Item 1.

Financial Statements

GIRASOLAR, INC.

UNAUDITED INTERIM FINANCIAL STATEMENTS

June 30, 2007

GiraSolar, Inc.
Consolidated Balance Sheets
			(Unaudited)
			June 30,		December 31,
			2007		2006
Assets
Current assets
	Cash	$	227,254	$	861.574
	Accounts receivable, net		441,182		4.720.686
	Inventory		983,444		738.879
	Prepayments		1,250,091		409.107
	Investments, held for resale		2,584		2.502
	Total current assets		2,904,555		6.732.748
Furniture and vehicles, net			30,920		24,249
Goodwlll			3,334,625		3,334,625
Customer list, net			2,087,416		2,329,810
Due from related parties			407,815		426,854
Tax refunds receivable			166,747		63,414
Other receivables			31,266		29,423
Total assets		$	8,963,344	$	12,941,123

GiraSolar, Inc.
Consolidated Balance Sheets (continued)
			(Unaudited)
			June 30,		December 31,
			2007		2006
Liabilities and stockholders' equity
Current liabilities
	Bank overdraft	$	252,436	$	---
	Notes payable		1,525,062		1,422,298
	Current derivative liability		139,171		82,817
	Accounts payable		223,118		390,085
	Customer prepayments		2,049,666		5,816,336
	Other accruals		651,704		675,555
	Accrued interest		394,268		299,273
	Provision for warranty claims		299,670		290,214
	Due to related party		4,126		4,024
	Total current liabilities		5,539,221		8,980,602
Minority interest			21,458		20,868
Commitments and contingencies			---		---
Stockholders' equity
	Preferred stock, $.001 par value, 5,000,000
	shares authorized, 1,000,000 Class A shares
	issued and outstanding		1,000		1,000
	Common stock, $.01 par value, 1,000,000,000
	shares authorized, 35,618,700 shares issued
	and outstanding at June 30, 2007 and December 31, 2007		356,187		355,987
	Subordinated loan		103,002		128,679
	Additional paid-in capital		7,316,520		7,303,120
	Accumulated deficit		(4,315,193)		(3,784,577)
	Other comprehensive income (loss)		(58,851)		(64,556)
	Total stockholders' equity		3,402,665		3,939,653
Total liabilities and stockholders' equity		$	8,963,344	$	12,941,123

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

GiraSolar, Inc.
Consolidated Statement of Operations
(Unaudited)
					Three months ended					Six months ended
					June 30,					June 30,
						2007		2006				2007			2006
Revenue					$	8,196,115	$	32,238,116		$		13,072,970	$		36,637,654
Cost of revenue						7,677,013		31,507,282				12,297,297			35,660,022
Gross profit						519,102		730,834				775,673			977,632
Operating expenses
		Selling, general and
		administrative				318,833		545,499				1,012,829			770,784
		Research and development				122,009		---				122,009			---
Total operating expenses						440,842		545,499				1,134,838			770,784
Income (loss) from operations						78,260		185,335				(359,165)			206,848
Other income (expense)
		Interest income				12,746		291				12,746			359
		Loss on derivative liability				(28,177)		---				(56,354)			---
		Interest expense				(64,994		(58,707)				(114,696)			(96,865)
Total other income (expense)						(80,425		(58,416)				(158,304)			(96,506)
Loss before provision for income
taxes						(2,165		126,919				(517,469)			110,342
Provision for income taxes						76,547		77,668				12,557			103,143
Loss before minority interest						(78,712		49,251				(530,026)			7,199
Minority interest						94,514		(89,834)				(590)			(122,720)
Net loss					$	(173,226	$	(40,583)		$		(530,616)	$		(115,521)
Basis and diluted loss per share					$	-0.00	$	-0.00		$		-0.01	$		-0.01
Weighted average number of
common shares outstanding -
Basic and diluted						35,605,366		13,629,382				35,602,033			13,629,382

	GiraSolar, Inc.
	Consolidated Statements of Cash Flows
	(Unaudited)
											Six months ended
											June 30,
											2007					2006
	Cash flows from operating activities:
			Net loss						$		(530,616)			$		(115,521)
			Adjustments to reconcile net loss to net cash provided by  (used in) operating activities
				Depreciation and amortization							244.596					3,829
				Issuance of common stock for services							13,600					41,800
				Change in derivative liability							56,354					---
				Notes payable issued for salaries							102,764					100,000
				Minority interest							590					136,759
				Other comprehensive income							5,705					---
			Changes in operating assets and liabilities
				Accounts receivable							4,279,504					2,505,512
				Inventory							(244,565)					(936,828)
				Prepayments to vendors							(840,984)					(3,025,621)
				Tax refund receivable							(103,333)					(88,569)
				Other receivables							(1,843)					(188,152)
				Accounts payable and accrued   expenses							(86,367)					(1,237,866)
				Prepayments from customers							(3,766,670)					5,879,601
				Provision for warranty claims												85,259
	Net cash provided by (used in) operating activities										(871,265)					3,160,203
	Cash flows from investing activities
			Notes receivable								19,039					10,000
			Investments								(82)					(391)
			Advances to related parties								---					(157,421)
			Property and equipment additions								(8,873)					(1,752)
	Net cash provided by (used in) investing activities										10,084					(149,564)

GiraSolar, Inc.
Consolidated Statements of Cash Flows (continued)
(Unaudited)
			Six months ended
			June 30,
			2007		2006
Cash flows from financing  activities
	Advances from related party, net		102		219,677
	Bank overdraft		252,436		---
	Proceeds from notes payable		---		46,971
	Decrease in subordinated loan		(25,677)		---
	Proceeds from the sale of common stock
Net cash provided by (used in) financing activities			226,861		266,648
Increase (decrease) in cash			(634,320)		3,277,287
Cash, beginning			861,574		119,380
Cash, ending		$	227,254	$	3,396,667

Note 1 – Organization and Significant Accounting Policies

Organization and Line of Business

GiraSolar, Inc. is a broad based solar energy company with business activities in several segments of the solar value chain ranging from silicon raw material supply to system integration. GiraSolar Inc. was established after Legend Investment Corp. acquired a majority of the Dutch GiraSolar BV group in February 2006 and consequently changed its name to GiraSolar Inc. and abandoned all its previous business activities not related to solar energy, GiraSolar BV- the majority owned subsidiary of GiraSolar Inc. which is operating in the field of solar energy and related products - was established in 2003 in Deventer, the Netherlands by W.M. Koornstra, H.J.M. Keijzer and K.H.J.M. Dirven, three seasoned solar energy entrepreneurs with a track record dating back to 1993 for W.M. Koornstra, involving on-grid and off-grid solar and R&D activities. GiraSolar BV operates two fully owned subsidiaries in the Netherlands (DutchSolar BV and GiraMundo BV) and a 51% owned subsidiary in Turkey (GiraSolar Turkey Ltd. Ste.) and a fully owned sales support office in Spain.

These financial statements include the Company and its subsidiary – GiraSolar, B.V.  The primary activities of GiraSolar, B.V. consist of the production of solar energy equipment; the sale of solar energy applications and equipment; and consultancy of solutions in the field of solar energy applications and equipment.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company incurred a net loss for the six months ended June 30, 2007 of $530,616 and at June 30, 2007, had an accumulated stockholders’ equity of $3,402,665 and a working capital deficit of $2,634,666.  These conditions raise substantial doubt as to the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Principles of Consolidation

The consolidated financial statements include the accounts of GiraSolar, B.V. and its two wholly owned subsidiaries and one 51% owned subsidiary, of which the Company has the ability to exercise control and direct operations.  All material intercompany balances and transactions have been eliminated on consolidation.

Revenue Recognition

Revenue is recognized in accordance with SEC Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements”.  The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer pursuant to applicable laws and regulations, including factors such as when there has  been evidence of a sales arrangement, the performance has occurred, or service have been rendered, the price to the buyer is fixed or determinable, and collectability is reasonably assured.

Revenues from the sale of solar energy equipment are recognized upon delivery.  

Revenues from services are recognized in proportion to the services rendered.  

Government operating grants are included in the statement of operations in the year to which the subsidized expenses are charged, in which the loss of income is incurred, or in which the operating loss has occurred.

Stock Based Compensation

SFAS No. 123, “Accounting for Stock-Based Compensation,” establishes and encourages the use of the fair value based method of accounting for stock-based compensation arrangements under which compensation cost is

determined using the fair value of stock-based compensation determined as of the date of grant and is recognized over the periods in which the related services are rendered. The statement also permits companies to elect to continue using the current intrinsic value accounting method specified in Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees,” to account for stock-based compensation. The Company has elected to use the intrinsic value based method and has disclosed the pro forma effect of using the fair value based method to account for its stock-based compensation issued to employees. For options granted to employees where the exercise price is less than the fair value of the stock at the date of grant, the Company recognizes an expense in accordance with APB 25. For non-employee stock based compensation the Company recognizes an expense in accordance with SFAS No. 123 and values the equity securities based on the fair value of the security on the date of grant. For stock-based awards the value is based on the market value for the stock on the date of grant and if the stock has restrictions as to transferability a discount is provided for lack of tradability. Stock option awards are valued using the Black-Scholes option-pricing model.

Use of Estimates

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

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and cash equivalents, other current assets, accounts payable, accrued interest and due to related party, the carrying amounts approximate fair value due to their short maturities.

Cash and Cash Equivalents

For purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with a maturity of three months or less, plus all certificates of deposit.

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist of cash and cash equivalents and accounts receivables. The Company places its cash with high quality financial institutions and at times may exceed the FDIC $100,000 insurance limit. The Company extends credit based on an evaluation of the customer’s financial condition, generally without collateral. Exposure to losses on receivables is principally dependent on each customer’s financial condition. The Company monitors its exposure for credit losses and maintains allowances for anticipated losses, as required.

Furniture and Vehicles, net

Acquisitions of furniture and vehicles are recorded at cost.  Improvements and replacements of furniture and vehicles are capitalized.  Maintenance and repairs that do not improve or extend the lives of furniture and vehicles are charged to expense as incurred.  When furniture and vehicles are retired, their cost and related accumulated depreciation are removed from the accounts and any gain or loss is reported in the statements of operations.  Depreciation is computed using the straight-line method based on the estimated useful life of each class of depreciable assets as follows:

Furniture and fixtures

5 -10 years

Vehicles

3 -  5 years

Impairment of Long-Lived Assets

SFAS No. 144 requires that long-lived assets to be disposed of by sale, including those of discontinued operations, be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing

operations or in discontinued operations.  SFAS No. 144 broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction. SFAS No. 144 also establishes a “primary-asset” approach to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for a long-lived asset to be held and used. The Company has no impairment issues to disclose.

Accrued Product Warranties

The Company’s product warranty accrual reflects management’s estimate of probable liability as a percentage of product sales.  Management establishes product warranty accruals based on historical experience and currently available information.  The provision was established for the year ended December 31, 2005 and is based on 1.75% of the sales of GiraMundo B.V. and DutchSolar B.V.  The provision is short-term in nature.  Management has determined that no additional accrual was required for the six months ended June 30, 2007.

Income Taxes

The Company accounts for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes”. Deferred taxes are provided on the liability method whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with SFAS No. 128, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares available. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted earnings (loss) per share has not been presented since the effect of the assumed conversion of options and warrants to purchase common shares would have an anti-dilutive effect.

All common stock shares are presented to reflect a five for 2 forward stock split approved by the Board of Directors on April 12, 2006.  All share and per share information has been retroactively restated to reflect this stock split.

Comprehensive Loss

SFAS No. 130, “Reporting Comprehensive Loss,” establishes standards for the reporting and display of comprehensive income and its components in the financial statements. Total comprehensive loss consists of the net income for the respective periods, the foreign currency translation adjustments, and the unrealized loss on available for sale securities.

Recently Issued Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board issued FASB Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109”.  FIN 48 provides guidance for the recognition, measurement, classification and disclosure of the financial statement effects of a position taken or expected to be taken in a tax return (“tax position”).  The financial statement effects of a tax position must be recognized when there is a likelihood of more than 50 percent that based on the technical merits, the position will be sustained upon examination and resolution of the related appeals or litigation processes, if any.  A tax position that meets the recognition threshold must be measured initially and subsequently as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority.  The interpretation is effective for fiscal years beginning after December 15, 2006.  The Company does not expect its adoption of FIN 48 to have a material impact on its consolidated financial portion, results of operations or cash flows.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 (“SFAS No. 157”), “Fair Value Measurements”.  This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.  The Statement applies under other accounting pronouncements that require or permit fair value measurements.  SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, or the Company’s fiscal year ending September 30, 2009.  The Company does not expect the adoption of this new standard to have a material impact on its consolidated financial position, results of operations or cash flow.

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”.  This Statement improves financial reporting by requiring an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income.  This Statement also improves financial reporting by requiring an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions.  The effective date to initially recognize the funded status and to provide the required disclosures is for fiscal years ending after December 15, 2006, or the Company’s fiscal year ending September 30, 2007.  The requirement to measure plan assets and benefit obligations is effective for fiscal years ending after December 15, 2008, or the Company’s fiscal year

ending September 30, 2009.  The Company does not expect the adoption of this new standard to have a material impact on its consolidated financial position, results of operations or cash flows.

In February 2007, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” and is effective for fiscal years beginning after November 15, 2007.  This Statement permits entities to choose to measure many financial instruments and certain other items at fair value.  The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions.  The Company is currently assessing the impact the adoption of this pronouncement will have on the financial statements.

Foreign Currency Translation

GiraSolar, B.V. maintains its books and records in Euros, the currency of the Netherlands.  The Euro is the Company’s functional currency, as the Company’s business activities are located in the Netherlands and dominated in Euros.  Assets, and liabilities are translated into United States Dollars have been made at the rate of $1.3627 (US$), the exchange rate prevailing at June 30, 2007. Revenue and expenses are translated into United States Dollars at the rate of $1.32961, the average exchange rate during the six months ended June 30, 2007.   No representation is made that the Euro amount could have been, or could be converted into US$ at that rate or at any other rate.  Foreign currency translation gains or losses are recorded as other comprehensive income in the stockholders’ equity section of the balance sheet.

Note 2 – Inventories

Inventories of raw materials, consumables, and finished goods are valued at the lower of cost or market, on a first-in, first-out basis.  The market value is determined by individual assessment of the inventories.  

Inventory consists of the following at June 30, 2007:

Finished goods          

$ 983,444

Note 3 – Accounts Receivable and Allowance For Doubtful Accounts

Trade accounts receivable are presented net of an allowance for doubtful accounts.  The Company estimates the allowance based on an analysis of specific customers, taking into consideration  the age of accounts and an assessment of the customer’s ability to pay.  The Company has determined based upon these considerations that no allowance for doubtful accounts is required at June 30, 2007.

Note 4 – Furniture and Vehicles

Property and equipment consists of the following at June 30, 2007:

Furniture and fixtures

$ 30,526

Vehicles

     9,651

                                                                     

   40,177

Less – Accumulated depreciation

   (9,257)

                                                                                      

         

$ 30,920           

Note 5 – Notes Payable (Including Related Party)

Notes payable consist of the following at June 30, 2007:

Notes payable to a Company officer bearing interest upon default at 21% per annum.

These notes are unsecured and were due on demand, and are in default at December 31, 2006

and 2005. These notes were issued for past due compensation for 2002, 2003, and 2004

salary, convertible at .02 per share            

$466,665

Notes payable to a former employee of the Company bear interest upon default

at 21% per annum.  These notes are unsecured and are due on demand, and are in

default at December 31, 2006 and 2005.  These notes was issued for past due compensation

$127,500

 

Notes payable to a Company officer, currently non-interest bearing, bears interest only

upon default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.02 per share. This note was issued for 2005 salary past due compensation.

$250,000

Notes payable to a Company officer, currently non-interest bearing, bears interest only

upon default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2006 salary past due compensation.

$175,000

Notes payable to a Company officer, currently non-interest bearing, bears interest only

upon default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2007 salary past due compensation.

$50,000

Notes payable to a Company officer, currently non-interest bearing, bears interest only

upon default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2007 salary past due compensation.

$50,000

Notes payable to a Company officer, currently non-interest bearing, bears interest only

upon default at 21% per annum, unsecured and due on demand. Convertible into common

 stock at $.02 per share. This note was issued for expenses advanced to fund operations

$303,362

     

Notes payable to a Company officer, currently bears interest at 8%, upon default

bears interest at 21%, per annum unsecured and due on demand. Convertible into

common stock at $.10 per share.  This note was issued for expenses advanced.

$66,985

Notes payable to a Company officer, currently bears interest at 8%, upon default

bears interest at 21% per annum, unsecured and due on demand. Convertible into

common stock at $.10 per share. This note was issued for legal fees advanced.

$29,000

Notes payable to an individual, non-interest bearing, unsecured and due on demand.

$  3,000

 

Notes payable to an individual, non-interest bearing, unsecured and due on demand.

$  3,550

Total

          $1,525,062

Other related parties have made a private loan to the Company.  The loan is subordinated to all existing and future liabilities of the Company.  The loan includes interest at 5% annually.  The loan is not yet formalized, and therefore there is no interest accrual at June 30, 2007.  The amount of this loan is $103,002.  This subordinated loan is included in the stockholders’ equity section of the balance sheet.  

Note 6 – Related Party Transactions

A total of $57,371 is due from three companies that are controlled by a related Company.  These advances are non-interest bearing and the Company can demand payment at any time.

A total of $350,444 is due from seven companies that are related to GiraSolar, B.V.  These advances are non-interest bearing,

Notes payable to a Company officer bearing interest upon default at 21% per annum.

These  notes are unsecured and were due on demand, and are in default at December 31, 2006

and 2005. These notes were issued for past due compensation for 2002, 2003, and 2004

salary convertible at .02 per share

$466,665

Notes payable to a Company officer, currently non-interest bearing, bears interest upon

default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.02 per share. This note was issued for 2005 salary past due compensation.

$250,000

Notes payable to a Company officer, currently non-interest bearing, bears interest upon

default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2006 salary past due compensation.

$175,000

Notes payable to a Company officer, currently non-interest bearing, bears interest upon

default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2007 salary past due compensation.

$50,000

Notes payable to a Company officer, currently non-interest bearing, bears interest upon

default at 21% per annum, unsecured and due on demand. Convertible into common

stock at $.35 per share. This note was issued for 2007 salary past due compensation.

$50,000

             

Notes payable to a Company officer, currently non-interest bearing, bears interest upon