UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): September 14, 2010

Sunvalley Solar, Inc.
(Exact name of small business issuer as specified in its charter)

Nevada
20-8415633
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
 
398 Lemon Creek Dr., Suite A, Walnut, CA 91789
(Address of principal executive offices)

(909) 598-0618
(Issuer’s telephone number)

_______________________________________________________
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

   [ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

   [ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

   [ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

   [ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

SECTION 1 – Registrant’s Business and Operations

Item 1.02                      Termination of a Material Definitive Agreement

On September 14, 2010, we gave notice of our termination and rescission of the Drawdown Equity Financing Agreement (the “DEFA”) and accompanying Registration Rights Agreement (the “RRA”) entered into with Auctus Private Equity Fund, LLC on or about September 10, 2010.

Under the DEFA, we had agreed to issue and sell to Auctus, and Auctus had committed to purchase, up to $10,000,000 worth of our common stock, par value $0.001 per share, over a three year period.

The DEFA entitled us to request “Advances,” or draw-downs, under the agreement at our election from time to time.  By delivery of a Drawdown Notice under the agreement, we could have effected the sale of common stock to Auctus valued at a maximum of either (i) $500,000 or (ii) 200% of the average daily volume of the common stock based on the ten (10) trading days preceding the Drawdown Notice Date (as defined in the DEFA), whichever is larger. The purchase price of the common stock for an Advance was set at ninety-three percent (93%) of the lowest closing bid price of the common stock during the Pricing Period, which is defined as the five (5) consecutive trading days immediately after the Drawdown Notice Date.  The DEFA required a minimum of five (5) trading days between each Drawdown Notice Date.

Under the DEFA, Auctus was to immediately cease selling any shares of our common stock during a Pricing Period if the market price of our common stock falls below seventy-five percent (75%) of the average closing bid price of the common stock over the preceding ten (10) trading days prior to the Drawdown Notice Date (the “Floor”). In our sole discretion, we could have waived our right with respect to the Floor and allow Auctus to sell any shares below the Floor Price.  The floor price restriction only applied to the five (5) consecutive trading days immediately after the Drawdown Notice Date.

Under section 7.2 (g) of the DEFA, Auctus’ beneficial ownership of common stock was subject to a limit of 4.99% of our issued and outstanding common stock, and we could not request an Advance which would cause Auctus to exceed this limit.

 
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Our ability to access funding under the DEFA was conditioned upon our fulfillment of certain additional obligations, including, but not limited to:

·  
A Registration Statement with respect to the resale of the shares of common stock to be delivered to Auctus in connection with the Advance shall have been declared effective.
·  
The shares to be delivered to Auctus must be timely delivered through a Deposit/Withdrawal at Custodian (DWAC)
·  
We shall have obtained all material permits and qualifications required by any applicable state for the offer and sale of the Registrable Securities, as defined in the DEFA
·  
We shall have filed with the SEC in a timely manner all reports, notices and other documents required of a reporting company under Securities Exchange Act of 1934
·  
All fees set forth in Section 12. 4 of the DEFA shall have been paid or withheld.
·  
Our common stock shall continue to be authorized for quotation on the Principal Market, as defined in the DEFA.
·  
We must cause our common stock to be registered under Section 12(g) of the Exchange Act.

Under the RRA, we were required to file a Registration Statement covering the re-sale by Auctus of all common stock saleable to Auctus under the DEFA.  The Registration Statement was to be filed within ninety (90) days from the date of the RRA.  We were to use all commercially reasonable efforts to have the Registration Statement declared effective within one hundred twenty (120) days.  We would have been required to maintain the effectiveness of Registration Statement until completion of the three-year Commitment Period as defined in the DEFA.

We do not believe that we have incurred any early termination penalties under the terms of the DEFA and RRA.

 
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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 hereunto duly authorized.

Sunvalley Solar, Inc.

/s/ Zhijian (James) Zhang
Zhijian (James) Zhang,
Chief Executive Officer

Date:   September 14, 2010