we may face challenges hiring and retaining these types of employees.

In order to successfully implement and manage our business plan, we will be dependent upon, among other things, successfully recruiting qualified management and company personnel with experience in the small wind turbine business. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain new and existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms. Additionally, the Company has made efforts to identify and recruit additional members for its board of directors. However, to date, the Company has been unable to retain any additional board members, and the board members it has identified have expressed a reluctance to join the board until the Company is better capitalized.

We are a new entrant into the small wind turbine industry without profitable operating history.

As of June 30, 2011, we had an accumulated deficit of $46,590,429. We expect to derive our future revenues from sales of our systems; however, the realization of these revenues is highly uncertain. We continue to devote substantial resources to expand our sales and marketing activities, further increase manufacturing capacity, and expand our research and development activities. As a result, we expect that our operating losses will increase and that we may incur operating losses for the foreseeable future.

If we are unable to successfully achieve broad market acceptance of our systems, we may not be able to generate enough revenues in the future to achieve or sustain profitability.

We are dependent on the successful commercialization of our systems. The market for small wind turbines is at an early stage of development and unproven. The technology may not gain adequate commercial acceptance or success for our business plan to succeed.

If we cannot establish and maintain relationships with distributors, we may not be able to increase revenues.

In order to increase our revenues and successfully commercialize our systems, we must establish and maintain relationships with our existing and potential distributors. A reduction, delay or cancellation of orders from one or more significant distributors could significantly reduce our revenues and could damage our reputation among our current and potential customers. We had previously signed 33 distribution agreements throughout the United States and international locations. The agreements have no termination penalties and not all of the distributors are currently active.

We were recently sued by one of our distributors and may face additional lawsuits in the future.

We were recently named in a lawsuit by one of our distributors for claims which include misrepresentation, breach of contact, breach of warranties and unfair practices under consumer protection statutes relating to our products and performance under the distribution agreement. While we believe we have defenses to these claims, there is a potential that the claims could be decided against us, which could result on our obligation to pay damages to the distributor, which would have an adverse effect on our financial condition. Additionally, we could face similar lawsuits from distributors or customers in the future.

If we can not assemble a large number of our systems, we may not meet anticipated market demand or we may not meet our product commercialization schedule.

To be successful, we will have to assemble our systems in large quantities at acceptable costs while preserving high product quality and reliability. If we cannot maintain high product quality on a large scale, our business will be adversely affected. We may encounter difficulties in scaling up production of our systems, including problems with the supply of key components, even if we are successful in developing our assembly capability, we do not know whether we will do so in time to meet our product commercialization schedule or satisfy the requirements of our customers. In addition, product enhancements need to be implemented to various components of the platform to provide better overall quality and uptime in high wind regimes. The system is now rated to support 100 mph sustained winds. The implementation of the enhancements to our system may also delay significant production by requiring additional manufacturing changes and technical support to facilitate the manufacturing process.

If we are unable to raise sufficient capital, we may not be able to pay our key suppliers.

Our ability to pay key suppliers on time will allow us to effectively manage our business. Currently we have a large outstanding liability with our product manufacturer that is inhibiting us from receiving additional units at this time. In addition, we have other large outstanding accounts payable with key suppliers that may inhibit the Company from receiving system product in the future.

If we experience quality control problems or supplier shortages from component suppliers, our revenues and profit margins may suffer.

Our dependence on third-party suppliers for components of our systems involves several risks, including limited control over pricing, availability of materials, quality and delivery schedules. Any quality control problems or interruptions in supply with respect to one or more components or increases in component costs could materially adversely affect our customer relationships, revenues and profit margins.

International expansion will subject us to risks associated with international operations that could increase our costs and decrease our profit margins.

International operations are subject to several inherent risks that could increase our costs and decrease our profit margins including:

- reduced protection of intellectual property rights;

- changes in foreign currency exchange rates;

- changes in a specific country’s economic conditions;

- trade protective measures and import or export requirements or other restrictive actions by foreign governments; and

- changes in tax laws.

If we cannot effectively manage our internal growth, our business prospects, revenues and profit margins may suffer.

If we fail to effectively manage our internal growth in a manner that minimizes strains on our resources, we could experience disruptions in our operations and ultimately be unable to generate revenues or profits. We expect that we will need to significantly expand our operations to successfully implement our business strategy. As we add marketing, sales and build our infrastructure, we expect that our operating expenses and capital requirements will increase. To effectively manage our growth, we must continue to expend funds to improve our operational, financial and management controls, and our reporting systems and procedures. In addition, we must effectively expand, train and manage our employee base. If we fail in our efforts to manage our internal growth, our prospects, revenue and profit margins may suffer.

Our technology competes against other small wind turbine technologies. Competition in our market may result in pricing pressures, reduced margins or the inability of our systems to achieve market acceptance.

We compete against several companies seeking to address the small wind turbine market. We may be unable to compete successfully against our current and potential competitors, which may result in price reductions, reduced margins and the inability to achieve market acceptance. The current level of market penetration for small wind turbines is relatively low and as the market increases, we expect competition to grow significantly. Our competition may have significantly more capital than we do and as a result, they may be able to devote greater resources to take advantage of acquisition or other opportunities more readily.

Our inability to protect our patents and proprietary rights in the United States and foreign countries could materially adversely affect our business prospects and competitive position.

Our success depends on our ability to obtain and maintain patent and other proprietary-right protection for our technology and systems in the United Stated and other countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from using our proprietary rights.

If we cannot effectively increase and enhance our sales and marketing capabilities, we may not be able to increase our revenues.

We need to further develop our sales and marketing capabilities to support our commercialization efforts. If we fail to increase and enhance our marketing and sales force, we may not be able to enter new or existing markets. Failure to recruit, train and retain new sales personnel, or the inability of our new sales personnel to effectively market and sell our systems, could impair our ability to gain market acceptance of our systems.

If we encounter unforeseen problems with our current technology offering, it may inhibit our sales and early adoption of our product.

We continue to improve on the products performance capabilities, but any unforeseen problems relating to the units operating effectively in the field could have a negative impact on adoption, future shipments and our operating results.

We are to establish and maintain required disclosure controls and procedures and internal controls over financial reporting and to meet the public reporting and the financial requirements for our business.

Our management has a legal and fiduciary duty to establish and maintain disclosure controls and control procedures in compliance with the securities laws, including the requirements mandated by the Sarbanes-Oxley Act of 2002. The standards that must be met for management to assess the internal control over financial reporting as effective are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. Because we have limited resources, we may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting, and disclosure controls and procedures. In addition, the attestation process by our independent registered public accounting firm is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accounting firm. If we cannot assess our internal control over financial reporting as effective or provide adequate disclosure controls or implement sufficient control procedures, or our independent registered public accounting firm is unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted.

Risks Related to Common Stock

There is a significant risk of our common shareholders being diluted as a result of our outstanding convertible securities.

We have 1,922,000,000 shares of common stock issued and outstanding as of the date of this report. We also have outstanding a gross aggregate principal balance of $4,384,825 of Convertible Notes as of June 30, 2011 which may be converted into shares of common stock at the conversion rate as provided in the convertible notes. Because the conversion rate under the Convertible Notes is at a discounted price from the trading price of the Company’s common stock, and the low trading price of the Company’s common stock, any additional conversions of these Convertible Notes would result in the issuance of a significant amount of additional shares of common stock which will dilute the ownership interest of our shareholders. The conversion of these Convertible Notes, exercise of warrants and new stock issued during the year resulted in an increase in the number of the Company’s issued and outstanding shares of common stock from 1,021,482,054 as of December 31, 2010 to 1,750,000,000 shares issued and outstanding as of June 30, 2011. In addition, we recently completed financings described in this report with St. George Investments, LLC pursuant to which we issued a convertible note, if exercised, would result in a significant amount of additional shares of common stock outstanding. Further, we anticipate the need to raise additional capital which would also result in the issuance of additional shares of common stock and/or securities convertible into our common stock. We also have outstanding warrants to purchase common stock the exercise of which could potentially result in the Company issuing a significant number of additional shares of common stock.

The increase in the number of authorized shares of common stock may allow for a significant number of additional shares of common stock to be issued and,therefore, a common shareholder has a significant risk of having its interest in our Company significantly diluted.

The large number of shares eligible for immediate and future sales may depress the price of our stock.

Our Articles of Incorporation had authorized the issuance of 1,750,000,000 shares of common stock, $0.0001 par value per share and 5,000,000 shares of preferred stock, $0.0001 par value per share. As discussed above, we had 1,750,000,000 shares of common stock outstanding as of the date of this report, and the Company has contractual obligations to issue a significant amount of additional shares issuable upon exercise and conversion of our outstanding warrants, stock options and convertible notes.

The amendment to the Company’s Articles of Incorporation referenced above increasing the authorized shares to 100,000,000,000 could have a significant dilutive effect on our shareholders and on your investment, resulting in reduced ownership in our company and decreased voting power, or may result in a change of control.

Additional financings may dilute the holdings of our current shareholders.

In order to provide capital for the operation of the business, we may enter into additional financing arrangements. These arrangements may involve the issuance of new shares of common stock, preferred stock that is convertible into common stock, debt securities that are convertible into common stock or warrants for the purchase of common stock. Any of these items could result in a material increase in the number of shares of common stock outstanding, which would in turn result in a dilution of the ownership interests of existing common shareholders. In addition, these new securities could contain provisions, such as priorities on distributions and voting rights, which could affect the value of our existing common stock.

There is currently a limited public market for our common stock. Failure to develop or maintain a trading market could negatively affect its value and make it difficult or impossible for you to sell your shares.

There has been a limited public market for our common stock and an active public market for our common stock may not develop. Failure to develop or maintain an active trading market could make it difficult for you to sell your shares or recover any part of your investment in us. Even if a market for our common stock does develop, the market price of our common stock may be highly volatile. In addition to the uncertainties relating to future operating performance and the profitability of operations, factors such as variations in interim financial results or various, as yet unpredictable, factors, many of which are beyond our control, may have a negative effect on the market price of our common stock.

“Penny Stock” rules may make buying or selling our common stock difficult.

If the market price for our common stock is below $5.00 per share, trading in our common stock may be subject to the “penny stock” rules. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules would require that any broker-dealer that would recommend our common stock to persons other than prior customers and accredited investors, must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations would require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market price and liquidity of our common stock.

Risks Related to Preferred Stock

Our board of directors has the right to issue additional shares of common stock, or preferred stock with rights, privileges and preferences which are superior to the shares of common stock, without stockholder consent, which could have the effect of restricting the ability of the common stock shareholders to impact the outcome of shareholder voting, and could create substantial dilution or impeding or discouraging a takeover transaction.

Pursuant to our certificate of incorporation, our board of directors may issue additional shares of common or preferred stock. The preferred stock may contain rights, privileges and preferences, including voting rights, which are superior to the common stock. The issuance of preferred stock could therefore have the effect of restricting the ability of the common stock holders to impact the outcome of matters put before a vote or consent of the shareholders. The preferred stock may also be given preferences over the common stock for dividends or other distributions from the company. Also, any additional issuance of common stock or the issuance of preferred stock could have the effect of impeding or discouraging the acquisition of control of us by means of a merger, tender offer, proxy contest or otherwise, including a transaction in which our stockholders would receive a premium over the market price for their shares, thereby protecting the continuity of our management. Specifically, if in the due exercise of its fiduciary obligations, our board of directors was to determine that a takeover proposal was not in the best interest of the Company or our stockholders, shares could be issued by our board of directors without stockholder approval in one or more transactions that might prevent or render more difficult or costly the completion of the takeover by:

	•	diluting the voting or other rights of the proposed acquirer or insurgent stockholder group;
	•	putting a substantial voting block in institutional or other hands that might undertake to support the incumbent board of directors; or
	•	effecting an acquisition that might complicate or preclude the takeover

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

On July 29, 2011, the Company issued 172,000,000 shares of the Company’s Common Stock upon conversion to a holder of 92,973 shares of the Company’s Series A Preferred Stock previously issued. The issuance of shares of common stock were exempt from registration under the Securities Act pursuant to Section 4(2) thereof and/or Rule 506 of Regulation D under the Securities Act. The offering was not conducted in connection with a public offering, and no public solicitation or advertisement was made or relied upon by the investors in connection with the offering.

Purchases of equity securities by the issuer and affiliated purchasers

None.

Item 3. Defaults Upon Senior Securities.

Item 4. (Removed and Reserved)

Item 5. Other Information.

None

Item 6. Exhibits.

Those exhibits marked with an asterisk (*) refer to exhibits filed herewith.

Exhibit No.		Description

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1*		Certification of Chief Executive Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

101.INS*		XBRL Instance Document

101.SCH*		XBRL Schema Document

101.CAL*		XBRL Calculation Linkbase Document

101.DEF*		XBRL Definition Linkbase Document

101.LAB*		XBRL Label Linkbase Document

101.PRE*		XBRL Presentation Linkbase Document

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.

	HELIX WIND, CORP.

	By:	/s/ Kevin Claudio
		Kevin Claudio
		Chief Financial Officer
		(Principal Financial Officer)

Date: August 15, 2011

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